Do we cut pensions or burden future generations?

By Seth Grossman, Political Columnist

Last week I explained in detail how it is not possible for New Jersey to pay all 800,000 of its current and retired state, county, local and public school employees the pensions they were promised, unless we crush our kids and non-government retirees with massive tax hikes for the next 30 years.

That is because the pension funds that are supposed to pay for them have less than half the money they need. The pension funds are in far worse shape than the politicians admit. That is because they still assume the pension fund investments will earn 8 percent per year for the next 30 years, when they are lucky to earn the same 2 percent as the rest of us.

I concluded with these questions: “What do we do now? Do we cut the pensions we can’t afford, or do we crush our kids with tax hikes they can’t afford?”

Many public employees and their union leaders react to just asking these questions with angry denial.

They are quick to blame Republican Christine Todd Whitman, who along with the Republican-controlled Legislature failed to pay the government’s share of pensions payments for a few years in the 1990s. But so what? Even if they paid every dime, there still would not be nearly enough to pay baby-boom pensions.

And besides, those Democratic “friends” and highly paid union leaders are just as much to blame. If the Republicans didn’t tax and spend enough to fund the pensions in the 1990s, Democrat Govs. McGreevey, Codey, Corzine and the majority Democratic legislators did the same thing for the next eight years when they took over in 2002.

And remember that it was public employee unions who demanded and got a 9 percent increase and new early retirements ? with no new money to pay for them ? in 2001. At the time, the unions, Republicans and Democrats falsely claimed they could do this because the pension funds had way too much money.

This single reckless act did more to break the back of the pension funds than anything else. If our current governor, Republican Chris Christie, were the tough prosecutor he claims to be, he would have turned a state grand jury loose and sent all those politicians and pension fund administrators who went along with this to jail for what they did.

But Christie is not going there, and nobody is demanding that he do so, because way too many powerful people ? Republicans and Democrats ? were in on it. And even if we did lock them up and seized all of their property, the pension funds would still be too broke to pay baby-boom pensions.

So far, most public employees, Republican and Democrat politicians, and union leaders talk only of some legal and moral obligation to fully fund these pensions. Many baby-boom cops, firemen, and public school teachers say they made plans to retire with a certain income at a certain age, and it would be wrong and illegal for the government to break its promise and upset their plans.

But Article VIII, Section 2 of New Jersey’s Constitution says the government has no power to incur obligation that will be paid for by future taxpayers unless it is approved by voters. So far, union leaders have blocked every attempt to put the issue on the ballot.

It is also well settled in English-American law that all victims of fraud, bankruptcy or insolvency be treated equally.

Yes, it is unfair for current retirees or baby-boomers approaching retirement to get a lot less than what they were promised.? But is it fair to give them 100 percent while younger public employees doing the same work get almost nothing?

And how is it fair, or legal, to tax our kids and grandkids to pay employees who did nothing for them and who retired before they were born or old enough to vote? Do Americans still oppose taxation without representation?

Liberty brings prosperity. Tyranny ruins it. Government that equally protects the “unalienable” rights of everyone gives everyone liberty ? and a fair chance to enjoy prosperity. Government that uses its power to give special privileges to a selected few creates a system known as tyranny or despotism.

Which system do you think is best for our kids and grandkids?

Somers Point attorney Seth Grossman appears on 1400AM talk radio 3-4 p.m. Mondays and Wednesdays and on 92.1FM 8-10 a.m. Saturdays. For information see, email call (609) 927-7333. Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Shore Diner on Fire and Tilton roads in Egg Harbor Township.

(Reprinted from July 6, 2011 Current-Gazette Newspapers of Atlantic and Cape May Counties,

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  • Seth Grossman

    Seth Grossman is executive director of Liberty And Prosperity, which he co-founded in 2003. It promotes American liberty and limited constitutional government through weekly radio and in-person discussions, its website, email newsletters and various events. Seth Grossman is also a general practice lawyer.

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1 thought on “Do we cut pensions or burden future generations?”

  1. Mark Hutchinson

    Great column! According to a George Mason University study the NJ pension funds are 174 billion dollars in the red. That money will never be there and the sooner the unions realize that fact the better for them.

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