NJ’s Constitution Was Designed to Prevent Politicians from Looting State Government

By Seth Grossman, Political Columnist
Reprinted from Current Newspapers of Atlantic County, Aug 6, 2008
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” The Legislature shall not in any manner, create. . . debts. . . or
liabilities of the State. . . unless the same shall be. . . submitted to the
people at a general election and approved by a majority of the legally
qualified voters. . . “?? New Jersey State? Constitution VIII, 2.3.
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??? Last June, 21 of 40 NJ Senators and 42 of 80 Assembly Members voted to borrow $3.9 billion without voter approval.?? This was to build new schools that were supposed to be built with $8.6 billion borrowed by the state six years ago.?? (Atlantic County Democratic Senator Whelan voted “yes” to borrow the money.?? Cape May County Democrats Senator Van Drew and Assemblymen Albano and Milam voted “no”.? Atlantic County Republican Assemblymen Amodeo and Polistina abstained.)?? That debt will be added to New Jersey’s previous borrowings totaling $40 billion.?? And do not forget New Jersey’s $25 billion worth of unfunded pensions and $58 billion obligation for “free” health care benefits for retired public school teachers and government employees.?? That will give New Jersey $123 billion of “liabilities” with no money set aside to pay for them.?? Only $3 billion was submitted and approved by voters pursuant to New Jersey’s Constitution.?? The rest was not.?? Because of this, even New Jersey’s left-leaning Supreme Court admits that the legislature can “repudiate” or refuse to make payments on that $120 billion any time during the next 30 years.
??? Right now, most New Jersey taxpayers seem OK with paying about $5 billion each year for these debts and liabilities we do not have to pay.?? But every year, that burden gets bigger and more painful as the state borrows more, and as aging baby-boom government employees start collecting.?? I am sure that when these payments get big and painful enough, most New Jersey voters will say “Enough,” and our politicians will listen.?? When New Jersey finally stiffs the suckers who loaned our politicians $120 billion without voter approval, the world will see a real financial disaster that will make the subprime mortgage crisis seem mild.?? Hundreds of thousands of private investors and dozens of mutual and pension funds will see $120 billion of their portfolios turn worthless overnight.?? The companies who insured this junk will fail, which will put hundreds of other securities insured by these companies into the tank.?? Every stockbroker who pedaled New Jersey “appropriation backed” bonds will get sued for everything they own-and more.
??? When that day comes, there will be no federal bailout.?? The Federal Reserve and the U.S. Treasury will be fully tapped out by the Katrina, airline-steelworker pension, Bear-Sterns, home mortgage, etc… bailouts.???
??? Think this can never happen??? Most passengers on the Titanic did not think their ship could ever sink.?? But this is exactly what happened 170 years ago during the Panic of 1837.?? Back then, politicians in New Jersey and every state borrowed massive amounts of money to build expensive “economic development” and public works projects, without raising taxes.?? They did it by borrowing and by printing money.?? Voters loved getting something for nothing, and had no problem re-electing politicians they knew were corrupt.??
??? But with a few exceptions (like the Erie Canal), most government financed, “no money down” projects failed, and the borrowed money never got paid back.?? Banks failed around the nation, and nearly a dozen states failed or refused to pay their debts.?? Five years of high unemployment and economic depression followed.?
??? Americans became so angry at their politicians, that they changed most state constitutions so this could never happen again.?? New Jersey was the second to change.
??? Under New Jersey’s new Constitution of 1844, (1) Politicians could no longer borrow serious money without voter approval.?? (2) State and local governments could no longer give special gifts, loans, “investments” or tax breaks to any selected groups or individuals.?? Such government “favors” would be equally available to everybody – or offered to nobody.?? (3) State and local governments were banned from investing public money in private business ventures.
??? These three basic reforms of New Jersey’s new constitution of 1844 worked brilliantly in New Jersey and most states for more than 120 years.?? They minimized corruption in government and made our country prosperous.?? However, since 1968, New Jersey’s Supreme Court said the words of the 1844 constitution are “outdated”.?? They created loopholes that eliminated its effectiveness.?? Thanks to them, the financial disaster of 1837 can now happen again.
For more information, visit www.libertyandprosperity.org or contact Somers Point attorney Seth Grossman at grossman@snip.net or 609-927-7333.?? Seth Grossman hosts a two way talk radio program every Saturday from 8am – 9am on WVLT Vineland, 92.1 FM.