a. The state pension funds are now running like a Bernie Madoff and Charles Ponzi scam. There is not nearly enough money to pay government employees what they are promised. Young employees with low salaries are paying more money than ever for benefits they will never get, while many older workers are retiring at age 55 and making more money retired, that they made most years when they were working.
b. Although the government employee unions blame Christie Whitman, the truth is that the unions supported both the Democrats and Republicans who created the mess.
c. The first thing to do is to have an honest audit of the state pension funds. We can no longer assume the pension funds will earn 8.5% per year, when most private investors can’t even get a one percent return on their money. If an honest audit confirms that there is not nearly enough money to pay every government or public school employee what he or she was promised, there are only three possible solutions:
i. Do nothing. When the pension funds run dry, pay everyone pennies on the pension dollars they were promised. Or force our kids and grandkids to pay all government and public school retirees in full by doubling or tripling all state and local taxes.
ii. Start paying all pensions at 50 cent on the dollar now (or whatever maximum figure would make the pension funds solvent). This still be a windfall “insiders” like Richard Codey’s brother who juiced up their pensions with super high-pay political jobs just before they retired.
iii. Cap public pensions at $50,000 per year (or whatever maximum amount would make the pension funds solvent), with no pension credits for elected officials or part time political appointees, so that most rank-and-file employees are paid in full.
d. Pension contracts, like all contracts, can be legally modified when required by the New Jersey State Constitution, and federal and state bankruptcy and insolvency laws.