Say Anything Blog

For all those on the arithmetically-challenged Left who thought the Bush administration's proposals to deal with the coming Social Security crisis, including partially privatzization, was so much rightwing nonsense, the future is now, and on a far, far smaller scale, the state of New Jersey is about to demonstrate the financial trauma that lies ahead for all of us… especially retirees and government workers, two key Democratic constituencies. From today’s NYT:

In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero…

The state has long acknowledged that it has been putting less money into the pension fund than it should. But an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.

The discrepancies raise questions about how much money is really in the New Jersey pension fund, which industry statistics show to be the ninth largest in the nation’s public sector, with reported assets of $79 billion.

State officials say the fund is in dire shape, with a serious deficit. It has enough to pay retirees for several years, but without big contributions, paid for by cuts elsewhere in the state’s programs, higher taxes or another source, the fund could soon be caught in a downward spiral that could devastate the state’s fiscal health…

Since taking office in January 2006, Gov. Jon S. Corzine, a former chairman of Goldman Sachs, has been warning that the pension fund is in worse shape than people may realize. “It’s impossible for us to stay on the course that we are on today, and deliver what people are asking for,” he said in an interview late last year. “The money will not be there.”

Douglas A. Love, a member of the system’s investment oversight board… recently completed a calculation showing that the fund had not measured its future liabilities properly and estimated it had a $56 billion deficit, much higher than the $18 billion that the state had reported. Of course, the deficit could be greater if the assets have been inflated.

Many of us have seen this sort of financial calamity coming for years. In my case, it is one of the principle reasons for starting my own company. The advantages of self-employment, particularly in the areas of asset accumulation and taxes are obvious to anyone willing to study the situation.

Both Social Security and Medicare are similarly threatened by unfunded liabilities, as is, ironically, the federal Pension Benefit Guarantee Corporation. Democrats have refused to even sit down and discuss the situation with the administration, preferring instead to bray about the evils of privatization.

Meanwhile, New Jersey Governor, Democrat Jon Corzine, is considering the sale (privatization) of the New Jersey Turnpike to try and shore up the state’s pension funds, the teachers’ union has file suit against the state, and the Democrat-controlled legislature which passed the legislation that allowed the fiscal fraud in the first place, is blaming the state Treasury for doing what the legislature directed it to do.

Social Security is a federally-mandated program income redistribution at the point of a gun. Clearly, it isn’t working very well. Individual-controlled retirement accounts are looking better and better all the time.