How Christine Whitman Destroyed New Jersey's Finances

A twenty-year plan that has come to fruition, and that the GOP hopes to replicate everywhere:

Whitman was one of those star Republican governors of the early 1990s. Like so many other Republican governors who win media attention for innovative approaches, she made her name through the not-so-innovative strategy of cutting taxes. Since she had to offset those tax cuts in order to balance New Jersey's budget, she reduced payments into the state's pension system. And that, as the New York Times noted last August, "contributed to the growth of the unfunded liability" that is now widely blamed for New Jersey's budget shortfall.

It's important to keep in mind that none of this is a surprise. When Whitman was defunding the pension system in order to cut taxes, there were warnings that this is exactly what would happen....

Whitman calls what she did a "reform" of the pension system that puts it on a more "sound actuarial footing." Others are less charitable. The one thing that even the actuarial consultants hired by the Whitman administration agree on, however, is that the chief effect of the changes will be to shift billions of dollars in pension obligations onto New Jersey taxpayers 15 to 20 years from now.

Let's see, that article ran in 1994, so 15 or 20 years would be right about … now. Huh.

"The New Jersey pension system was highly rated in terms of its fiscal integrity," said [Henry] Raimondo of the Eagleton Institute. "Now that's compromised. She has effectively slowed down" the amount of "money going into the system, and in around 2010 the liability to New Jersey taxpayers is going to grow dramatically."

So, in the mid-1990s, Christine Whitman raided New Jersey's pension fund to pay for tax cuts. Critics warned that doing so would cause massive problems for the state's budget -- and nailed the timing of those problems with remarkable accuracy. And now, the media is full of stories suggesting New Jersey's pension system is the cause of the state's budget shortfall -- without mentioning Whitman's role in causing it to happen. (The Washington Post, which reported on Whitman's role at the time and which frequently reports on current pension/budget issues, last mentioned Whitman's diversion of funds from the pension system on December 20, 2005.)

...You've probably seen dozens of statements like that lately. It should be clear by now -- though it isn't from most news reports -- just how disingenuous this is, at least as far as New Jersey is concerned. Let's review: A Republican governor of New Jersey reduced payments to the state pension system so she could cut taxes. Critics warned doing so would cause significant budget shortfalls in 2010. 2010 rolled around, and -- surprise! -- so did budget shortfalls. And now those shortfalls are used by New Jersey's current Republican governor (along with many in the media) to justify cutting pensions (while again cutting taxes.)

Basically, conservatives have staged an end-run around having a public debate over cutting pensions in order to pay for tax cuts. Rather than making the argument that tax cuts are more important than pensions, they just went ahead and cut taxes, raiding the pension system in the process, then waited 15 years for predictable -- and predicted -- deficits, which they now point to as evidence that the pension system is unsustainably generous. And they've done it with the help of countless news organizations that fall for this shell game.