Chris Christie Still Has Something to Prove

By Rich Danker

(Image via the White House Flickr feed)

Chris Christie has the reputation of an aggressive reformer, bolstered by a steady stream of YouTube clips of the New Jersey governor haranguing audiences around the state. His tough but pragmatic approach to working with the Democratic legislature is seen by admirers in both parties as a model for governing. The idea that Trenton now has something to teach Washington about good government is not a joke, and is frequently touted by Christie himself. But does he have the record of accomplishment to back it up?

On his highest-profile issue, pension reform, the answer is clearly no. Less than two years after Christie struck a deal with Democratic leadership to make changes to the state’s pension plans, the alarm is sounding again. Most recently it came from the State Budget Crisis Task Force, a bipartisan project co-chaired by former Federal Reserve chairman Paul Volcker and former New York lieutenant governor Richard Ravitch.

Their report shows that in the next five years New Jersey’s pension contributions are scheduled to rise from $1.03 billion to $5.5 billion, an increase equivalent to 40 percent of the state’s annual education spending. The funded ratio only improved from 56 to 62 percent since 2011, and it won’t reach 80 percent (the threshold for plan health) until 2041. It is almost like pension reform never happened.

That should not be a surprise, because Christie and the legislature left the problematic pension system in place when they cut their deal. The retirement age was bumped up, contributions increased, and cost of living allowances were suspended, but the defined benefit system was left untouched. The state continues to promise pension payouts to workers in excess of what it can afford.

Christie made this point on affordability the centerpiece of his argument in 2010 when as a new governor he barnstormed town halls with the warning that New Jersey was running out of money. Basing the argument for pension reform on fiscal austerity, however, led him into an unfavorable compromise. Senate President Stephen Sweeney persuaded enough fellow Democrats to accept marginal sacrifices that allowed for a short-term win in the form of pension savings for Christie while preserving the status quo and keeping the plagued system open. If Christie rejected this framework, he risked appearing unreasonable. 

A better strategy would have been to portray the state pension system as unfair rather than simply too expensive. It is unfair to private-sector workers who plan for retirement based upon their contributions to savings accounts rather than taxpayer-backed pensions. Public sector retirement compensation should be equal to that of the private sector, a principle that spurred federal pension reform in the 1980s when a blue ribbon commission found that the Civil Service Retirement System was providing benefits three times as large as that of the top corporate plans.

If Christie had led with the fairness argument he would have been able to take aim at the pension system as a whole rather than features of it that merely enhance the tab (e.g. cost of living allowances). Too often fiscal conservatives rest their argument for downsizing government programs on cost rather than the moral conundrums associated with them. Liberals, on the other hand, have been successfully rebutting spending cuts in moral terms since the Clinton years. Ronald Reagan was the last Republican president to make a successful political case for less government because he used rhetoric linked to principled and virtues, not just numbers.

Christie has proven he can do this (check out his pitch for school choice, delivered to a black audience). When he takes up pension reform in a second term – whoever is elected will have to – he should make it about fairness rather than cost. The argument will appeal to more New Jersey voters and leave Democratic lawmakers in the position of having to explain why government workers should continue to get richer benefits.

“By dropping the issue without a fight,” the Wall Street Journal editorial page lamented in 2010, “Mr. Christie has given away too much even before the unions get to the table.” Let’s hope he pursues that fight and tries to remake, not patch over, New Jersey’s pension system. Then Washington, and Republican presidential primary voters, will deservedly take notice.

 

Rich Danker is economics director at American Principles Project, a Washington policy organization.

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