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New Jersey Will Default on Government Pensions

Written by Gary North on July 31, 2014

State by state, county by county, city by city: they will default. The money is not there. The promises were huge.

New Jersey’s governor Christie is touring the state, telling the voters that the state will break promises to retired government workers. He is doing what other government officials refuse to do: tell the truth early.

The public employees were told to trust the state. Silly people. They believed the promises: above-market salaries, tenure, and fat retirement benefits, including health care. Now fiscal reality is intruding. This has barely begun.

A few New Jersey retirees are protesting. These protests will do no good. You can’t extract income out of a state that is over-taxed, over-regulated, and running deficits. The gravy train is about to run out.

In the next recession, retired government employees around the nation will experience what New Jersey’s retired government employees are now experiencing: reality.

They would be wise to start looking now for a second income stream. Avoid the rush.

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25 thoughts on “New Jersey Will Default on Government Pensions

  1. SURPRISE! No honor, amongst THIEVES. They created the PONZI scheme, knowing full well the bubble would burst. You can be guaranteed when push comes to shove, the RULING CLASS will still have theirs. Ultimately, COMMUNISM fails every time and that's the guiding principle of unions.

  2. Gen Early says:

    I am constantly amazed at how long the Ponzi Fed Reserve has continue to counterfeit "money", how long the sheeples have gobbled it up, how long the Feral Gov has seized liberty, how long it takes a country to die. I only hope, and hope is not a plan, that a sapling Tree of Liberty comes forth again in some Spring in the future. We have totally squandered our heritage. A truth I abhor, but facts are facts, comrades.

  3. Holy Shirt says:

    Praising New Jersey's Chris Christie? Is it pure coincidence he looks like he fell from a 'Sopranos' soundstage? Training in economics does not provide immunity to irrationality. I have no sympathy for the public-sector whores in Obama's 'Occupy' movement that blackmailed taxpayers, but 'conservatives' who negotiate long-term, pie-in-the-sky contracts that rape taxpayers, and later try to weasel out of their malfeasance by renaming the contracts 'promises', are "deeper in de Nile" than the piles anchoring Egypt's Aswan Dam. The economy taking a swan-dive, because the Federal Reserve System (a syndicate of a dozen private banks) decides to become a better counterfeiter than 'Mr. 880', is no excuse—legal or otherwise. If you or I tried that, they would put us UNDER the jail!

    After New Jersey's cities were caught tampering with traffic lights to entrap motorists, and courts ordered a stay of enforcement , Christie not only allowed them to self-certify their equipment (a conflict of interest big enough to refloat Atlantis), he supported backdating the self-certifications; prosecutions for untested equipment; for-profit business partners suppressing discovery from police officers and motorists alike; and the issuance of criminal warrants for civil process. Predatory enforcement for filling government coffers is government corruption at its best!

    'Ex post facto' law enforcement is as unconstitutional in the 21st century as it was in the 18th.

    The I-95/George Washington Bridge fiasco is the tip of the iceberg.

    If Dr. North manages to get Chris Christie into the White House, America will keep going South!

  4. Dale left coast says:

    I am not a a Christy fan Holy . . . but this problem goes back a lot further than the last 6 years. Decades of far-left incompetence and greedy unions created this monster . . .

    America has been going "South" for Six Years NOW . . . in case you have not noticed ! ! !
    The incompetent poser in the WH is no leader, has zero experience to draw upon . . . other than campaigning and fund raising. This situation is Jersey is ONLY the tip of the Iceburg . . . America is toast and the left owns this.

  5. Too many tax eaters and not enough producers to keep the system going. Dropping the borders and giving green cards to millions of illegals will not stave off collapse because there aren’t enough jobs for all the legal Americans out of work. You know, the ones who lost their livelihoods and homes during the last “haircut” in 2008.

  6. Red Martin says:

    You guys find a lot of doom/gloom (which is certainly there)…so here's some good news to cheer you up…
    1) The exposure of the NSA & IRS spying is really a bomb (of enlightenment) ready to dismantle a lot of the crap. 2) The Bundy thing…which aroused thousands of citizens to his defense (at least some patriots are awakening/arising to the occasions of Communism; 3) The task force in S Calif about the alien-child crisis is another symptom of change in the wind over this abominable regime. 4) Florida passed the Memorial on HR-25 (FairTax) overwhelmingly in both houses in the Legislature….this is in preparation to overturn the 16th Amendment & pave the way to destroy the IRS and all Fed taxation, to be replaced by a sales tax that will lower mkt place prices, even after imposed. Florida carries a lot of electoral votes…and Texas, Virginia & Ohio are poised to follow suit! Do your part & make sure your Reps are on board….HR-25 (Ways/Means) & S122 (Senate). If you have any misgivings about this, please check out FairTax web-sites & attend meetings…your questions will be answered! It is YOUR money….you earned it, you should keep it & spend/save/invest as you wish! Next…we'll tackle term-limits for Congress!

  7. Anything for votes … spread investment to and through the 'good old boys' and into programs that drains the systems.
    If employees money were set into separate funds and not used for anything but to pay retirements, there would be enough money. When they started to commingle other payment [insurance, and those who did not fully contribute] into the system to gain their votes … the expected happened.

  8. Any scheme I've seen for a "Fair Tas" or a "Flat Tax" is full of bad ideas, and is NOT the needed solution. What is needed is to trim government waste, bureaucracy, bloat, unconstitutional spending….. start with disbanding a number of federal agencies… the list Ron Paul promised he'd terminate is a good start (oh but HE was declared "unelectable" so he wasn't).

    As to term limits.. absolutely NOT. What is needed is to wake up the voters. We already HAVE term limits.. its called the ballot box. When we finally manage to get a proven good guy in there fighting FOR us (rather than against us) he needs to be able to stay… for ten terms if he will. The bad guys? Turn them out at the end of their first term, something that happens far too rarely. Stupid,m selfish, ignorant voters are the problem, and that won't change until the pain gets unbearable so as to awaken the sleeping bear. There is a sight chance that is happening, in small ways in a few places. But the heat IS getting turned up rather quickly these days. When a Mum gets arrested for letting her boy walk a few blocks to a public park (he's been doing it for quite a while, and does fine) the pain comes down to the man/woman on the street. I'll bet SHE is considering some things after that horror show.

  9. kenny9876 says:

    This is the inevitable consequence of allowing government employees to unionize. They are like pigs that will consume until they are bloated, and die. Public employtee unions have been conspiring against the public, and taxpayer, interests since they were first allowed to exist. Even FDR warned us about public employee unionization.

  10. So the gravy train is certain to wreck, eh? WHY is anyone surprised? Now SEIU are working a corrupt big-business government agency to declare McDonald's is the direct employer of ALL McDonald's employees, they are NOT working for the individual franchisees. Why is that significant? Easy… SEIU only need to get their propaganda machine cranked up for the national company, not for each local stand, then BOOM, the whole shebang is in their back pocket. They want fifteen bucks an hour for burger floppers and change miscounters? New Jersey writ large… and headed in the same direction. Of course, they'll all "get" that $15 per, along with full medical, retirement pensions.. and the union stands to collect close to a billioin a year in "dues".

  11. Charlieg says:

    I see people blaming the unions, blaming the government, both are the blame. When you rely on future tax money to pay the retirement bills, you are in a deep hurt. The retirement money should have been paid on a regular basis to an outside agency that reports its annual status to the workers. Yes these agencies can also lose your money through bad investments. but are less likely than the government. "Rob Peter to pay Paul!" The government has been doing that for ever. But Peter is bankrupt (been robbed to many times) and now Paul can't pay his bills.

  12. I respectfully disagree on both of your counts. First – a flat tax or national sales tax IN PLACE of the IRS will remove the ability to harass groups or citizens, and to create all kinds of hidden loopholes for this or that group. The percentage of tax is the percentage of tax whether you are Donald Trump or John Doe. The tax rules are so complicated and hide a lot of perks and unfairness to those who don't know how to work the system. And term limits ARE needed to prevent us from getting these lifelong political hacks who can't be gotten rid of. Set the limits short enough that they do not qualify the office holder for a lifetime pension and benefits either, another huge savings that will put our 'servants' back on our level.



  15. baleisen says:

    Our retirement sucks as it is. They cannot reduce my benefits any more than they are right now. The new teacher won't get a retirement program. They have to have their own. But I wouldn't bother. The new education rules are driving new teachers out of the field.

  16. baleisen says:

    No, they won't! McDoodoo's will simply put robotic employees to work. Better service and cheaper, too.

  17. Public employees, join the rest of us. When I started working I was promised full SS retirement benefits at 65; they made it 66 later on. The money was supposed to be held in trust and earn a reasonable return to come back to us. Surprise, surprise! It's poor to piddlin' and a year late.

  18. Disagree with you on term limits. The present system creates and perpetuates a political class whose livelihood depends upon being repeatedly reelected. Too many of our fellow citizens (Bless their hearts!) are so concerned with which star can outdance the other stars or who got kicked off the island that they know nothing about the issues of the day. I take that back; they know a lot that is not so due to lies and obfuscations by the enemedia.

    Instead of "whatever it takes" to protect and improve the country, it is "whatever it takes" to be reelected.

  19. peleus212 says:

    Startng in 65 when they started using SS as a slush fund with the promise of 'IOU's and I don't think the retirement funds even got the IOU promise so they are totally screwed. So it is possible we could see the whole house of cards come down and more and more states will go the way of Detroit. [Democrat rule since '62] While things were good demands/ promises were high things not so good, we will just be arranging the deck chairs on the Titanic

  20. peleus212 says:

    While it may have been done long before he got into power, nothing has been done and the can continues to be kicked. If he gets the nod for Pres dont' be surprised if with all the fluster and saber rattiling we quietly go the way of the do do bird as a country

  21. The problem is not term limits, Its the bureaucrats that stay after the elected leave. They welcome newbie,s and help them fit into DC company. Make all newly elected bring their own home staff with them from their home state.

  22. Bama Bill says:

    McD's already has robot "Burger Flippers", when they let you order from a touch screen, and an automated "Burger topper/wrapper" is developed, fewer workers will be needed. Champion Spark Plug kept automating and has not increased it's workforce. Entry level jobs will never pay as much as trades, skilled, or professionals. But get some union thugs to "Rile them up" and they will do their "Dance". Look what happened to all the manufacturing when the unions kept striking. Only 7 states now have manufacturing as their main employment. None west of the Mississippi.

  23. Libs had to tell all those lies to buy votes. It doesn’t matter if it bankrupts the country, cuz all they care about is power and control over the people. The people I want to see screwed the hardest are the teachers in Chicago. 8th Grade student read at 3rd grade level, and do math at 4 grade, yet the teachers are the highest paid in the world.
    As a rule, Government workers get paid 45% more than the private sector, get 254% more in benefits, and do less than half the world as the private sector.

  24. The most important job for Seascape crew members is removing the algae that collects on the new coral. Depletion of the island’s algae-grazing fish, combined with an unexplained die off of algae-grazing sea urchins, led the previous coral to choke under algae grown out of control. So part of Seascape’s daily routine involves doing the work that nature used to do.

  25. The most important job for Seascape crew members is removing the algae that collects on the new coral.