SL Editorial reminds Republicans they helped create these problems

by: Jason Springer

Mon Aug 10, 2009 at 01:15:00 PM EDT

The Republicans were fast to jump on reports last week of the bond-rating agency Moody's mixed outlook for New Jersey's credit as the Philadelphia Inquirer put it. But the Star Ledger has an editorial that reminds the GOP of the blame they share in that ratings change:

The problem, according to Moody's, is that "Through several administrations, the state has utilized non-recurring solutions to resolve budgetary gaps, leaving the state with a sizeable structural imbalance, one of the highest debt burdens, one of the lowest-funded pension ratios, and one of the highest post-retirement health insurance liabilities in the country."

After singling out that section of the report, they continued:

Among those "several" administrations is the last one controlled by the Republicans, the
Whitman/DiFrancesco administration. The Republicans in that era created most of the "structural imbalance" cited by the investors' service. Standard & Poor's will also cite the state's "above average" debt burden and pension problems as a credit weaknesses in a report due this week.
Christine Todd Whitman greatly expanded the debt burden, borrowing more than $11 billion in so-called "contract" debt, bonds that were sold without voter approval. Part of that went into the pension fund and part for school construction, but all of it should have gone before the voters. That would have set a precedent that might have precluded later Democratic governors from trying the same trick, which they did with glee.
And it would have saved hundreds of millions in interest payments. Moody rates the state's "general obligation debt" -- the type approved by the voters -- at Aa3, which is a high-quality rating. But because it is not secured by the state's assets, contract debt is rated a notch lower, at A1. The lower the rating, the higher the interest rate. This is a good reason for borrowing only with voter approval. That's what the state Constitution seems to require, but both parties have been adept at exploiting loopholes.

We've written many times on this blog about the games that have been played by all parties involved, but this is a clear accounting of the groundwork laid by the GOP, which our own party capitalized on. But that's not all the GOP holds a share of the blame for:

As for that big pension deficit, again the Republicans laid the groundwork back in 2001 when they raised pensions 9 percent even after the internet bubble was beginning to rapidly deflate and the value of the pension fund was dropping. Again, the Democrats supported this move and have since moved to add more unfunded liabilities to the system.

More bi-partisan responsibility, when all we get is partisan blame. But wait, there's more:

As for that question of unfunded post-retirement health benefits, the blame falls entirely on the GOP. Back in 1995, Whitman ended the practice of setting aside money for future retiree health-care commitments and switched to a pay-as-you-go basis. The problem with that approach is, the further you go, the more you pay. The cost of retiree health benefits rise by hundreds of millions every year. With no fund, that all has to come out of current expenses.

And while the GOP criticizes Corzine and the Democrats, the Ledger reminds them of the void that is their own candidate and his ideas:

But the standard-bearer for Kean's party, gubernatorial nominee Chris Christie, also refuses to come up with any ideas for addressing the deficit.
Well, he's come up with one: He's going to cut the income tax. That's a nice idea, but that just makes the so-called "structural" deficit worse unless he has a plan for reversing the Republican moves that created that structure. If Christie has such a plan, he's not sharing it with the voters.

So far the savior from the party that helped create this mess has offered solutions that will help exacerbate the problem. But people have short memories and the GOP is counting on that, because if history is a prelude of things to come, they're far from the saints they would have the voters believe.

Jason Springer :: SL Editorial reminds Republicans they helped create these problems