A View into the Future: Post Script to June-November 2012

Using the previous 4 years experience as guide we may expect:

The national economy will continue to languish with low growth and high unemployment. I do not believe we will enter another recession during the next four years but we will be becalmed. Some states – New Jersey under Christie/Sweeney among them – will continue to apply the brakes on the nations’s economic growth. Neither Obama nor Romney, and certainly not the U.S. Congress, will address the factors in the U.S. tax code which encourage capital export.  Accordingly, regardless of who wins, Wall Street will remain disconnected from Main Street.

Needless to say, the national debt will continue to grow with either one.

Even if president Obama wins in November 2012, we already know his capability for abdicating postulates made while campaigning. We should expect that there will be negative effects on Social Security and Medicare, two social programs which candidate Romney has on his hit list, even if Obama is victorious. Obama will adopt some of Romney’s proposals. Such effects would most likely be cuts in both programs, perhaps somewhat smaller under Obama than those which would be implemented by a hypothetical President Romney.

We should also expect a re-elected President Obama to slightly reduce other social programs that he is now, during the campaign, defending with vigor. Either Obama or Romney will sweeten draconian cuts by phasing them onto the younger generations.

I would also expect that a re-elected President Obama would abandon at least some of his tax positions in support of the lower and middle classes, all for the sake of compromise. Similarly, there will be retreats in issues such as the environment and Wall Street regulatory statutes.

As a rule of thumb, President Obama will cede ground wherever big money is involved. He will hold out better in social issues such as birth control and same sex marriage.

President Romney would be very negative on the social issues mentioned above and similarly or even more accommodating toward big money.

Income gap would grow more under Romney than under Obama although the difference between the two will not be large.

We should expect that either President Obama or Romney will continue making inroads into our civil liberties using terrorism as excuse, even after Al Qaeda is wiped out.

A President Romney would be more likely to get the United States involved in another major foreign war.

With either president, New Jersey should expect very little help from Washington and that is why our own gubernatorial election of 2013 is so important: We will be basically on our own. We can hardly afford irresponsibility, demagoguery, and incompetence any longer.

Advertisements

June-November 2012

This is my last article until after the U.S. Presidential election. I shall not endorse any of the candidates although I believe Romney will be far worse than Obama has been.

After two years of fighting almost alone, it is also time for me to rest and regroup before the big push of 2013. My entire program is posted in this blog and I have presented it in other sites. I can be considered the wrecking ball candidate because I intend to bring down the entire rotten structure of abuse and irresponsibility that the two dominant political parties have erected in New Jersey.

Former Governor Whitman advised newly elected Governor Christie in January 2010 “to above all have fun.” Governor Christie himself said last week that he loves the job 11 months of the year.

I take a much less sunny view of  governing: It is a burden – if one feels responsible for the well being of millions. It is when one does not give a damn that then it can be fun.

I will campaign as vigorously as I can from November 2012 on. By early Summer 2013, I will carry out an objective evaluation of my campaign and the degree of support I am receiving. If there is a fighting chance, I shall get on the ballot. If not, I will close the chapter.

I wish all very nice Summer and Autumn seasons.

The Shrinking New Jersey

Real gross domestic product (GDP) increased in 43 states and the District of Columbia in 2011, according to new statistics released yesterday by the U.S. Bureau of Economic Analysis (BEA). New Jersey moved in the opposite direction.

New Jersey was among the few states which actually experienced a GDP contraction: -0.5% and that explains why government revenue is also down. New Jersey’s unemployment rate was 9.1 percent in April, a full percentage point above the national rate.

New Jersey is now the 47th state out of 50, measuring from best to worst, in economic performance. Only Wyoming, Mississippi, and Alabama are worse off. We are the brakes on the national economic recovery.

http://www.bea.gov/newsreleases/regional/gdp_state/2012/pdf/gsp0612.pdf

Governor Christie will go on pushing his fiscally unsustainable tax cut which will have no economic effect because a single such measure does not stimulate aggregate demand – the missing link in our economy.

But blaming the policies of Governor Christie alone for the economic decline is a gross simplification of the facts. Unfortunately, almost everyone, including the media, prefer simplifications. Candidate A vs Candidate B; or Raise Taxes vs Cut Taxes. That is why single issues become so disproportionally influential in elections: Abortion, Guns, Gay Marriage, etc .

The reality is that in New Jersey, regardless of what candidate we elect, the roots of the problems are in the political system. And attacking the system is not safe. I have already been harassed for what I am doing and this is just the beginning. We are not even in our election year yet.

A candidate fails New Jersey the moment he/she shuns to even attempt to revamp that system. I mean really doing change; not just propaganda and token tinkering.

What is the political system? The two dominant political bureaucracies, Home Rule, political patronage, political money, the tax code, the laws that skew the political contest in favor of the two parasitic parties, and more.

But it is much easier to focus on one face than on a myriad of political and economic reforms.

As I have said many times: It is not so much what Governor Christie has done. It is what he has not done. His sin is for the most part in omission.

If elected governor, my administration will be made up of technocrats. The mission will be to put New Jersey on a path of economic growth and social balance. Nothing will be untouchable.

In a presidential election year, a gubernatorial candidate for the year after is a lone wolf. However if we look at the two presidential candidates, Obama and Romney, there are differences in positions but when we come to the actual actions, they do not look as distinct. Obama appears as the lesser of two evils. Telling of our political drought is the fact that many people vote for one candidate just to keep the other one out of office.

New Jersey shall have a more diverse menu in November 2013.

Stopping the Fleecing of N.J. Pensions by Political Hacks

I know a former politician who after being a part time elected official for a number of years and perhaps having a menial public job somewhere, landed a very lucrative position in an independent public authority, plausibly to make a living but also to qualify for a juicy pension. The position was security chief and all he did was to convert the place in an Auschwitz-look-alike, and spend $ tens of thousands chasing the Canadian geese out of the grounds – a never ending crusade for the geese were incredibly persistent and multiplied… like geese do.

He also declared war against feral cats and red foxes. Two of the persecuted feral cats applied for political asylum at my house when they were babies and live happily here. This guy knew about security as much as I know about deep sea diving. That is zero.

I was engaged in an interesting debate with a friend of mine after my last article on pension returns and probably the only thing we agreed on was that the problem is pervasive: People with political connections (she disputed that her friend had any) hold menial or part time positions, or political office for a number of years, with low wages, and then as they reach the 20th or so year in the pension system, they talk to their political godfather or godmother or ally or political boss and voila – from one day to the next they become managers of things that they often have no idea how they work but which secure them juicy pensions after a few years on the public dole.

There are thousands of those cases. Christie himself has appointed a few, even at the Port Authority of NY and NJ.  Another instance is, I believe, the chief of the Delaware River Port Authority who is a former assemblyman or senator of NJ. But they are present at every level of government.  This type of thing is as Newjersian as apple pie is American.

Up to now, in my program, the line of defense against these abuses has passed not through the pension system but through civil service law. That is: I would very strongly advocate for a reform of CS Law so that almost every position in the public sector has to be open to the general public through conspicuous advertisement, examinations and/or professional vetting. Thus neither the governor nor anybody else could just pick someone and give him/her a public job, or worse, invent un unnecessary job to favor a political supporter, relative, etc.

The only exceptions would be at cabinet level, executive secretaries, etc. That is my concept of civil service reform.

But after the discussion with my friend I thought that there could also be a safety mechanism in the pensions themselves. That is: When there is a sudden and very large (we have to define very large) increase in wages, during the last ten (or so) years of public employment, then the retirement pension becomes a fraction (also to be defined) of the total employee contribution to the pension during the entire public career and not calculated on the last 5 years base-salary.

I am still turning  this idea around in my mind so it is by no means a finished product. But it would be an additional hoop pension abusers would have to jump through.

Obviously, all those in the N.J. Pension System today, such as the officials of the N.J. League of Municipalities, League of Counties, some legal and consulting firms associated with county governments, etc., who are not public employees, should be expelled from the New Jersey Pension System.

From left to right: Albert and Jimmy days after receiving refugee status at home

Actuarial Analysis of N.J. Public Pensions Are Unrealistic

Financial markets are in turmoil. Most world economies are barely growing. Interests rates can not go lower. Real estate is comatose. Public pension funds everywhere are awakening to the fact that their actuarial profiles are way too optimistic and do not reflect the real world. However, the corrections also fall short. To quote the comments of NYC Mayor Bloomberg published in the NYT on Memorial Day: “The actuary is supposedly going to lower the assumed reinvestment rate from an absolutely hysterical, laughable 8 percent to a totally indefensible 7 or 7.5 percent.” New Jersey currently expects 8.25% in its investment returns. It is absurd. But it allows the state government to contribute less, passing the shortfall to future administrations.

With the rosy actuarial projections the Christie administration claims, the funds are some $44 billion short. But here, back on Planet Earth, if we plug in realistic numbers, say 6.0% return, the deficit of the pension systems blows up to over $100 billion – I am being cautious here.

The problem is that government, in New Jersey particularly, can not afford to be realistic, as we saw very well with the projection of growth made by Governor Christie when he launched the “New Jersey Comeback” in January 2012. The economic and fiscal doctrines of the Christie administration resemble voodoo. But they are dictated by politics.

There are seven public pension funds in New Jersey: They cover some 800,000 employees and retirees. Many of these have dependents so we may be talking about as many as 25% of the N.J. population which could be directly affected by pension problems. Then we must add all the businesses which derive income from these people. Even if we leave aside all legal obligations, this is a New Jersey issue.

The seven plans are: Public Employees Retirement System (PERS); Teachers Pension and Annuity Fund (TPAF); Police and Firemen Retirement System (PFRS); State Police Retirement System (SPRS); Judicial Retirement System (JRS); Consolidated Police and Firemen Pension Fund (CPFPF); and Prison Officers Pension Fund (POPF).

The main plans are the first two: PERS and TPAF.

http://mercatus.org/sites/default/files/publication/WP1031-%20NJ%20Pensions.pdf

Most if not all the N.J. funds were healthy (PERS and TPAF where actually over-funded in the early 1990’s) when Governor Florio, facing $1 billion shortfall in his budget, changed the plans assets from book value to full market value and increased the assumed rate of investment return from 7% to a whopping 8.75%. A higher nominal return led to lower governmental contributions to the systems. But experience shows that financial markets are too fluid and uncertain. The numbers above were a stretch.

Then came Governor Whitman in 1993. She changed the actuarial valuation method from Entry Age Normal (EAN) to Projected Unit Credit (PUC) which, although acceptable, is like a balloon mortgage: PUC lowers the liabilities at first but then they explode in later years(1).

Whitman, among other damaging measures, also issued Pension Obligation Bonds for a total of $2.7 billion, through the New Jersey Economic Development Authority, NJEDA. She also included the bond returns in the total valuation of the Pension Systems. The bonds returns were the only government contribution to the funds.  But the bonds were offered at a rate of  7.5% and the actuarial expected return of the Pensions was 8.75% at the time. She also allowed  local government to take pension holidays: That is to say: not contributing. Nonetheless, property taxes still skyrocketed during Whitman and the following administrations. Of course those NJEDA bonds will come due at maturity one day if they have not done so already.

The following Governors – Di Francesco, McGreevey, Codey, and to a lesser degree, Corzine – were also reckless and overall disastrous for the N.J. Pensions Systems. What Christie has now done with the Pensions and Benefits Reform Law is to essentially refinance the liability accrued and pass it onto the workers.

In the bigger picture, unless New Jersey experiences significant economic growth, the government will not be able to keep pace with the increasing contributions set by the Pension and Benefits Reform Law of 2011. But in the economic growth area, Christie has failed. Therefore, to achieve that growth, we must have a change not only of government but of the structure of government in New Jersey.

We must also bring the actuarial analysis of the New Jersey Pension System(s) to normalcy. The actuaries should be independent, shielded from political influence.

(1) State and Local Pension Fund Management, Jun Peng, CRC Press, pp 154, 155

Victory for Liberty: NDAA Struck Down by Manhattan Federal Judge

The National Defense Authorization Act 2012 had been signed into law by President Obama on December 31, 2011 and it included, buried amid the defense appropriations, a section 1021 which authorized the President of the United States to have any American citizen arrested and detained indefinitely, without cause, charges, or trial, and conveyed the same powers – more absolute than those enjoyed by King George III over his royal subjects in 1776 – to any future president.

Federal judge: Terror law violates 1st Amendment – Yahoo! News.

The immense majority of the current U.S. Congress supported the Tyranny Law – that is how I called it.

NDAA (section 1021) was deemed unconstitutional by a U.S. District Judge Katherine Forrest in Manhattan yesterday. The judge said that the Act had a chilling impact on the First Amendment. She cited testimony by journalists that they feared their professional association with certain individuals overseas could result in their arrest because a provision of the law subjects to indefinite detention anyone who “substantially” or “directly” provides “support” to forces such as al-Qaida or the Taliban. She said the wording was too vague and encouraged Congress to change it.

She said the law also gave the government authority to move against individuals who engage in political speech with views that “may be extreme and unpopular as measured against views of an average individual.

“That, however, is precisely what the First Amendment protects,” Forrest wrote.

Attorney Carl Mayer, speaking for plaintiffs at oral arguments earlier this year, had noted that “even President Barack Obama expressed reservations about certain aspects of the bill when he signed it into law.”

Nonetheless, he signed and shame on him for that. However, I do not doubt for a minute that a potential President Romney would have signed it too. I fear that the endless war on terrorism is being used to build a police state here at home.

After the ruling, Mayer called on the Obama administration to drop its decision to enforce the law. He also called on Congress to change it “to make it the law of the land that U.S. citizens are entitled to trial by jury. They are not subject to military detention, policing and tribunals, all the things we fought a revolution to make sure would never happen in this land.”

The government had argued that the law did not change the practices of the United States since the Sept. 11 terrorist attacks and that the plaintiffs did not have legal standing to sue.

This ruling should have made front lines in every newspaper in the nation however I have not seen it in either the New York Times or the Washington Post online versions today. Neither does CNN make any mention of it.

I do hope that the Obama administration does not appeal this decision.

Term-Limits for the New Jersey Legislature Are a Must

If two people so immensely different as governor Christie and I are supportive of the same measure – setting term limits for NJ legislators – there must be some merit in the idea. In fact, there is not just some merit: It is very much needed.

Christie favors term limits for state legislators | The Source | NorthJersey.com.

The main ingredient to the sclerotic political system of New Jersey resides in the Legislature whose two political parties gerrymander the electoral districts to keep the membership of the two chambers almost constant term after term. Members die in office and their relatives come or at least attempt to finish the term of the diseased as if the legislative branch of the State of New Jersey were a hereditary succession system. Once in a while, some of the legislators leave the office just to take some more lucrative patronage positions in the numerous independent authorities created by themselves. The long stay of the legislators in their offices leads to the rise of political bosses, such as George Norcross.

I favor limits of two terms for both the Assembly and the Senate. Furthermore, NJ legislators should be subject to the same pension and health benefit contributions as all other public employees.

The two branches of the State of New Jersey, executive and legislative, use above $500 million from a $31 billion state budget. That is also excessive. If elected governor my first budget will propose significant cuts to both branches.

As a side note, the NJ Division of Taxation is engaging in what I perceive as harassment, possibly because of my militancy and candidacy. Since my tax returns are very simple – wages only – they have resorted to attempt to collect NJ tax again on my contributions to a small 457 retirement account I once had. Employees’ contributions to 457 retirement accounts are tax deferred by the federal government but New Jersey taxes them in the payroll. They are demanding that I pay again. The distribution was in the tax year 2008 and the notice I received lists me as customer 001 – like sending me a message – I presume.

New Jersey could only tax at distribution any dividend earned during the life of the account and that tax was paid with the 2008 return.

Additionally, they arbitrarily rejected my homeowners credit in this last return of tax year 2011 offering no reason. Of course I meet all the criteria and my tax return was impeccably simple. I contacted the division by phone and they said it was their error which they would correct but with two incidents back-to-back, when I know I am correct in both, I do not trust the system. Some hack has been instructed to get on my case by any means possible.

Although the total amount in question in the two incidents combined is $452.60, I have sued the Division of Taxation in Tax Court, with the complaint served  to them and the NJ Attorney General today. The court fee is $35 and the postage certified and return receipt to all 3 was about $18.