"New Jersey is on the cusp of a public pension crisis that could dwarf the $3.5 billion to $4 billion funding shortfall projected by Gov. Jon Corzine in October," writes Harvard government scholar and onetime Reagan Treasury aide Thomas J. Healy in this blog.nj.com item. "Although the figures are obscured by current accounting rules, a detailed examination shows that New Jersey actually faces a potential $80 billion pension shortfall (not even counting the more than $20 billion in losses from the current stock market free-fall) and $50 billion in unfunded post-retirement medical and prescription drug benefits.
"This total unfunded liability of $130 billion is more than four times the state's 2008 fiscal year budget, and represents a shortfall of around $44,000 for every household in the state. It's fair to conclude that sooner or later, someone -- almost certainly the taxpayer -- will be forced to shoulder this staggering fiscal burden."
Healy's cure is another disease: He wants to end pensions for new hires and make them responsible for their own retirement investments -- a potential disaster, since most of us amateurs aren't competent to make investments or choose investors, as too many 401-k and IRA plan owners learned this year.
But he's right that Jersey, like Pennsylvania, Philadelphia and other pension systems, needs to limit future benefits to what yearly taxpayer subsidies and the erratic investment markets can reasonably support, instead of guaranteeing relatively high benefits for politicians and well-organized public-worker constituencies, and shoving the cost onto future taxpayers.