Something astonishing happened in New Jersey last week. A majority Democratic Legislature and a Republican governor agreed on a measure that will cut benefits for the state's 750,000 employees and retirees.
The new law "will sharply increase what state and local workers must contribute for their health insurance and pensions." And in a major whack at rising costs, it will "suspend cost-of-living increases to retirees' pension checks, raise retirement ages and curb the unions' contract bargaining rights," reported the New York Times.
Gov. Chris Christie's administration estimates the deal will save New Jersey $132 billion over the next 30 years.
Predictably, labor unions are excoriating Democrats who joined Republicans to pass the law, but even "tax and spend" Democrats are beginning to realize that we can't go on like this and the future of the country is more important than seeking short-term partisan political advantage.
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A new study co-authored by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, both finance professors, has concluded that without a change in their pension systems, federal, state and local governments "will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems." The study also found that New Jersey "will need to increase its revenue by the largest margin, requiring $2,475 more from each household per year." That was if the new law hadn't passed.
Last week the nonpartisan Congressional Budget Office released a frightening report that concluded the debt would be 69 percent of gross domestic product this year. That's 7 percentage points higher than last year. The CBO predicts that without a serious recalibration in Social Security, Medicare and other spending, debt quickly will reach 76 percent of GDP by 2021. Under another scenario, public debt will be 101 percent of GDP 10 years from now. Interest on the debt is now more than the entire GDP of some nations.
The Federal Reserve last week issued a gloomy forecast for the U.S. economy. It noted "slower than expected growth" and warned of "higher inflation." This and many other signs undermine the Obama administration's claims about last year's "summer of recovery" and other rosy scenarios about sluggish economic growth and "job creation."
The Obama administration, which now "owns" the economy, as acknowledged by Democratic National Committee chairwoman Debbie Wasserman Schultz, is incapable of turning things around as long as it remains mired in its Keynesian, redistributionist mentality of punishing the successful and subsidizing the unsuccessful.
In justifying his vote for meaningful entitlement reform in New Jersey, Assemblyman Angel Fuentes, a Democrat from Camden, told the New York Times, "These reforms are unquestionably bitter pills for us to swallow, but they are reasonable and they are necessary."
Are there enough "reasonable" Democrats in Congress who will join with reasonable Republicans and do what is necessary to repair what out-of-control spending, unlimited benefits and entitlements are doing to the federal government and to the other 49 states? If not, in the coming election, voters will have another opportunity to increase reasonable representation in Congress and in the White House.