Senate President Steve Sweeney’s idea to overcome the unfunded liability in New Jersey’s pension and health benefits system by borrowing $50 billion from the federal government is likely dead on arrival on Capitol Hill (if it gets that far).
But the immediate and chief beneficiary is Sweeney himself as he continues to shore up his relationship with organized labor in general and public-employee unions in particular in anticipation of a run for the Democratic gubernatorial nomination in 2017.
Understanding that he and Gov. Chris Christie are hopelessly deadlocked, it is crucial for Sweeney to demonstrate his commitment to devising a plan to close the pension-system deficit while maintaining his unyielding opposition to the governor’s recommendation for, among other steps, further employee contributions and benefit reductions.
Having been stymied by the governor’s veto of an income-tax surcharge on wealthy New Jerseyans and devoting the revenue to the system and stung by a Supreme Court ruling that said it was the responsibility of the executive and legislative branches to resolve their differences without judicial intervention, Sweeney couldn’t take the political risk of simply engaging in an argument with Christie -- one he knows he cannot win -- while letting the funding issue go unaddressed.
With both sides locked in, Sweeney recognized the need to extricate himself from an increasingly sticky political dilemma. Christie was in a position to argue that he had a credible plan, but that the only solution Democrats -- including Sweeney -- could come up with was a tax increase.
Sweeney needed to move beyond the verbal dueling with Christie and present what he could offer as a competing idea to rebut the governor’s tax-and-spend accusation and, more importantly, to demonstrate to organized labor that he was taking up the fight on their behalf with more than rhetoric.
While not a capitulation certainly, Sweeney’s proposal for a $1 trillion federal revolving-loan fund to assist states like New Jersey, which face crushing pension obligations, is a concession that the political pressures he and Christie face foreclose any chance of the two sides reaching a compromise.
Since 2011 when he played a key role in advancing the governor’s pension overhaul program and its requirement for greater employee contributions, Sweeney has devoted considerable time and energy toward re-ingratiating himself with organized labor, a constituency of enormous importance to any Democrat with higher ambitions.
For the moment, there is no issue of greater importance to labor groups than erasing the unfunded liability in the pension system and requiring the state to live up to its contribution obligations.
If the adage is true that for a politician to be successful, it’s necessary to find a parade and get in front of it, Sweeney has positioned himself as the grand marshal of the march toward pension-fund solvency.
At the same time, much of Christie’s political reputation was achieved through bitter confrontations with public-employee unions, portraying him as standing astride the battlements fighting off the hordes of tax-raising Democrats in hock to organized labor.
His administration’s response to Sweeney’s federal loan suggestion was typical -- benefits are far too generous and public employees are getting off cheap. It’s a position that he and his presidential campaign advisers feel plays well with conservative party leaders and audiences.
He’s offered a broad program of systemic changes to the benefits system and has made it clear that he will not settle for anything less and will certainly not agree to increased contributions without them.
Sweeney took pains to insist repeatedly that his proposal should not be considered a bailout, but rather a loan program requiring repayment with interest. To many members of Congress, though, the bitter partisan battles of recent years over providing billions in taxpayer dollars to banks and investment firms to cover corporate misdeeds are still fresh.
While they may understand and sympathize with the crisis confronting states reeling under pension obligations, they also won’t accept the distinction drawn by Sweeney between a government-funded rescue and playing the role of kindly neighborhood banker.
Sweeney is sufficiently experienced in the ways of politics both state and national to realize his proposal faces very long odds in a Congress where the idea of taking on a trillion dollar debt to solve problems created by the states themselves holds significant downside and no upside.
It may afford Sweeney an opportunity to rail against a Republican-controlled Congress, but the probability that a Democratic one would respond any more positively is remote, indeed.
To some observers, it was telling that Sweeney acted alone in presenting his idea, suggesting that Assembly Speaker Vincent Prieto isn’t fully on board and prefers his own plan to lengthen the time over which the state should meet its funding obligations. Christie, by the way, has rejected Prieto’s idea as well.
It would appear that Christie continues to hold the upper hand, using his veto power to again thwart Democratic proposals and relying on a unified Republican Party in the Legislature to uphold his actions.
With his federal loan proposal, the Senate president has played to a crucial constituency, just as the governor has consistently played to his.
Politics is driving them both and, for the time being, compromise seems to be out of the question.