Where to begin? Is it more egregious that Gov. Chris Christie is trying to pin NJ budget woes on public workers' unions (and models his solutions on Grover Norquist) -- or that a "60 Minutes" producer allowed his misinformation to go unanswered?

First of all, New Jersey's pension problems came to a head in 1997, during the rein of one Christine Todd Whitman, who cooked up a high-risk scheme to finance tax cuts by refusing to make the state's mandated pension payments from general revenue. Instead, she and state treasurer Brian Clymer floated a $2.75 billion bond issue that would fund the payments.

In other words, she and Clymer were gambling that the market would generate enough money to cover their pension obligations, so they could borrow that money right away for tax cuts. (The state paid $23.9 million in bond fees, by the way. Plus interest.)

This was a radical idea for the time, and not everyone was thrilled with the plan. The mayor of Edison N.J. filed a lawsuit to stop it. The State Supreme Court refused a stay, saying the point was moot -- but agreed with the plaintiff that the bond authority was merely a legal shell created to get around the state's debt ceiling without putting it to a public vote.

And of course the inevitable happened: Whitman's pension obligation bonds (and just about every other state's) became a ticking time bomb.

From I've read, the Whitman bonds made no payments for the first 12 years and then, during the last 18 years, they were supposed to pay both the deferred interest and the current interest. Whitman assumed that the irrational exuberance of the market would continue to generate high returns -- in other words, the state of New Jersey was looking at a massive balloon payment.

Just to make things interesting, average annual returns on the bonds haven't even been enough to cover the interest payments.



Christine Todd Whitman, financial genius. Profit!



Let me point out the obvious: This is how politicians have passed the buck for decades, simply because the Reagan years made them so wary of the political fallout from tax increases. See how well that worked out?

When a state is in debt and cuts taxes, the cost of the tax cut is actually a loan that taxpayers will pay interest on, sooner or later.

Now on to the second part of the story -- namely, that 60 Minutes didn't bother to get another side to this story.

Jamison Forer at Media Matters notes: