He Helped Wreck NJ Pensions. Now, He’s Got His Eye on Medicare

We mark an anniversary in New Jersey politics this week, but if you’re a state worker or retiree, you’re not celebrating. Twenty-five years ago, Republican Christie Whitman salvaged her bid for governor with a deal too good to be true: she would cut income taxes 30 percent over three years. She’d part with $1.2 billion, about 13 percent of state budget revenues, and pay for it by chiseling out “waste,” like selling the governor’s helicopter. Imagine saying you’ll pay off your mortgage with the contents of your kid’s piggybank. Experts howled. Even legislators in Whitman’s own party laughed behind her back.

But when Whitman won, she ignored their advice. Instead, she relied on Larry Kudlow, a supply side veteran of the Reagan administration. Despite never earning a credential as an economist (although he plays one on TV), Kudlow is now the director of President Trump’s National Economic Council.

From his White House perch, Larry Kudlow is eyeing new targets: Medicare and Social Security. This should alarm every voter, but especially families in Hamilton and Robbinsville who earned state pensions and health benefits, but now wonder how New Jersey will fund them.

There are striking parallels between what happened here to state employees and what could happen everywhere to seniors and those nearing retirement. The good news is, we still have a chance to stop Larry Kudlow and his allies if we elect a Democratic Congress on November 6th. In the Fourth Congressional District, that means voting for Josh Welle, a Navy veteran who listens to voters and who will protect Medicare and Social Security.

Josh understands the frustration of government breaking its word—too many in his generation who served in Iraq and Afghanistan needed help from the VA but struggled to get the healthcare they were promised. Unlike those who call Medicare an “entitlement,” Josh knows you earned your benefits. They aren’t a handout.

The supply-side myth. Targeted tax programs that are tied to specific incentives to boost job creation—like funding workers’ education—can help employees and employers alike. But supply side plans like the one Larry Kudlow designed for New Jersey—and the one just passed in Washington—drain revenue and run up deficits with hopes of growth, but no guarantees. For Whitman, no number of helicopters or state cars could be auctioned to total $1.2 billion. So, she looked to the giant investment funds that pay for public employee pensions and health benefits (yes, we prefunded retiree healthcare back then). Whitman freed up cash with a series of tweaks that assumed the funds would earn more than they did. And when those tricks ran out, Whitman turned to borrowing.

Rebranding benefits as “entitlements.” To justify her actions, Whitman portrayed state workers as overindulged. Remember this, Hamilton voters, when you hear Medicare and Social Security described as “entitlements.” This is a trick Republicans use to portray benefits as something you don’t deserve, even though payroll taxes have been coming from your check since you were a teenager.

The same trick is under way in Washington, and we’ve heard it straight from Larry Kudlow’s mouth. Last month, he told the Economic Club in New York that Medicare and Social Security will be on the chopping block after the election, because “We have to be tougher on spending.” In response to a CNBC reporter, Kudlow said, “We’ve already tackled a big part of the newest entitlement, namely Obamacare. As far as the larger entitlements, I think everybody’s going to look at that probably next year. … I don’t want to get ahead of our own budgeting, but we’ll get there.”

Tax breaks but no wage increases. Wasn’t Trump’s $2.3 trillion tax cut supposed to help us? So far, it has not produced gains in real wages despite low unemployment, and many companies are buying back stock. Less revenue from taxes is putting a strain on the Medicare hospital trust fund; the chief actuary said this year the fund will spend more than it takes in for the first time since 1982.

If you’re a state worker or retiree, you’ve seen this movie before. While Whitman’s successors are not blameless, the origins of our pension crisis and lousy bond ratings start with the Kudlow economics of the 1990s. These policies set in motion the events that forced state workers to hand over more and more of their paychecks to prop up the funds while the state shorted its payments. And now, catching up is hard to do. One recent report said if New Jersey doesn’t double its contributions to $6.6 billion, that pensions for public employees and teachers could “disappear.”

The GOP agenda is clear. There’s still time to fix this, but Republicans in Congress have other ideas. For years, House Speaker Paul Ryan has talked about converting Medicare to a “premium support” program—seniors would get a grant to spend in the insurance market instead of the defined benefit program they have today.

Already, the 2019 budget proposal includes $537 billion in cuts to Medicare and three times that for other health programs. When seniors face Medicare open enrollment in about two weeks, they will see a multitude of changes, and if they are not careful, they could select a plan that will not meet their needs.

There’s never been a more important time for members of Congress to be engaged with their constituents. Yet our current “representative” will not even hold a Town Hall meeting where seniors and those nearing retirement can ask about the future of Medicare and Social Security. Given the number of seniors in the Fourth District, Chris Smith should be sounding the alarm over Kudlow’s “entitlement” comments—to say nothing of his White House job—and tell us how he plans to protect New Jersey from the smoke and mirrors endured a generation ago.

If Smith won’t speak up for Medicare and Social Security, we need someone who will. On November 6th, elect Josh Welle, so that Larry Kudlow can never “get there.”