John Bury is an actuary that tightly covers New Jersey pension news over at the blog Bury Pensions. He has an interesting perspective on the latest pay-to-play allegations thrown at Christie.
Bury’s point: if the pay-to-play allegations are true, it’s par for the course. But there are bigger issues with New Jersey’s pension system, and those issues are the ones we should worry about. Here’s Bury’s post in full:
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By John Bury, Bury Pensions
“It’s a cheap political stunt based on shoddy, distorted reporting from an individual [David Sirota] who over and over again has been shown to be biased, willfully inaccurate, and just flat out wrong,”
– NJ Governor Chris Christie spokesman Kevin Roberts responding to allegations in an AFL-CIO lawsuit
He may have some points – though not the ones I would make:
Like the double-dipping non-issue I do not see Chrisitie allegedly steering investment contracts to campaign donors as the state Retirement System’s biggest problem. Remember, this is New Jersey. Find me someone who has donated to a politician or party who does not expect (and get) payback of some sort.
How about a law firm where the lawyers get together each election cycle to give $30,000 to the campaigns of freeholders and somehow wind up with annual billings from that county of over $1 million. That’s legal here so what’s the problem with hedge fund honchos working the system we have, though much less blatantly than DeCotiis according to Fortune Magazine?
Then there’s the issue of criticizing a rate of return of 16.9% (or 15.9% or 15.5%). Imagine you get any one of those as an annual return in your own portfolio. Are you complaining? The question in New Jersey is whether those Alternative Investment assets being reported are really there. I don’t think so.
Finally, there is this reality:
Employ only investment advisers who have never donated to a political campaign (if you can find any) and get rid of all the double-dippers and you may have solved 1% of a $150 billion problem that will be a $250 billion problem in the years it will take your distracto-reforms to be implemented.