NJ cuts union benefits; will ax fall nationwide?

Luis DelGado, an official with N.J. Education Association (NJEA), leads a protest in front of the State House in Trenton, N.J., Thursday, June 23, 2011. An estimated 8,000 people protested employee benefits legislation.
AP Photo/Rich Schultz

TRENTON, N.J. - Eight thousand chanting protesters outside New Jersey's state Capitol were not enough to keep benefits from being cut for public employee union members.

New Jersey is facing a crisis. The state's pension and health plans are underfunded by $110 billion, CBS News correspondent Jim Axelrod reports.

So with a new law, public employees will contribute several thousand dollars more for their benefits. New Jersey's Gov. Chris Christie, a Republican, is claiming a major victory that will become a national model for other struggling states.

N.J. Gov. Christie jabs Obama on budget talks

"This reform bill will save $132 billion over the next 30 years for the taxpayers of New Jersey and would finally put on firm footing the pension systems," Christie said.

But the law would never have passed without the help of an unlikely ally.

"We got into this pension mess cause some labor leaders simply failed to be honest with their members," New Jersey Senate President Steve Sweeney said.

Sweeney is not just a Democrat; he's an official with the ironworkers union.

"So what are you doing being the guy who is asking public employees to pay more for their health insurance and pensions?" Axelrod asked him.

"I am the guy who sits on the same side of the table as they do and I know what fair is," Sweeney said. "Someone has to step up and say, with credibility and credentials, and say, 'Wait a minute, this is wrong; we have to fix it.'"

An underfunded state pension plan isn't just New Jersey's problem. According to the most recent calculations, the gap between promises states made to public employees for pensions and the amounts set aside to pay for them is at least $1.26 trillion.

New Jersey joins states including Wisconsin, Ohio and Michigan asking public employees to kick in more. It's an assault on collective bargaining, said labor studies professor Tom Juravich.

"Once you take health care out of collective bargaining, what's to stop you next year taking income out of collective bargaining?" Juravich said.

Christie said this law also represents a victory for bipartisanship - one the governor said Washington could learn from.

  • Jim Axelrod
    Jim Axelrod

    Jim Axelrod is the chief investigative correspondent and senior national correspondent for CBS News, reporting for "CBS This Morning," the "CBS Evening News," "CBS Sunday Morning," and other CBS News broadcasts.