to the word ‘bankrupt.’”
(telling the truth is a rookie mistake)
By Brendan A. McGrail
Jan. 14, 2011 (Bloomberg) -- New Jersey Governor Chris Christie’s comments that rising health-care costs might “bankrupt” the state, made on the same day of a planned bond sale, drew criticism for their poor timing and may have driven borrowing costs higher.
About 20 minutes after Christie, 48, made the bankruptcy reference in a town-hall meeting in Paramus yesterday, the New Jersey Economic Development Authority cut its tax-exempt school bond offering by almost half to $777.5 million.
“He is scaring some people when he says the state is going bankrupt,” said Gary Pollack, head of bond trading at Deutsche Bank Private Wealth Management in New York.
“It wasn’t timed well,” said Pollack, who oversees $6 billion and said he continues to buy New Jersey bonds.
Linking the governor’s remarks with the decision to reduce the debt sale is a “completely bogus interpretation and an irresponsible connecting of unconnected events,” Michael Drewniak, a spokesman for Christie, said in an e-mail to Bloomberg News. A spokesman for the Treasury Department also denied any connection, as did the deal’s main underwriter.
Christie, a first-term Republican, said health-care spending “will bankrupt” the state unless it requires its workers to pay more for medical coverage. New Jersey will spend $4.3 billion on employee and retiree health insurance this year, and that cost will rise 40 percent within four years, he said. He wants all public employees in New Jersey to contribute more than the current 1.5 percent of salary toward medical benefits.
‘Rookie’ Error“Mr. Christie made a rookie mistake,” said Mike Pietronico, who oversees $360 million as chief executive officer of Miller Tabak Asset Management in New York. “The market is very sensitive to the word ‘bankrupt.’”
The Christie administration rejected that interpretation.
“The governor has been making these comments and warnings for months, all while instituting and pursuing reforms to fix the well-documented policy failings of prior administrations -- which, by my recollection, analysts have recognized and applauded,” Drewniak said.