A Lifeline for New Jersey

[The Editors: The economic recession has had a devastating impact on states across the country, but New Jersey has been hit harder than most. In no small part, that is because the economic downturn has only compounded the problems that have seen the state once considered among the wealthiest in the North East become a synonym for corruption, political dysfunction and fiscal mismanagement. State spending is out of control, the public sector has become unsustainable, billion-dollar budget deficits loom, and a tax burden that ranks among the steepest in the country has forced businesses and other creators of wealth to flee the state in record numbers. But the state may have found a reprieve in newly elected governor Chris Christie. After ousting Democratic incumbent Jon Corzine in last fall’s election, the new governor has made good on a campaign promise to reform the way the state does business by unveiling a budget loaded with spending cuts and no tax increases. Can Christie put New Jersey on the path to economic recovery and create a model for other states to follow? To discuss New Jersey’s prospects and the background of the current crisis, Front Page turned to Matt Rooney, 25, founder of Save Jersey, a New Jersey blog that monitors state politics and advocates for low taxes and limited government. Rooney is also a Rutgers law student, Young Republican leader, and new media strategist for GOP campaigns and conservative organizations.]


FPM: Gov. Chris Christie made national news when he recently unveiled a budget heavy on spending cuts – the kind of thing that politicians often promise but seldom deliver. What were some of the highlights of his proposed budget for you?

Rooney: There are plenty of reasons for taxpayers to celebrate this budget. The best part? In the interest of rescuing New Jersey from a fiscal abyss, Christie’s budgetary cuts to municipal aid are a challenging but extremely necessary step in the right direction. Right now, our 566 towns are literally addicted to annual handouts from Trenton. You can’t save money or avoid waste with such an inefficient system in place. The only workable solution is to cut out the middleman, slash state spending, and let towns keep more of their revenue. The next logical step will be corporate and property tax cuts, but Christie’s first budget is an important leap forward towards structurally reforming the way our state government operates.

FPM: New Jersey is facing colossal debt problems. Since 2002 alone, total state debt has tripled from $17 billion to over $51 billion. Presently, the state is facing a nearly $11 billion budget gap, which has been described as the largest deficit of any state in the country and the largest in New Jersey history. How did the state get to this point?

Rooney: Put simply, New Jersey’s politicians over-spent and over-promised. The State gifted Cadillac pension plans to its public employees for the price of Toyotas, gave away medical benefits packages without requiring employee contributions and, in some cases, engineered budget-busting union contract concessions in exchange for political cooperation. An infamous example occurred in 2009, when former Governor Jon Corzine signed off on a midnight deal guaranteeing millions of dollars in perks for the State’s largest public worker union. His primary motivation was to avert a union-led protest at his reelection campaign rally with Vice President Joe Biden. Is it any wonder why we’re broke?

When ominous fiscal warning signs began to surface, our “leaders” responded with quick fixes, bond schemes, and borrowing campaigns that amounted to band-aids on broken bones. Ultimately, these gimmicks only exacerbated the core problems underlying the financial crisis.

The rest is history. New Jersey is now completely broke, and the Democrats who voted this mess into being have been unbelievably complaining that Christie’s budget cuts are somehow “unnecessary” and “cruel.” Such illogical and absurd protests might be funny if our economic situation wasn’t so tragic.

FPM: Let’s talk about another aspect of that fiscal tragedy. Besides massive debt, New Jersey also has some of the highest taxes in the country: the highest top marginal income tax rates; the second highest sales tax rate; the sixth highest corporate tax rate; and the highest property taxes in the nation. What effect o you think has that had on the state economy?

Rooney: The liberals who have run Trenton for decades just don’t understand the nature of wealth. They think it’s a static pool of resources that they need to redistribute in order to ensure “fairness” which, of course, is a fundamentally subjective concept open to all sorts of abuses. Our Founders understood this all to well; that’s why they wanted to keep government’s annual allowance as minimal as possible.

Unfortunately, New Jersey voters didn’t heed these lessons and elected the wrong people. Now, every dollar Trenton takes from a middle class homeowner limits his or her ability to consume commercial goods or invest in a new venture. Furthermore, overtaxed small business owners have less capital at their disposal to upgrade equipment, expand facilities, raise salaries or expand shifts. Put simply, Trenton has neutered the traditional economic engines of our state’s economy (consumers and entrepreneurs) by confiscating the tools (liquid capital) they need to create and sustain jobs.

And, as if our poisonous tax climate wasn’t bad enough for current residents, we’ve developed an unfortunate but well-deserved reputation as a “tax hell” for anyone who might otherwise consider moving their family or business to our state. It’s a vicious cycle, perpetuated by liberals who can’t keep their hands to themselves!

FPM: To control runaway state spending, Gov. Christie has proposed a constitutional amendment to cap the growth of property taxes at no more than 2 ½ percent per year. That would force municipal governments to get by with less funding. But you’ve suggested that this can be a good thing. Why do you think so?

Rooney: Necessity is the mother of all invention, right? For far too long, municipal governments in New Jersey have had unfettered access to revenue because they could raise property taxes on their citizens with impunity. It’s akin to a teenager with a debit card account that his or her parents prevent from running a zero balance. You can’t foster fiscal responsibility when there are no financial consequences!

If Christie’s property tax cap clears the Legislature, mayors and councilmen will be forced to think creatively to ensure their residents are provided with the services they require at — and this is the key part — a manageable and sustainable cost to taxpayers. At the state level, Governor Christie is constrained by a balanced budget requirement that forces his administration to find and eliminate “fat” and waste. Why shouldn’t city hall also have to watch what it consumes?

FPM: New Jersey’s economic crisis has affected the private sector and the public sector in very different ways. While New Jersey’s private sector lost 121,000 jobs just in 2009, New Jersey’s local governments added 11,300 new municipal and school employees. How is it possible that those paying taxes to fund the government are being laid off while government employees are growing in number?

Rooney: Democrats excel at buying votes with tax dollars. They accumulate power by making as many people as possible dependent on the government for a paycheck. Sadly, this institutional corruption is nothing unique to my home state.

In New Jersey specifically, the public sector unions grew so powerful over the past ten years that legislators dared not attempt cost-saving layoffs or benefits reforms. Politicians betrayed taxpayers for union votes and campaign cash. Patronage jobs multiplied at a pace that required the taxes necessary to produce them to increase to a level that resulted in the elimination of revenue-producing private sector positions.

It’s not hard to see why New Jersey’s excessive government overhead is a real job killer. The only mystery is why voters put up with it until 2009 without so much as a whimper!

FPM: Democrats have claimed that Christie’s call for shared sacrifice in tough economic times is belied by his decision not to renew the so-called “millionaire tax surcharge” that applies to state residents making over $400, 000 a year. They insist that the rich are not paying their fare share in taxes and they need to be taxed more. You’ve argued that would be bad for the state and that the taxes on high income earners are one of the main reasons that the state now finds itself in such dire economic straits. Can you explain your reasoning?

Rooney: A recent Boston College study found that New Jersey lost $70 billion in revenue over just a four-year period between 2004 and 2008. $70 billion doesn’t simply disappear! Affluent New Jerseyans left the state and took it with them.

In the midst of waging class warfare to divide and conquer the electorate, Democrats strategically neglect to mention that “the rich” have been shouldering most of New Jersey’s tax burden for decades. Now our State’s biggest taxpayers have finally had enough and are moving their families and businesses to states like Pennsylvania and North Carolina in pursuit of lower tax rates. And who could blame them? Imagine you worked hard all your life to develop a successful pizzeria. You can probably afford to move, and if you’re trying to protect your life’s savings, then voting with your feet is definitely cheaper than voting at the ballot box.

A much healthier governing approach would be to recognize that we’re all connected in a free market economy. By overtaxing some of our State’s most successful citizens to pay for big government’s excesses, Trenton politicians have succeeded only in robbing our State’s most economically-vulnerable residents of the quality jobs they need to prosper. The poor get poorer, the rich leave town and, proving that irony can be cruel, the state no longer possesses sufficient revenue to provide a safety net for the unemployed who lost jobs when the wealth-creators fled!

FPM: Both parties have to some extent been complicit in the state’s fiscal mess. For instance, Gov. Christie has criticized Republicans for approving an increase in pensions for public unions without having a way to pay for it. Given that history, what are the chances that Christie’s tough-medicine budget will pass the state legislature in anything like its proposed form?

Rooney: The Governor’s worst enemy and greatest ally is necessity. Last Monday, New Jersey’s overwhelmingly Democrat Legislature passed sweeping public employee pension reforms. Trust me – these Trenton liberals didn’t wake up one morning and experience a mass ideological conversion! Nor did they arbitrarily elect to infuriate their union backers: Far from it.

Dire circumstances and public opinion have Democrats over a barrel. Few politicians seriously dispute the magnitude of the Garden State’s financial turmoil. With this crisis in mind, voters elected Chris Christie to change the way Trenton does business, and poll after poll demonstrates that residents believe dramatic spending cuts and pension reforms are important parts of the change they desire.

Will Chris Christie get everything he wants from the budget process? Absolutely not. He’s outnumbered by Democrat majorities in both chambers. But, the voters are watching and our state’s balanced budget amendment – and the Governor’s promise to veto any tax increase schemes from the floor – conspire to guarantee significant government downsizing in the new fiscal year whether or not the Democrats want it.

FPM: The New York Times last weekend ran an interesting piece suggesting that many on the Left who publically oppose Gov. Christie’s spending cuts privately support them. How widespread do you think that phenomenon is and what does it say about the management of state finances that even some Democrats have become closet fiscal conservatives?

Rooney: The uncomfortable truth is that many Democrats do know better! But then why do Dems continue to perpetuate lies if they don’t really believe them?

The answer is complicated. I’m not a psychologist, but it’s common knowledge how hard it is to stop telling a lie when you’ve been clinging to it for a long period of time. Ask Bill Clinton! I also believe, on some level, that owning up to the fact that you’ve been terribly wrong about something big is an emotionally challenging feat. Many people would rather continue to live a lie than admit complicity in a sin. It’s the comfortable alternative.

But more than anything, we have to accept that liberal economics is first and foremost a system designed to control people, their choices, and their property. “Big government” isn’t about “helping people;” the real goal is to concentrate power in the hands of a relatively small cabal of people motivated by greed or the delusion that they somehow know how to organize the universe better than God or any of His individual creations – us, the taxpayers.

Liberalism is arrogance, and the unseemly process of moral rationalization is the mechanism arrogant men utilize to justify their lies. Of course, no one would mind if liberal arrogance didn’t impoverish the rest of us!

FPM: Matt Rooney, thank you for joining us.

  • Johanna F Biermann

    Simply put ….marvelous! Thank you for the stating the the reality in back of the statement ……"Truth is affirmative and confers harmony" MBE

  • Eli

    SOSS (Save our Sh*%%y State). Keep it up we need more like you in the Garden State!

  • Richard C. Wagener

    Let's get him in the White NOW! By now it should be obvious to all, that the Democrats haven't a clue how to lead, how to govern, or how to get out of the way. They lie, can't be trusted, and are incompetent and unschooled in politics, defense, good manners (treatment of the PM of Israel),. You ask, can't you come up with anything they are good at? Of course, everybody has some good in them, in fact they are good at a couple of things. First they are
    excellent at taxing; and second, they are extremely generous with other people's money.

    • Joe

      OK, Mr. DIEHARDREPUBLICAN

      ALL I REPEAT ALL POLITICIANS LIE

      GET OFF YOUR HORSE.

      Just that comment alone shows how ignorant you are. I liked how this guy referred to Bill Clinton not being able to fess up to lies. Only a redneck could look someone in the eye and say Bush never lied or fabricated anything.

      This is why this country sucks you look at one side of the isle and ignore everything your party does wrong.

      Good job morons. You ruined our country.

  • Howard

    Too late for New Jersey and New York.
    Both states have too many corrupt Democrats and lifetime parasites to dig out of their hole. Any productive business or person would be better off leaving as soon as possible. The same goes for most Democrat cesspools in America.

  • J. Joseph Rivera

    It's a shame that Howard is so cynical. Cynicism and voter apathy were what got us into the mess we've been in over the last twenty years. Nobody thought Rudy Giuliani could rebuild New York City either but he did it. Same with Bret Schundler in Jersey City. In just over two months into taking office, Gov. Christie has taken major steps to fixi our broken state. I say leave if you want to, we can fix things with you or without you.

  • USMCSniper

    There can be no economic recovery until we shitcan the Democrats and Rinos out of the Congress and Senate and remove that clandestine muslim marxist chimpout from oval office.

  • Dee

    Liberals are control freaks. That is their weakness. They think they are "Father Knows Best" candidates. They want to micro-control everything; it is in their nature, like the Scorpion on the Frog's back who couldn't stop himself from stinging the Frog at his own peril.

  • Barack yo Bush

    There can be no salvation with democrats in this worlddddd AHHH

    REPUBLICANS MUST RULE THE WORLD AND WE WILL BE SAVED!!! Everything will be perfect with republicans leading every government! Just look at the last time they had it all (1995-2006) Things went perfectly, we had no budget problems… wait forget that we actually have a record debt because of them… ok what about world peace? Ehhhh nope 2 FIASCO wars faught… uhhh well everybody loved us? HA yeah ok… and Elvis is still alive.

    Please Republicans honest? They are liars like ANY other politician. DO NOT be blind/ignorant/STUPID.

    A zebra is a zebra. A politician is a politician. (in case you need this statement to be dumbed down keep reading)

    All politicians have their own GREEDY interests, which means: They all lie, cheat, steal, and the most important people are NOT who they represent it is none other than themselves.

    America, wake up, you elect a democrat because the REPUBLICANS F*CKED UP EVERYTHING.
    And then you elect republicans because the democrats did the same job.

    WHEN WILL WE LEARN????? Our system is broken and with the supreme court ruling companies can now give all the money they want to our "leaders", we're screwed.

    When I was younger, I thought this country was the greatest thing on earth. But like everything else, nothing is what it seems. Valuable lesson.

    Christie doesn't give two sh*ts about any citizen in NJ. Neither does ANY other "representative", they just want their voting numbers and they do anything to get it.

    Point is, those who cry liberals suck and those who cry republicans suck… both of you are retarded. They both suck and you suck… and the tea party is a joke.

  • Tough Love

    Wow, This "youngster" Matt Rooney has a lot on the ball….. you've got one heck of a career ahead of you.

    That being said, and with the benefit of wisdom that comes with age (and financial training) I'll add my 2 cents…..

    If NJ is to financially survive, Christie still has one BIG mission yet to accomplish, and that's getting a significant reduction in the pension formula , not for PAST, but for FUTURE years of service for CURRENT (yes CURRENT) employees, That and a VERY significant reduction in retire healthcare subsidies just may save us.

    AND … the reductions MUST apply to ALL Civil Servants …State, County, City, Municipal, Teachers, Police, Firemen, etc.
    *****************************************************************************
    While we're at it, we must also STOP adding years of pension service to CURRENT part-timers, and CAP Sick Pay Accumulations for CURRENT (not just new) workers.

  • Civil Servant

    Part 1
    Yes, it is true that due to the concerted efforts of corporations and conservatives, private sector unions have been eviscerated and ignorant employees have accepted profitless 401k's as compensation. Also taxes have been taboo so that revenue is greatly diminished all of which is to the benefit of the wealthy who could care less about the average person. Trickle down economics always was and still is a scam. The rich really do get richer and the poor get poorer. Except now, the conservative agenda of the past thirty years of their reign has driven the middle class back down to income inequalities not seen since before FDR. Where is this data that the rich are leaving NJ? Where will they go? New York and Connecticut are hardly better. And I don’t see them migrating to North Dakota, Louisiana, or Wyoming. That would not support the lavish life style they obtain in the Metropolitan NYC area.

  • Civil Servant

    Part 2
    And puhleese…don’t tell me about their tax problems. They actually only pay an average of 16.5% because much of their income is from capital gains. Not to mention the high priced lawyers and accountants they employ and the off shore accounts they utilize to “shelter” their money. And what about how they obtained such wealth? Well, if they are Wall Street traders then you can be sure that much of it was through scams perpetrated on our financial system which have contributed to the dire straits we are in right now. They owe us all big time and the so called Millionaire’s tax should be reinstated in perpetuity.

  • Civil Servant

    Part 3
    We are in trouble with the pension system because:
    1) The Bush tax cuts which overwhelmingly benefited the wealthy cost 1 trillion in revenue which could have been used to assist the States;
    2) The unnecessary war in Iraq which has cost another 1 trillion and may end up costing us as much as 3 trillion not to mention 5000 lives. And for what?…now that the country is falling into Iran's hands;
    3) The greedy "Masters of the Universe" on Wall Street who perpetrated fraud and deceit and received our tax monies to bail them out;
    4) The corrupt politicians, Democrat and Republican, who failed to fund the pension system so that they would not have to raise taxes and then hopefully get re-elected to keep their noses in the corporate contribution trough.

  • Civil Servant

    Part 4
    Governor Christie’s gratuitous examples of public sector pension abuse are a distinct minority and designed to further his agenda of undermining government and promoting the interests of the wealthy. He should not only keep the Millionaire’s tax but also raise the gasoline tax. Our country has one of the lowest gasoline taxes of any western industrialized nation in the world. With a higher tax we can promote utilization of public transportation and the purchase of fuel efficient cars instead of promoting terrorism by sending our wealth overseas to oil producing nations who do not have our best interests in mind. Governor Christie is transparently demonstrating his sympathy for the well-to-do in our state and he will reap the whirlwind.

  • Tough Love

    Dear Civil Servant …. (call it part 5 ) …..

    Kiss my ARSSS, you greedy pig !

  • Tough Love

    Now That I got that off my chest, here's what Christie needs to do….

    Significant reductions for future years of service for CURRENT (yes CURRENT) Civil Servants, and elimination of (or VERY significant reductions in) retiree healthcare subsidies.

    The CURRENT pension formulas produce pensions 2 to 6 times more valuable than that of COMPARABLY paid Private Sector worker's.

    This excessive accrual needs to end …. it is digging the hole deeper every day … and it must end for those working NOW, not just for new workers.

    Taxpayers are tired of being fodder for jackasses like commenter "Civil Servant" who thinks diverting attention from the issue at hand (EXCESSIVE PENSIONS & BENEFITS) with all his miscellaneous drivel will lessen our resolve to fix this mess ….. a mess created by greedy Civil Servants, Greedy Unions, and complicit/corrupt politicians.

    • Civil Servant

      These replies are the typical conservative argumentum ad hominem that camouflage the ignorance of people who obtain their information from sites such as this and Fox News (Bigoted and Unbalanced)

      • Tough Love

        OK, if we can EVR get past you diversionary tactic of changing the subject …..

        Answer the question ……. What is your justification for pensions (80-90% of which is paid-for with taxpayer contributions, or interest earnings thereon) 2-6 times more valuable than comparably paid taxpayers ?

        And ……….. Don't give me the bull that Civil Servants are paid less so pensions/benefits must be higher. Per the US Gov't BLS, they are paid MORE, not less.

        And …………Don't tell me the bull that safety wokers have a shorter life expectancy. They don't per a recent study of data from the giant (credible) CalPERS retirement system.

  • Rib/eve

    Dear Civil Servant.
    A)People have forgotten that they are supposed to plan their own retirement. Not have it done for them. Then no can be blamed but the individuals themselves.
    B) New Jerseyers have moved, to PA for crying out loud. And unfortunately have learned nothing. They still vote the same way. Stupid huh.
    C) FYI Wall Street is filled with Liberals – which is why they got bailed out.

    to your:
    #1. States need assistance because they over spend, not because they don't get enough revenue.

    #2 Liberals have us fighting a war on egg shells and now show crocidile tears about our brave and honorable men and women dieing at war. Well, if you really have concern for our troops lets change the intolerable "rules of engagement". At present the way these rules are set up it gives the enemy every advantage. I would like to see liberals be as concerned with our troops welfare as they are for the enemies. But, you aren't, unless it is a tool you want to use in an argument.
    The above problem of course, also extends the war and now you want to cry about the financial cost

    • Civil Servant

      My dear fellow,
      People in the public sector do plan their retirements insofar as they have historically accepted below market wages in return for retirement benefits. According to the latest Bureau of Labor statistics, which includes salary and benefits, the professionals in the private sector make $46.82 per hour and the professionals in the public sector make $1.12 more at $47.94 per hour. (This slightly higher rate for the public sector is NOT historically representative and undoubtedly reflects the corporate migration overseas and the ability of the non-unionized private sector to lay off employees at will). Public sector employees have planned their careers “in reliance” upon these promises made by the state. They are contractual and default will only undermine the state’s credibility.

      As regards your 1), both your point and mine are valid. States overspend and they do require assistance.

      In regard to 2), you are using a typical assumption tactic of distorting my statement to create the ubiquitous conservative argumentum ad hominem reply which reflects your inability to make a cogent argument.

  • Rib/eve

    Dear Civil Servant
    to continue. . .
    The "Masters of the Universe" would be the Federal Reserve.

    The amount of gas tax that is collected would make Exxon's profits look like the bingo pot. When was the last time you saw a real accounting of the money collected from this and what it is spent on?

    • Civil Servant

      Yes, this is true that they are part of the problem. Unfortunately the Federal Reserve is composed of 'Wall Street Masters" of the Universe.

      Exxon made a profit of 45.2 billion in 2008 and did "suffer" in 2009 in the recession with a mere profit of 19.4%. Not sure of the question you are asking…please clarify.

  • Andy Bradshaw

    Ronald Reagan believed in devolving government from the center to the grassroots. In that he followed Alexis de Tocqueville's arguments about the importance of America's local municipal governments. Governor Christie is opposed to the Reagan model and seeks to centralize government in Trenton.

    In New Jersey, it is rather easy to change local government in most of the more than 500 smaller municipalities. You don't need a lot of money to run the kind of grassroots effort to affect a change. A couple years ago someone beat a county machine with a million-dollar campaign in a town in Burlington County, on a cake-sale budget. The winning candidate simply walked door-to-door and talked to every voter.

    It is much harder to change a state. Even Christie has to work with a legislature in Democrat hands.

  • Andy Bradshaw

    Under the Christie budget, all of these suburban and rural districts are getting cuts. The percentage of money going to the favored urban districts actually grows under Christie's budget. Many suburban and rural districts are getting less than $1,000 per pupil. If it was spread fairly, every child in New Jersey would get more than $8,000.

    It costs about $8,700 to educate a child in New Jersey. What a local school district doesn't get in state education "aid" (actually, the state simply sends back a portion of the income tax it collects) must be made up for in property taxes. This is why NJ hast he highest property taxes in America.

  • Andy Bradshaw

    Christie's budget cuts state education "aid" (income tax money going back to the towns from whose residents in was collected) by $800 million while raising the money spent on pre-K "babysitting" (that's what Christie said it was in the primary) to more than $600 million. This money goes to those favored urban districts too.

    Unfortunately, Christie seems unwilling to take on the Court. Typical trial lawyer stuff, but as a result, his budget is more status quo than Reagan revolutionary.

    Another article:
    http://blog.nj.com/njv_paul_mulshine/2010/03/gov_

  • Andy Bradshaw

    The problem in New Jersey is its education funding formula, which has been taken over by the State Supreme Court. In the most unequal system in America, the Court mandates that over 60% of all state school funding aid (which is derived from the revenue from state income tax and part of the sales tax) goes to 31 urban districts. The left-overs go to the suburban and rural districts that pay almost all the state income tax.

    Here's a good article on the subject:
    http://blog.nj.com/njv_paul_mulshine/2010/04/sund

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