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‘If you tax them, they will leave’

Chris Christie seeks to mend the broke and broken state of New Jersey.

Apr 26, 2010, Vol. 15, No. 30 • By FRED BARNES
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Trenton

If the citizens of New Jersey like candor, Chris Christie is the governor they’ve been waiting for. Or I should say citizens of “the failed state” of New Jersey, as he tends to call it. It’s a “broken state” and a state that’s “broke.” New Jersey was in “a shambles,” he says, when he became governor in January. It’s “a fiscal basket case,” suffering from the “madness” of tax increases and excessive government spending, a “wonderful state” that’s been brought to “the edge of bankruptcy” and faces “the ruination” of its economy and “the quality of life that we want all of our citizens to have.” New Jersey has “deceitful politics,” and “the defenders of the status quo .  .  . yell and scream” and “demonize” those, like Christie, who seek change. 

The state’s misery is quantifiable, and Christie routinely quantifies it in his speeches. His budget address in March to a joint session of the state legislature—controlled by Democrats—included this riff:

New Jersey residents are the most over-taxed in the country. We have one of the highest top marginal in-come tax rates, the second highest sales tax rate, the sixth highest corporate tax rate, and the highest property taxes in the nation. Add it all up, and the sad fact is that we are number one with more state and local taxes taken as a percentage of income than any other state in America. This is one distinction I am prepared to give up.

There’s more. “We are first in the number of college students who, once educated, leave our state,” Christie said. “We are near the top in debt, and number one in getting the least back from Washington for every dollar we pay in taxes.”

And people, at least the more affluent, are fleeing. From 2004 to 2008, New Jersey “experienced a net outflow of wealth of $70 billion,” the governor said. “If you tax them, they will leave.” Unemployment is the highest (9.8 percent) in the region, having doubled since 2007. The state lost 121,000 private sector jobs last year while local governments added 11,300 new employees. There are “two classes of citizens in New Jersey,” Christie said, “those who enjoy rich public benefits and those who pay for them.”

Governors aren’t ordinarily this downbeat about their own state, even when pointing out the mistakes of their predecessors. I can’t think of another example. Christie is notoriously blunt. When reporters tried to question him during a Q&A session last week with businesswomen, he brushed them off, saying questions were limited to “real people.” To a woman who asked if he has a “strategic plan” for the state, he simply said, “No.”

Before running for governor, Christie, 47, was U.S. Attorney for New Jersey with a reputation for single-minded pursuit of corruption by public officials. Though he lacked prosecutorial or trial experience, Christie had sought the job aggressively after raising money for George W. Bush’s presidential campaign in 2000. Bush appointed him. His records in seven years was impressive: 125 convictions or guilty pleas from public officials, both Republicans and Democrats. 

Christie has a powerful motive for not sugarcoating the state’s troubles. His program is radical, at least for New Jersey. He wants to slash $10.7 billion from a 2011 budget projected at $38 billion, reduce taxes, cut regulations, and privatize enterprises such as the state-owned TV network and parking garages. He refuses to consider raising a single tax rate.

This includes the “millionaire’s tax.” Perhaps only in New Jersey would such a tax apply to personal income starting at $400,000. Passed in 2009, it raised the top rate from 8.9 percent to 10.75 percent before expiring at the end of the year. Democrats declined to renew it in a lame duck session of the legislature in December, leaving the issue to Christie.

“They wanted a twofer,” Christie told me. “They wanted the issue and the revenue” (estimated at $900 million in 2011). “My response was, you’ve got the issue. Now you’re not getting the revenue.” Christie says more than half the 63,000 taxpayers earning over $400,000 are small business owners. “This is not a tax on the rich. We can’t grow jobs if we continue to raise taxes.”

The tax issue has spilled into a feud between Christie and the state teachers’ union. The governor has asked teachers to forgo a pay raise for one year and begin paying 1.5 percent of their salary for their generous medical benefits. The union answered with TV ads urging Christie to approve the millionaire’s tax instead. “All of this stuff is about the union’s greed rather than putting the kids first,” he said on Fox News.

The feud intensified last week when a union official posted a prayer for Christie’s death on the Facebook page of New Jersey Teachers United Against Governor Chris Christie’s Pay Freeze. Union president Barbara Keshishian apologized in person to Christie. But when he said the official should be fired, “She left my office in a huff,” he says. The union, by the way, ran television ads last year opposing Christie in the governor’s race in which he defeated the incumbent, Democrat Jon Corzine.

The breadth of change proposed by Christie—“bold action now to reverse the direction we have taken for many years”—has surprised many New Jerseyans. He was less candid during the campaign, for a reason. Voters “wanted back then what he’s doing now,” said Russ Schriefer, Christie’s media consultant. “But he couldn’t do it now if he’d said it back then.” Corzine would have killed him with attack ads.

“The day of reckoning has arrived,” Christie declared in his budget address. “The attitude has always been the same—continue to spend, continue to borrow, and drop the catastrophic sum of all these poor choices into the lap of the next guy. Well, time has run out. The bill has come due.”

He stressed his aversion to new taxes. “I was not sent here to approve tax increases. I was sent here to veto them. .  .  . It is time for the tax madness to end.” Raising taxes “would be insane,” he said. “If you are unemployed and support tax increases, be ready to stay unemployed. .  .  . We have the worst unemployment in the region and the highest taxes in America, and that’s no coincidence.”

Christie’s most ambitious proposal is to cap state spending and local property tax increases at 2.5 percent a year. This would require a three-fifths vote of the legislature and approval by voters in a referendum this November. And he wants to curb sharply the power of public employee unions. “We must have collective bargaining reform that respects these new caps.” He accused the unions of “excesses” in pay raises, benefits, and pensions.

Though his agenda is far-reaching, Christie has the power to get much or all of it done. New Jersey has “the strongest constitutional governorship in the country,” he told me. He has three types of veto authority, one allowing him to rewrite legislation. He appoints the attorney general, controller, every judge and county prosecutor, and the members of 700 boards, authorities, and commissions. “It’s a pretty powerful job,” Christie notes.

He is using all his prerogatives. Three weeks into office, he declared “a state of fiscal emergency” and froze $2.2 billion in 2010 spending by executive order. He spurned calls to relent on the “millionaire’s tax.” “There’s no chance I’ll sign this tax .  .  . no chance,” he told the businesswomen last week.

His lieutenant governor, Kim Guadagno, has been assigned to examine every state regulation for possible elimination. “Whatever she recommends I can do by executive action, I’ll do by executive action,” Christie says. 

He has “a lot of leverage” over the 2011 budget. A balanced budget is mandatory, and the legislature cannot exceed the revenue projection of the state treasurer and the nonpartisan Office of Legislative Services—unless there’s a tax increase, which Christie would veto. 

He also got Democratic leaders to back him on pension reform, requiring state workers to contribute
1.5 percent of their income for retirement and health benefits. The Democratic state senate president, Stephen Sweeney, has begun sounding like Christie. “The governor and I agree wholeheartedly, we have too much government, there’s too many layers, there’s too much of it and we need to shrink it and we need to cut it.”

But what Christie calls “Trenton’s addiction to spending” remains strong. The legislature approved $800 million in new spending after the election and was still handing out money on the morning of Christie’s inauguration. The program of “extraordinary and special” aid to municipalities had been suspended for lack of funds. But extra revenues suddenly appeared. Christie dispatched an official to halt the dispensing of funds moments after he was sworn in. It was too late. Seventy million dollars were already gone.

Now the governor wants the entire state to, as he puts it, “jump off the cliff” with him. “The watchwords of this [2011] budget are shared sacrifice and fairness,” he says. “Individuals contribute, businesses sacrifice, local governments tighten their belts, and we end our addiction to spending. Everyone comes to the center of the room—we jump off the cliff together to stave off certain fiscal death for the hope of salvation tomorrow.”

With his zeal for smaller government, Christie has prompted comparisons with Ronald Reagan. “Tone-wise,” Christie says, he reflects “Reaganism with a Jersey edge. Reagan had a better way of making it sunnier than I do. Our personalities are at core a little different.” His first vote for president, at age 18 in 1980, was for Reagan.

Christie believes he can accomplish his goals in one term. He wants to trim the tax rate on individual income to 6 percent and see the jobless level sink and compare well with neighboring states, making New Jersey competitive. “Everything else flows from that,” he says. “It’s a great state to live in. It’s just become unaffordable.”

There’s a bigger goal, too. “We should be seen as the failed experiment for other states and the country,” he says. “Spend beyond your means and then kill your tax revenue base by raising taxes 115 times in eight years, and then you’re New Jersey,” Christie said last week on MSNBC. With a brash recovery, “We can be an example for others.” That would be “an extra, added benefit” to success as governor of a state that failed, then mended its ways and flourished.

Fred Barnes is executive editor of The Weekly Standard.


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