Winners and Losers

The dust settles. The Democrats retract their claws and arrive at a mutually agreeable plan for raping the taxpayers. It seems safe to move onto Trenton’s favorite past time: choosing winners and losers.

Likely, the headlines tomorrow will read that Governor Corzine triumphed in his intramural battle with Speaker Roberts. He got the sales tax hike he wanted. He made no significant cuts in the bloated state budget (not that the Democratic "opposition" wanted any). He made only a token concession: half of the sales tax revenue must be devoted to property tax relief. As demonstrated below, that concession is both meaningless and trivial.

Generally, in such battles, the combatant willing to inflict the most pain on innocent bystanders prevails, and Corzine proved much more ruthless. He threw tens of thousands of workers out into the street, including private sector folks who can’t treat the last few days as a taxpayer funded vacation. And he didn’t have to; what court would second guess him? Who would bring the suit? Roberts, seeing tens of thousands of folks without paychecks, blinked first. Compassion points to Roberts; political victory for Corzine.

Only because the stakes were so small was the combat so intense. All the Democrat parties to the tiff agreed that spending needed to balloon and that the taxpayers required another hosing. Only the details of the hosing were in dispute.

Picking a loser is easy: the people of New Jersey. The insatiable maw of the governmental spending monster will suck another billion from the pockets of those residents foolish enough to stay. For some, like casino employees, the price might be more immediate and much higher, in the form of lost wages. And NJ’s already sad reputation took a major hit.

The compromise solution – the asserted dedication of funds for property tax relief – is a total farce. First, rebates at some level already exist, and nothing prevents the Guv from simply replacing the extant funds with those from the sales tax increase. Seen the rebate from the fraudulent "millionaires’ tax", "every penny of which" – the Dems promised – "will go to property tax relief"? Forced to choose between cutting spending elsewhere and funding property tax relief programs, property tax relief programs inevitably bow.

Second, a paltry $500 million means just about squat. Property taxes amount to more than $16 billion per annum. So, we’re dedicating a princely 3% of that amount to "tax relief" at a time when property taxes increase by 5% per year. It’s worse that a cruel joke.

And, third, the Dems employ a quirky definition of "property tax relief". Already, they assert that most of the budget goes to "property tax relief", which would puzzle any reasonable observer until he realizes that they define massive subsidies to Abbott districts and other Democratic municipalities as "property tax relief". Few, if any, residents of the suburbs see – or will see – any "relief".

Look for this newfound "relief" to be directed to additional aid to Newark, Camden, and Jersey City, maybe somewhat larger rebates to seniors. For the overtaxed middle class, essentially nothing.

In his brief speech to the Legislature today, Corzine observed that when one finds oneself in a hole, one should stop digging. NJ finds itself in a tax hell and Corzine’s solution amounts to piling on even more. As spending is the problem, cutting spending is the solution.

And just wait when the economy burps...

The Bush tax cuts produced an above-average-length economic expansion, but it’s getting long in the tooth. A contraction is inevitable. Those tax cuts benefitted "the wealthy" – that is to say, people who live in New Jersey; only Bush’s policies gave the NJ economy any life, despite the heroic efforts of McGreevey/Codey/Corzine to kill it completely. But even the salutary results of Bush policies don’t repeal the business cycle. When it inevitably falters, and NJ tax collections decrease, look for Corzine and the Dems to be back, digging even deeper into the taxpayers’ wallets. They’ve repeatedly demonstrated that no matter how deep the hole, they will not stop spending.

So, six months or so in, the Corzine record heretofore? Massive increased borrowing for the TTF (and a promise for hundreds of millions more for stem cell research). Huge tax increases. Gargantuan spending increases. But for Jim McGreevey’s precedent, it would be difficult to imagine a worse beginning to a gubernatorial term.

Corzine’s policies -- far from fixing things -- will merely hasten the exodus of productive folks from NJ. About the best that could be said is that if he listened to Jon Shure, things would be even worse.