Facing unprecedented Draconian cutbacks on the state level, and a $3 trillion war draining the nation’s federal resources, wary New Jersey taxpayers are warning politicians not to seek solutions in their pocketbooks. Meanwhile, former Treasury secretary Robert Rubin is unsure whether our current economic slide has hit bottom or or will go another 18 months.
Truly, both state politicians and this year’s presidential candidates face daunting economic challenges. To help lay out several possible political paths and detail what our leaders might choose NJN Television’s senior political correspondent, Michael Aron, will speak on “The Political Forecast — How Much It Will Effect Your Business?” on Thursday, April 3, at 11:30 a.m. at the Princeton Marriott Hotel on College Road East. Cost: $45. Visit www.princetonchamber.org.
A veteran of both print and television journalism, Aron feels that both hold a vital place in reporting. “Print is able to give a depth of factual detail that is difficult to achieve in other media,” he says. “On the other hand, I like television because it is more of a team effort, and you can poignantly reveal things that really hit home — such as was done in the civil rights movement.”
Raised in a Philadelphia suburb, Aron attended Harvard University, earning a bachelors degree in government. He then earned his masters in public administration at Princeton University. Launching his journalism career in print media, Aron successively wrote for and edited “Seattle Magazine,” the “Los Angeles Sunday Times Magazine,” several in-flight magazines, “Harpers,” “Rolling Stone,” and finally “New Jersey Monthly.”
In 1982 Aron left the print world for NJN Public Television and Radio. In addition to his special reporting on New Jersey’s political and social issues, he hosts and produces the weekly “Reporters Roundtable with Michael Aron” in which Garden State reporters join to discuss statewide political topics.
Exactly how much hope we can count on from above remains very much in question. All of our political leaders realize that current economic woes are the great white elephant in our living room. Their strategies for leading this pachyderm outside vary greatly, and business people are predicting a tight and painful fit.
Candidate pathways. Among the three major presidential hopefuls, Aron sees a rather traditional split along historic party interests. “Obama and Clinton have mostly aligned themselves with the standard Democratic platform which serves the working person’s goals,” he says. “Meanwhile, Republican McCain seems to be taking his party’s usual business-friendly stance.”
These leanings do not necessarily indicate a total anti-business or anti-worker plank, he says. Just recently Hillary Clinton stated she would pass legislation to protect mortgage companies from the threat of extreme lawsuits. Barack Obama, while named the most liberal senator by some journals, continually speaks to issues of economic revitalization. “McCain recently made the slip and said that the economy was not his strong suit,” notes Aron, “but there is no doubt his knowledge and concern are vast. He has, I’m sure, the ability to take the problems in hand.”
State of the state. “Everyone is wondering how New Jersey got itself into so poor a business climate when we are being run by one of Wall Street’s most successful businessmen,” says Aron. “Admittedly, this is scarcely all Governor Corzine’s making.” The governor inherited a state with exceptionally high taxes, a large debt, and a lot more mandates and regulations than most states in the region. New Jersey holds a $33 billion debt, (fourth highest per capita in the nation) with a $2.5 billion a year debt servicing. Aron further points to the federal burden of a deficit and war sucking up our resources, plus the pending recession.
“This is not the kind of climate that allows a liberal governor to do what he wants to do,” Aron notes. The governor has sought and struggled to promote universal health care, add 100,000 units of new affordable housing, and fund new biotech research. And while in many ways these goals may have seen slim success, New Jersey has held onto its tradition of being a cutting-edge, progressive state.
The Garden State remains the leader in commitment to alternative energy — and the leader in alternative energy financial incentives. Aron notes that our high tax rate maintains more advantages and offerings for both residents and businesses. “If a business moves across the Delaware, it is going to pay less, but get a lot fewer services,” he says.
Tapped out? On its own, New Jersey faces great fiscal problems, produced by a long history of taking in less than we spend. These fiscal troubles are joined by a downward economic spiral experienced throughout the region. “For years, we have kept ourselves afloat with creative financial maneuvering,” says Aron. “But now we’ve increased the sales tax and even the income tax for those making more than $500,000 annually.” One complaints is that this income tax rate boost is based on the small business’ gross, not the actual salary taken by the owner.
Aron points to two watershed moments that have at last made the New Jersey Legislature sit up and take notice. First was the November, 2007, defeat of the governor’s proposed stem cell research bond. While most believed in stem cell research, the words, “Will you fund a $450 million bond that …” proved enough to nix the referendum. The second wake up call came with Corzine’s town meetings on his toll hike proposal. The near-unanimous chilly reception forced this plan to the shadows.
Will New Jersey’s toll roads again be pushed as a source of economic salvation? Assuredly not in the old Corzine form, Aron feels. The much less ambitious plan to raise tolls 25 percent over 10 years, along with a six-cent-per-year gasoline tax increase, with a little tweaking, could stand a chance of adoption.
Yet with the state coffers nearly empty, are the taxpayers tapped out or merely unwilling? Many nations pay far higher residential and commercial taxes than New Jersey, with more services making up for the extra pinch. Higher taxes would give the Garden State the sewerage and transportation systems it desperately needs and even fix much of the flagging health care industry.
Cosmetic cuts. Last year the New Jersey Department of Agriculture, with rapid response, oversaw the recall of poison beef that had entered more than 100 schools and countless stores. This is necessary work, and no responsible government would do away with such functions.
That said, on February 26 Corzine announced that the New Jersey Commerce Commission and the departments of Agriculture and Personnel were to be eliminated from the state’s new frugality budget.
Aron feels that if any of these entities are legislatively eliminated, their people and duties will of necessity go on under new titles, rather than totally disappear.
The Commerce Commission, which was already downgraded from a department to a commission under Governor Christie Whitman, could move even closer to the governor’s office. Ever since Corzine unveiled his Office of Economic Growth in 2006 and brought its chief, Gary Rose, on as a cabinet member, a certain duplication has occurred.
“If these elimination’s take place they will be more cosmetic than real,” says Aron. The savings are not great (a scant $4 million for the Department of Agriculture) and with so much of their functions mandated, these state workers may even remain at their same desks, serving a different department, he says.
“At this point, I think the governor is placing all his efforts in getting his budget passed,” says Aron.