04.30.2010 0

The New Jersey Plan

  • On: 05/31/2010 23:01:53
  • In: Economy
  • By Bill Wilson

    Last week, without much ado, Barack Obama’s $23 billion bailout for state education spending was promptly taken off the table by Congressional Democrats, first in the Senate, when Senator Tom Harkin could not muster the votes, and then in the House, when the AP reports that House Appropriations Committee Chairman David Obey “abruptly canceled a committee meeting to put the money in a war spending bill.”

    The AP attributed the bailout’s failure to “election-year jitters among moderate Democrats over deficit spending and only lukewarm support from the White House.” Really, the plan fell flat because it epitomized the failed spend-now, pay-later approach to governing that has come to embody the Obama Administration.

    It is the same approach that got insolvent states like California and New York in trouble in the first place, and now threatens the nation’s very solvency with a $13 trillion national debt.

    The truth is, the American people much prefer a different approach. Call it the New Jersey Plan.

    Balancing the budgets of insolvent states with borrowed money from China, Japan, and the Federal Reserve is nothing more than payback for the political loyalty of public employee unions to the Congressional majority at the expense of taxpayers who would be forced to pay for it, with interest, when the bill comes due. In the meantime, California and New York lawmakers have forestalled making tough decisions to slash spending.

    In contrast, in New Jersey, Governor Christie reports that because of the spending freeze he has undertaken, New Jersey will not have to raise taxes to balance the budget. But, to come to pass, the legislature will still have to act on Christie’s proposed $23.9 billion budget that closes a $10.9 billion budget shortfall from the previous year.

    Just consider that: before Chris Christie came along, New Jersey was some 31 percent over-budget.

    Lawmakers want to forestall tough decisions in New Jersey for another year, too. But, standing tough, Christie already has vetoed a so-called millionaire’s tax and a $618.74 million supplemental appropriations bill. When confronted with an angry teacher who wanted taxpayer compensation for her student loans, Christie responded, “Well, you know what, then you don’t have to do it… Teachers go into it knowing what the pay scale is. Teachers go into it knowing all of that.”

    Christie through his vetoes is forcing the legislature to work within the framework of revenues as they are, not as lawmakers wish them to be. The legislature has until June 30th to complete the budget process by law, and they lack the votes to override Christie’s veto.

    That leaves them with but one choice: cut spending. As Christie noted in an address unveiling a proposed constitutional amendment capping taxes and spending to no more than 2.5 percent increases annually, “Over the last ten years, municipal spending has grown by 69 percent, and property taxes have grown by 70 percent, until New Jersey property taxes are now the highest of any state in the nation.”

    If taxes go any higher, or if job creators are punitively targeted, Christie warns that people will simply leave the state. He’s right. With such high taxes already, New Jersey really does have to make the necessary cuts, even if lawmakers don’t want to. It’s the only choice that makes any sense.

    Fortunately, now that Obama’s $23 billion states bailout is dead — for now — troubled states like New York, California, and New Jersey are actually going to have to balance their budgets. Call it tough medicine.

    Call it the New Jersey Plan.

    Bill Wilson is the President of Americans for Limited Government.

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