New Jersey's recent budget numbers have been very grim. Governor Chris Christie is facing an $807 million budget shortfall, income tax revenues have come in well below expectations, and five ratings agencies have downgraded the state's bonds. Now, the state might delay a payment to its pension fund, which could lead to lawsuits and further downgrades, the Star Ledger reports. Politico and the Ledger have both speculated that the state's financial woes could hurt Christie's chances to become the GOP presidential nominee in 2016.
Yet one even more important takeaway hasn't really been discussed so far. Two years ago, Christie proposed an enormous tax cut. If he had actually gotten it, New Jersey would be in even more disastrous fiscal shape.
When Christie first took office, New Jersey faced a $1.3 billion budget shortfall. He managed to close that gap in the short-term through spending cuts — and when the Democratic legislature sent him a bill that would tax millionaires, he vetoed it. "I said, 'Take this back where it came from, 'cuz I ain't signin' it,'" Christie bragged at a seminar of wealthy conservatives convened by the Koch brothers. He said he was cutting spending the state just couldn't afford. "There's one simple truth: we cannot and should not spend money we don't have."
But by 2012, when the state's budget picture had brightened somewhat, Christie was sounding a little less concerned about shortfalls. All of a sudden, he proposed to cut all income tax rates by 10 percentage points — which would have cost the state $1.1 billion by 2016. "Every New Jerseyan deserves a tax cut," Christie said, arguing that lower tax rates would help attract more businesses.
As for whether the state could afford it? Well, according to the numbers Christie released, the state's overall revenues were going to soar after the cuts took effect. When the legislature's nonpartisan budget analyst said they'd actually fall dramatically short, Christie mocked him and suggested that he be fired. (The budget analyst's numbers turned out to be right on.)
The Democratic leadership of New Jersey's legislature didn't buy Christie's optimistic estimates, and refused to approve the tax cuts. But Christie revived the proposal the following year, on the campaign trail. After his landslide reelection, an adviser suggested he'd make a new push for the idea, but Christie opted not to. The brutal recent budget numbers have killed whatever chance there was of reviving the proposal. But what if Christie had managed to muscle the proposal through the legislature back in 2012? The state would be forced to either undo the tax cuts, raise revenues some other way, or institute truly draconian spending cuts.
It's clear that Christie talks a good game on fiscal discipline. But at the first opportunity, he was willing to throw it out the window for politically popular tax cuts — tax cuts it's now clear the state couldn't afford.