Tuesday, June 29, 2010

Wait and See

The New Jersey legislature has just passed a budget for Gov. Chris Christie (R) to sign:
New Jersey’s Democratic-controlled Legislature has approved a $29.4 billion budget, sending back to the Republican governor a spending plan that cuts hundreds of millions of dollars in public school aid, suspends property tax rebates and adds levies on businesses, students, the elderly and the disabled.

The budget, approved by the Assembly early Tuesday morning and by the Senate hours earlier, is close to the one Gov. Chris Christie introduced in March amid some blunt talk about the state’s bleak finances. He said New Jersey was facing an $11 billion deficit and needed to cure its addiction to spending.

Democrats got just $74 million in programs and services restored to the budget out of roughly $400 million sought. They insisted that Republicans sponsor the budget bills, so the GOP would own the bare-bones budget...

Even Republicans said they didn’t like parts of the budget, which cuts spending by 9 percent over last year. But, Republican Sen. Joe Pennacchio commended Christie for charting a more responsible fiscal course for the future while Democratic Majority Leader Barbara Buono said the budget contains wrong-headed choices.

The budget skips a $3 billion contribution to the state pension system, for example, and saves $848 million over last year by suspending property tax rebates.

Democrats enacted a one-year surcharge on millionaires, but Christie vetoed the tax and the Legislature failed to override it. The $600 million or so the tax would have raised was to restore rebates for senior citizens and disabled homeowners.

Christie faced off with the legislature about this measure, and corralled enough Democrats to vote for the measure out of fear of a government shutdown. This was a hard-fought battle, but it looks like Christie got his way. Christie's victory in this battle is a sign of political resolve and toughness: he didn't blink.

Now comes the time of waiting. If this budget is not successful or if Garden Staters find these cuts too painful, the weight of failure will fall squarely upon Christie's shoulders. He fought for this and made it the centerpiece of his agenda; if it fails, his administration may fail. If it succeeds, he could very easily find himself an icon for Republicans across the nation.

But more rides on this budget than Chris Christie's political future. Conservatives have taken to speaking of the need for austerity budgets to restore the nation's finances. New Jersey offers a testing ground for this policy prescription. If this budget can shore up the financial state of New Jersey and if the public find its budgetary pain bearable, New Jersey would provide one model for fiscal reform. Its failure would engender considerable doubts about the feasibility and future of austerity budgets.

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