Chris Christie’s Biggest Problem Isn’t ‘Bridgegate’

The Fiscal Times

The day after he delivered a doom-and-gloom budget address this week in Trenton, New Jersey, Governor Chris Christie stuck close to home to do his 111th town hall. He picked Long Hill Township, in Morris County, perhaps the state's most Republican county.

It was time to shore up the base. Last month Christie's visions of 2016 faded as he publicly apologized for the role of his aides in a spiteful plan to shut down the local traffic lanes of the George Washington Bridge, giving Fort Lee a four-day traffic coronary — all to allegedly punish that town's Democratic Mayor for not endorsing the governor in his cakewalk re-election bid. This marked a stunning reversal from the month earlier, when he mocked the press for suggesting his team had anything to do with the closures.

Related: Chris Christie in a New Jam Over Bridgegate

This week it was back to basics — and back to a more mundane challenge that could be even more threatening to Christie’s New Jersey legacy, if not to his national political aspirations: The state’s vaunted economic “comeback,” a rebound that helped propel Christie to a second term, now seems to be languishing. And the thorny budget problems that Christie had boasted of beating back have sprung up again.

The friendly Long Hill crowd repeatedly applauded Christie as he warned that without additional concessions from public employees, New Jersey would find itself like Detroit, which is going through the nation’s biggest municipal bankruptcy. Gone were Christie’s coy references to 2016 or the shots at Washington’s dysfunction. The impediments to a return to prosperity, as Christie saw it, were insatiable public unions and their Democratic apologists — this was red meat for the overwhelmingly Republican crowd.

The Long Hill audience may have loved Christie’s message, but much of the state’s population has quickly soured on the governor in the wake of “Bridgegate.” Patrick Murray, who leads the Monmouth University Poll, says that Christie has seen an across-the-board slide in his New Jersey approval ratings since that scandal broke. In Murray’s latest survey, Christie plummeted from his 70 percent approval rating to 49 percent. “He has a crack in his base as well,” Murray says. “When he lost credibility with Bridgegate he started losing it when it came to how good a job he has done with the Sandy recovery.”

Related:  Christie Has 3 Ways to Handle the Bridge Scandal

With his poll numbers in a free fall, the backyard excursion to Long Hill was Christie's attempt at launching a 2.0 version of himself. He was now casting himself as a second-term-limited governor, who never would have to face voters again. He was, he said, poised to be a truth teller, above the fray of partisan politics, ready to start “calling stuff out.”

“I am not worried about politics anymore. I am on the back nine,” Christie said. “My name is not going to be on the ballot in this state again.”

A day earlier Christie had presented a $33.4 billion dollar budget, the state’s largest yet, with no new taxes. Much to the relief of Democrats who control the N.J. legislature, Christie made good on his pledge to make a $2.25 billion contribution to the state’s public pension fund. For decades both parties had badly mismanaged the pension fund, increasing the benefits while chronically failing to make the required payments into the system.

There was a $159 million increase for higher education and a near-symbolic $39 million increase on the state’s record-breaking $13 billion for local public schools. His anemic $313 million reserve fund on the fiscal 2015 multi-billion dollar budget, the lowest since Christie took office, is bound to arouse the disapproval of bond rating outfits like Moody’s. Moody’s has already raised red flags about the state’s record high $78.4 billion debt and disappointing tax revenues for the current year, running a half billion below Christie’s projections.

Christie sees a record he can be proud of, though. “If you take out the three entitlements that the state pays for: pension, health benefits, and debt service ... from all the spending the state does, in the budget I just proposed, we are spending $2.3 billion less than we did in 2008,” he told the crowd. Christie said he had made good on his original pledge when he first ran for governor to shrink state government by cutting 6,000 state workers, close to 10 percent of its workforce. 

Revisiting a Pension Deal
Christie’s proposed pension payment for fiscal 2015, the largest in state history, was part of a bipartisan deal which included raising the state’s public employment retirement age from 62 to 65, foregoing cost-of-living increases and requiring public workers to pay more toward their health care coverage. Throughout Christie’s re-election campaign, he hailed the controversial bipartisan pension reform deal as a signature achievement. But now, just two months into his second term, he told the audience at Long Hill it was insufficient.

True, he conceded, it would save local and state governments $122 billion over 30 years. But Christie said the last pension deal just bought the state time to figure out how to come up with the additional $52 billion in unfunded pension liabilities and the even larger unfunded health care cost liability for public retirees.

Related:  Christie Scandal Opens the Door to Far-Right GOP Hopefuls

For Democratic Senate Majority Leader Loretta Weinberg, going back to the public unions is out of the question. “The only ones not paying their fair share has historically been the employer, the state,” Weinberg says. “From everything I have learned, as long as we stay the course with the pension we will be fine.”

Charles Wowkanech, the leader of New Jersey’s AFL-CIO, was even more direct. “Public employees, unlike the state, have never skipped a payment into the pension system and over the past three years, they’ve paid in even more to try to bring the funds back to health.”

In the Democrats’ press conference after Christie’s budget address, Senate President Stephen Sweeney made it clear he believes the solution to the state’s revenue problems is “getting people back to work.” Sweeney tweeted, “We need plan to grow the economy. Gov vetoed bills we gave him. Where is his plan?”

The Jersey Jobs Picture
Beyond Bridgegate, Christie's enduring problem is the state's lackluster economic track record since the recession. Even at the height of the last gubernatorial campaign, there were already signs of a kind of unraveling in New Jersey: The Advocates for Children of New Jersey, a 30-year-old Newark-based non-profit, reported that poverty was up in 19 of the state's 21 counties.

During his re-election campaign, Christie touted the creation of 130,000 new private sector jobs during his first term. Yet the U.S. Bureau of Labor Statistics reported last month that in December, just a month after Christie's lopsided victory, the state lost 36,300 jobs, a dramatic reversal from the month before when the state added close to 17,000. In a state-by-state comparison by the BLS looking at private sector job growth in the three years from 2010 until 2013, New Jersey ranked 36th, with just a 3.78 percent increase, compared with a 6.33 percent national average for new jobs added post-recession.

The Washington Post reports that New Jersey, more than any other state, continues to feel the massive job losses from the Great Recession, with almost half of its more than 300,000 unemployed residents classified as long-term jobless, meaning they’ve been out of work for more than six months. Nationally, roughly 37 percent of the unemployed are so-called long term. Congress’s failure to renew an extension of long-term unemployment benefits for 2014 hit New Jersey particularly hard. The Garden State represents roughly 3 percent of the national population but close to 7 percent of those who were thrown off the extended unemployment benefits program.

In many ways, from a macro-economic perspective, New Jersey suffers from the same problems plaguing the nation — a recovery marked by a declining unemployment rate driven to a large degree by a troubling decline in the labor force. While the national work force participation rate is slightly lower, the New Jersey trend lines are much worse. The Wall Street Journal reported this month that the alarming trend had accelerated in New Jersey, with just 63.9 percent of the labor force working or actively engaged in looking for work in December, down from 66.4 percent at the start of 2013. This troubling 2.5 percent one-year drop compares to less than a 1 percent slide nationally.

The state's business community still seems to be in Christie's corner. After Christie's budget address, the New Jersey Business and Industry Association released a supportive statement calling the FY 2015 budget blueprint a "fiscally responsible" one that promotes "the state's stability and prosperity."

Carol Ann Short, president of the New Jersey Builders Association, says her constituency also sees signs the state is headed in the right direction. Yet there are even signs in the upbeat data she cites of a downsized American Dream: "We are at this point cautiously optimistic. The number of residential permits at the end of 2013 for the first time in five years exceeded 25,000. In the last few years we were hitting numbers like 12,000." What's new, Short says, is that "60 percent of the new building permits were for multi-family rentals."

Short says that New Jersey hangover from the real estate bust from the Great Recession still weighs down on the state's recovery, with a foreclosure rate second only to Florida. "There is debate over how much the state's extensive judicial review of foreclosures have delayed these properties from working through the system, but the number of units out there is still problematic."

Christie-crats Pull Back
This governor has faced formidable challenges before and it is a mistake to underestimate him. When he came into office in 2010, the state was in a major fiscal crisis. But in that first term Christie always had willing partners in Democratic leaders like Senate President Sweeney. It was this army of so- called "Christie-crats" that basked in the governor's meteoric rise.

Now pollster Murray says for Sweeney, with his own gubernatorial ambitions, there's just no upside in providing Christie the bipartisan cover. "Sweeney just can't be seen as having Christie's back anymore with all those Democratic Party primary voters," says Murray.

Next week Christie takes his traveling town hall to Ocean County, where he got almost 76 percent of the votes last November, farther from home than Long Hill but still historically very friendly.

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