New Jersey is a Fiscal Time-Bomb

NJ Spotlight | Budget Expert: Income Tax Cuts Will Benefit the Rich.

Christie and the democrats debate the merits of the proposed 10% tax cut and both miss the train. They want to make omelettes without cracking eggs, gain without pain, have the cake and eat it too.  As the Office of Legislative Services points out: The Tax cut as proposed will produce an insignificant benefit for all but a small minority.

Let’s forget about fairness for a moment:

From the strictest economic viewpoint, the 10% tax cut would fail to create the additional aggregate demand needed to stimulate the economy and I am presuming that that is the ultimate goal. Why would it not work? Because the immense majority of consumers would see their finances hardly changed by it – apparently Christie’s goal: The 10% cut is designed so that most people see almost nothing of it.

But even if we put that billion – following the democratic recipe – toward property tax relief, it amounts to approximately 2.2% of the total property tax paid by New Jersians – the equivalent of freezing property taxes for one year; again hardly worth to write home about.

Since the 2% cap is rather flexible, municipalities would find ways to make up for the one-year freeze. In fact, they would be forced to do so by their obligations. Postponed obligations accrue more debt. On the other side, Christie and Sweeney can talk all they want about merging services: It will not happen to the extent or with the speed needed.

The ultimate purpose of any fiscal measure should be to stimulate growth. Even measures of austerity should have the long term goal of stimulating growth. With growth come jobs, better wages, better infrastructure, more accessible education opportunities and wider horizons for our youth, higher standards of living, etc. I presume we all want our children to live better than we have. But everything that has been put on the table by both parties is insufficient: We have serious structural problems and among the main ones is the very expensive political class that permeates everything. We must address those structural problems with drastic reforms if we want to reverse an otherwise inexorable decline.

Net Increase in Property Taxes Under Christie is 20% in 2 Years

NJ Spotlight | Net Property Taxes Up 20 Percent Under Christie.

The net increment is considering both the actual property tax increases and the reductions in homeowners’ rebates – which in essence have the same effect as paying higher tax. That is the problem with having a multitude of taxes: On income, on property, on sales, and then a multitude of user fees. Politicians use them for their shell game,  just like street swindlers do. Both republicans and democrats do the same and then pretend they are different.

Christie’s boast of the 2% cap is just a great sham.

This spider web of taxation allows the two parties to make all these false claims about reductions while in fact the burden continues to increase and we are not getting its value’s worth in return. The bulk of the increases go to feed an enormous and  useless layer of political hacks.

If elected governor of New Jersey in 2013, I intend to eliminate property and sales taxes . Some user fees may be abolished as well, notably Turnpike and Parkway tolls. In turn, government will be drastically reduced at the top – where it is never touched. Income tax and taxes on dividend earned off New Jersey will increase as well. Education will be funded entirely from the income tax and general revenue.

Property Tax Spreadsheet: http://www.state.nj.us/dca/lgs/taxes/taxmenu.shtml

Comparing Between towns: http://www.townstats.org/

Christie Loyalists Flood the Port Authority of NY and NJ

Dozens of Port Authority jobs go to Christie loyalists – NorthJersey.com.

Perhaps the solution is to dissolve the Port Authority of NY and NJ and give the task of maintaining our side of the bridges and tunnels, as well as Newark International Airport to the NJ DOT. New York can do its own side.

Every additional independent authority or commission represents another layer of bureaucrats and proliferation of abuses and waste. It is in the interest of New Jersey to reduce the number of such agencies to a minimum.

Governor Christie is just another politician fleecing New Jersey. Only a  strong Civil Service Law will prevent these abuses. I am the only candidate for governor of New Jersey in 2013 willing to undertake such monumental task. Both dominant political parties will oppose reform tooth and nail.

Grow a Pair of Cojones Governor Christie

Christie: Social issues can wait, jobs can’t : page all – NorthJersey.com.

The governor is not doing anything of significance for the “jobs issue” and regarding the “social issue” – I presume that is the same sex marriage that he wants to dodge, it won’t take much of his time: If the bill arrives to his desk, either sign it or veto it as he has promised.

Gov. Christie: You are the one making a big deal out of this.

Calling for a referendum on that is simply avoiding responsibility. Make a stand. This is not as easy as steamrolling public workers but it still is your job. Weigh your personal beliefs against the constitutional factors such as equality under the law and act. There is no room to wiggle here.

If I am elected governor in 2013 and that bill arrives on my desk, I will sign it in one minute and go back to the job of rebuilding New Jersey. There will be no fanfare, no photo-ops, no big (or even little) speeches. In my calendar, it will be a footnote. But I will sign it.

U.S. Economy Grows 2.8%, Less Than Forecast

U.S. Economy Grows 2.8%, Less Than Forecast – Bloomberg.

The data is telling the same story that I have saying for months: The basic element for growth is demand. Demand is for the economy what an amino-acid is for a protein: the Building Block. Very few economists recognized this and that is why the federal government embarked in the stimulus programs without taking the necessary steps for spurring demand – other that cheap credit. They also failed to recognize that cheap credit does not help when most consumers are maxed-out and have lost the sense of security in their jobs.

The data is also saying that most of the growth was in rebuilding inventories rather than consumption. Less than 1/3 of the growth was brought about by consumer spending. In an economy where consumer spending represents 70% of the total, the figures for 2011 are alarming indeed.

The pressure will be now to sell that inventory and businesses may have to offer extraordinary discounts to do so. This could lead to deflation – lower prices – which is a good thing for the consumer but also leads to reduction in supply and consequently more layoffs.

Even the president mentioned the other day the idea of taxing more those who outsource overseas and giving tax breaks to those who invest at home. The President did not offer any details and we do not know if there is any concrete plan in Washington. Rewarding those who invest in New Jersey is at the core of my reform plan with abundant specificity. I have introduced that proposal for one simple reason: It is indispensable. But to apply it, it must be defined.

New Jersey is a reflection of the national economic picture, perhaps a bit worse with respect to unemployment figures. The democrats in Trenton have proposed an increase in the minimum  wage and the governor has proposed a 10% tax cut which only has relevant impact on a minuscule portion of the population. Both measures are insufficient with regard to their intended purpose, and the state is hardly in the position to be able to afford them – without some other additional steps. But because the steps involve the dismantling of part of the political bureaucracy, neither party will hear of it in New Jersey.

Economists often use the term aggregate demand which simply means the sum of all demands. I have called it just demand although meaning the same. The economists term is perhaps clearer. Conditions must be created so that demand growth is universal. We can not expect  1% or 10 %, or even 25% of the population carrying the economy on their shoulders. It is not sustainable. For growth to rise, aggregate demand must behave like many Euclidean vectors – there must be a genuine general uplift of the standards of living.

Freedom of the Press: U.S. Plummets to # 47 in the World in 2011

Press Freedom Index 2011-2012 – Reporters Without Borders.

During the course of the repression of the Occupy movement in many American cities, police forces made a conscious attempt to restrict press coverage of events. As a result, in the Press Freedom ranking done annually by RWB, the United States moved from position 20 in 2010 to position 47 at the end of 2011.

But don’t blame the average cop on the streets. The fault here resides with the political authorities who set policy, sometimes explicitly, sometimes implicitly. NYC mayor Bloomberg is a typical example. When a political leader set the rules of engagement clearly and concisely, law enforcement follows those rules. But ambiguous leadership sends confusing signals to the men on the ground and then instincts take over.

Press Freedom Index: Occupy Wall Street Journalist Arrests Cost U.S. Dearly In Latest Survey.

One link in this article – meet with journalists – points out at the cumbersome process for getting press credentials from the NYPD. The reporter describes it as Kafkaesque – a sort of senseless catch-22 maze.  We also read of some newspapers self-censoring with both the N.Y. Post and Daily News praising the NYPD treatment of the Occupy protesters while their own reporters were arrested and mistreated.

When we have a press freedom ranking lower than Namibia, El Salvador, and Mali, and then we add NDAA section 1021, and SOPA/PIPA, it all  indicates that that there is an ever increasing disregard for the Bill of  Rights among some of the power elite.

Pension Crisis Returns – New Jersey

N.J.’s failure to make full pension payments hinders fund | NJ.com.

The public pension hole grew by an astounding $ 5.5 billion by the end of 2011 after going down from $53.9 billion to $36. billion with the pension reform of last year. At the core of the reasons is the failure of the Christie administration to make a full contribution. In fact, the government has not even contributed the minimal amount which it had agreed to in the reform law. That is how the governor balances the budgets. It is the same irresponsible policy of his democratic predecessors.

The reduction of the deficit in 2011 was achieved totally on the backs of the workers after years of government un-funding. Public employees always contributed as the money is a payroll deduction.

What occurs with failing to fund the system is that the deficit poses a negative accrual just as a contribution creates a positive one. Money that is not there fails to earn any interest but both the principal and the interest were parts of the formula to keep the fund solvent and the finances of the state sound. The deficit compounds.

The carelessness of the governor was exemplified  just a few days ago when he refused to sign a law removing from the public pension system those political beneficiaries who are not public workers and should have never been part of the system.

Fully funding the public pension systems is fundamental for the fiscal health of New Jersey. The governor is acting in the style of Louis XV:  Apres-moi le deluge – After me the flood.