This a proposed budget; not the final budget. An over-optimistic proposal is not a capital sin but the main problem is that if this become the budget and the revenue does not meet the glossy expectations, of course the governor will rather sacrifice something else than his pet-tax-cut experiment – not for any economical reason but for purely political and propagandistic purposes. And here are two further points:
First: The question if the governor is throwing this in to influence the VP selection in the event that Romney becomes the republican candidate in 2012. That would be the most unconscionable act but nothing surprises me. And anyway, I still believe it would be a futile sacrifice of New Jersey’s interests: I think that Romney – if he wins the nomination at all – most likely will choose a more conservative VP from the South or Midwest. A Northeastern ticket may not do very well in November considering that the bulk of the republican base is not in the Northeast.
Second: Every imponderable is against the prospect of a fast recovery: High consumer leverage, possible conflict with Iran, possible U.S. intervention in Syria (Obama may turn more hawkish if he sees re-election in doubt), China’s economy slowing down, political gridlock in Washington, more problems with the EU crisis (Greece is not out of the woods and Portugal is beginning to show signs of distress again), New Jersey’s highest unemployment in the Northeast, wage stagnation, and the list goes on – all on the negative side.
I frankly can’t imagine how the administration arrived at this rosy forecast. As in “When Harry Met Sally”
I’ll have one of what he’s having.
Then, for the sake of argument, we must arrive at the best scenario – that everything goes well – and thus face the question: What does this tax cut accomplish – from the economic point of view? My answer is: Nothing, and the same goes for the democratic alternative. Both proposals are political; not economical measures. They are too small, would be applied in lieu of drastic structural reforms, and as they have been proposed are spread out – because the fat State of New Jersey is unable to do any better – so the input of cash in the economy is diluted to insignificance.
But we will see what comes out as final product at the end of June. By then, the French presidential election will be over and we may have a socialist government in France which may close the chapter of euro rescue. Or all hell may have broken lose in the Persian Gulf. And even if neither happens, we should be addressing our outstanding obligations before they compound beyond reach.