When the Earth ceases its trembling in the confrontation over the state budgets, the chief protagonists — Gov. Chris Christie and Senate President Steve Sweeney — will come away from their stare-down having achieved their predetermined goals.
Christie, by fulfilling his promise to veto any tax increases, will be able to continue to point to his record of blocking any rise in broad-based taxes — income, sales, corporate, or gasoline. A laundry list of fee increases and another delay in the homestead rebate program won’t figure into his political equation.
Sweeney, meanwhile, re-ingratiated himself with organized labor by insisting on restoring the administration’s proposed $2 billion reduction in the state’s pension payments and financing it with restoration of the tax surcharge on the wealthy and a corporate tax increase.
There’s a whiff of kabuki theater about it all, of both men filling self-assigned roles for an audience of their choosing while fully aware of a predetermined outcome.
While Sweeney’s tax increase recommendations differ from those proposed by Assembly Speaker Vincent Prieto, it matters not. Christie will veto tax increases that comes to him in any form and, with Democrats lacking the numbers to override, the more than $2 billion in pension payment cuts to balance the current budget as well as the fiscal 2015 one will stand.
While there was some hope expressed earlier that legislative/administration negotiations could resolve the differences and produce balanced budgets, it was never a realistic option.
Democrats were in a weak negotiating position, having neither the stomach nor the votes to cut more than $2 billion in spending, and aware all the while of Christie’s promise to veto tax increases and their inability to override it.
The governor held the upper hand and merely had to hold to his position to secure his way. There was no “Plan B,” the governor said; no immediate solution other than cutting the payments; and no longer-term answer than a significant overhaul of the entire public pension and health benefits system.
His view was repeated in the state’s response to a lawsuit brought by a number of public employee unions to force the administration to meet its full pension obligation. The state, the attorney general’s office argued in its brief, faces an unprecedented fiscal disaster due to declining revenues and — in a contention somewhat at odds with Christie — said the pension system is sufficiently healthy to meet its obligations to retirees for many years.
The fiscal disaster the state’s attorneys referred to was brought about in large measure by three consecutive years of unrealistic revenue estimates that built upon one another until May of this year when the shortfall reached $800 million and threatened to topple the budget into deficit unless covered by the end of June.
The situation was reminiscent of the scene in Ernest Hemingway’s novel “The Sun Also Rises,” in which one of the book’s characters is asked how it was he came to fall into bankruptcy.
“Gradually and then suddenly,” was his sardonic reply.
Like the novelist’s barroom denizen, the state’s slide toward bankruptcy has been a gradual one, abetted by Democratic legislative majorities that accepted the administration’s overly optimistic revenue estimates and the spending that went with them while ignoring repeated warnings that the money was illusory and wouldn’t materialize.
The budget crisis developed into a politically fraught circumstance for Sweeney who led the charge against Christie’s payment cuts, going so far as to issue a public threat to close down state government if the administration shorted the system.
To little surprise, he backed down from that ill-advised and rash pronouncement, but realized it was crucial for him to mollify public employee groups who remained angry with him for aligning with Christie three years ago to support legislation requiring increased employee contributions to the pension and health-benefits program.
Sweeney was the man on the bubble and an adamant Christie was poised to pop it. Hence, the tax increase recommendations and pledge to fully fund the pension system.
It’s an open secret that Sweeney is seriously considering a bid for the Democratic gubernatorial nomination in 2017, and organized labor, with its financial clout and prowess as a voting bloc, is crucial to his ambition.
His recent road shows, for instance, touting an increase in the minimum wage and improving the state’s relief efforts for victims of Hurricane Sandy, are integral parts of a long-term strategy to shore up his standing with the party’s base and repair any damage he suffered through his perceived closeness with Christie.
Public employee groups made it clear that the governor’s pension cuts are the issue on which it will make its stand and anything less than full support from legislators will not be tolerated. Sweeney understands the message and is sensitive to it.
He’ll make a strong argument that he stands solidly with organized labor by arguing that the wealthy have become a protected class under Christie, while middle-income earners have borne the brunt of the administration’s policies.
Reneging on his promise to leave the pension system untouched while vetoing a tax increase on the rich, Sweeney will contend, is merely further evidence of Christie’s disconnect from the majority of New Jerseyans.
The public employee groups are certainly receptive to Sweeney’s message but are aware as well that it’s likely Christie’s cuts will stand. For his part, Sweeney is hopeful they will give him credit and support for taking up on their behalf.
It may all be theater and the curtain will fall at some point. Be prepared for a revival, though.