Opinion: Doing the Murphy Math — Taxing Millionaires Won’t Cut It

Carl Golden | September 20, 2017 | Opinion
Dragging the Christie anchor behind her, Guadagno can’t get any traction when it comes to warning voters what her rival’s programs could cost

Carl Golden
The year was 1938. Franklin D. Roosevelt occupied the White House, struggling to lift the nation from the depths of its most punishing Great Depression.

History has it that Harry Hopkins, head of the Works Progress Administration (WPA) and Roosevelt’s closest and most trusted advisor, recommended unprecedented massive government intervention as the solution.

“We shall tax and tax, spend and spend, elect and elect,” Hopkins is supposed to have said to the president, a blunt assessment for breaking the bleak economic circumstances of the time by extracting money from the wealthy, spending vast sums of it on public works job creation, and basking in subsequent electoral victories delivered by a grateful nation.

Hopkins later disputed reports of his rather cynical political calculation, but the legend lives on. (Note: Hopkins’ remark was first reported by the New York Times. His denials may be the first recorded allegation of “fake news” directed at the Times.)

Murphy and FDR

Democratic gubernatorial candidate Phil Murphy is no FDR, and he certainly doesn’t confront the economic disaster the president faced, but given the promises he’s offered thus far in his campaign, it seems the ghost of Hopkins is whispering in his ear.

His latest offering — free tuition at county colleges at a cost of $200 million but likely more — is another in a laundry list of pledges designed to appeal to a broad swath of the New Jersey electorate, but whose ultimate cost remains a moving target.

He’s promised to fully fund the state’s aid to local education formula, restore the homestead rebate program, increase the minimum wage to $15 per hour, provide funding for Planned Parenthood, implement paid leave for everyone, invest in infrastructure improvements, provide greater aid to higher education, and increase the state’s contribution to the fiscally beleaguered public pension system.

He’s expressed support for Vermont U.S. Sen. Bernie Sanders’ proposal for a single payer health care system — Medicare for all — even though whether there’d be an additional cost to the state isn’t clear.

He’s recommended a $1.3 billion tax increase, consisting chiefly of a higher income tax rate on the wealthy and closing corporate loopholes. 

The $1.3B down payment

The totality of his platform, though, suggests the $1.3 billion — while it would increase the current budget by four per cent — may be more of a down payment rather than full coverage of the ultimate cost.

He would, he asserts, enact policies to “grow the economy” to boost the flow of tax revenue to the state — a worthwhile goal embraced by every gubernatorial candidate but one almost impossible to quantify.

Republican gubernatorial candidate Lt. Gov. Kim Guadagno has portrayed Murphy’s laundry list of promises as wholly unrealistic without a massive tax increase. 

Her campaign has estimated the cost of Murphy’s pledges at upwards of $7 billion, a sum far from achievable through taxing the rich and corporate New Jersey, and charging that a substantial portion of the burden would fall inevitably on the middle class.

Moreover, Guadagno argues, there is little in the way of property-tax relief being offered by her opponent. 

Murphy himself has been vague about identifying sources for the funding that full implementation of his proposals would require, arguing that the recommendations he’s campaigning on are critical if the state is to regain its economic vitality and provide essential services.

Punishing tax increases

While Guadagno has stepped up her criticisms and dire predictions of punishing tax increases that would result from a Murphy administration, it’s gained little traction.   

Murphy maintains a substantial lead in early polling, an edge some observers attribute more to the drag on Guadagno’s candidacy from her two-term association with Gov. Chris Christie than on a favorable response to Murphy’s spending plans.

Nearly eight years at Christie’s side has, by all measures, been harmful to Guadagno. Several polls have shown that voters are less likely to support her because of her service in the administration.

She has tried to mitigate the deep public dissatisfaction with Christie — he stands at 16 percent approval at the moment — by concentrating on her proposals for property-tax relief and reining in the cost of government.

If there is a bright spot for her in the polling data, it is that a full 40 percent of voters admit their knowledge of both candidates is insufficient to make a judgment.  

Murphy will likely continue on the course he’s charted, convinced that voters will overcome doubts about his greater spending proposals by accepting his argument that the rich will pay more and that the programs he espouses will benefit them.

For her part, Guadagno will continue to hammer home her message of property-tax relief, austerity, low taxes, and government restraint, all the while dragging the Christie anchor behind her.

It’s been nearly 80 years since Hopkins advised  Roosevelt to buy into his tax-spend-elect theory of government, an idea that cynics claim was based on a belief that people like free stuff as long as someone else pays the bill.

Guadagno’s task is to convince voters that Hopkins will stalk the State House halls if Murphy is elected and that taxpayers will pay a high price, indeed.