How Chris Christie Has Left New Jersey's Economy Sputtering
New Jersey Governor Chris Christie in Newark, New Jersey on October 29, 2013
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This article was first published at WhoWhatWhy.
Governor Chris Christie is back on late-night television, gyrating to the amusement of Jimmy Fallon’s millions of viewers and stumping for the 2016 Republican presidential nomination.
While Christie shimmies, his state continues to sink into the deepest economic morass in generations. He raced to plug an $800 million budget gap by July 1, a shortfall that credit ratings agencies blamed on reliance on non-recurring revenues and poor projections. As a result, only California and Illinois have lower credit ratings, and ratings agency Moody’s this year lowered its outlook on the state to negative.
To balance the budget on time, Christie backed out of the terms of a deal to reform the underfunded public employee pension system, the kind of bipartisan solution he’s been talking about during visits to places like New Hampshire and Iowa. Instead of paying the $1.6 billion into the fund as agreed with the Democratically-controlled legislature, Christie invoked his emergency powers to cut that payment by more than half to close the budget hole.
But the governor’s showmanship aside, the scramble to close the state’s budget gap is symptomatic of deeper concerns about the economic future of New Jersey, with the 7th largest US economy—and a window on what Christie would do if elected in 2016.
Why New Jersey’s Travails May Matter to the Country
New Jersey is among the prime specimens of post-recession America’s lasting political and economic malaise. The state’s $108.7 billion in unfunded public pension and health care liabilities offers a prequel to a nation in deep denial about the real costs of keeping its social contract with the Baby Boomer generation and of continuing to subsidize big corporations. Most importantly, it’s a bellwether of who, in the final accounting, is going to foot the bills when things go wrong.
As we told you in an earlier story, New Jersey’s failing economy may be a bigger threat to the governor’s political ambitions than the still-unresolved Bridgegate scandal.
Christie inherited a New Jersey in a long, slow economic decline. Decades of macroeconomic trends, in particular the loss of manufacturing jobs throughout the Northeast, have damaged the state’s economy. During the same period, no matter which party was in power in Trenton, New Jersey’s leaders kept expanding state pension benefits while failing to adequately fund the system.
Much of the state has become a wasteland—the vacant strip malls, the abandoned homes on suburban cul-de-sacs, and empty office buildings surrounded by empty parking lots where the weeds pop up through the blacktop.
Evidence of financial pain is everywhere, from persistent long-term unemployment to a mortgage crisis in which several cities have a higher percentage of underwater loans than Detroit did before it went bankrupt. Add in one of the highest foreclosure rates in the nation and the agonizingly slow payment of settlement money to victims of foreclosure and mortgage fraud, and it’s clear that New Jersey’s recovery remains distant.
Consider that almost none of the fraud victims in Christie’s state have seen any of the money allocated for their relief more than a year ago. Of the $762 million in direct relief to homeowners that New Jersey was awarded under a 2012 class-action settlement, only $8 million has been disbursed, Leland Moore, a spokesman for Acting Attorney-General John Jay Hoffman told WhoWhatWhy in an e-mail.
A federally-funded program called HomeKeeper, administered by the state, has been more successful. It’s paid out a little more than half of the $300 million it has to help people facing unemployment or underemployment forestall foreclosure, according to its latest report. Christie’s office said the program has helped more than 5,600 families keep their homes.