In one budget cycle during the McGreevey Administration, tax revenues proved somewhat higher than anticipated. Instead of reversing a decision to borrow for operating expenses, the Democrats engaged in a spending orgy, increasing expenditures by approximately 17% in just one year.
Republican objections to this obvious profligacy, and their pleas for fiscal restraint, fell upon deaf ears; the Democrats then, as now, consider "restraint" a dirty word. (Governor Corzine refers to fiscal responsibility as "playing Scrooge"). So, after the Republicans finished reciting their litany of woe – and their prescient predictions of pending penury – Assemblyman Louis Greenwald, Chairman of the Budget Committee, took to the floor, and delivered an impassioned address known ever since as the "courage to spend" speech.
In those days, the theater of the budget consumed the better part of the night, with votes held in the wee hours of the morning. Greenwald, unquestionably the Assembly’s best dressed Member, displays a happy talent for looking as fresh at 3 AM as at 8 PM. Furthermore, he possesses a certain felicity of expression and can call upon a deep reservoir of passion to make his point.
That evening, he presented in finest form, extolling the virtues of every proposed spending increase, asking – presumably rhetorically – if anyone favored less, while he remonstrated in favor of "more, more, more". Alas for the days before YouTube; it made a fine spectacle, watching as he defended the bloated budget proposal as a reasonable response to unanticipated revenue. Such a video might be offered as a primer for legislators: this is how you create a massive budgetary hole.
Curiously, within months, when the excrement impacted the air circulation device, this once zealous advocate of unlimited profligacy affected the stance of a born-again fiscal conservative, piously intoning on the necessity for responsibility with precisely the same passion he brought to his defense of governmental extravagance.
But he never really meant it.
Recently, Greenwald took to the floor to defend $75 million or so of Democratic spending proposals designed to "stimulate the economy", the money to be taken from a "surplus" that – everyone knows – does not exist. All the proposals were silly. Some involved increased welfare expenditures; another establishes a governmental bank, from which small businesses can secure loans. It never seems to dawn on the Dems that if they wish small business to thrive, cut taxes on them all instead of providing loans to a few.
This last proposal – state loans to small businesses – produced this from the Chairman:
"That will put people to work. When those people go to work, they pay income taxes. The backbone of New Jersey’s government is paid for by taxes. We know that. We like to rail against taxes, but by the end of the day, it is those taxes that fund programs like this that allow us to invest back into our communities and to make the necessary investments so that our economy can grow."
THAT represents – better than any conservative, Republican characterization – the essence of the Democratic Party philosophy: taxes and governmental spending – "investment" – make the economy grow. Akin to that old Donald Duck cartoon to which I cited a few columns back: taxes for roads! Taxes for bridges! Taxes for schools! Taxes for teachers, administrators, and professors! Taxes for open space! Taxes for cities! Taxes for "affordable housing"! The backbone of the economy. But for those massive tax levies, the economy would, self evidently, implode; if government let you keep your money, who would ensure that it was spent in the sort of "targeted" fashion Jon Shure supports?
Think about the conceit and hubris inherent in such statements: government can "invest back into our communities and make necessary investments" – with your money – better than you can yourself. The salons in Trenton or DC know how to target such investments for maximum return on investment. Instead of letting businesses simply keep their own money and invest as they see fit, government takes those funds and "invests" as the bureaucrats see fit.
Of course, each such "investment" produces ample opportunity for ribbon cuttings and press releases, with gushing pols slapping themselves on the back and congratulating each other for making the "investments" in a particular, high profile project. Meanwhile, the rest of the economy tanks, groaning under the weight of the taxes needed to fund such "investments".
Business expansions in a free economy produce no such political opportunities.
NJ has not created a single private sector job since the Democrats took over in 2001, because they see government as the engine which drives the economy. This wonderland mentality, the mirror image of reality, produced the present economic doldrums – which, obviously, far predated the meltdown of liberal Big Government programs in DC – and makes recovery any time soon hugely unlikely.
If massive governmental spending, mountains of debt, and high taxes "stimulate" an economy, NJ should be a veritable hive of activity. Just last year, we dropped about $3 billion or so of borrowed money into urban school and road construction: where, pray tell, is the resultant boom? How is it that such massive spending produced precisely no economic benefits? Where are the increased tax revenues, the jobs, the ripple effect throughout the economy? Having amounted one of the biggest piles of debt in the country, imposed taxes at stratospheric levels, and bloated governmental spending up by about 40% since the voters ushered the GOP from office, how is it that the Dems have failed to deliver prosperity?
Could it be (gasp!) that all of their economic nostrums are … wrong? Their answer to whatever problems confront us is always the same: higher taxes, more spending, bigger government. It NEVER works.
In short, having dug us into an abyss, the Democrats now propose … more of the same to get us out.
Here’s a novel proposal: when one’s policies demonstrably produce a miserable failure, try something else.
Economic freedom cannot guarantee perpetual prosperity; the business cycle has not be repealed. But evidence conclusively demonstrates: the freer the economy – lower the taxes, fewer regulations, an no attempt to "spread the wealth" – the more prosperous the society.
NJ should cut taxes back to their pre-McGreevey level, cut governmental spending to match, and let the magic of the free market deliver the prosperity no governmental program can hope to match.