Side-splitting humor from the Hudson County Dem crowd

DeGise wows the faithful with a "We're going to have smaller government" speech including a list of fresh spending initiatives (including support for the half-full St. Mary's). How will our pols keep both promises? Why, by cutting truly wasteful spending like a $2.5 million special election for Corzine's old Senate seat!

Dems should laugh while they (and you) still can

Jersey's Democrats will need to eliiminate all elections if they want to hang on to power in the years ahead. All they can offer is reform-shaped rhetoric, not actual reform. Corzine's inaugural speech promised a new deal even while he was surrounded by the same old players. Unless he's going to pull a Carla Katz and bail the state out himself (even he can't fill a $5 billion chasm), Jersey is going to raise taxes, and raise 'em big. Meanwhile, right across the river, New York City and State are talking budget surpluses, rebates, and further cuts, to stimulate business and their overall economy.

Why Corzine's easy win means no meaningful changes

Here comes a whole new level of pain, as the wealthy and mobile continue to bail and the tax burden gets driven down to lower economic stratas. You'll see gas taxes, clothing taxes, incomes taxes, and sales taxes hiked. Will they be accompanied by belt-tightening measures like NOT throwing money at a money-losing, half-empty Hoboken hospital? Hey, unlike YOU, Democrats CARE about people (I.e., there are fresh votes to be bought)!

Corzine's win means that voters don't see the danger ahead, and we can't blame them for being in denial over our situation. But that also explains why no real change is forthcoming. Until real pain is felt by voters, Democratic power will remain effectively unchallenged. Without effective challenge, Hudson County and State Democrats have no incentive to change. So until meaningful opposition presents itself, meaningful budget cuts will NOT happen, no matter how obviously bloated our government's payrolls are. Instead of cuts, business-destroying sales taxes are on the way. Our most mobile (often our best-off) citizens aren't going to sit and be fleeced, not with the option of New York or PA nearby and looking increasingly competitive.

Death cab for Jersey

Our situation resembles the death spiral that patronage-bound New York City endured in the '70's. The difference today is that the national economy is far more buoyant now than it was then. That's what has kept Hudson County's cities from circling the drain - low interest rates combined with a general real estate rise and (high-paying Wall Street) job opportunities across the river have been pushing area real estate prices higher. Our wealthiest citizens (those who buy at the full market value) are paying a tax hidden from other citizens. This enables Hoboken to raise and spend millions more dollars while not outwardly seeming to raise taxes substantially. Jersey City has not been as fortunate, and is facing a much more visible hike. The state as a whole can likewise no longer evade the reality of its spending decisions.

This cycle of government spending and empty 'reform' promises will continue until the system finally collapses. This will happen as this year's tax hikes fail to close the following year's gap (because taxpayers have voted with their feet). The following year then leads to another gap, and still more taxes. And so on. There will be finger-pointing, more of these meaningless promises of "reform", and eventually - capitulation. Reality will finally overtake rhetoric, and Dems will start to lose elections.

Inertia and housing prices pull us deeper

Unfortunately, by then it's too late, and cuts won't end the death spiral. There's too much momentum the other way - dollars intent on leaving are not so easily coaxed back. You'll know we're approaching the final hours when Hudson County housing prices start to sag. Last time this happened was the early '90's, caused by a recession on Wall Street that drove down prices all over the region (including NYC). Arthur Imperatore coughed up his Port Imperial project to the bargain-hunting Joe Barry. This time, the sag will have to occur despite no corresponding sag across the river and no Wall Street crash. That's no mean feat. It will have to be triggered by higher real estate prices coupled by taxes rising to a point where backs start to break. Jersey CIty is swallowing 14% this year. At some point, home sales are no longer driven by a desire to cash-in but a need to get out from under. When that threshold is reached (and we don't know where it is), a quiet selling trend begins as mortgage holders start to see that their recently-bought home is not holding it's value. When that knowledge becomes widespread, the selling becomes a frenzy and much value is wrung out of the market.

Another factor accelerating a housing slide will be revaluation. Hoboken, by law is overdue for one. When reval happens, the burden now borne exclusively by new buyers will shift to long-time homeowners. Those who see the writing on the walls will cash in their chips (smart ones are doing so already), flooding the market with more product than it may be able to handle. Such oversupply in turn would cause a softening of new-sale prices, contributing again to the selling frenzy we mentioned earlier. All this is the flip side of buyers willing to pay any price in fear of the market shooting higher.

The approaching local real estate slide can only be mitigated by increasing NYC prices and continued strong demand there. However, if rising interest rates place a ceiling on prices, and if we are nearing the end of a building cycle, NYC's prices will soften while Hudson County's plunge.

This softening of the housing market tends to reflect the bottom of the political death spiral we noted earlier, because there is no more angry taxpayer than the one whose wallet has been hit, and nothing hits harder or more profoundly than real estate losses.

The struggle at the center of change: A school system so wasteful that funds simply vanish

The first wave of patronage reform, whenever it comes, will require years to have noticeable impact. It will be ugly, particularly in our school system where only radical changes can have an impact (yes, we are talking the dreaded school vouchers the blatantly corrupt, powerful and monolithic teachers' union villifies as "hurting the kids"). Even in the depths of disaster, the Dems still depend on the bloated, wasteful jobs mill they pass off as a "school system" as well as symbiosis with the teachers (and other muni unions) to fuel the core of their political machine. Reform of the school system means cutting their hearts out, and they know it. This they will fight to the last man even if the state goes down in flames.

The change needed to produce a healthy economy and responsive government is so radical that it can only be precipitated by the shock of a very long drop off a very high cliff. Corzine is approaching the precipice now.

Much more: Lawhawk yells 'Geronimo'.

UPDATE: Two and a half years after this was written, New Jersey realtors note a 30% year-over-year (1st quarter) drop in housing sales.

Categories: New+Jersey+Taxes, Hudson+County+Politics, Government+waste, Democratic+patronage+system