A model for Clinton - comparing Bill Clinton's tax policy to that of New Jersey Governor James Florio

National Review, May 24, 1993 by Brian Robertson

It may be too early to talk of a one-term President. If Jim Florio can be re-elected, anyone can.

REINVIGORATED by their unexpected success in blocking President Clinton's "stimulus" package--a glorified bundle of pork-barrel spending--Republicans in Congress must now decide whether to take a similarly tough stand on the President's proposed tax hikes. Senator Dole and his colleagues may be tempted to go along with the tax hikes in order to avoid the impression of partisan obstructionism contributing to "gridlock." But one look at the experience of the GOP in New Jersey should be enough to tell them that this is a losing political strategy and with disastrous economic consequences.

Two years ago in New Jersey, about the only person less popular than Governor Jim Florio was Saddam Hussein. After pledging in his 1989 campaign not to raise taxes, Florio in 1990 rammed through the legislature the biggest tax hike in New Jersey history (and the biggest state tax hike in U.S. history up to that time). Florio's approval rating plummeted to 18 per cent, "Impeach Florio" bumper stickers were seen everywhere, there were raucous demonstrations outside the statehouse in Trenton, and Florio was treated as a political pariah by his fellow Democrats, who were trying desperately to shed the image of tax-and-spend liberalism. His prospects for re-election were judged to be nil.

Today the New York Times is running stories on Florio's political rehabilitation, President Clinton is citing him as a profile in courage who has faced tough realities in the face of popular pressure, and some polls show him running ahead of both the leading Republican contenders to replace him. While his negatives are still high for an incumbent, Florio now has a good chance of winning in November, an amazing prospect considering the damage his tax package has inflicted on New Jersey.

If Florio is re-elected, New Jersey Republicans have only themselves to blame. Promising to roll back Florio's $2.8-billion tax increase and to pass popular voter-initiative and referendum legislation, GOP candidates for the New Jersey legislature won big in the 1991 mid-term elections, gaining veto-proof majorities in both houses for the first time in 37 years. It was a golden opportunity to repudiate the tax-and-spend policies of the governor and put the state back on track.

Florio's package, with the same faulty reasoning as Clinton's, assumed that by doubling income-tax rates, imposing massive sales-tax hikes, and eliminating the deductibility of already oppressive property taxes, he would generate $2.8 billion in additional tax revenue. Not only were his estimates about $2 billion short, the new taxes had a devastating effect on the job market, with private-sector employment falling by almost 10 per cent in the next two years, leaving New Jersey with the second highest unemployment rate in the nation.

The subsequent loss in tax revenue meant that when Republicans took over the legislature in January 1992, they were looking at a budget deficit of close to a billion dollars. Florio added to the fiscal crisis by presenting the legislature with a 1993 budget that increased spending by another billion, paying for it with taxes the Republicans had already promised to revoke. Florio reasoned that since New Jersey's constitution requires a balanced budget, the

legislature would have to either cave in on the tax rollback or begin massive layoffs of state workers, both of which would have serious political consequences for the new majority.

The Republicans managed to slip between those two scenarios, but Florio was successful in his larger design of defusing the tax issue because of their fear of boosting the deficit. The legislature voted to revoke the penny increase in the state sales tax, but left in place the gas, property, and income taxes that made up the bulk of Florio's increase. And while they were able to trim a billion dollars from Florio's inflated budget, they did much of the trimming via one-time sources and gimmicks like state pension refinancing, instead of tougher choices like going after the out-of-control education budget. Not only did they fail to make much of a dent in Florio's tax hike, but after intensive lobbying from special interests, who didn't wish to have their influence on legislation impaired by ordinary citizens, the voter-initiative bill was resoundingly defeated, a major embarrassment for Assembly Speaker Chuck Haytaian, who had promised quick passage under a GOP majority.

Another issue that helped Florio was the legislature's botched attempt to repeal his ban on assault weapons, the toughest law of its type in the nation. Although it wasn't a major issue in the last campaign, individual Republicans received large contributions from the NRA on the basis of their position against the ban, and considering the size of the new Republican majorities, most thought repeal a foregone conclusion. But a combination of NRA strong-arming and Florio grandstanding provoked substantial grass-roots opposition to getting rid of the ban, and legislative Republicans started to waver. After Florio vetoed the repeal, Senate President DiFrancesco announced that he would defy the NRA by voting against an override. But standing up to the NRA at this point looked more like opportunism than courage, and Florio once again had made the Republican majority look foolish.