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Thursday, March 23, 2006

Your Tax Dollars At Work
Posted by Jill | 6:17 AM

Here in New Jersey, people are all up in arms about Gov. Corzine's budget. There's the usual hue and cry about broken promises and how we in NJ are being taxed too much; and perhaps we are. We have a state income tax AND a state sales tax, though our sales tax does not extend to clothing and groceries. And of course we have horrific property taxes, which have been addressed in recent years by rebates from the state -- rebates which in most cases don't even offset the annual increases by municipalities.

Much of the screaming and rending of garments has to do with the perception that Corzine is raising taxes instead of cutting spending; which isn't the case, though spending is cut less than some would like to see. But Jon Corzine has been handed a mess passed down from Christine Todd Whitman, who cut taxes using borrowed money (sound familiar?), and Jim McGreevey, whose crony-based administration was archetypal of New Jersey lore. This budget indicates to me that Corzine is fully cognizant of the political risk he takes with this proposal, and is equally prepared to fix the mess and take whatever lumps are required. It's not as if he needs the job, after all.

Yesterday, the Record praised his efforts:

The Corzine budget calls for $1.8 billion in new taxes -- most of them from an increase in state sales tax from 6 cents to 7 cents on the dollar -- along with cuts of $2 billion in both personnel and programs. Perhaps the biggest loser is the state college system, which would see its overall funding decreased by $169.1 million.

The governor brought forth no ground-breaking revelations, no magic wands with which to spin gold and no artificial stop-gap spending measures that offer no lasting stability.

"Anyone who says we can save $3 billion to $4 billion from eliminating waste, fraud and abuse is selling snake oil," Corzine said. "Worse, they are hiding from the painful alternatives and choices that will truly address our failing financial circumstances."

In addition to raising the sales tax, which would reportedly generate $1.3 billion, Corzine also urges increases in the state cigarette tax, from $2.40 to $2.75 per pack, generating $80 million; and the addition of a $2.5 percent surcharge on the corporation tax, generating $60 million.

Given the numbers and the fiscal "mess" in Trenton, Corzine expressed regret at having to step back from a campaign promise in which he had vowed to restore and expand property tax rebates. Instead, Corzine's budget calls for only a 10 percent bump in rebates, and otherwise largely ignores the issue, arguably still one of the most volatile concerning New Jersey residents.

Corzine admits his $30 billion budget is merely a starting point, a blueprint to begin serious discussion of the state's finances. Certainly, spirited discussion will be coming in the weeks and months leading to June 30, by which time a balanced budget must be adopted.

No one, least of all working parents, want to see massive cuts coming to higher education, because at some point, those cuts will be passed on to tuition payments. Yet Corzine was adamant about the need for cuts, and they will necessarily come somewhere else.

Corzine's budget already eliminates 75 programs, and cuts funding to 130 to below current levels.

In short, there are no winners to be found in the fine print. There are only losers, and bigger losers, people and programs destined to suffer because of the short-sighted practices of the past. Corzine's plan may not be perfect, his vision may be flawed, but at last someone is looking at the state through a longer lens, and seeing that future gain is just not possible without immediate and real pain.


You might not like the news contained in Corzine's budget; God knows I don't. I'm facing an increase in property taxes of about $1300 even BEFORE this budget as a result of a county-mandated revaluation. But unlike the people who still buy the Reagan Doctrine of "You can have what you want and it's all free, just don't look at that debt column", I recognize that my state is in some deep shit and digging us out of it is not going to be easy or fun.

One of the problems that no one has addressed in all the coverage of this budget is the fact that New Jersey receives less return on its investment in the federal coffers than any other state. For every dollar we send to Washington, we receive 50 cents back -- and that number is down from 55 cents just a few years ago -- making us the #1 donor state in the nation. This disparity is the crazy aunt in the attic about which no one wants to talk. When I wrote to my wingnut Congressman Scott Garrett about whether he agrees with Karl Rove that all liberals are terrorist sympathizers, I received a return letter very quickly, answering in the affirmative and citing the usual suspects: Michael Moore and MoveOn.org. But when I inquire why we receive so little back for our federal dollars, I receive no reply. Of course, Garrett is too busy carrying water for Tom DeLay to represent his district.

That New Jersey residents are paying so much more than our fair share to the federal coffers means that we are also heavily subsidizing George W. Bush's war in Iraq.

Bob Herbert:

The president and his hot-for-war associates were as wrong about the money as they were about the weapons of mass destruction.

Now comes a study by Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University, and a colleague, Linda Bilmes of the Kennedy School of Government at Harvard, that estimates the "true costs" of the war at more than $1 trillion, and possibly more than $2 trillion.

"Even taking a conservative approach and assuming all U.S. troops return by 2010, we believe the true costs exceed a trillion dollars," the authors say.

The study was released earlier this year but has not gotten much publicity. The analysis by Professors Stiglitz and Bilmes goes beyond the immediate costs of combat operations to include other direct and indirect costs of the war that, in some cases, the government will have to shoulder for many years.

These costs, the study says, "include disability payments to veterans over the course of their lifetimes, the cost of replacing military equipment and munitions, which are being consumed at a faster-than-normal rate, the cost of medical treatment for returning Iraqi war veterans, particularly the more than 7,000 [service members] with brain, spinal, amputation and other serious injuries, and the cost of transporting returning troops back to their home bases."

The study also notes that Defense Department expenditures that were not directly appropriated for Iraq have grown by more than 5 percent since the war began. But a portion of that increase has been spent "on support for the war in Iraq, including significantly higher recruitment costs, such as nearly doubling the number of recruiters, paying recruitment bonuses of up to $40,000 for new enlistees and paying special bonuses and other benefits, up to $150,000 for current Special Forces troops that re-enlist."

"Another cost to the government," the study says, "is the interest on the money that it has borrowed to finance the war."

[snip]

In an interview, Mr. Stiglitz said that about $560 billion, which is a little more than half of the study's conservative estimate of the cost of the war, would have been enough to "fix" Social Security for the next 75 years. If one were thinking in terms of promoting democracy in the Middle East, he said, the money being spent on the war would have been enough to finance a "mega-mega-mega-Marshall Plan," which would have been "so much more" effective than the invasion of Iraq.

It's not easy to explain just how much money $1 trillion really is. Imagine a stack of bills worth $1 million that is roughly six inches high. (Think big denominations — a mix of $100 bills and $1,000 bills, mostly $1,000's.) If the six-inch stack were enlarged to the point where it was worth $1 billion, it would be as tall as the Washington Monument, about 500 feet. If it were worth $1 trillion, the stack would be 95 miles high.

Ms. Bilmes said that the $1 trillion we're spending on Iraq amounts to about $10,000 for every household in the U.S.

At his press conference on Tuesday, President Bush made it clear that whatever the cost, American forces would not be leaving Iraq soon. When asked whether a day would come when there were no U.S. forces in Iraq, he said that decision would be made by future presidents and future governments of Iraq.


So if you live in New Jersey, and you're upset about Corzine's budget proposal, write to your representative and find out where s/he stands on the war, and why s/he isn't fighting for his/her constituents.
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