Christie Whitman by a Whisker
Jude Wanniski
November 5, 1997


Memo To: Brit Hume, Fox News Washington Editor
From: Jude Wanniski
Re: Christie Whitman's "tax cuts"

When I talked to you last night, I was afraid that if Christie lost her re-election contest for governor of New Jersey, the national press corps would announce that not only do the voters not care about candidates who promise tax cuts, but are also ungrateful to those who keep their promises. Christie's campaign slogan was "Promises Made, Promises Kept." As I explained last night, our governor never exactly did deliver on her promise to cut income-tax rates by 30%. The only Jerseyans who got a 30% cut in their state income-tax rates were those with the lowest taxable incomes, none above $20,000. Those with taxable incomes above $75,000 got only a 4.1% cut, which is negligible when applied against a starting rate of 6.65%. Now if the voters expected this when the promise was made in 1993,1 do not believe they would have been so ungrateful yesterday in giving her only a 1% margin of victory. The campaign promise was made as a result of a decision she made when her candidacy against the very unpopular incumbent, Jim Florio, was faltering. The tax-cut package was presented to her in a meeting in her office by Steve Forbes (before he even thought of entering elective politics), Lawrence Kudlow, then chief economist at Bear Stearns, and former N.J. Governor Tom Kean. Christie and her husband John were on the receiving end of the advice from these three. You could ask him yourself, but I believe it is Tom Kean's recollection that it was supposed to be a 30% cut across-the-board. This was my understanding when I read of the proposal in the NJ press. I believe the voters went into the ballot box four years ago with that in mind. That being the case, there was a sense I felt that there had been some sleight-of-hand in the governor's office.

It did not make me feel any warmer to Christie, who I advised and supported avidly in her Senate race against Bill Bradley, which she lost by a whisker, when early in 1996 she announced her support for Bob Dole in the race for the GOP presidential nomination. Had she not taken Steve Forbes's advice on the 30% tax cut, she would not have won the governorship. Yet she chose to flip him the bird when he embarked on his race for the nomination, when it would have been the easiest thing in politics for her to back a "favorite son" of New Jersey. Both the decision to chisel on the tax-cut promise and the decision to back Dole instead of giving Forbes a hand were, I think, made by her husband John, who is surely a wonderful husband and father, but has been a drag on her political career at important moments.

Four years ago, Christie got three votes in my house, including those of my wife and mother. This year she got none. I would not forgive her on the tax cuts and Steve Forbes and voted for McGreevey. My wife and mother would not forgive her on her in-your-face attitude on feminist issues, including support for late-term abortions and voted for the pro-life libertarian.

Last May, I wrote a letter to The Wall Street Journal on Christie's chiseling on her 30% tax cut promise, when the Journal made a big deal out of it. The letter which follows was not published. It did run in the Daily Record of Morristown, my local paper, on May 30, and was discussed in other papers around the state. Thanks to you and Fox News, at least there were some people outside of New Jersey who learned that her promise keeping was not what it seemed to be.

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May 13, 1997
Letters Editor
The Wall Street Journal
200 Liberty Street
New York, NY 10281

Dear Editor:

Gerald F. Seib's report yesterday on how little New Jersey's economy has benefitted from the reported 30% income tax cut under Gov. Christie Whitman fails to take into account the concurrent increase in federal income tax rates rammed through the 1993 Democratic Congress by President Clinton.

At the time Ms. Whitman was elected governor in 1993, the top combined federal/state rate on income tax was 37.65%, that being 31% federal and 6.65% state. The Whitman tax cut brought the top marginal income-tax rate on residents to 6.37% @ $75,000 from 6.65%, at the same time the Clinton increase brought the federal rate to 39.6% from 31%. The combined rate thus increased to 45.97% from 37.65%. If your reporter had asked to see the tax tables, he would have realized the Whitman "30% cut" really only applied to incomes below $20,000, where the rate dropped to 1.4% from 1.9%. My numbers come from the Florham Park, N.J., CPA firm of Giordano, Cohen, Shafrnan, Haimann & Co.

The higher the combined marginal rate, the more counterproductive it is. Gov. Whitman should at least have made the cuts across-the-board -- which is what people outside of New Jersey assume she did. The only reason there was slight improvement in the economy was due to the small cuts in income tax and the tiny cuts in the capital gains tax. The federal rate remained at 28% and the state rate came down by a fraction of a point. The economy would have shown " much better results if Gov. Whitman and her Republican legislature heeded the advice of those who urged elimination of the capital gains rate, which would have cost nothing at the revenue level and generated much healthier economic growth.


Jude Wanniski