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Deborah M. Figart

Who Should Pay for Seasonal Worker Wage Increases?

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Who Should Pay for Seasonal Worker Wage Increases?

Deborah M. Figart, Ph.D.

New Jersey Governor Chris Christie recently announced that the state has a $807 million budget shortfall in Fiscal Year 2014. So proposals to “give away” tax revenue need to be considered very carefully. My estimate of one such bill in the New Jersey Assembly that provides seasonal employers tax credits on their income tax forms for hiring minimum wage workers is equal to $14.8 million in 2014 and up to $30.9 million by 2019.

On New Years Day in 2014, New Jersey became the 21st state to have a higher minimum wage than the federal minimum wage: $8.25 per hour, up from $7.25 per hour. Voters in New Jersey and other states have pushed for a minimum wage that would keep pace with the cost of living; the New Jersey and federal minimum wage had been $7.25 since 2009. Increases would raise the incomes of the working poor and help struggling families put more food on the table. Raising the minimum wage puts the burden for adequate living standards on employers, alleviating pressure on the social safety net.

In 2013, the New Jersey legislature delivered a bill to raise the state minimum to $8.50 per hour and index it to inflation. It was vetoed by the governor. After Governor Chris Christie vetoed the increase to $8.50 per hour, the measure was sent to the voters as Public Question 2 on the November 2013 election ballot. The same day that Chris Christie overwhelming won a second term, 61 percent of New Jersey voters pulled the lever in favor of raising the state minimum wage to $8.25. More important, the voters approved language that would automatically index the new state minimum wage to inflation.

Inflation has been running about 2.5 percent per year over the past 10 years, less than the average long run rate of 3.0 percent. Assuming 2.5 percent for each of the next five years, a low estimate, the New Jersey minimum wage would gradually increase to:

2015                $8.46

2016                $8.67

2017                $8.89

2018                $9.11

2019                $9.34

Those dollar amounts are too high for New Jersey State Assembly members Samuel L. Fiocchi and Chris A. Brown, who have sponsored a Bill No. 2983 that provides certain seasonal employers tax credits on their income tax. An “eligible employee” is one employed by a seasonal business for not more than 30 weeks per year. It has been referred to the Assembly Labor Committee for consideration. The sponsors hope for it to pass by the end of June, just in time for the summer tourism season at the Jersey shore.

The proposed legislation would allow seasonal employers to claim a tax credit equal to the federal-state minimum wage gap, the total number of hours worked by eligible minimum wage employees times the dollar amount by which the state minimum wage exceeds the federal minimum wage. The gap is currently $1.00 per hour ($8.25 minus $7.25). Seasonal employees would include groups such as migrant farm workers and teenagers at amusement parks and some Jersey shore restaurants.

Let’s do some basic math to estimate the effect of this bill. The current federal-state minimum wage gap is $1.00. Suppose seasonal employees work 4 months per year, or 18 weeks. Some work more, some less, so I have selected a midpoint. At 40 hours per week, this equals 720 hours per year. So 720 hours multiplied by a tax credit of $1.00 per hour equals $720 per employee. A tax credit, unlike a deduction, comes directly off the bottom line of the amount of taxes owed to the state.

How much total loss in tax revenue is this for the State of New Jersey? In other words, how much would the state subsidizing the hiring of private sector seasonal employees? The answer depends on developing an estimate for the number of seasonal employees in the State of New Jersey.

A data retrieval tool from the U.S. Bureau of Labor Statistics helps us calculate this estimate. We can compare the seasonally adjusted total private employment for New Jersey with the not seasonally adjusted total private employment. By selecting July 2013, a month and year with seasonal employment, the BLS shows the following for New Jersey:

3,365,200 employees, not seasonally adjusted

3,324,100 employees, seasonally adjusted

The difference is 41,100 employees (3,365,200 – 3,324,100). But not all seasonal employees work for seasonal employers. For example, casinos hire extra dealers every summer but are open year-round. Let’s assume that one-half of seasonal employees work for seasonal employers. That would be 20,550 workers or about 0.6 percent of the current New Jersey private sector labor force, which seems reasonable.

Recall our $720 dollar subsidy per worker. With 20,550 workers in a season, the total cost to the state would be $14,796,000 or $14.8 million dollars (20,550 employees x 720 hours x $1.00). According to the New Jersey Department of the Treasury, New Jersey is projected to collect about $2.483 billion in corporate business taxes in Fiscal Year 2014. The tax credit for seasonal employees would therefore amount to a 0.6 percent reduction in tax revenue.

By 2019, the state minimum wage could be $9.34 per hour. Assuming no growth in the number of seasonal employees by 2019, the cost to the state would be $30.9 million dollars in 2019 (20,550 employees x 720 hours x $2.09). The subsidy would be $1,504 per worker per year, reducing corporate tax revenue by about 1.2 percent. Of course, if the minimum wage is subsidized for seasonal but not permanent employees, there could be perverse incentives. For instance, Jersey shore restaurants that try to remain open during the winter, with pared down staff, may opt to close to meet the definition of “seasonal employer.” Another example is the inducement to cut labor costs. For employers who used to pay seasonal employees 50 cents an hour or more above the minimum wage, they would be incentivized to cut that wage down to the minimum to quality for the tax credit.

One may think that this is costing the state a lot or just a little. My point is this: we should have a reliable estimate of the cost of the Assembly bill by the New Jersey Office of Legislative Services. Finally, we should ask ourselves another question. If the federal minimum wage stays constant, New Jersey taxpayers will assume an increasing percentage each year. At what point does an increasing taxpayer subsidy mean that the seasonal employees are partly government employees and not just private sector workers?

Columns

OPINION: CHRISTIE’S AVAILABLE OPTIONS HAVE GONE

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OPINION: CHRISTIE’S AVAILABLE OPTIONS HAVE GONE

FROM BAD TO WORSE

CARL GOLDEN

| MAY 29, 2014

The governor’s reliance on wishful thinking when it comes to the budget finally comes up against reality.

Being governor is all about having options, settling on a course of action, marshaling legislative and public support, and then implementing it smoothly and effectively.

From time to time, though, issues arise for which none of the available options is particularly appealing or without considerable risk. The choice is narrowed to selecting the one that is the least distasteful.

This is where Gov. Chris Christie is at the moment.

The state budget is more than $800 million in the red; he faces a legislative revolt and two court challenges to his plan to dramatically reduce contributions to the public pension system; the state’s credit rating has been cut six times, and the outlook for 2015 is equally gloomy.

Moreover, he’s deferred the homestead rebate program until next year, the equivalent of a $375 million property tax increase on the seniors and disabled eligible for the credit. The rebate program has been skipped in three of the five years Christie’s held office.

The shortfalls are the product of successive budgets built upon wishful thinking rather than hard fact. The administration based its proposed spending on revenue growth of between five percent and seven percent, despite repeated warnings that the state’s economy — while recovering — remained too weak to sustain such optimistic forecasts.

As the gaps between income and spending developed toward the conclusion of each fiscal year, they were bridged by fund transfers, shifting money from dedicated programs, or delaying expenditures until the following fiscal year.

The effect of these last-minute manipulations was to create a rolling structural deficit from one year to the next, putting off an eventual day of reckoning when the shortfall reached a level too great to be overcome by bookkeeping sleight of hand.

The Legislature is hardly an entirely innocent bystander in this drama. Despite hearing the same warnings Christie heard — including from its own budget research office — the Legislature accepted the governor’s glowing revenue estimates and the spending that went along with them.

The Democrats recent indignation over the governor’s inclusion of some $32 million in tax and fee increases was short of genuine as well, since both they and the media were told of the plan in a treasurer’s budget briefing in February.

The sheer size of the impending deficit left Christie with no option but to reduce by $2.27 billion the state’s contribution to the public pension system this year and next. His opposition to any sort of broad-based tax increase and his promise to veto one should the Legislature approve it left the pension payment as the only source of readily available funds sufficient to cover the shortfall.

The reaction of the Democratic legislative leadership was predictable — outrage, accusations that the governor was in violation of the law, and warnings that the state’s credit rating would be downgraded yet again.

Senate President Steve Sweeney who earlier this year threatened to refuse to act on the budget and shut down state government if the pension payment was not made in full didn’t repeat it, but said instead he would pursue reinstatement of a surcharge on incomes above $500,000 – the so-called millionaire’s tax — something Christie has vetoed twice.

It’s not likely that Sweeney will follow through on a government shutdown. Democrats are leery of being blamed for denying essential state services to taxpayers to prove their point that shoring up the pension plan for public employees is more important.

In the ensuing public relations war, Christie would seize the high ground, insisting his plan addressed the budget shortfall and protected against a tax increase while Democrats, on the other hand, were willing to punish taxpayers in the interest of appeasing its public employee union base. He would argue, with validity, that the shutdown was initiated by the Democrats in a brazen move to gain political advantage.

The more likely Democratic strategy would be enacting the tax surcharge on wealthy earners, include the revenue in the pending budget, restore the cut in the pension payment, and send it to Christie’s desk.

As anticipated, the governor would veto the surcharge legislation, use his line-item veto to strike the revenue from the budget, and proceed with the reduced pension payment.

Democrats are short of the required votes to override a veto, but will settle for a “lose the battle, win the war” outcome, one which they believe will support their argument that the governor is more sensitive to the desires of the wealthy than the middle class.

They’ll point out that a modest increase in the tax rate for upper-income earners has consistently enjoyed overwhelming public support and that Christie, by his steadfast opposition, has turned his back on the majority of taxpayers while clinging to the discredited notion that the wealthy will flee the state in great numbers if faced with a tax increase.

Christie’s resolute opposition to any tax increase, including raising the gasoline tax to replenish the soon-to be-bankrupt Transportation Trust Fund, guarantees that in the end he’ll prevail. His line-item veto and the Democrats’ inability to override it ensures he’ll succeed.

The New Jersey Education Association and the Communications Workers of America have challenged Christie’s pension reduction in court, alleging that his action violates a 2010 law that locked the state into a specific payment timetable. How and how long the litigation will take to play out is anyone’s guess.

Of the options at his disposal, Christie chose the one he felt posed the lowest political risk. For instance, should he decide to seek the Republican presidential nomination in 2016, he can do so as someone who refused to raise taxes while reining in the burgeoning cost of public employee benefits — conservative credentials all.

His candidacy would still confront questions about his fiscal stewardship, the lagging pace of job creation and economic growth, and the state’s creditworthiness being near the bottom in national standings. Like all his predecessors, Christie enjoys a wide array of options to address problems. Nowhere in the oath of office, though, does it mention they’ll all be good ones.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at the Richard Stockton College of New Jersey.

ALL RIGHTS RESERVED ©2014 NJSPOTLIGHT

Columns

Money and politics lead to scandal

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DANIEL J. DOUGLAS

Recently, the United States Supreme Court, in a 5-4 ruling in McCutcheon v. Federal Election Commission, effectively overruled limits on aggregate campaign contributions. Before the ruling, individuals were restricted to giving no more than $123,000 to candidates and party committees per election cycle.

The decision by the court allows even more money in a political system awash in dollars and influence peddling.

For some perspective, the 2012 median household income in the United States was $51,371; and, in New Jersey it was $69,667. These figures are from the U.S. Census Bureau American Community Survey.

Not only does this ruling demonstrate how out of sync Washington is with the rest of the country, it also points to the degree to which Washington is not in tune with regular Americans.

Clearly, an individual making about $50,000 in the United States, or even $70,000 in New Jersey, is in no position to contribute $123,000 or more during the course of an election cycle. Citizens in this income area are lucky if they can afford to make a $5 or $10 contribution to a favored candidate for office

This ruling rewards the interest groups and individuals who already dominate Washington, advocating agendas that push apart the American electorate and tempting candidates and elected officials.

United State Sen. John McCain, Republican from Arizona, has already predicted, “There will be major scandals in campaign finance contributions that will cause reform.

“There will be scandal,” McCain repeated. “There’s too much money washing around.”

Money scandals in national politics and in New Jersey politics serve as warning signs of too much money concentrated in too few hands. The film “American Hustle” is a fictional account of the Abscam scandal of the 1970s. More than 30 political figures were included in the bribery investigation. Eventually six members of the U.S. House of Representatives, a U.S. senator, a New Jersey state senator and the mayor of Camden were convicted of crimes.

In 2007, the then-U.S. Attorney Chris Christie warned mayors and other local officials at the New Jersey League of Municipalities convention in Atlantic City: “If over the next couple of days someone approaches you with an envelope of cash looking to seek a favor from you, unless it is your mommy, turn and run for the ocean.  It’s probably us.”

Despite the warning, two years later the U.S. Attorney’s Office conducted a sting involving bribes that ensnared local elected officials, real estate developers, a former punk rocker, an illegal body parts broker, five Orthodox rabbis and a retired exotic dancer.

Ted Sherman and Josh Margolin co-authored “The Jersey Sting,” which chronicled the true story of a three-year corruption investigation that ended up so comical and sensational that it found its way into late-night talk show monologues.

But it is not really funny because, as McCain said, “there will be scandal.”

Daniel J. Douglas is the director of the William J. Hughes Center for Public Policy at The Richard Stockton College of New Jersey.

 

Uncategorized

Stockton’s Hughes Center for Public Policy Launches Online Forum, ‘Policy Hues’

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Stockton’s Hughes Center for Public Policy Launches Online Forum, ‘Policy Hues’

For Immediate Release; with photo of Figart

Tuesday, May 27, 2014

Contact:    Maryjane Briant

                        News and Media Relations Director

                        Galloway Township, NJ 08205

                        Maryjane.Briant@stockton.edu

                        (609) 652-4593

Deb 1

 

 

 

 

 

 

 

 

Galloway, NJ – Concerned citizens have another forum in which to engage on today’s public policy issues with the start of “Policy Hues,” a new blog (http://blogs.stockton.edu/policyhues) hosted by the William J. Hughes Center for Public Policy at The Richard Stockton College of New Jersey.

Policy Hues will feature blog posts from Dr. Deborah M. Figart, professor of Education and Economics in the School of Education and a Contributing Policy Analyst for the Hughes Center. Figart is also director of the Stockton Center for Economic & Financial Literacy, which serves as the southern regional office of the New Jersey Coalition for Financial Education (www.njcfe.org).

Dr. Figart received a Ph.D. in Economics from The American University in 1986 and a B.A. in Economics, summa cum laude, from Wheaton College (Mass.) in 1981.

Dr. Figart is an internationally known scholar in the field of labor and employment issues. She has written on the subjects of equal pay, working time, emotional labor at work, minimum and living wages, job evaluation and career ladders.

With her academic background rooted in her knowledge of economics, Dr. Figart will provide commentary on other public policy issues including those affecting the workforce, financial literacy and economic development.

She is the author or editor of 18 books or monographs, including: Women and the Economy: A Reader (M.E. Sharpe, 2003); Living Standards and Social Well-Being (Routledge, 2011); and Handbook of Research on Gender and Economic Life (Elgar, 2013). Some of her current research is on financial exclusion in the U.S. and the student loan debt crisis.

Dr. Figart currently serves on the Board of Trustees of Novadebt, a non-profit credit counseling corporation. She recently completed terms as a member of Atlantic County Advisory Commission for women and coeditor of the Review of Social Economy, a peer-reviewed journal in economics.

“We are pleased to have the distinctive voice of Dr. Figart in providing commentary on contemporary policy issues,” said Daniel J. Douglas, director of the Hughes Center.

“We encourage members of the public to read and comment on the blog posts,” said Douglas.

In addition to Dr. Figart’s blog posts, Policy Hues will also include columns from Carl Golden, press secretary for former New Jersey Governors Tom Kean and Christie Whitman. Golden is a senior contributing analyst with the Hughes Center.

The new blog expands the Hughes Center’s web and social media presence that includes a website (www.stockton.edu/hughescenter), Twitter handle (@hughescenter or (www.twitter.com/hughescenter), and Facebook (www.facebook.com/Hughes.Center.Stockton.College).

About the Hughes Center

The William J. Hughes Center for Public Policy (www.stockton.edu/hughescenter) at The Richard Stockton College of New Jersey serves as a catalyst for research, analysis and innovative policy solutions on the economic, social and cultural issues facing New Jersey, and is also the home of the Stockton Polling Institute. The Center is named for William J. Hughes, whose distinguished career includes service in the U.S. House of Representatives, Ambassador to Panama and as a Distinguished Visiting Professor at Stockton College. The Hughes Center can be followed on Twitter @hughescenter and found on Facebook at http://www.facebook.com/Hughes.Center.Stockton.College.

 

Columns

Opinion: Gov. Christie’s Made Champagne Promises on a Beer Budget

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Opinion: Gov. Christie’s Made Champagne Promises on a Beer Budget

Carl Golden | May 6, 2014

Recipe for a fiscal crisis — optimistic revenue projections, midcourse corrections, and a Legislature all-too-willing to sign on

carl golden

Stripped of the sloganeering — “Turn Trenton upside down . . .” “the Jersey comeback . . .” “the new normal . . . ” — the brutally bleak reality is that the state’s fiscal condition is the worst it’s been in decades.

In a scene reminiscent of the investment broker staring in disbelief at the stock ticker in October 1929, the Christie Administration confronts the following:

  • A shortfall of $807 million in the current budget that must be bridged in less than two months.
  • The fifth downgrade of the state’s credit-worthiness by rating agencies since 2010.
  • A Transportation Trust Fund with no money left.
  • The need for $620 million to continue the state’s capital construction transportation program in 2016.
  • An underfunding of the statutorily mandated aid to education formula by $1 billion, leading to property tax increases or cutbacks in personnel and programs at the local level.
  • Unemployment stubbornly lodged at over seven percent.
  • A job creation rate that has recovered little more than half of those lost five years ago.
  • A scheduled payment of $2.2 billion into the state’s public employee pension fund.
  • A home foreclosure level now the highest in the nation.

Not surprisingly, accusations are flying thick and fast over who bears the responsibility for the sorry state of fiscal affairs, but a good deal of the blame must fall on Gov. Chris Christie who, as a candidate in 2009, pledged that “change is on the way,” an implicit promise that the old ways of tax and spend would end and be replaced by prudent policies to restore sound financial footing.

It’s been the rating agencies, entities with no political axe to grind, that have consistently identified the underlying reason for the state’s ills — wildly optimistic predictions of anticipated revenues year after year, despite repeated warning signs that the economy remained so fragile the estimates would not be realized.

Those same agencies agreed also to the continuing use of one-time budget maneuverings — fund transfers, postponing scheduled spending from one fiscal year into the next, a reliance on borrowing — all served to undermine long-term stability and erode confidence in the state’s credit standing.

It is indisputable that the administration’s revenue projections have fallen considerably short year after year, requiring midcourse corrections to maintain a balanced budget.

Whether the estimates reflected wishful thinking or were based on a political decision to do whatever it took to get through the year and avoid tax or fee increases is up for argument.

David Rosen, budget director for the Office of Legislative Services, has for each of the past four years, warned that the administration’s revenue estimates were too generous and submitted his own figures which, in the end, proved more accurate.

Rosen was publicly castigated by the governor who accused him of partisanship and lacking the intellectual heft to be taken seriously. Rosen can take solace in the knowledge his projections turned out much closer to reality than the administration’s.

With its optimistic estimates, the administration constructed annual budgets that, in reality, contained structural deficits which it then addressed at the end of the fiscal year by rolling them over into the coming year, virtually guaranteeing an annual crisis to be solved by last-minute manipulations.

The Legislature shares some of the blame as well, for accepting the administration’s projections despite Rosen’s warnings they wouldn’t materialize. It could have scaled back the estimates, crafted a budget to comport with the more conservative numbers, and sent the budget to the governor’s desk.

While the exclusive authority to certify revenue estimates rests with the governor, it would have been politically difficult for him to reject the lower projections in favor of his more optimistic outlook and seek approval for the spending increases it would permit.

With less than 60 days remaining in the fiscal year and with 90 percent of the current budget appropriations already spent, Christie has few options to fill the $800 million gap.

Widespread speculation has it that the governor will settle on a reduction or a delay in meeting the $1.6 billion obligation due the pension fund. It is the largest single pot of money remaining and, despite the potential for a major political uproar in the Legislature, it appears Christie has little choice but to move toward skipping a part of the payment or putting it off into the next fiscal year.

It’s highly unlikely that cuts in those few areas in which the money hasn’t already been spent will be sufficient to cover the $800 million shortfall, pushing the Administration closer to the pension solution.

Equally disturbing is the certainty that the budget difficulties — most prominently devising a method to replenish the Transportation Trust Fund — will continue into next year and the year after. Christie has given no indication his unyielding opposition to a tax increase of any sort and for whatever purpose has softened, even though a pay-as-you-go program for capital construction doesn’t appear possible or probable.

There is also the matter of increased payments into the pension fund, as well as the pressure to comply fully with the state’s aid to education formula.

There is no question that the administration’s wide-of-the-mark revenue estimates played a major role in creating the current crisis, as the credit rating agencies contend.

When the state could afford Budweiser, Christie budgeted for Dom Perignon ’55, a menu substitution the Legislature couldn’t resist, either.
It’s time for both to retreat from the taste.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at the Richard Stockton College of New Jersey.

Deborah M. Figart

Vive les Vacances

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Vive les Vacances

Deborah M. Figart, Ph.D.

It is May. With approaching Memorial Day signifying the unofficial start of summer, it means planning a summer vacation. Or does it?

I read with interest a recent column by my colleague, Joe Molineaux, Director of the Small Business Development Center at The Richard Stockton College of New Jersey: “Business owners can profit from taking a vacation.”

Vacation is an English word derived from old French. But Americans are not acting like the French when it comes to vacations.

If we think that Americans even have much vacation time, the National Compensation Survey (NCS) – Benefits Program by the U.S. Department of Labor reveals otherwise. The NCS provides information on the availability, costs, and usage of employee benefits, including holidays and vacations, sick leave, health and life insurance, and retirement plans. The latest data from the 2012 indicates that 77% of workers in the broad survey of private and public employers had access to paid vacation. On average, workers with at least 1 year of service received 10 days of paid vacation in 2012.

Ten days of paid vacation (2 weeks) is low by European standards. The Working Time Directive of the Commission of the European Union (EU) guarantees twice as much—4 weeks or 20 days. Europeans are typically “on holiday” for the entire month of August. A 2013 report by the Center for Economic and Policy Research arrays the paid vacation days for employees across 21 developed industrial (OECD) countries (see Table 1). The United States and Japan are the “work horses” of the world with only 10 paid vacation days. At the other end of the spectrum, France has 30 days and the United Kingdom has 28.

Since Americans average only two weeks of paid vacation, you might think we are using it. Think again. Expedia.com’s 13th annual Vacation Deprivation study reveals that we are leaving 577,212,000 vacation days on the table unused, about 30% of our total days. Another Glassdoor survey from the first quarter of 2014 finds that Americans are only taking about half of their vacation or paid time off.

This get back to Joe Molineaux’s dispatch to entrepreneurs: take time to recharge those batteries. If workers are hanging around because their bosses are loath to leave the workplace, then it’s up to the bosses to set an example. This means small business entrepreneurs, CEOs, managers of medium- and large-size companies, non-profit organization directors, state and municipal leaders, and even the President of the United States. Psychologists agree: take your vacation.

Being at or near the top of the world’s list of workaholics is not an occasion to chant “We’re #1.” Instead, embrace your inner French: Vive les Vacances.

Columns

Opinion: Is Gov. Christie Headed for a Political Comeback or Catastrophe?

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Opinion: Is Gov. Christie Headed for a Political Comeback or Catastrophe?

Carl Golden | April 22, 2014

Presidents Nixon and Clinton offer some very useful examples on how to manage through a crisis — and how not to

carl golden

Most political scandals ultimately come down to a public relations war.  Bridgegate — the uproar over closing access lanes to the George Washington Bridge in Fort Lee last September — is headed in the same direction.

A little history:

In 1998, when President Bill Clinton was caught in an Oval Office dalliance with a woman barely older than his daughter, he lied about it for months. His strategy was to convince the American people that his misbehavior was a personal matter between him and his wife and did not impact his ability to continue as president.  He adopted a tough-it-out approach, gambling that while people would find his conduct distasteful, they’d eventually agree that it was a family issue and not sufficiently egregious to drive him from office.

Clinton rode out the storm, finished his second term, embarked on a lucrative after-office lecture circuit, and rehabbed himself into a revered party figure in great demand as a fundraiser and campaigner.

Twenty-six years earlier, President Richard Nixon spent more than two years trying to ride out the storm of Watergate with a public relations offensive that insisted he knew nothing about what a gang of rogue operatives working in his re-election campaign had done.  His strategy ranged from the dismissive (Watergate was “a second rate burglary.”) to ridicule (He didn’t intend to “wallow in Watergate.”).  None of it worked. Slightly more than two years later he resigned from office and — like Clinton — took up writing books and giving speeches.

Clinton’s affair with an intern was remarkably stupid and publicly embarrassing, but it did not measure up to Watergate with its repeated lawbreaking and obstruction of justice.

The common thread was the effort to convince the American people to look past each president’s conduct and forgive him for it.  It worked for Clinton, whose party rallied to him; it didn’t for Nixon, whose most fervent supporters deserted him.

The Christie administration’s strategy for dealing with Bridgegate is similar: Ride out the storm, maintain political support, strive to bend the public debate toward other issues and areas of concern to taxpayers, discredit the legislative investigation as a politically drenched attempt to embarrass him, and — most crucial of all — continue to drive the narrative that he was unaware of the misconduct of his subordinates and that not a shred of evidence has been produced to disprove that.

The recent suggestion by Assembly Minority Leader Jon Bramnick that the Republican members of the select investigating committee may resign en masse is the next logical step in furthering this strategy.

Bramnick claimed that he and his party colleagues were being ignored by the Democratic majority and that the committee’s work had deteriorated into a partisan campaign to besmirch Christie — and an expensive one at that.  Republicans, he said, agreed to the committee’s creation and to serve on it in good faith but after two months of testimony and examination of documents, little progress had been made and it was time to cede control of the investigation to the U. S. Attorney.

Had it not been for the original Assembly Transportation Committee hearings, though, the scandal and the intimate involvement of top Christie staffers would not have been uncovered.  Since then, the committee has been stymied, and even its strongest supporters will privately admit there’s been little of note revealed.

The committee’s effort to obtain emails from former Deputy Chief of Staff Bridget Anne Kelly and Christie confidant Bill Stepien — two central figures in the scandal — was unsuccessful when a Superior Court Judge ruled the Fifth Amendment right against self-incrimination covered the requested documents.   The committee’s failure to appeal the decision has produced speculation that the Democrats fear a higher court upholding the ruling would be devastating and encourage anyone else it wished to subpoena to assert the same Constitutional protection.

There has been a reluctance to offer immunity to prospective witnesses out of a concern that such a move could complicate and potentially undercut the inquiry underway by the U. S. Attorney’s office.

Even the documents demanded by the committee from Randy Mastro, head of the outside attorney group hired by the administration to determine what level of involvement existed in the executive office, turned out to be of little value.

Aside from some rather colorful email and personal exchanges among staffers, the documents, consisting of notes and memos rather than official interview transcripts, shed no light on the question of responsibility.  While the Mastro report exonerated the governor and his staff, it was almost universally panned as one in which conclusions were reached first followed by an investigation to support them.

Unable to compel the production of documents while holding cartons of essentially worthless papers and memos, along with the legal complications inherent in granting immunity, leaves the committee with little to continue to attract media and public interest.  Any witnesses it calls will most certainly follow the Kelly/Stepien precedent and refuse to testify.

In contrast, the Watergate scandal was kept alive for more than two years because many individuals — including a high-ranking official of the FBI — were willing to talk . . . and talk . . . and talk, leading to new and more sensational front page revelations on a regular basis.  It was precisely the opposite of what’s occurring with respect to Bridgegate.

Also troubling for the committee was the comment by Senate President Steve Sweeney that, having lost its court challenge to Kelly and Stepien, the committee should consider disbanding in favor of the federal probe.  While Sweeney quickly retreated publicly, there is no reason to believe he’s changed his mind or that, in private, he’s not urging his view on others in his party caucus.

The committee cochairs have said more subpoenas will be issued in a few weeks, possibly ones drawn more narrowly as the court suggested to avoid a “fishing expedition” defense.  Documents may or may not be revealing, but in-person testimony under oath and without immunity is out of the question.

In the meantime, the governor is bounding around the state, conducting town hall meetings where he plays to packed houses and the media, cutting ribbons, delivering speeches, raising money, and doing what he clearly relishes — berating Democrats for repeatedly failing to act on property tax relief.

Assembly Speaker Vincent Prieto, in an unfathomable public relations blunder, refused to move on legislation to continue a two percent cap on salary arbitration awards to police and firefighters, allowing the law to expire, and handing Christie a club to bludgeon legislative Democrats while surrounded by a few hundred cheerleading local officials.

The governor’s standing in various polls has crept slowly upward, although remaining in negative territory in several categories, and the investigation by the U. S. Attorney is still ongoing.   Both are matters of concern for him.

The legislative committee is seemingly stymied at the moment and in need of a jumpstart of some kind to pique interest.  Investigations like this need fresh developments and new revelations the way the rest of us need oxygen.

Moreover, if the Republican members make good on their threat to remove themselves and if a handful of Democrats accept Sweeney’s reasoning, the committee’s future is dim, indeed.

The administration has not been immune from its own public relations blunders, most notably the gratuitous insults and personal invective poured on Kelly in the Mastro report. The missteps portrayed an administration confused and uncoordinated, fanning the controversy rather than dousing it. It’s managed, though, to largely move past them and, at this point, is approaching a standoff with the committee.

The tough it out strategy has made inroads.  Christie and his allies hope it turns out like it did for the 42nd president, not the 37th.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at the Richard Stockton College of New Jersey.

Deborah M. Figart

Financial Literacy Month: How Capable Are We?

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Financial Literacy Month: How Capable Are We?

Deborah M. Figart, Ph.D.

Special months can be designated by U.S. presidential proclamation. For example, February is Black History Month. March is Women’s History Month. June is Caribbean-American Heritage Month and Gay and Lesbian Pride Month. October is Breast Cancer Awareness Month and Domestic Violence Awareness Month.

In 2011, President Barak Obama declared April as National Financial Literacy Month. Four years later, like the many other special proclaimed weeks and months, it has stuck. April—the month that our income tax forms are due—is financial literacy month. In 2014, the United States Conference of Mayors joined the cause, declaring April 2014 to be their DollarWise Month.

Do we really need a month to focus on financial literacy? According to findings from national surveys, we do. The FINRA Investor Education Foundation piloted the first-ever National Financial Capability Study in 2009, and has updated the findings in 2012. The most recent results are startling: 36% of individuals surveyed spend all of their income, and 19% spend more than they earn. Only 40% of persons had access to a “rainy day” fund, a reserve of several months of expenses to carry them through a spell of unemployment or unexpected emergencies.

Compared to other industrialized countries with whom we increasingly do business, we have the lowest personal savings rates. According the Organization for Economic Cooperation and Development (OECD), the household net savings rate in the U.S. was 3.9%. Switzerland’s was 13.1%. Sweden and Australia were 10.9% and 10.0% respectively. The EU average was 7.8%, double the U.S.

It may not be surprising to find that Americans are not the greatest savers. We’re not very good managing debt, either. Because of compound interest, paying the minimum amount on a credit card bill can keep one indebted for a long time. Yet 34% of FINRA’s survey respondents paid just the minimum. And 6 out of 10 did not shop around to compare credit card offers, annual fees, interest rates, and other policies.

The financial behavior of those who live in New Jersey, a high-income and high-expense state, are more encouraging. (FINRA now actually conducts state-by-state studies and a military survey, as well as the national survey.) Fewer New Jerseyans spend more than their income. They also save more in rainy day funds, are more likely to pay their credit card bills in full, and are less burdened by have less outstanding medical debt. Yet when it came to answering five knowledge questions covering aspects of economics and finance encountered in everyday life: (1) compound interest, (2) inflation, (3) principles relating to risk and diversification, (4) the relationship between bond prices and interest rates, and (5) the impact that a shorter loan term can have on total interest payments over the life of a mortgage, New Jerseyans did worse than the national average. So there is still room for improvement in our financial literacy.

A Buy-Now-Pay-Later culture has fueled a U.S. consumption binge for the last 50 years of the twentieth century. This consumerism sustained several decades of prosperity and economic growth—and seemed manageable when we were buying products that we ourselves produced. Spending on goods “made in the USA”, at least, allowed money to circulate domestically and increase family incomes.

Though our financial knowledge and behaviors seem to be wanting in the twenty-first century, they are affected by our circumstances. We still are recovering from the worst economic crisis since the Great Depression of the 1930s. Survey answers reveal that in a typical month, 42% find it “difficult” to make ends meet, that is, cover expenses and pay all the bills. Another 16% find it “very difficult.” Medical debt, one of the chief causes of personal bankruptcy, is a major reason. Roughly three out of ten individuals face outstanding bills from a hospital, doctor’s office, or testing lab. And 54% of adult respondents with student loans have concerns about their student loan debt, which has been rising at the same time that a college degree has become more important for economic survival. Financial education can help, but it can’t solve all of these problems.

A 2013 Junior Achievement survey about teens and personal finances suggests that this dismal economic news is having an impact. Today’s teens don’t anticipate achieving financial independence from their parents until their mid-20s or even later. And 52% recognize that students are borrowing too much for college. Teens’ cautiousness about their financial future compared to their parents’ and grandparents’ generations may be the silver lining in this story. Financial Capability studies in ten years may show improvement.

 

 

 

Deborah M. Figart

Holes in the Airspace, Holes in our Infrastructure – Deborah M. Figart, Ph.D.

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Holes in the Airspace, Holes in our Infrastructure

Deborah M. Figart, Ph.D., Professor of Education and Economics, The Richard Stockton College of New Jersey

With globalization, we thought the world was shrinking until the reality set in that a valuable and expensive asset, a Boeing 777 from Malaysia Airways, along with human beings can go missing from the skies. Why is it that Global Positioning Systems software (GPS) can track our children through their cell phones but we cannot instantaneously determine where a large jumbo jet is in the sky? Because air traffic control technology is over 70 years old.

Air traffic control uses ground-based radar (short for radio detection and ranging) to track the location of airplanes on the ground and in airspace. It is more precisely a transponder on a plane that broadcasts data through radio waves to the ground. While advances have improved accuracy, airplanes could still be hundreds of miles off from the sophisticated triangulation. (My apologies to scientists and engineers for this amateur explanation of radar.)

The United States is taking the lead in working on a new generation of satellite-based air traffic control system. The Next Generation Air Transportation System (NextGen) was authorized by Congress in the Century of Aviation Reauthorization Act of 2003. NextGen is expected in phases and seeks to fully provide the new system by 2025. It is a huge undertaking coordinated by the national Federal Aviation Administration (FAA), with the William J. Hughes Technical Center in Galloway Township, NJ, serving as the main facility supporting the research and testing for NextGen.

NextGen is one of the largest investments in infrastructure in U.S. history, totaling billions of dollars. The investment has been plagued by delays and difficulties, according to the U.S. General Accountability Office and the Department of Transportation’s Office of the Inspector General. At times, this bipartisan program has suffered from spending cuts or threats of spending cuts. This is not how to treat an investment project with such enormous potential.

When governments take leadership in investing in infrastructure, significant scientific advances can exert positive externalities and well-being throughout the globe. Witness the Netherlands and dike and floodgate construction. Or Germany’s national highway system. And the United States’ exploration of space. A similar high priority should be accorded to NextGen.

In fact, with our economy remaining relatively anemic, we should accelerate the NextGen timetable. In addition to making our skies safer, every dollar we spend will generate jobs, income, and technical expertise—all of which can help the private sector. People with jobs and income spend money. The knowledge gained from investments in scientific and technical projects can be translated into applications we have yet to imagine.