Louisiana North: Why New Jersey is a pit of corruption

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Louisiana North: Why New Jersey is a pit of corruption.

Monday, August 16, 2004 12:01 a.m. EDT
John Fund, The Wall Street Journal

There is a real story in the personal and family tragedy surrounding James McGreevey's decision to resign as New Jersey's governor on Thursday. There's also a story in the difficulties of someone being gay and holding high public office. But the bigger story here isn't about Mr. McGreevey. It's about how the elites of a major state, one with the nation's second-highest per capita income and one of its most educated and skilled work forces, have allowed it to be so poorly governed by both parties over a span of decades.

New Jersey's political corruption has been legendary since the days of the late Mayor Frank Hague, who ran Jersey City for 30 years with such an iron fist that he told federal officials "I am the law." Just two years ago, Sen. Bob Torricelli had to drop his re-election bid after the Senate Ethics Committee detailed his improper relationship with a donor. A spineless state Supreme Court allowed Democrats to replace him on the ballot even though a firm deadline for doing so had passed. The state's politics are awash in allegations of conflicts of interest, raids on public treasuries and corrupt alliances between favored business interests and local officials.

Mr. McGreevey, a former mayor of Woodbridge, became governor in 2002 pledging to "change the way Trenton does business." Ross Baker, a professor of political science at Rutgers, says that McGreevey promise "was the second most unfortunate utterance by a modern politician, after the first President Bush saying, 'Read my lips.' "

Indeed, Mr. McGreevey accomplished the remarkable feat of lowering ethical standards in the state capital. The McGreevey administration was stuffed with hacks and yes-men, and within months two of his aides had to resign after scoring millions of dollars in suspect profits on an outdoor billboard deal. Joseph Santiago, his appointee to head the state police, had to resign after it was revealed he had a criminal record and alleged relationships with mobsters. The governor himself was tape-recorded in one meeting with a principal in a fundraising scandal using the word "Machiavelli," which prosecutors say was a code word for a bribery scheme.

Just last month, prosecutors announced that Charles Kushner, Mr. McGreevey's top donor, was being charged with hiring prostitutes to entrap a witness and obstruct a federal investigation. It was Mr. Kushner who sponsored Golan Cipel, an Israeli poet and PR flack, to enter the U.S. In 2002, the governor appointed Mr. Cipel head of the state's homeland security efforts, starting a chain of events that culminated in Thursday's resignation announcement.

In the end, Mr. McGreevey had become a political shape-shifter, an unprincipled and voracious fund-raiser who was easily the East Coast equal of Gray Davis. To pay off all the favors he owes, his latest $28 billion budget includes a 17% spending hike, the largest in state history. The state's top marginal income tax rate is going up by 41%--to 8.97% from 6.37%--at the same time the two top rating agencies have downgraded New Jersey's bond rating because of repeated borrowing.

"They raised taxes, but instead of balancing the budget, they're borrowing and accelerating spending," says Richard Raphael, executive managing director of Fitch Ratings. Last month, the state Supreme Court declared the latest borrowing tricks unconstitutional.

How did the nation's ninth-largest state compile such a record of mismanagement and corruption? Traditional explanations include the fact that the state is dominated by the huge broadcast markets of New York and Philadelphia, voters get shortchanged on local Jersey news. Others blame the state's Byzantine proliferation of hundreds of self-governing towns, which they say allows the perpetuation of local machines. The electorate also bears part of the blame. Philadelphia Inquirer columnist Alan Caruba says that "something is terribly wrong with voters who have demonstrated a virtual death wish so far as any sensible governance of the state is concerned."
Here are some other culprits:

• The media. Several papers reported on Mr. Cipel's mysterious influence over Gov. McGreevey, but they underplayed the matter. Bob Tennant, editor of the Trentonian, insists that "there was nothing concrete that we could put in the paper" about the nature of the relationship. Others aren't so sure. Steve Adubato, a former Democratic state legislator and current host of a PBS public-affairs show, told Fox News's John Gibson that journalists did not pursue the Cipel story aggressively enough because "we were afraid of being accused of being homophobes and we were wrong for doing that."

• The state's imperial structure. New Jersey's post-New Deal constitution made the state's governor what columnist George Will calls "an American Caesar." As the only statewide elected official, he appoints the attorney general, the treasurer, all the county prosecutors and almost all the judges. When Mr. McGreevey leaves office, state Senate president Richard Codey will become acting governor, but he will also keep his old job, thus allowing him to control both the executive branch and half the legislature.

He will be able to do this because the state also has a bizarre law that allows New Jersey officials to hold two elected positions at the same time. Sharpe James, the closest thing the state now has to Frank Hague, is both mayor of Newark and a state senator. Before Mr. McGreevey became governor he served as both mayor of Woodbridge, the state's sixth-largest city, and in the state Senate. The arrangement invites conflicts of interest and corruption.

• The minority party. Republicans are too often part of the problem in New Jersey, and too rarely part of the solution. In 1991, the party won more than two-thirds of the state Legislature in a voter revolt against then-Gov. Jim Florio's tax increases. In 1993 the GOP won the governorship with a pledge to cut income taxes 30%. After honoring that pledge, Republicans decided that rather than drain the Trenton swamp they would turn it into their own private hot tub.

Spending and state mandates on local government ran rampant, as Gov. Christie Whitman sanctioned a tripling of the state's debt. Her plan to reform auto insurance was strangled in its crib by trial-lawyer Republicans in the Legislature. Under pressure from lobbyists, less than half of the state's Republican legislators honored a party pledge to pass the right of initiative and referendum that voters in 23 other states have. "If I&R had won, the investment lobbyists had made in having legislators see their way would have been threatened," said John Budzash, a founder of Hands Across New Jersey, which collected one million signatures backing I&R, only to have them ignored by legislators. Small wonder that Jersey Republicans saw their legislative majorities shrink in five consecutive elections until they lost control of both houses in 2003.

The party has learned few lessons from that experience. Don DiFrancesco, who served as acting governor for a year after Ms. Whitman's departure, is already talking about making a comeback even though he had to withdraw from the GOP primary in 2001 under an ethical cloud. The party's establishment sometimes seems to spend as much time attacking Bret Schundler, a conservative former Jersey City mayor who was the party's nominee for governor in 2001, as it does Democrats. "In New Jersey, the tax recipients are more organized than the taxpayers," Mr. Schundler says. He is planning another run for governor next year if Democratic plans to scotch a special election to replace Mr. McGreevey succeed.

• The county chairmen. New Jersey is a machine state, and the center of its boss rule are the party chairmen, who dominate local politics in the state's 21 counties. They wield huge influence and can and do usually block the candidacies of independent-minded reformers who want to change things in Trenton. Nearly two-thirds of the GOP county chairmen work for state or local government. In a twist common to dying machines, the county chairmen sometimes seem more afraid of reform than losing to Democrats.

Gov. McGreevey's resignation may create a rare opening for change. Many New Jersey residents of both parties share a disgust at being continually stiffed by the politicians. The current scandals should give them all the indignation they need to demand change.