Beware of government fixes

By Seth Grossman, Political Columnist

For the past two weeks, the newspapers and TV networks told us how bad the economy was, and called for ?compromise? by Republicans and Democrats so government could ?fix? it.

But our economy is now broken because government has been ?fixing? it for the past 15 years with all sorts of bi-partisan spending programs (like the FAA?s NextGen) and special tax credits (like for Obama-friendly General Electric) and $9 trillion of new debt to pay for them.

Most Americans think these programs ?stimulate? the economy and ?create jobs.? But they don?t work ? they make things worse.

When government ?pumps money into the economy,? it does ?create jobs? for some people with political connections. But this kills even more jobs elsewhere. Every dollar pumped in somewhere must be sucked out somewhere else ? through taxes and borrowing. Here are some examples:

Republican Gov. Chris Christie said the new Revel Casino is the ?key? to Atlantic City?s rebirth. Christie worked with Republicans and Democrats in the state Legislature to give this casino project $261 million in state tax breaks over the next 20 years. Those future tax breaks were then used as collateral to borrow about a third of the $1.2 billion needed to finish the project.

But existing casinos like Resorts and Trump Marina that were worth more than $400 million a few years ago were just sold for less than $40 million each. The Hilton is for sale and can?t find a buyer. And MGM needs another year to unload its half of the Borgata.

How will the taxpayer bailout of the failed Revel Casino project play out? Will the new Revel Casino lose money and go under because it has six times the debt burden of competing casinos? Or will it ?succeed? and knock four or five older casinos out of business? Either way, Atlantic City will soon have vacant casinos to go with its empty baseball stadium and near-empty Boardwalk and Convention Halls ? all paid for by taxpayers to ?create jobs? and ?fix? the local economy.

Last March, Republican Lieutenant Gov. Kim Guadagno was in Atlantic? City with a plan for state government to ?save? the tourist business in New Jersey. State government is spending $9 million this year ?to promote tourism,? and another $15.8 million on grants to dozens of ?arts? organizations around the state. Where is this $24.8 million coming from? From a new 5 percent tax added to the 7 percent sales tax on every hotel and motel bill in the state.

Hotel and motel visitors already pay higher prices in New Jersey than in Delaware, Maryland and Virginia because our real estate taxes are so high. The 12 percent total tax on top of that adds insult to injury. Every hotel and motel owner I know tells me they would much rather do without any ?help? from the state if they could knock off half of the 12 percent tax on their customers.

Gov. Christie repeatedly said he wants even higher electric rates to pay for even more money-losing windmills and solar panels. Is this boosting the economy with ?green energy? jobs?

Last year, the Hamilton Township Public Schools spent $3.8 million to put solar panels on three school buildings. Martha Jamison, business administrator for the school district, said the panels would pay for themselves with lower electric bills over the next 15 years.

But last year, before the panels were installed, the school district paid $824,000 for electricity. This year, with the new solar panels, the school district paid $918,000. What happened? Why are Mays Landing taxpayers now paying more, not less, for electricity with ?free? electricity from the sun?

Martha Jamison said she wants to go another year before she compares energy bills. But she also said that electric rates are higher this year.

Of course they are. Even though the cost of making electricity is down, thanks to abundant, low-cost natural gas now coming out of Pennsylvania, electric rates in New Jersey are way up. New Jersey already has the fourth-highest electricity rates in the country, and Atlantic City Electric is now proposing another increase for next year.? This is because about one-third of our electric bills pay owners of windmills and solar panels far more than the electricity they produce is worth.

And these high electric bills, along with high property, income, sales, business, and payroll taxes, are what killed thousands of jobs when major employers like Wheaton, Lenox China and Ocean Spray were forced to close down or leave New Jersey.

(Reprinted from August 17, 2011 Current-Gazette Newspapers of Atlantic and Cape May Counties,

Somers Point attorney Seth Grossman appears on 1400AM talk radio 3-4 p.m. Mondays and Wednesdays and on 92.1FM 8-9 a.m. Saturdays. For information see, email

or call (609) 927-7333. Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Shore Diner on Fire and Tilton roads in Egg Harbor Township.

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