Orwell Comes to NJ

War is Peace, Freedom is Slavery, Ignorance is Strength...

And downgrading bonds is proof of good fiscal policy:

Towns and cities in New Jersey, the second-wealthiest U.S. state, lead the nation in bond-rating downgrades this year.

From Newark to Seaside Heights, home of MTV’s reality television show “Jersey Shore,” Moody’s Investors Service cut ratings on $1.7 billion in general-obligation debt issued by at least 23 municipalities in New Jersey this year, almost twice as much as the next-highest state, New York, according to a tally by Bloomberg News. The moves follow local-aid cuts by Democratic Governor Jon Corzine and his Republican successor, Chris Christie, who has also enacted a 2 percent annual cap on property-tax increases.

“It’s a great referendum on my fiscal policies,” Christie, 48, said of the downgrades on Dec. 16. “It says that we’re getting our fiscal house in order. When other states get their houses in order, they will see the downgrades too.”

Well, I'll bet their towns just can't wait to pay more to borrow, can they?

Were I a snarky bastard, I'd point out that Mrs. Christie works on Wall Street, as does the governor's brother, Todd. Downgrading bonds leads to higher yields, and potentially bigger fees for underwriters.

Just sayin'...

As Paul Krugman reminds us today, interest rates are at historical lows. There really is no excuse for localities to pay more in interest in this climate.

In New Jersey, Christie has “cut back a lot to balance the budget, and one of the biggest items in those cutbacks is aid to municipalities,” Alan Schankel, director of fixed-income research at Janney Montgomery Scott LLC, a Philadelphia-based broker, said in an interview.

“They’re downstreaming the deficit,” Schankel said. “The state starts out with a deficit; they close it and cut back in a lot of areas, but the biggest impact is on municipalities.”

So let's stop the nonsense, Star-Ledger and others, that Chris Christie is somehow "courageous" in tackling the budget. He has passed on the hard choices to the towns and cities and schools, all while giving tax gifts to the wealthiest residents of the state. Those towns and schools - many of which have been run with good fiscal oversight - are now paying the price for Christie's refusal to actually lead.