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Endorsing Decline

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Endorsing Decline

A New Jersey newspaper’s backing of Bob Menendez illuminates the Garden State’s long economic slide. October 31, 2018
Politics and law
Economy, finance, and budgets

New Jersey’s largest newspaper, the Star-Ledger, is facing intense criticism for its reelection endorsement of New Jersey senator Bob Menendez, who was “severely admonished” by a bipartisan Senate ethics panel for accepting gifts from a donor and advocating for the donor’s personal interests. Menendez’s actions “reflected discredit upon the Senate,” the committee wrote. Nonetheless, the Star-Ledger said that voters should “Choke it down, and vote for Menendez” because he’s a reliable opponent of President Trump’s agenda. The paper itself has been a reliable, if somewhat shrill, opponent of Trump policies on immigration, Obamacare, and the appointment of federal judges. It opposed Trump’s tax reform, though 80 percent of Jersey residents will see a tax cut, and even as the national economy’s growth spurt in the wake of that legislation has increased tax collections in the perpetually budget-challenged Garden State.

But appearances aside, the paper’s editorial decision is not all about Trump. Like many local newspapers, the Star-Ledger has a reliably left-leaning editorial board that has consistently supported big-government Democrats who spend their state and local governments into economic oblivion. It’s convenient to justify the Menendez endorsement as an effort to resist Trump, but even critics of the president (like myself) have no doubt that the paper would have made the same move had Ted Cruz or Marco Rubio been in the White House.

Many left-leaning newspapers lament the economic forces shrinking their industry, gobbling up jobs and newspapers with startling speed. But few see a link between the corrosive economic impact of big government and their own troubles. Their faith in taxing-and-spending blinds them to the inevitable consequences of that policy.

An episode in recent New Jersey history illustrates this point. Advance Publications, which owns the Star-Ledger, announced that the paper might shut down in 2008 because it was bleeding $30 million a year; the publisher cited declining ad revenues from department stores as one of its big problems. What the publisher didn’t mention: when Governor Jim McGreevey raised corporate taxes in New Jersey in 2002, the Star-Ledger editorial board praised the increase as a necessary “compromise” for a state government that had taken in “only” $22.4 billion in revenues but had allocated $23.4 billion in projected spending. Apparently, it hadn’t occurred to the paper that Trenton, which even then collected more revenue per resident than almost any other state government, had alternatives to raising taxes on local companies as a means of dealing with its budget shortfall. 

A few days after the budget passed, the CEO of Federated Department Stores, which operated Macy’s and Bloomingdale’s in New Jersey, said that the new tax was so onerous that it threatened local profitability, and that the company would probably open no more stores in the state—and might actually close some. Critics pilloried him, pointing out his own high compensation, and asking why a profitable company couldn’t afford to pay more to support state government. But department stores, like newspapers, were under intensifying economic pressures at the time. Since the tax increase was instituted, Federated has continued to cut back in Jersey, from 32 Macy’s stores to 24 today, and from 10,000 employees to 6,300. Other retailers, facing a difficult selling environment, have also shrunk.

Newspapers have retreated even more rapidly. Since 2008, the Star-Ledger has downsized several times, and it continues to rack up big losses. Despite deep concessions by workers in 2008, for instance, the paper was still losing $20 million some six years later, when it laid off newsroom staff, sold its headquarters, and moved to smaller offices. It hasn’t helped the newspaper or the state’s retailers that, since McGreevey’s tax increases (he raised taxes 33 times, and his successor, Jon Corzine, added billions of dollars in sales and income-tax increases), New Jersey’s economy, once a model of growth and productivity, has consistently lagged the national economy, creating an almost perpetual state of budgetary crisis in Trenton.

It's easy for a left-leaning paper to attribute its own retrenchment to the powerful forces undermining local newspapers, without drawing any connection between the kind of big government it embraces and the decline of the area economy. This is why it’s hard for small-government advocates to feel much sympathy for the decline of papers like the Ledger. But it’s also hard to feel a sense of schadenfreude over the economic conditions that exacerbate the problems for newspapers, because those same conditions hurt many other businesses, including some in vibrant industries that should be thriving.

The Menendez endorsement might be the story today, but in New Jersey and elsewhere, there’s an older, more telling story—about economic decline.

Photo by Spencer Platt/Getty Images

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