Is the Northeast Necessary?
Moore, Stephen
IS THE NORTHEAST NECESSARY? STEPHEN MOORE A few years ago a cheeky pollster asked Americans what one state would they most like to see secede. New Jersey won the contest—with New York and...
...The one positive political development in the Northeast has been the ascendancy of tax-cutting GOP governors like Whitman, New York's George Pataki, and Connecticut's John Rowland...
...Did you know that if your funds are in the stock market, your principle is at risk...
...In this sea of statism there is a tiny island of cultural normalcy and free markets: New Hampshire, "the Orange County of the East Coast," as the Wall Street Journal's John Fund calls it...
...At a time when most of the country has grown more conservative, more dismissive of big government command, and more prosperous, the heavily unionized, economically exhausted, industrial Northeast has edged ever further to the left...
...and yet with a per capita income that has surged to among the highest of any metropolitan area...
...In 1996 the Democrats proudly celebrated their pickup of six House seats in the Northeast...
...Late last year Pataki pushed through an enormous $1.75 billion environmental bond act, while the legislature and teachers' unions are pushing a $2 billion school construction bond—all in a state that already has one of the three worst credit ratings among the fifty states...
...In Massachusetts and Rhode Island only slightly more than one-in-four voters chose Dole—paltry numbers normally reserved for third party candidates...
...and it will produce a smaller percentage of America's total value added than at any time in the nation's history...
...Workers and employers know better...
...All 38 December 1997 The American Spectator last year Al D'Amato of New York whined about know-nothing "ayatollahs in the party" — and he wasn't referring to himself...
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...Ott Are you like most people...
...Republicans and Democrats alike seem almost genetically incapable of learning to say "no" to the herds of special interests that roam the state...
...A region consisting almost solely of tax consumers sows the seeds of its own destruction...
...the city with no manufacturing and no industry (besides influence-peddling...
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...Other than taxes, this may be the single greatest impediment to the region's economic competitiveness...
...Of course, much as we might like them to, these states cannot formally secede from the rest of the United States...
...The rest of the nation has grown by 15 million people, an increase of 6.9 percent...
...For good reason...
...nervous about the stock market...
...Incomes in the Northeast have grown 20 percent slower than in the rest of the nation in the 1990's...
...Republicans, in fact, are rapidly disappearing from the region...
...Outside the Northeast, last year's presidential race was surprisingly competitive—with Bill Clinton edging out Bob Dole by3 percentage points...
...In the year 2000 the Northeast will be home to a smaller share of the U.S...
...So it's not surprising that there is a free lunch quality to the sentiments of contemporary northeastern voters...
...George Pataki and Mayor Rudy Giuliani have taken bold steps to stop the bleeding...
...The political importance of the Northeast hit its high water mark long ago—and with every year it recedes still further...
...All ten Massachusetts House seats are now controlled by liberal Democrats like Joe Kennedy, Barney Frank, and Joe Moakley...
...It stares you in the face at every curb, every subway stop, every building site...
...What would say to: Your Principal is...
...In Massachusetts, Connecticut, Washington, D.C., New York, New Jersey, and Rhode Island, the after-tax value of all welfare benefits (including AFDC, public housing, food stamps, child nutrition payments, and Medicaid) exceeded a $12-per-hour, 4o-hour-a-week job...
...Why indeed...
...Parris Glendening have co-opted the GOP tax agenda...
...Either way, the rest of America wins...
...There is one conservative issue that plays well in the Northeast these days," explains political strategist and 1982 Republican Senate candidate in New Jersey Jeff Bell, "and that is taxes...
...Eighty-five percent of D.C...
...The ten largest cities of the Northeast, including Boston, Philadelphia, and New York, have lost a combined 1.6 million people in the past quarter-century...
...They may gripe about overtaxation, but they're just as quick to condemn any effort at even modest budget restraint and join with the media, unions, and poverty industry in invoking visions of the apocalypse...
...With each passing day the region's shrinking conservative voting base is retreating to the more economically robust and culturally normal places like Georgia, North Carolina, Florida, and Texas...
...But as Richard Vedder, economist at Ohio University, has found, "For twenty years now Americans have been voting with their feet against the high taxes and debilitating policies of the Northeast —creating a massive brain drain from the region...
...A1997 Dunn & Bradstreet study notes that so far in the 1990's New York has lost more businesses than any other state...
...From 1990 through 1995 the Northeast lost nearly half a million jobs—mostly high-paying manufacturing slots—while the rest of the states gained 8.5 million jobs...
...But in the Northeast each new piece of special-interest driven legislation is encrusted upon layers and layers of existing anti-business rules, regulations, edicts, and laws...
...Pro-abortion sentiment is so universal in New England, for instance, that even the Catholics are disdainful of the right to life...
...forced-unionism states...
...Some of the most scathing critics of the Contract With America were northeastern Republicans...
...In New York City welfare is worth as much as $30,700 a year, or $4.50 an hour—more than a starting secretary or computer scientist earns...
...For the past quarter-century the non-northeastern states have gained new jobs at three times the pace of the northeastern states...
...In fact, their welfare generosity rivals socialist Sweden's...
...With no state income tax or property tax, and the third-lowest per capita tax burden in the nation, New Hampshire has enjoyed the fastest growth rate in all New England...
...In New York, Gov...
...Northeasterners complain disdainfully of the "war between the states" for jobs and businesses...
...What about the liberal distraction of rent control...
...than the Northeast today...
...Last year was no aberration...
...But in charge of what...
...Labor costs here are about 30 percent above the national average...
...The New England-Metroliner corridor has seen a piddling population gain of less than 1 million, or just 1.6 percent...
...On the values issues," writes Barone, "the New England states are not as secular and liberation-mindecIAS 37 post-Thatcher Britain, but they are getting there...
...The good news is that the left's monopoly is almost inconsequential...
...In New Jersey Democratic gubernatorial candidate James McGreevey ran to the right of Christie Whitman on property taxes...
...Minimum wage and pro-union laws don't matter...
...In 1995 the ADA's ratings of New England Republicans—Jim Jeffords, John Chafee, Olympia Snowe, and the like—was four times higher than its ratings for other Republicans in the Senate...
...S.E.P...
...Connecticut and Rhode Island are the only two states to have lost population since 199o, (The Providence Journal recently quipped: "Will the last person in Rhode Island please turn off the lights...
...Defenders of the Northeast argue that the region is already in the process of healing itself...
...What would a decline in the stock market do to your stocks, mutual funds and retirement accounts...
...Meanwhile, the Northeast is becoming increasingly inhospitable to employers...
...Would it be a great loss to the smaller-government movement if Republicans lost the Chris Shays, the John Chafees, the Jim Jeffords, the Al D'Amatos, and country club New Jersey and Long Island voters...
...There's no surer way to infuriate a snobbish northeasterner than to remind him that the businesses in his state are trading up for Mississippi...
...Today, the two states with the highest percentage of employment in manufacturing are North Carolina and Mississippi...
...For the rest of the United States — competitive, capitalist, and confident—the Northeast is not so much unnecessary as it is irrelevant...
...The financial wreckage of Cuomo-ism has ended for now as tax rates and welfare rolls have finally started to decline...
...The very demographic trends that are draining the region of economic energy are weakening its political clout...
...Nowhere is the economic corrosion from years of command and control governance more evident than in New York City...
...Every northeastern state has a corporate tax rate above the norm...
...Thousands of small and large factories have uprooted themselves from the north-Atlantic states...
...Throughout the region politically savvy Democrats like Vermont Gov...
...But have they really...
...The American Spectator • December 19 97 41...
...But only the Northeast offers an agglomeration of states that share a common left-wing ideology virtually across the board...
...But a different mix has been left behind here: welfare recipients, government workers, senior citizens, and university professors...
...But these are not Republicans properly understood...
...In the short term, yes...
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...At some point, the political balance in New England will tip irretrievably in favor of the redistributionists, business-bashers, anti-growth preservationists, the swelling ranks of government employees, and retirees living on tax-exempt bonds," notes John McClaughry, president of the Ethan Allen Institute in Vermont...
...As Dusty Rhodes, chairman of Change-NY, a taxpayer group, noted, "Governor Pataki inherited the most anti-competitive tax structure in the nation and even with his 40 December 1997 • The American Spectator economic plan passed into law New York still has the nation's most anti-competitive taxes...
...The result: an ever widening ideological Grand Canyon between what truly is now two Americas...
...The American Spectator • December 1997 with an ex-convict mayor...
...But inside the Northeast Clinton trounced Dole by 28 points (59-31...
...Yes, STOCK MARKET RETURNS without STOCK MARKET RISKS...
...In the 1980's and early go's this same group routinely outspent Mario Cuomo...
...Six of Money magazine's ten "tax hells" this year are in the Northeast: Maryland, Massachusetts, Maine, Rhode Island, Washington, D.C., and New York...
...In Philadelphia, Mayor Ed Rendell's tough stance on public employee unions has cut municipal costs and made the city more livable...
...In all of New England, 19 of the 21 House seats are now held by Democrats (or Bernie Sanders...
...Each had enacted highly touted progressive "shake down the rich" tax hikes to fund Robin Hood social programs, only to be repudiated by voters...
...The corporate tax rate is the highest anywhere in America...
...Like every failing institution, the region now confronts a clear choice: change, or die...
...The rest of this other America encompasses the New England states of Connecticut, Rhode Island, Massachusetts, Vermont and Maine, all of them systematically anti-free enterprise and culturally left-wing...
...Driving north from Washington along the Interstate 95 corridor, you first hit Maryland, which hasn't officially elected a single Republican to statewide office in twelve years (though Ellen Sauerbrey did have the governorship stolen from her in 1994...
...In normal America Republicans won the House vote by a 51-47 percentage...
...residents voted for Clinton and the remaining 15 percent for Dole presumably by mistake...
...It's less clear all the time whether northeastern Republicans in Congress are signed on to that message—even in principle...
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...Hollywood and San Francisco may be more leftleaning than Boston or New York City...
...In isolation, none of these cock-eyed public policies would cripple a state's economic competitiveness...
...it will have a smaller industrial base...
...After a half-hearted attempt to overturn the law, Pataki and other Republican leaders essentially ratified it, despite compelling evidence uncovered by William Tucker, author of two books on rent control, that without the laws the city would have at least 300,000 more low-income housing units...
...Ideological purity has all but been achieved...
...In the 1990's domestic flight from the Northeast into the sunbelt, southeastern, and mountain states has begun to resemble a stampede...
...Pataki boasts, "We have discarded all the old liberal distractions of the previous era and are ready to move into the twentieth century...
...Regulatory costs don't matter...
...The effect of the northeastern Republicans in Congress is to constantly dilute what should be the party's unwavering populist and winning message — more freedom, less government...
...Real estate values have plummeted 25 percent relative to the rest of the nation...
...Everyone who lives here is exposed to the failures of government on not a day-by-day or hour-by-hour, but minute by minute basis," complains Richard Emery, a prominent Manhattan lawyer and Democratic activist...
...A Federal Reserve Bank of Minnesota study last year showed dramatic differences in job creation rates in right-to-work vs...
...In the 1950's thenortheastern states had 41 House seats...
...STEPHEN MOORE is director of fiscal policy studies at the Cato Institute...
...Despite the diluting effect of a steady stream of tax-refugee yuppies from Boston, New Hampshire's cultural and political institutions remain mostly conservative and populist...
...And for good reason...
...11 the data, then, point to one conclusion: the Northeast is dying, victim of the same sclerosis now paralyzing most of welfare-state Europe...
...Although New York's greatest wealth-producing sector is Wall Street, residents pay the highest capital gains tax rate in North America...
...Today, the number has dwindled to 47...
...This is a long term trend...
...The GOP would do well just to hold on to its current few seats...
...Democrats won the House vote 58 to 41 percent...
...population...
...A Southern governor recently told me that his state had closed its economic development offices in Europe...
...Thus all of the statistics used below to describe the maladies of the Northeast do not apply to New Hampshire—an exclusion not likely to offend too many New Hampshirites, I suspect...
...These pols understand, as Bell notes, that "once the tax issue is neutralized in their states, all other issues are overwhelmingly in favor of Democrats...
...Fifteen years ago roughly 4o percent of the nation's security and commodity brokers were in New York, now only 27 percent are—and the percentage shrinks each year...
...Other statistics only add to the depressing tale of regional sclerosis...
...Whenever a Dean or Glendening proposes expansive state-run health care systems, "free" child care centers, pay raises for teachers, government-subsidized sports stadiums, or some other gold-plated government scheme, northeasterners still salivate...
...Only Delaware escaped the bottom rungs (finishing 19th), while the rest of the Northeast ranged from Massachusetts (37th) to New York (46th) to Rhode Island (49th...
...The Northeast, by contrast, was an anti—Newt Gingrich bloodbath...
...Of the nation's twenty-two right to work states, not one is northeastern...
...In Boston, the state senate is dominated by the Democrats, 33-7, and the state house by a laughable ratio of 132 Democrats to 28 Republicans...
...This is a war they cannot win...
...Between 1990 and 1995 right-to-work states, mostly in the South and Sunbelt, snatched away 164,000 manufacturing jobs from non-right-towork states —mostly in the Northeast...
...The prototypical politician of the region may very well be Bernie Sanders, the Harvard professor turned mayor of Burlington turned congressman and an avowed socialist...
...Yes, Dole was a lousy candidate...
...But the congressional vote was just as lopsided...
...In November 1996 Financial World magazine published a comprehensive state-by-state Cost of Doing Business Index...
...Why search for factories overseas when we can plunder high tax areas like Connecticut, and New York...
...In the longer term, probably no...
...In 1994 northeasterners were all but immune from the national mood swing against big government...
...The compounding effect has been to convert the entire region into a kind of businessman's purgatory...
...Republicans may very well have no choice ut to write it off...
...These people, whose policies have driven out those who create wealth, will be permanently in charge...
...While the rest of the nation was electing a Republican Congress, Democrats carried the Northeast by 54-42...
...The New York state senate has long been controlled by Republicans...
...The crime rate is down 30 percent in New York City under Giuliani...
...Under normal circumstances domestic migration could mitigate the economic and ideological distinctions among various regions...
...The city is a testament to George Gilder's adage that "high tax rates don't redistribute income, they redistribute people...
...I.R.A...
...Maturity dates may vary...
...39 or years northeastern politicians F and academics have responded to critics with a self-delusional mantra: Taxes don't matter...
...Michael Barone, compiler of the indispensable Almanac of American Politics, calls this peculiar region the "New England-Metroliner Corridor...
...Even accounting for the celebrated tax cuts in the Atlantic states in the past three years, only Connecticut and Pennsylvania have top personal income tax rates below the national average of 5.5 percent...
...New Jersey won the contest—with New York and Massachusetts not far behind...
...Howard Dean and Maryland Gov...
...We've learned that the only thing worse than the D's in New Jersey are the R's," laments former Reagan economist Larry Kudlow, a close adviser to Christie Whitman during her 1993 campaign for New Jersey governor...
...The average tax premium for the privilege of living in New England is almost $3,000 per family—for schools, police protection, and other state and municipal services that are arguably inferior to those elsewhere...
...Of course, New England is not the only left-wing stronghold in the U.S...
...Sounding like Jack Kemp, Glendening last year announced that "an income tax rate cut in Maryland is the single most important The American Spectator • December 1997 thing we can do to increase the competitiveness of our state...
...But not since the Civil War and Reconstruction has any one region been more culturally, economically, and politically isolated from the rest of the U.S...
...Result: thirty years ago 254 of the Fortune 500 companies were headquartered in the Big Apple...
...It begins with Washington, D.C...
...In the Northwest Oregon and Washington are extremely liberal on non-economic issues, particularly the environment...
...Gone are the tax-and-spending likes of Michael Dukakis, Jim Florio, Lowell Weicker, and Mario Cuomo...
...New York is now America's premier welfare mecca...
...Forty years ago the Northeast was the global capital of manufacturing...
...The governments in New England are already nearly one-third more expensive than in the rest of America—$3,226 versus $2,483 per resident—and the gap continues to widen...
...Business start-up and bankruptcy rates in the Northeast reveal less vitality and investment in the region...
...New York's tax system seems intentionally designed to repel the financial industries that made this city the most important center of capitalism in the world...
...But all six and a few more will be gone after the z000 redistricting: seats that will shift to the South and the West—conservative country...
...Manhattan is visibly cleaner and safer...
...It could cost the GOP its slim congressional majorities...
...Now it is true that in non-New England New Jersey, New York, and Pennsylvania Republicans fare better—particularly in state and local elections...
...Then in succession you go through a modern-day rust belt: Delaware, eastern Pennsylvania, New Jersey, and New York...
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...The shared experience of these states is oppressive tax rates, mindless and meddlesome regulation, obese social welfare programs, slumping real estate markets, and a steady stampede of outward migration—and this is the politically conservative section of the region...
...Maine, Massachusetts, New Jersey, New York, and Vermont have experienced practically no population growth—and without an influx of foreign immigrants, they would be suffering population losses as well...
...But even the region's remaining Republicans are no bargain—more akin to Rockefeller than Reagan in their beliefs...
...Employers are abandoning the East Coast even faster than workers...
...I know, because I've made the move myself...
...with one of every three households receiving a government paycheck or welfare payment...
...The prevailing attitude in New York City and Albany these days is: we're done reforming...
...As Kate O'Beirne of National Review points out, "New England Republicans advertise themselves as socially liberal and economically conservative, but the truth is they're almost never with us when push comes to shove on the economic issues either...
...Voting trends are perhaps the most obvious indicator of the region's separateness...
...Now they are down to 115...
...Picture for a moment a legislative chamber filled with thirty-five D'Amato pork-barreling clones and you'll get the picture...
...Republicans seized control of the New Jersey legislature in 1993, but then went on to renege on most of their promises—on budget cutting, term limits, referendum and initiative, and recall of elected officials...
...he reasons...
...A typical family of four living in Maryland, for example, can save close to $2,500 on its taxes by simply packing the U-Haul trailer and moving across the Potomac to Virginia...
...Washingtonians extract wealth, they don't create it...
Vol. 30 • December 1997 • No. 12
