Features August 25, 2010, 11:01PM EST

Governor Chris Christie: GOP Darling

(page 4 of 4)

It ranks second in the nation in per-capita income (behind Connecticut) and fifth in the percentage of people 25 and older who have bachelor's degrees, according to the Census Bureau. It's in the nation's densest urban zone, with New York City on one border and Philadelphia on another. Jersey City, across the Hudson from lower Manhattan, has sprouted a forest of tall buildings filled with financial firms like Goldman Sachs and Morgan Stanley (MS). The center of the state has vast campuses of pharmaceutical companies such as Bristol-Myers Squibb (BMY), Johnson & Johnson (JNJ), Roche, and Merck (MRK). And even though it's no longer the headquarters of the Bell System, New Jersey still has a web of telecom and data center infrastructure.

From the 1960s through the mid-1990s, New Jersey used lower taxes and cost of living to lure jobs out of New York City. But steadily rising taxation has lessened its allure, says the Manhattan Institute's Malanga. Much of the spending increase has occurred at the local level. In the well-to-do New York City suburb of Closter, N.J., which has a below-average crime rate, all but two of the 20 members of the police force are earning more than $100,000 this year, not including benefits or overtime. To blame: Arbitration rules that are tipped in unions' favor—and that Christie is trying to change. New Jersey ranked last in a Tax Foundation survey of states' business-tax climates. "What's particularly disturbing to us is that we have now fallen behind our regional competitors such as New York and Pennsylvania and Delaware and Connecticut," says Philip Kirschner, president of the New Jersey Business & Industry Assn.

Verizon New Jersey President Dennis M. Bone, interim chairman of a new public-private partnership called Choose New Jersey, says Christie has energized businesses by working to hold down their taxes, streamline regulation, and keep jobs in the state. Christie says when he heard that Honeywell International (HON) was about to move its 1,200-employee headquarters from Morris Township to Pennsylvania, he told CEO David M. Cote, "Give me a week." Christie offered tax credits that persuaded Honeywell to stay—and expand.

Confrontational Style

The friendly face Christie shows to business isn't in evidence in his confrontations with the New Jersey Education Assn. and other public-employee unions. His method is divide and conquer. On pensions he formed an alliance with Democrat Stephen M. Sweeney, the state senate president and treasurer of an Ironworkers union local in South Jersey. (It was Sweeney who began pushing pension reform in 2006.) Christie has also exploited regional divisions between Democrats in the legislature.

Party discipline is much tighter among the Republicans in Trenton and tighter still in the Christie administration. Some 24 of his appointees worked under him in the U.S. Attorney's office, including his attorney general, his chief counsel, his press secretary, and the head of the school development authority.

Being a Republican in a state with a Democratic legislature is not the handicap it might seem. While Corzine and other Democratic governors felt they needed to accommodate the wishes of the powerful county Democratic leaders to keep peace within the party, Christie feels no such compunction, says Ross Baker, a Rutgers University political scientist. "He just doesn't give a damn," says Baker. "One should never underestimate the value of fortitude in a politician. Chris Christie's got fortitude in abundance."

The rap on Christie from his sometime-ally Sweeney and others is that he can be gratuitously confrontational. His riffs go over big on YouTube (GOOG) but not in Trenton. State Senator Buono accuses Christie of "scapegoating and demeaning anyone who disagrees with him. That drowns out thoughtful, honest discussion and debate about the issues. All it really does is further undermine the public's confidence in its government."

The senate and assembly haven't fought back hard because their standing with the public is lower than his. They might discover some backbone if the people of New Jersey—like, say, the people of Greece—start chafing under austerity. The state Civil Service Commission says 132 local governments have filed applications since January seeking to fire as many as 2,674 workers. In Newark, Democratic Mayor Cory Booker closed city pools in August and put nonemergency workers on 19 days of furlough. "We're going to stop buying everything from toilet paper to printer paper," Booker said. "Call me Mr. Scrooge, if you want, but there'll be no Christmas decorations around the city."

No Christmas decorations! That's just the type of thing that has wrecked the careers of previous governors who went to Trenton with the best of intentions. Then again, New Jersey's financial situation is more dire now, and people know it. The time may be right for Jersey's new action hero to kick down a few doors.

Coy is Bloomberg Businessweek's Economics editor. With Terrence Dopp and Dunstan McNichol in Trenton, N.J., and Laura Litvan in Washington D.C.

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