Will Chris Christie Borrow a Page from Obama's Reelection Playbook?

Agenda-Setting Financial Insight.
Nov. 5 2012 12:35 PM

Will Chris Christie Borrow a Page from Obama's Re-Election Playbook?

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Barack Obama and Chris Christie discuss Hurricane Sandy's impact on New Jersey. The Republican governor may soon be borrowing a page from the Democratic president's election playbook.

Photo by Jewel Samad/AFP/Getty Images.

Chris Christie’s budding bromance with Barack Obama may grow even stronger. New Jersey’s Republican governor, who praised the president as they surveyed superstorm devastation together last week, faces a Sandy-related revenue hit that will make it hard to balance the budget, as mandated by the state constitution. That could leave Christie stealing a page from Obama’s election playbook. 

Recent history may provide a guide for the Garden State. Hurricanes Katrina and Rita contributed to a 42 percent decline in Louisiana’s tax receipts in third-quarter 2005. Considering, for example, the direct impact on Atlantic City, a gambling and convention hub, New Jersey could easily experience something similar. 

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That would equate to some $3 billion of lost revenue, assuming the state generates an equal amount each quarter. Federal funds, insurance payouts and rebuilding efforts would help mitigate such losses. Louisiana’s tax receipts rebounded by a third in the following quarter. The delay could be tricky, however, especially when clean-up costs hit the $32 billion budget much faster. 

New Jersey already has an income problem. Despite its small budget surplus, revenue is running 16 percent below pre-crisis levels, according to the Pew Center on the States. Even before the hurricane, inflows were falling short of Christie’s optimistic projections for the fiscal year ending in June. That means the governor could need to make some unpleasant choices in 2013, an election year. 

Christie has already slashed from previous years’ budgets, including unpopular choices like after-school programs and services for low-income residents. If the lost revenue can’t be recaptured, not only will Christie have to explain his failure to cut taxes further, but he’ll need to convince voters to accept stingier services or pay more in a state that already has the second-highest burden in the country. 

That gives the governor a chance to show how to orchestrate the sort of compromise he has found lacking under Obama. And yet Christie also may need to take some cues from his new bestie. Throughout the president’s re-election campaign, he leaned on the argument that he was dealt a terrible hand. Christie, who also may have aspirations to higher office, will know soon enough if the strategy works.

Agnes T. Crane is a Reuters Breakingviews columnist, based in New York, where she covers capital markets and Latin America. She joined from Dow Jones Newswires, where she was an award-winning journalist who led a team of reporters covering the credit crisis.