Politics: Corzines Crash
"THE STATE," DICK Codey famously declared upon handing Corzine the reins, “is pretty much broke.” Yet if anyone seemed up to the challenge, it was Jon Stevens Corzine.
The son of a farmer and a schoolteacher, he’d grown up in central Illinois and earned an MBA from the University of Chicago; in 1975, he landed a bond-trading position at Goldman Sachs on Wall Street. Twenty years later, as Goldman’s co-chairman — and against the wishes of co-chairman Hank Paulson, who would go on to serve as George W. Bush’s Treasury Secretary — Corzine steered the company public. While history has pretty much adjudicated this the right decision (and while it made everyone at Goldman insanely rich, with Corzine hauling in upwards of $300 million), it cost Corzine his job after Paulson staged a coup while Corzine was away with his family, skiing. In hindsight, the incident might have been emblematic of a leadership style that continues to cause him problems. According to Charles D. Ellis’s The Partnership: The Making of Goldman Sachs, Corzine’s headstrong independence — his tendency to go it alone in pursuing business deals, his supreme confidence in his own ideas, and an “informal, intuitive, undisciplined way of making senior-level decisions” — damned him.
Around the same time, a U.S. Senate seat in New Jersey opened up. Corzine spent $60 million of his own money to win it. He quickly found the Senate, with its arcane seniority rules, boring, and by the time Jim McGreevey announced he was resigning, Corzine decided he wanted to be a chief executive again. Never mind that the acting governor, Dick Codey, had high approval ratings and was said to be planning to run. The governor and Codey have maintained that the latter’s decision not to run was voluntary. But Codey is now more … forthcoming. “Was I a bit resentful? Of course I was. You take over in an absolute chaotic situation, and after a couple months people are saying, ‘Hey, this guy looks pretty good, he’s doing a good job.’ And instead of the party saying, ‘Jon, step back, stay in the Senate, this guy looks like he’s catching on’ … ” He trails off. Corzine ran — and won — on promises not to punt the state’s fiscal problems the way his predecessors had, and to make tough, but fair and ethical, decisions. Just as Obama would three years later.
To understand how Jon Corzine went from savior to pariah in one seemingly fell swoop, one has to first understand how New Jersey got into its latest economic mess. The trouble really started in Republican Christie Whitman’s administration. As the conservative editorial page of the Wall Street Journal noted, after Whitman delivered on her campaign promise in 1993 to slash income taxes by 30 percent, “Republicans decided that rather than drain the Trenton swamp, they would turn it into their own private hot tub. Spending and state mandates on local government ran rampant, as Gov. Christie Whitman sanctioned a tripling of the state’s debt.”
Fast-forward to 2006. By the time Corzine took office, state debt stood at $29.7 billion. After putting the legislature in a headlock to approve a one-cent increase in the sales tax (he allowed the state to shut down for a week), Corzine planned to tackle the debt issue head-on. Thus was born the most ambitious economic scheme in New Jersey history: a plan that proposed increasing highway tolls by 800 percent over the next several decades. The money raised would halve the state’s debt and fund sorely needed transportation improvements for years to come. It was just the kind of big-idea, think-outside-the-box plan people are now expecting from the Obama administration.
