I had an interesting lunch in Washington yesterday with Gov. Jon Corzine of New Jersey,thankfully on the mend after his his horrendous auto accident earlier this year. It was all the more interesting for the fact thatI had interviewed his sort-of political neighbor Rudy Giuliani, two days before.
Corzine sharply disputed Giuliani's assessment of several economic issues. That's not surprising, since Corzine is a liberal Democrat who supports Hillary Clinton for president and Giuliani is seeking the Republican nomination.
But Corzine, as former chairman of Goldman Sachs , gets a much greater presumption of credibility on economic issues than most liberal Democrats. Here's his take on:
*S-Chip, the children's health care program. Corzine was in Washington, lobbying for expanded funding. Giuliani signaled support for President Bush's veto threat on grounds that the expansion represented a step towards "big government" and "socialized medicine." Corzine noted that 43 of 50 governors support expansion and added: "It's anything but socialized medicine. I wouldn't want to be a Republican who voted against it."
*Private equity tax hike. Giuliani condemned Democrat proposals to raise taxes on hedge fund and private equity executives as a dangerous "soak the rich" move that could blunt capital formation and cost New York jobs. "Chicken little" nonsense, Corzine says. "Will you be able to find one or two hedge funds that leave New York, yeah." But nothing substantial. As for whether "carried interest" deserves preferential capital gains tax treatment, he says, "It's compensation." Nor is there reason to expect it would drive talent out of the business. In fact, he says, many hedge fund executives regard the tax break as "found money" that they never expected until their tax accountants advised them it existed.
*The state of the economy. We discussed our new NBC-Wall Street Journal poll showing public angst about the state of the economy. Corzine wasn't surprised. "The macro-economy is reasonably healthy," he says. But "the numbers are different from what the feel is on Wall Street. The reality for the vast majority of Americans is they're lucky if they hold on."
Corzine applauded his former Goldman Sachs colleagueHank Paulsonfor highlighting, at Bush's Treasury Department, the issue of income inequality. And he said Democrats can win the 2008 election by proposing to do something about it--not by restricting free trade, but rather by offering help with health costs, housing, and other everyday strains.
"We ought to be talking about how we make bread and butter issues better for people who are not seeing the benefits of the global economy," he said.