It's Florio, stupid - New Jersey gubernatorial campaign between James Florio and Christine Whitman

Bret Schundler's inauguration was the place to be one hot July Thursday. Schundler, a white Wall Street Republican, had run for mayor of this poor, largely minority city on a platform of empowerment, and won in a 68 per cent landslide. In attendance at his inaugration were former governors, statewide officials, and Mr. Empower the Inner City himself, Jack Kemp. Also tagging along, evidently hoping to exploit Schundler's enormous popularity, were Democratic Governor Jim Florio, who signed a 3-million "jobs" bill at the podium, and his Republican challenger, Christine Todd Whitman.

Mayor Schundler's speech, as it happens, rebuked politicians who imply that signing bills and sending money is the way to treat society's maladies. He went on to pitch his own message of low taxes, safe and clean streets, and an end to welfare and the NEA's lock on public education. In effect he dismissed the governor and took control of the debate about how to save Jersey City. The question from now until November is: Can Christine Whitman do the same?

Mr. Florio, a pugnacious ex-boxer from Brooklyn, likes to joke that many Jerseyites seem to think his first name is "Dump." After making a Bushian tax pledge in his election campaign four years ago, Florio and a Democratic legislature pushed through a disastrous tax hike which doubled higher-end income-tax rates, raised other income-tax rates, and punched up the sales tax. He was hissed and booed by the people; his approval rating slid down to 18 per cent.

The economic results were just what Ronald Reagan would have predicted. Florio's projected $2.8-billion "revenue increase" turned out to be a paltry $700 to $800 million. And in the process, some 300,000 jobs were lost, driving the state's unemployment rate to second-highest in the nation (though it has recently dropped slightly). New Jersey had had a large share of heavy-truck sales in the region; after the sales tax kicked in, sales dropped by about 75 per cent, as out-of-state buyers stayed out of state and locals went out. Businesses closed or fled, leading New Jersey to underperform the anemic national economy for the last two years.

Republicans jumped with partisan joy: Florio clearly had no chance at re-election. Indeed, in the legislative elections halfway through the gubernatorial term, the solid Democratic majority was replaced by veto-proof Republican majorities in both houses. GOP candidates had only to mention the words "Florio" and "taxes" to have voters clicking their lever.

The voters' wrath was rekindled this spring when Mr. Florio's chief of staff and longtime chum, Joseph Salema, had to resign because of allegations that his firm, Armacon Securities (which advises the state on bond investing), had received kickbacks from Merrill Lynch and other houses to steer business their way. And Salema resigned on the very same day the Kennedy family gave Florio its Profile in Courage award, stomping on his moment of glory.

Florio's current campaign strategy is to go on the offensive. Top Gun consultants James Carville and Paul Begala are waging a class war, using Mrs. Whitman's wealth against her, suggesting that her policies are designed to favor the rich Florio's team will argue that their man made some hard choices early on ("breaking the bad news about the emperor's new clothes," as one aide put it), and thus the state has a solid budget despite the Bush recession. If re-elected Mr. Florio can thus spend his second term fighting for the middle class.

The governor has already toyed publicly with the idea of a middle-class tax cut. Mrs. Whitman responded awkwardly bemoaning "cynical" election-year politics that offered a tax cut "when," she said, "the money isn't there."

Which is just what Mr. Florio had hoped she would say. This left him on the side of the tax-cutters while she hedged her bets. The Florio camp swooped. Mrs. Whitman is not willing to cut taxes on the middle class after all, they said, and furthermore she can't decide how she wants to govern. As August began, the two were tied in the polls, even though Florio's approval ratings hovered near those of his buddy the President.

Mrs. Whitman is not helped by the fact that the GOP's veto-proof legislative

majorities more or less went along with a Florio budget that raised spending by more than $900 million. This produced an inevitable result: a recent survey indicated that voters felt Republicans would do no better than Florio on tax policy.

Mrs. Whitman hopes to counter these setbacks by making trust an issue. Mr. Florio did, after all, break a clear no-new-taxes pledge. But pols agree she can't simply attack her opponent's record. She must offer clear and explicit proposals for reducing taxes and spending. If she preaches caution and a nuanced approach to cutting taxes, she will appear savvy to some, but others will see her as deceptive: just another rich Republican hoping to ride voter discontent into office and then do - nothing very much.

But Mrs. Whitman has a disturbing talent for being put on the defensive. When attacked last month for meeting with a pro-life: state senator, she accused the Florio camp of raising petty issues. That pleased no one. It looked as if she was unwilling to defend a pro-life position while hoping to pick up pro-life votes.