Sept. 8 (Bloomberg) -- New Jersey Governor Jon Corzine finds himself in the most precarious situation of his political career: trailing his challenger by as many as 10 percentage points just two months before Election Day as residents vent frustration for the state’s financial and corruption problems.

Corzine, a Democrat and former chairman of Goldman, Sachs & Co., seeks to make voters look beyond their economic woes and recognize his efforts to create jobs, expand health care and improve public education. Republican Chris Christie, a former U.S. attorney riding a reputation as a corruption fighter, will continue blaming Corzine for the state’s 9.3 percent unemployment and the highest property taxes in the nation.

“The only way Corzine can win this is to make Christie the greater of two evils,” said Jennifer Duffy, senior editor at the nonpartisan Cook Political Report in Washington. “And what Christie needs to do is to deflect that as much as possible and keep the spotlight on Jon Corzine and his record.”

Corzine, 62, is the only U.S. governor seeking re-election this year. While Virginia has a gubernatorial race, the state’s chief executive, Tim Kaine, isn’t seeking another term. Both races are seen as a referendum on President Barack Obama, who has campaigned for the Democrats.

Support for Obama and his policies declined over the summer, making it harder for Corzine to ride the President’s coattails. Fifty-one percent of New Jersey voters approved of the job Obama is doing in a Sept. 1 poll by Quinnipiac University, down from 60 percent approval in a July survey.

Challenger’s Lead

This month’s poll had Christie leading Corzine, 47 percent to 37 percent, and 60 percent disapproving of Corzine’s job performance. The survey of 1,612 likely voters had an error margin of 2.4 percentage points.

“Jon Corzine is continuing to take the beating of a bad economy, any incumbent would,” said Ben Dworkin, director of the Rebovich Institute of New Jersey Politics at Rider University in Lawrenceville, New Jersey. “He should be worried, but he still has a shot.”

Republicans haven’t won a statewide election in New Jersey since voters returned Christine Todd Whitman to a second term in 1997. Four years earlier, she beat Democratic Governor James Florio as voters revolted against his tax increases. Only one other incumbent New Jersey governor, Republican William Cahill, lost an election since 1947.

Campaign Season

Incumbents trailing in early polls have come back and triumphed. In 1977, Democratic New Jersey Governor Brendan Byrne won re-election, after trailing his Republican challenger by seven percentage points in a July poll by Rutgers University’s Eagleton Center.

Labor Day marks the unofficial kickoff of the campaign season in New Jersey. Corzine spent the holiday weekend attending community fairs, picnics and parades from Lodi to Princeton Junction. Christie rode his campaign bus up the Garden State Parkway, making stops in popular Jersey Shore towns, including Cape May and Point Pleasant.

The governor promised in his 2005 campaign to use his Wall Street acumen to repair the state’s finances. Within months of taking office, he enacted the first sales-tax increase since Florio to help close a budget deficit.

Last year, voters and lawmakers shot down Corzine’s plan to reduce state debt and fund road work for 75 years by raising tolls on the Parkway and New Jersey Turnpike as much as 800 percent. Corzine’s approval further slid this year after he enacted tax increases and service cuts to cope with declining revenue, as the recession led consumers and businesses to cut spending and joblessness climbed to its highest since 1977.

Critical Ads

The governor has spent campaign money on ads seeking to link Christie to former President George W. Bush and criticizing the former U.S. Attorney for failing to report a $46,000 loan to a subordinate or pay taxes on it.

The Republican, in a Sept. 2 telephone interview, said his campaign saved its resources for a strong ad presence in the remaining two months. Christie, who is taking public matching funds and limited to spending $10.9 million, said he expects to be outspent.

“The next 60 days are going to be extremely challenging,” Christie said. “New Jersey has become a very difficult state for Republicans. We’re going to have to do really well with not only our Republican base but in getting the independents and the Democratic-thinking independents.”

New Jersey had 5.2 million registered voters as of June. Democrats outnumber Republicans by more than 720,000 voters, while almost half of those registered are unaffiliated.

Convincing the Electorate

Corzine said his biggest challenge will be to convince the electorate that the economy is mending. He said he “feels very strongly” about his record in job creation and school test scores, and will highlight them.

“People understand that there is a national problem,” he said yesterday as he greeted residents at a church festival in Lodi. “There are a lot of indications that we’re turning our ship and people will have to make a judgment about who will be able to get us out of this.”

As the governor greeted dozens of people, he said his challenge in the final weeks of the race will be to demonstrate to voters successes such as 13,000 private-sector jobs created in July. “It’s more difficult” during a recession, he said.

Christie, riding in a parade in South Plainfield, yesterday, said less government and tax stability will be the real creators of employment.

“If things were going good he’d be taking credit for it,” Christie said of Corzine. “People need hope and that’s why we’re going to win.”

Corruption Sweep

Corzine has trailed Christie in polls since February. The July 23 arrests of 44 people in New Jersey in a federal corruption sweep helped Christie in a state where more people associate Democrats with political bribery than they do Republicans, according to a survey by Hamden, Connecticut-based Quinnipiac.

A week after the arrests, Congressional Quarterly changed its rating of the New Jersey governor’s race from a tossup to leaning toward Christie winning.

For Corzine to win, he needs to increase his support among ambivalent Democrats, said Peter Woolley, director of Fairleigh Dickinson University’s PublicMind poll. The Madison, New Jersey, center’s Sept. 1 survey found 29 percent of Democrats had an unfavorable view of Corzine, while 12 percent of Republicans had an adverse opinion of Christie. The margin of error was 4 percentage points.

“When people are angry and frustrated, they tend to reach out for an alternative,” Woolley said. Corzine “needs to reassure Democrats that he’s a better choice than Christie.”

To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net.

Last Updated: September 8, 2009 00:01 EDT