The newspapers are reporting that the Mayor will join the City Council in calling for big tax increases during a recession, when people can least afford it. What? Didn't they in fact call for tax breaks, likely to be temporary, when the economy is strong and unemployment is low? Yes, but the first follows from the second, time after time. And the state is doing the same thing with transit fares, holding out for a big increase at the worst possible time rather than lifting the fares year by year as labor costs rise. So when property taxes are once again jacked up when you can afford it least, and elected officials say they have no choice, remember that they did have a choice. They are making that choice right now.
The idea that government raises taxes in a recession while business cuts expenses is a false one. Business revenues fall when sales fall, meaning that employees have less to do, so there is less need for them. When government revenues fall, on the other hand, the demand for public benefits and services rises. Those who lose their jobs and health insurance are forced to rely on public benefits. People who can no longer afford private school tuition send their children to public schools. Those who cannot afford to buy a book try to get one from a public library. Etc.
Raising taxes in a recession exacerbates the downturn in the consumer economy by withdrawing buying power. But cutting spending does the same.
If anything, cutting capital spending in a recession is worse than cutting operating spending. Right now, construction costs are up and the city and state are getting less for their infrastructure dollar, since they must outbid private construction for less qualified workers and inferior materials. In graduate school, my housing markets professor advised avoiding buying a home produced at the peak of a boom for that reason. Having borrowed to the hilt and with no money set aside, however, the city and state will once again cut back capital improvements in the next recession, when construction workers really need the work and good values may be had.
Perhaps the people are to blame, since pols seem to be engaged in a bidding war to hand out goodies to improve their popularity, using the future as collateral. Or perhaps the state is to blame, since outside New York City jursidictions that engineer fiscal crises get state aid from elsewhere, while those who are responsible foot the bill. Tough love, which was dispensed to New York City in the 1970s back when it was in the habit of whining to Albany, seems to apply only to New York City.
I hope the public will not have amnesia when the bill comes due.