The Meaning of the $400 Check

In the last month I received a couple of financial communications from the City of New York: a $400 property tax refund check and a $170 property tax increase bill. Even factoring in the cost of the stamp and the hassle of going to the bank to deposit the check, I guess this makes me a “winner” in the special deal sweepstakes that is our government. A winner, that is, assuming that I don’t care about anyone who is a renter, and thus did not get a check, is likely worse off than I am, and if they are in a rent regulated apartment will have the cost of the property tax increase passed onto them (my guess is that in the coming real estate environment market-rate landlords will be eating that increase and much else). And assuming that either my employer does not have a commercial lease that allows such increases in cost to be passed on, or can absorb a higher tax burden without adversely affecting my job. And assuming that I won’t be interested in, or forced to seek, a job with another firm that might be discouraged from opening here by the higher commercial tax burden. But here on Room Eight let’s not talk about what the $400 check means to me. Let’s talk about what it means to Mayor Bloomberg and the New York City Council.

Now that Mayor Bloomberg has proposed a repeal of the check, or at least its suspension, and has been over-ruled by the City Council, should I refer to it as the City Council check rather than the Bloomberg check? Should I therefore remove it from the black side of the Mayor’s public policy ledger? No.

What I hope the $400 check means to Mayor Bloomberg is that he now understands that special deals and favors to already-privileged interests are irrevocable in New York politics, no matter what the consequences for others or the future. He cannot hand out political favors and withdraw them as he wishes, because other pandering politicians will rush in to pander in his place. What he can do without much trouble is raise the tax burden on those who do not have breaks to such a high level that people begin to leave and new businesses do not open here, sending the city into a downward economic spiral. And what he can do is reduce the quality of public services to such an extent that they become virtually worthless, though still expensive. But deals and favors, privileges and exemptions? They keep growing year after year after year. By adding to them, he has fully joined the city’s political culture.

Next up is term limits. Mayor Bloomberg might say, and might even believe, that he merely extended term limits, and will make sure that they remain in place in four years. But he will find that the City Council will not allow him to remain in his position as long as he wishes, without taking for itself the right to remain in office as long as they wish as well. After all, that would be “unfair,” given that fairness is only measured among the oligarchies, and not in comparison with the voting serfs. So expect terms to be extended further, perhaps indefinitely, over the Mayor’s veto if necessary. Expect initiative and referendum to be eliminated, again over the Mayor’s veto, to make sure the serfs can never bring them back. And then expect public financing of campaigns to be eliminated, to make it even more difficult for incumbents to ever be challenged. Just like the $400 check, having done a political special deal the Mayor will not be allowed to change his mind.

So what does the $400 check mean to the City Council? Let’s assume for it the best of intentions, that its members were solely concerned with the well being of New York City’s people. So what does the Council’s determination to keep the check say about what it thinks is in the people’s interest?

The City of New York, as a result of the recession and the ongoing shift of public spending from public services to debts, pensions, and other benefits for the early retired, is going to drastically slash public services and benefits over the next three years. And the City Council has now decided that the last $250 million in public services and benefits what will be lost are such a ripoff for New Yorkers that they are better off having the money sent back to them, or at least some of them. That is the priority decision they have made by keeping the $400 check at a cost of $250 million and, in the near future, cutting public services and benefits by that much more. That the public services and benefits provided by the City of New York are worth much less to the city’s people than their cost, and reducing both that cost and those public services and benefits makes the people of New York City better off.

Consider this, however. Those debts, pensions, and retiree benefits, and money transferred from New York City to the rest of the state, get the first bite of all the state and local taxes New Yorkers pay. It is only those public services and benefits that can, and will, be reduced. So the more spending is reduced, the higher the share of those taxes go for debts, pensions and other retirement benefits rather than public services, and the more of a ripoff the government that the City Council oversees becomes.

Wouldn’t people be better off, therefore, if government services were eliminated completely?

If there were no taxes as well as no public spending, the affluent would be able to afford (for example) quality schools, parks, and transportation for themselves, while the poor wouldn’t be able to afford anything. But if the government was in fact collecting taxes in proportion to people’s income, spending and wealth, and then sending out checks of equal value, that affordability problem would go away. Is there a concern that some people would blow those checks on short-term consumption and neglect long-term goals such as education? Then some of the checks could be restricted, and only allowed to be used for certain things. As in checks that could only be used for elementary and secondary education, for example.

Remember, it is the New York City Council that has made the judgment that the public services provided by the City of New York are such a ripoff that people would be better off keeping their money and losing some of those public services. I would like to see the members of the City Council asked about this. Because they may be on to something. Because our state and local governments are not, in fact, equitable providers of fairly-valued public services and benefits. They are a special deal sweepstakes that benefits fewer and fewer people.