Author: Larry Littlefield

Questions Not Asked

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Why are municipalities that have higher median incomes, lower poverty rates or both proposed to get AIM aid from the State of New York, while the City of New York gets none? No, the excuse in the Cuomo budget presentation, that New York City doesn’t need AIM because it has lots of taxes, doesn’t cut it. Other places could have personal income taxes too. Yonkers, for one, has had such taxes. Is it because local governments in the rest of the state have added employees over 20 years, while New York City has reduced employees?

And given that the State of New York is broke, why can’t Mayor Bloomberg ask that municipalities that do not have median incomes that are lower than New York City, or poverty rates that are higher, have their AIM aid eliminated too, to save money and reduce other cuts? Wouldn’t that also be equitable, and not make the state’s budget problems worse?

Lightbulbs Coming On Outside NY State

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I try not to just cite articles, but here's one people in NY really ought to read. It is a commentary by Hawaii Governor Neil Abercrombie in a local newspaper. "Together we must face a fiscal deficit of $844 million over the next two years. Every possible solution is on the table for consideration. This includes improving our current tax system so that everyone pays their fair share."

To see who isn't paying their fair share according to the Governor, read the article.

What Governor Andrew Cuomo Did Not Propose

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Those close to Governor Cuomo have called his budget revolutionary. But it is far from the revolution someone like myself might have suggested. Under his proposal, instead of paying higher taxes for the same public services, New Yorkers will pay the same taxes – highest in the nation – for diminished public services. Those who have made out on the deal might not grab as much extra. But they are certainly not giving anything back. Particularly Generation Greed. Let’s provide some examples.

Point of Intersection Between The Years in Retirement Rich and the Bonus Rich

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Reviewing the economic history of the past 35 years, one finds that two groups of people are getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and the retired, particularly retired public employees and those approaching retirement, who control state and local government. Everyone else is getting poorer, a trend that has been covered up first by having a higher share of family members in the workforce, then by taking away their future income when they themselves reach old age, which doesn’t affect their current spending, and then by debt. There is, in other words, the executive class, the political and politically organized class, and the serfs, with the latter including members of generations born after 1955 or so in the former middle class. The point of intersection between the two advantaged groups is the projected rate of return for public employee pension funds, and the Wall Street firms that manage them.

Just for the Record

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Six of the eight largest snowstorms in NYC history have taken place in the past 15 years. Three of the top eight have taken place in the past 12 months. Two of the top eight have taken place in the past month. And last summer was the hottest in NYC history.

Pehaps the guy who suggested that I stop kvetching about the financial damage to public services, benefits and the infrastructure caused by Generation Greed — because global warming and rising oil prices will make it seem like a walk in the park — has a point.

Generation Greed Looks At the State Budget

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A recent poll shows New Yorker are against all spending cuts and tax increases. These traditional telephone polls, in my view, are probably skewing older — toward Generation Greed, the one that ran up the debts and promised itself benefits for seniors it refused to pay for.

The only budget cut New Yorkers favor, according to the poll? Lower wages (but not retirement benefits) for state (lot local government or non-profiteer) workers. Of which there are relatively few, and which have absorbed a substantial share of the cuts already. The state has a $9 billion budget deficit I read, although that is likely an underestimate. According to employment and wages data from the Bureau of Labor Statistics, state workers earned a total of $12.3 billion in 2009, down slightly from the year before. That is actually down, not a diminished pace of growth.

Waiting for the Chickens to Home to Roost

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It's hard, under the circumstances, to work up the motivation to write about the same things I've written about over and over, going back to a time when it wasn't too late to do something about it. Is it then technically impossible to avoid a repeat of the 1970s for public services, with higher taxes and the needy not being cared for (then senior citizen bag ladies abandoned by those younger, now younger people raped by the same people who are now older)? It is worse than being technically impossible. It is technically possible — with a decade of blood, toil and shared sacrifice — but politically impossible with Generation Greed still in change and fully vested under the deals they have made with themselves.

This city was almost destroyed in the 1970s, but the debts and pensions were paid. Taxes were paid in exchange for nothing. The infrastructure fell apart. Multiple generations of NYC children were not educated. How many members of the state legislature lost their jobs? Well, this time the destruction will be state wide, and in lots of other states too, so you may not be able to flee to the suburbs and leave and smoking ruin behind. Perhaps the folks elsewhere in New York will figure out a way to throw the bastards out without putting the other bastards in.

How Are Businesses Like People?

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The New York Times is reporting that the majority of states did not save up enough money in the good times to pay unemployment benefits in recession, and have borrowed $billions from the federal government. One reason is that businesses successfully lobbied for lower unemployment taxes. "Right now, 30 states owe money to the federal government for their unemployment programs. Many of them tried to keep their unemployment taxes low in recent decades as states have competed with one another to lure companies and jobs. Now, although unemployment taxes are low by historic standards, the states face the strong possibility that they will have to take action at the worst possible time, raising taxes on employers at a time of low hiring, and cutting benefits when they are most needed."

If you outsource everything to China right now, your business would have benefited from those lower taxes in the past and won't be around to pay that money back. But if you start a new business today you'll get socked with the higher taxes to offset what was not paid in the past.  This is just one example of what is happening, and will be happening.

Notes On Budget News

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The New York Times reported today that Illinois has increased its state income tax rate by 66 percent. But that state had a state and local tax burden, as a percent of its residents' personal income, that was well below the national average in FY 2008. Most states could raise taxes, increase debts, and cut the quality of their public schools, and still have a lower state and local tax burden and lower debts as a percent of personal income than New York, and better schools than most New York City children have had for the past 40 years. So what is New York supposed to do?

The Times also reports that the federal government is accusing New York City of fraudulently authorizing unneeded 24 hour personal care for seniors since 2006, and demanding that the city pay tens and perhaps hundreds of millions of dollars back. It believes a change in state law in 2006, eliminating the city's share of personal care Medicaid expenditures, is responsible for the unnecessary spending. The city's likely defense? It has always overbilled for home and personal care. In the late 1990s, New York accounted for half of all the personal care expenditures in the United States — it is less today. And given the political clout of those who benefit in Albany, the city has no choice but to authorize, justified or not.  The change in the law has nothing to do with it.