Category: News and Opinion

While this week is of course one of new beginnings, it also brings the political year 2008 to a very happy ending.

Can any New York City Democrat not already on Mayor Bloomberg's campaign payroll (as of this date, still the majority of us, but give it time) say the same concerning the likely outcome of 2009?

It is time for us to hold auditions, and take the likely prospects out for a spin. On Thursday, January 22, 2009 at 7:30 PM, the 41st Assembly District Democratic Club, headed by Councilman Lew Fidler (probably the Mayor's least favorite Councilmember among those who voted in favor of modifying the term limits law), will begin its 2009 Guest Speaker Series, with perhaps Bloomberg's strongest potential opponent, City Comptroller Bill Thompson.    

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.

Once everything goes right, the world will witness a coronation of sorts next Tuesday, when Barack Obama is sworn in as the 43rd president (yes/Grover Cleveland counts only once) of the USA; and without doing a formal survey, I can safely say that most people in the world -who will be aware of this event- will be pleased. I can also safely say that this will be the most communicated event ever: whether by radio, internet, television, telephone, text messaging or whatever. The potential for this event -in terms of national and international human interaction- is proverbial; it will probably even surpass the attention paid to the coverage of the 9-11 cataclysms on that tragic day itself. 

All of a sudden, I read everywhere that the U.S. national debt is around 35% of GDP, although the massive deficits resulting from past fiscal recklessness are likely to increase it to 60% or more, a new post-war record, over the next few years. I’ve read the 35% of GDP figure in the Financial Times, Bloomberg News, Wall Street Journal, MSNBC, etc. Everywhere the national debt is discussed. Funny but until I few months ago I had been reading for years that the national debt was already around 60% of GDP. And that’s what I find in the Statistical Abstract of the United States. So what disappeared? Among other things, the Social Security Trust fund.

That trust fund is the result of all those extra payroll taxes low, moderate and middle-income workers have paying in, in excess of what Social Security has paid out, since the huge payroll tax increase of 1983, which was coupled with benefit reductions for younger generations of workers. The federal government spent the money on income tax cuts and extra senior citizen health care for the generations in charge, and left IOUs. But now the federal government needs to borrow $trillions more over and above the amount it is diverting from Social Security, and our foreign creditors are beginning to worry (as well they should) that the United States could never pay both them and Social Security back. And all of a sudden — poof! — the trust funds are no longer part of the national debt. Get the picture?

I have questioned, on this blog, whether my teenage children will still have health insurance as young adults. The answer, provided by Governor Paterson, is yes. Because my wife and I have health insurance through our employers, under Paterson's proposal we would be able to pass that gift onto them through age 29. Presumably with tax advantages, which means (given our marginal tax rate) the federal, state and local governments would in reality be paying for about half of it. Meanwhile, those whose parents do not have health insurance, or who have moved here from other states and countries, would not receive this benefit and its back-door taxpayer subsidy. And not just them. It is estimated that 800,000 would be eligible for the program, but just 80,000 would take advantage. Which 80,000? The richest of course, since they could afford it! This is what I fear about the Democratic road to "universal health care." Rather than figure out what the government can provide for everyone, and leave other to pay for more themselves, an open-ended commitment to ever rising expenditures (or back door tax expenditures) could be kept open for those who matter, even as others get nothing once limited resources intrude. More deals and breaks, and programs, layered onto the current mess, could take the place of root-and-branch reform. Governor Paterson's heart may be in the right place, but ironically our first Afro-American Governor has just proposed a Grandfather Clause for health insurance in New York.

On Monday, New York Post Washington Bureau Chief Charles Hurt, as part of his continuing audition to become a Republican hitman on FOX calls “Illinois Gov. Rod Blagojevich, Obama's old pal and political ally.”

In case you are wondering, the title is optimistic. A pessimistic scenario, which I will share below, would have future years that are progressively worse. I expect the value of assets — stocks, bonds, real estate — to fall farther before bottoming out, because I do not believe their current value could have fully anticipated and “priced in” an economic disaster that (outside Michigan) is really just getting started. What has happened, and will happen, is enough to make one look behind the economic artifice that has built up over the decades and ask more fundamental questions, such as “what is real wealth.” In response to a query on the subject on another discussion board, a man from Virginia put it this way: real wealth “is an asset for you that isn’t a liability for someone else, whose value to you does not rely on other people’s opinions.” What a brilliant statement, perhaps even more so than he intended, because in the current environment it seems to eliminate just about every possible place one could put their savings.

The Center for Worker Education runs a graduate program in Urban Policy and Public Administration, through the Department of Political Science at Brooklyn College. Last semester (Fall 2008), five graduate students from the course “Politics and Public Opinion Formation (#735x)” completed a poll on the term limits extension issue. It was conducted over a one month period and ended on December 13th, 2008.  

There were nine questions asked to a total of 364 respondents. Ninety-three percent of the respondents were registered voters in NYC. Eighty-five percent of them were Democrats. The poll was authorized -as part of this course- by Dr. Joe Wilson; the program’s director. Professor Many Ness is his deputy. M. Pam Miller is the administrator of this program and also approved the survey. It just happens that I have been a lecturer here since last year. I also facilitated the students in this endeavor; this effort was primarily theirs; they deserve the credit: not me.

If you want to know what Obama and the Congressional Democrats could do to aid state and local governments in an equitable fashion, read this.  Tom Suozzi proposes that in lieu of other state and local government bailouts the federal government to pick up the full tab for Medicaid (eliminating the state government matching share), allow more people (especially the newly unemployed) to be covered, and require cost reductions, rather than keep the current structure intact and merely add more money temporarily. “For a modest investment of $50 billion, our new President could deliver real and immediate relief to state and local governments, and ultimately our taxpayers. The benefits would be distributed equally to every state, and we would take a big step toward achieving his vision of a comprehensive health care.” Why does it take a Suozzi to state the obvious — that rather than having separate funds of money shifting all over the place in a series of special deal bailouts, federal-state fiscal relations and the government health care finance system should be restructured? Perhaps because his proposal would not benefit those who have lucrative health benefits, who are powerful, and might limit the amount of money the health care industry can receive.