Tag: Albany

Imagine that I were to propose, or some politician were to propose, or some group of politicians were to propose, or some publication were to propose exempting those age 40 and younger from New York’s state and local income taxes, while charging senior citizens the highest taxes in the country. There would be outrage at seniors receiving such a raw deal. There would be questions of fairness. The discussion and attention to the issue would be massive.

In reality, however, what is proposed and enacted over and over again in New York is the opposite: special deals for today’s seniors to the detriment of younger people, in the highest taxed state in the U.S. The latest example of this is the tax changes proposed by the Republicans in the New York State Senate. The pension income of public employees is fully exempt from all New York State and New York City income taxes, no matter how high that income is, and no matter how young the retired public employee is. As a matter of “fairness,” the State Senate Republicans now propose that ALL seniors be allowed to ripoff younger generations in the same way, by exempting private sector retirement income from taxes as well (the first $20,000 of retirement income is already exempt after age 59 ½; Social Security income is fully exempt for public and private employees).

I’ve noted that I don’t vote for Democrats at the local level, because they represent the producers of public services at the expense of increasingly less well off taxpayers and consumers of public services. And I don’t vote for Republicans at the federal level, on generational equity grounds and because they represent the unearned privileges of the wealthy in exchange for campaign contributions. In my post on Bill DeBlasio, I challenged him to earn my vote by separating himself from the public employee unions and contractors, to at least present the illusion that someone will be representing everyone else. In this post on Joe Lhota, I challenge him to separate himself from policies that shift costs to the future and disadvantage younger generations to make things easier for Generation Greed – and politicians today. Admit that the future will be tougher for younger generations, and they will have to settle for less as a result. And to break the seeming rule of Omerta with regard to what has gone on in the past by talking about it, saying it was wrong, and promising to try to reverse it or at least not make it worse.

In general Republican politicians have robbed the future from younger generations with debts and tax breaks for seniors, and Democratic politicians have done so with pension deals and senior services what will leave younger generations destitute when they reach old age themselves. But in bi-partisan New York State, both Democrats and Republicans work together to destroy the future of the city and state, and those who will live in it, both ways. Including the Giuliani Administration and those who have run the MTA. Let’s take a walk down memory lane with two examples of the policies Lhota would need to bring up, criticize, vow not to repeat, and admit that things will be worse – not better – to pay for going forward.

"Speaking of rabbit years, Councilman Lew Fidler thoroughly disapproves of Time Warner Cable’s CBS blackout. “Shame on all of you,” he declared at a recent hearing. “There is something wrong with all of you … Every time I want to watch The Big Bang Theory I have to put 50 cents into the pot? … No one has rabbit ears anymore!”

Actually, I've never been willing to spring for paid TV. Same with quite a few people I know. And Brooklyn has traditionally been the urban county where paid TV had the lowest percentage of the market. But that may have changed, because younger generations, who are poorer, are skipping cable TV (and auto ownership and homeownership) in droves to try to offset the economic and fiscal hand they've been dealt by Generation Greed. I guess you can’t expect those in politics, who are mostly in Generation Greed or insulated from the situation of those coming after, to get that.

Politics in New York is driven by two groups of people. Producers of public services, the public employee unions and contractors, who are always looking to provide less in exchange for more. And wealthy people and interests who do not require public services themselves, and do not want to pay for others to have them. The wealthy dominate the federal government, using it to profit at the expense of the rest of us, but the public employee unions and contractors dominate New York State government, using the power of the state legislature to cheat the less well off and the common future. That’s why we have the highest state and local tax burden in the country, but also have declining public services.

The state’s politicians don’t want to admit, to us or even themselves, that they are cheating less powerful ordinary people to benefit the interests that back them. So they seek to separate in time the sacrifices they impose from the deals they do, postponing the pain to a future they don’t care about, when they can lie and claim that it is “due to circumstances beyond our control.” And they seek with rage and desperation to ensure that the consequences of their deals and favors, for the ordinary people and the future, are kept quiet. That is why the special interests try so hard to keep control of the Office of the Comptroller, city and state. Because it is the purported job of those offices to tell the truth, loudly and passionately, and defend the future in order to force elected officials to admit, or at least consider, the consequences of their actions. Neither of the current candidates for New York City Comptroller is likely to do. Based on what Scott Stringer has done and more importantly has not done, and Eliot Spitzer has done and has not done, I fear the former is just another Albany legislator sent to the Comptroller’s office to cover things up, and the latter is a megalomaniac.

One of the ironies of recent history is that although politicians from the rest of the New York State routinely accused New York City of draining their communities through wasteful government spending and a welfare culture, a charge dating back to the administration of Mayor Lindsay and the annual tin cup pilgrimage to Albany, the reality has been nearly the reverse. During the Pataki Administration and after, in fact, local government employment in the rest of the state soared. Even as the independent economic base of Upstate New York, Long Island and the Lower Hudson Valley – in manufacturing, corporate headquarters and high tech companies such as IBM and Grumman, withered away. During the darkest days of the New York City economy, someone like Bella Abzug might have suggested making up for lost private sector jobs by just giving people more government jobs, so they could have unlimited health insurance and early retirement pensions, and making someone else pay for it. But the rest of New York State has seemingly tried to actually pull that off, burdening the remaining private sector employers there, New York City, and – through debts and deferred pension costs – the future. This trend was relentless and seemed to go on and on regardless of economic cycles.

Starting in 2009, however, it shuddered to a halt and began to reverse. Have the policies of Governor Andrew Cuomo stopped the trend? Has the burden on the private sector in the rest of the state reached breaking point? Or have the costs from the past finally caught up with the local government growth machine? You can review the data on "Saying the Unsaid in New York."

New York's pension rules automatically allow the taxpayer contributions that are theoretically required today to be put off until tomorrow, through "smoothing." That makes it easier to, among other things, retroactively enhance pensions while deferring the costs until they could be blamed on something else. But that wasn't enough for State Comptroller Thomas DiNapoli, who proposed that the pension contributions by the State of New York and local governments outside New York City be re-smoothed – by borrowing money from the pension funds to defer costs until the stock market went back up. Then-Governor Paterson and the State Legislature readily agreed back in 2010. Well, the stock market went back up and now it’s time to pay back the pension funds under the DiNapoli deal, but guess what? No one wants to do that. So now-Governor Andrew Cuomo has proposed re- re-smoothing by having school districts borrow against the pension funds yet again. This will be counted as state school aid.

It turns out the Generation Greed bond in Poway, California that I wrote about here is not alone. I just followed a link to this from National Public Radio. “Look, there's no doubt that this has happened in dozens if not hundreds of school districts around California. I mean, we're already finding them; we've been sort of broadening our scope and we're actually publishing a piece today that shows three other local school districts that have very similar deals to Poway's. This is a multi,-multi-billion dollar issue across the whole of the state. Tens of billions of dollars of debt out there in this type of creative financing.”

What about New York, where these horrors are cooked up. Did some of our government entities snort our own supply? The MTA perhaps, or Nassau County, or the State of New York?

Like many Americans of the past 30 years, the people of Poway, California wanted more in government services, in this case new schools, but didn’t like taxes, and weren’t likely to complain as long as they got what they wanted. The future was not one of their concerns. And like many politicians, the Poway school board gave them exactly what the whiniest generation in U.S. history wanted. How they did so has now become a scandal that has received national attention.

“School officials said the long-term bond was needed if the district was to continue with a school construction program in these difficult economic times” according to the San Diego Union Tribune. “Board member Marc Davis pointed to the taxpayer approval of the bond measure in 2008 without a tax increase. ‘We had those parameters and we executed or operated within the parameters you had given us,’ Davis said, adding: ‘There are no backroom deals. There are no shenanigans. There is no fraud.’” Not in the legal sense, I suppose. But there is the fraud that Generation Greed has perpetrated on those coming after, and not just in Poway. As the future no one cares about continues to arrive, and politicians and the media call for “creative” ways to pay for things now that so much of people’s taxes are going to past debts and public employee retirement benefits, New Yorkers should pay attention to what the Poway Unified School District did.

While waiting for some new data and a Supreme Court decision, we’ll interrupt the series of posts on making adjustments to the pillaging of our existing institutions to report some good news: New York City is getting better at allowing people to create new ones. People who have started their own business have told me the most important factor in their success is not the ability to create to good product or service, but the ability to sell it. Customers were the scarcest resource even before the global crisis of demand created by the end of the U.S. consumer debt binge. And metropolitan New York, combining a large population, above average incomes, and a large and diverse potential business client base, has lots of potential customers. Many of which can be reached in person in a small area in or near Manhattan. Combine that with a large and talented workforce and global connections, and I think the song “New York, New York” had it exactly backward. This is, or ought to be, a fertile ground for the new.

While New York as a place is hospitable to entrepreneurs, however, New York as a political culture has traditionally been hostile. To New York’s Democratic establishment the only good business is an existing business, preferably a large corporation that that makes campaign contributions. This bias has come out in a variety of ways, from tax breaks and subsidies to big companies, to complex and obsolete regulations that are only enforced against those who don’t play ball, to calls for commercial rent control. Wall Street may have both the Democrats and the Republicans in their pocket, but in the past New York’s Democratic politicians have shown zero interest in new businesses, and have generally preferred to preside over subsidized decline. A few years ago I had wondered why Mayor Bloomberg, coming into politics from the outside as someone who have founded a large company himself, hadn’t done more promote New York as a place to “take your shot.” But I’m pleased to report there has been a change large enough for someone like myself, on the outside, to notice it. But I have a question. Where is the attempt to encourage new banks?

Just over four years ago, when any real opportunity to improve the New York City schools was de-funded by the pension deal to allow New York City teachers to retire years earlier, it was for me both a last straw and an epiphany of sorts, as reflected in this post. Our common future has been sold, and the increasingly frantic efforts by the beneficiaries to delay the reckoning and shift the blame only amount to selling the future even more. What is best and fair for everyone, now and in the future, was never really up for discussion among those in the room making deals in their own interest, I now understand. The result could be, and perhaps should be, institutional collapse.

Realistically, I concluded, “perhaps all the time, energy and money directed toward trying to reform or improve our social institutions, particularly our government institutions, would be better spent preparing to do without them.” Or try to replace them. But rather than writing about such preparations, I’ve spent most of the last four years tallying the damage and venting. Over the next few posts, however, I’ll try to review what the household economic situation is now, and what it is likely to become, for each of the most important goods and services each household needs to obtain and pay for – housing, transportation, food, health care, education, and income in retirement. I’ll review the reasoning behind my personal choices, choices people make mostly in young adulthood, and describe the options that will remain in the environment Generation Greed will leave to those who. I’ll describe how federal, state and local policies enacted by Generation Greed politicians have affected those choices. This post provides some background, while those following, written as I have time, will go through each of the major categories of household expenditures in turn.