Tag: Albany

What do I want Eliot Spitzer to do in this state budget? First of all, I want him to tell the truth. In the past, whenever the budget was tight, the City and State of New York have cut spending in categories and places where it is not high, to continue increasing spending in categories and places where it is high. I want the Governor to publicly identify the winners, and freeze or reduce their funding, and publicly identify the losers, letting them know they have been sacrificed. Let the over-funded sacrifice this time. In the past, tax rates have been increased to raise revenues. I want the Governor to keep his pledge on taxes with regard to rates and only raise revenues, if required, by cutting back exemptions, deductions and preferences. And I want him to tell those paying more who is paying less. In the past, the State and City of New York have always sacrificed the future when confronted with difficult choices in the present. I want the Governor to tell people exactly what those decisions, on debts and pensions, has cost them, and to avoid additional debts and one shots, no matter how difficult that will make the next year or two.

Every time a bull stock market puffs up the pension funds, the State of New York passes more sweeteners for those cashing in and moving out, but every time a bear market causes pension cost to soar, state-appointed arbitrators and control boards cut pay and benefits for hires while leaving those with seniority untouched. Because the sweeteners and the lower pay for new hires occur at different times, no one says the policy is to enrich one generation of workers at the expense of another. But that is what the policy is. Whenever the economy is flush, money is borrowed to allow more of it to flow to politically powerful priorities on which New York City and State spending is already above average. And when “uncontrollable” spending such as interest on debts subsequently soars, other public services such as parks, libraries, and the Administration of Children’s services are first in line for the axe. Because the spending increases and cuts occur at different times, no one says New York City and New York State policy is to spend more where we already spend more and less where we already spend less. But it is. Similarly, every time a hot economy swells New York City and New York State tax revenues, our elected officials curry favor with politically active discrete groups by handing out tax breaks.

And when the economy cools and tax revenues drop, tax rates are increased, nailing those who didn’t benefit from the breaks, or benefited less than others. Again, because the tax breaks and rate increases occur a few years apart, no one says New York’s policy is to impose higher and higher tax rates on a narrower and narrower tax base. But it is.

There is no more hypocritical whine than older New York State residents complaining that their children find it necessary to move away to find a decent life for themselves. It is hypocritical because while providing the nation’s richest Medicaid services for senior citizens, and excluding retirement income from state (and in New York City local) income taxes, New York has made decision after decision for nearly 20 years to favor those cashing in and moving out at the expense of the state’s future, which is now the present. In general, Republicans sell out the future with debts, caused by tax breaks and rich government contracts for business. Democrats do it with pension enhancements for those with seniority and already retired, passed every time a stock market boom swells pension fund coffers, followed by lower wages and benefits for new hires, agreed to by the Democrats’ union allies every time high pension costs leave the government broke. Now that the bills are starting to come due, there is a bit of unease in Albany, as our “leaders” look around for someone to blame. But with every deal passing the state legislature 212 to 0 they are all to blame. So are the older generations that have gratefully accepted this largesse without questioning who would pay how much. It is those deals that should be undone, and those generations who should pay first, if a recession and fiscal crisis requires sacrifice. To do otherwise would mean that Spitzer and Francis are merely continuing the practices of the now-despised Pataki to pump up the current Governor’s short-term popularity. In the end, Spitzer would be despised as well.

Newsday has reported that Governor Eliot Spitzer and budget director Paul Francis are “engaging the public as we determine our priorities for how to best use the state's limited financial resources, while minimizing the burden on taxpayers and keeping our business climate competitive.” If by “the public” they mean those with the greatest sense of entitlement and the most hooks into the state legislature, then all they have to do is choose the same victims to pay more or get less as in the early to mid-1990s and early 2000s. That is the “humble” thing to do, since it is the path of least resistance in the state legislature, and the path least likely to generate reputation-tainting opposition advertisements. If that is the path they choose, however, the Spitzer Administration will have failed the people of this state to an unimaginable extent. My suggestion, if they wish to “engage” with it, is to do the opposite. Reduce spending in categories and places where it is high, not where it is low. Raise revenues by eliminating tax breaks, even popular ones, rather than raising rates. And stop destroying the common future in order to curry favor with those with the greatest sense of entitlement in the present. For health care and aid to local governments, the details are below. And they assume a much more difficult fiscal environment than has been admitted thus far.

In the discussion of public expenditures, it was shown that the unit of government that directly provides a public service or benefit isn’t necessarily the unit of government that pays for it. In this section, the overall structure of funding of government revenues will be discussed in detail. One finds nationally that local governments, which are responsible for a very large share of the direct provision of public services, pay for relatively little of this in local taxes. Fees for services, fines for misbehavior, and aid from higher levels of governments account for the majority. And many local government services are not only funded by state governments, or federal aid passing through state governments, but are provided under rules set by state governments. Under our federal system, the federal government collects most of the money, and local governments do most of the work, but it is the state governments that actually make most of the decisions on the margin. Here in New York City, there is an important difference. Local taxes pay for 60 percent of the city’s spending, even though that spending includes services and benefits, particularly public assistance and a Medicaid, that are state functions just about everywhere else. Still, the rest of the state in many ways controls the city’s budget.

If Sheldon Silver is right and Eliot Spitzer has learned his lesson, then he has learned the wrong lesson, and the rest of us need to be worried. Silver's lesson probably is:

a) Don't contest elections, even against the other political party, and upset the deal.

b) Don't challenge existing fiscal priorities.

c) Don't concern yourself with fairness for the victims of those priorities.

Just because someone cames up with a really bad solution doesn’t mean he didn’t identify a legitimate problem. At the core of Marx’s economic thought is the identification of a “contradiction” in capitalism: each individual business can maximize its own profits by cutting its workers’ pay, but business in general has to turn around and sell products and services to those same workers in order to make money. The result, Marx asserted, there would be a series of increasingly dire crises and depressions, a theory that looked pretty good in 1932. But capitalism is an adaptable economic system. For the past decade or more, businesses have been able to make rising profits, and top executives have been able to capture a rising share of national income, by selling more and more to those who have less and less. This has been possible for three reasons. First, thus far health insurance and pensions, which affect well being in the future when one is sick or retired, have been cut more than cash, which is spent today. Second, Americans have gone deeper and deeper into debt, increasing spending today but cutting it tomorrow. And third, people in the rest of the world have been willing to lend Americans the money they need to spend more than they earn. But the wheels may be about to come off this system, and New York City and State had better be ready for the fiscal consequences.

There is a reason why advertisers target the young, and why they are willing to pay more for media that attracts a young audience. It isn’t that they young have more money; they have less today and, as a result of public policies, their own spending habits, and the decisions of prior generations in the marketplace, today’s young people may also have less throughout their lives. Despite this, advertisers target the young, and opinion leaders among the young, because there are apparently very few people with open minds. Most people, it seems, do and think what people around them do and think, rather than deciding how they are to live and what they will believe. And once they have been shaped in a particular way, this tends to get locked in. The general unwillingness to be open to new ideas has implications both for politics and public policy, including transportation policy.

The non-farm employment numbers from the New York State Department of Labor are out for June. From June 2006 to June 2007, government employment in New York State rose by 4,500, while government employment in New York City fell by 2,400. Which means that government employment in the portion of the state outside New York City rose by 6,900 year-over-year. Again. No wonder the seniors outside New York City want more and more tax breaks. Of course, the rest of the state could point out that they suffered from the decline in government employment in New York City, since those outside New York City also hold a large share of the government jobs in it, and drive in to work. So NYC cutbacks had to made it up somewhere else.

Based on the congestion pricing debate, it looks like Bruno and Silver are looking for someone to blame for the transportation-related consequences of the debts and pension enhancements they enacted from 1990 to 2006 in order to pander to interests, hand out benefits, and make themselves popular, all the expense of a future no one cared about. Having apparently turned down Bloomberg's political gift, a funding source that he would have taken the heat for, they seem to have decided on Eliot Spitzer, who is the one person now in office who was not involved. And if Spitzer decides to bury his head in the sand rather than making the pain felt in 2008, when the legislature is up for re-election and he is not, they will succeed.