The First Cut is the Deepest

As we pointed out yesterday, the city is now being forced to cut its budget basically on the fly-having avoided the more creative approach of really reinventing government that could have been ushered in after 9/11 when the city's sense of crisis was most severe. Instead, we get the more pedestrian budget cutting dance that Mayor Mike began yesterday. As the NY Times highlights: "With an eye on Wall Street’s turmoil and New York City’s fragile economy, Mayor Michael R. Bloomberg ordered city agencies on Tuesday to cut spending by about $500 million this year and $1 billion next year. The cuts are to be made across the board, affecting agencies including the Police Department, which must cut costs by $95 million this year, and the school system, which needs to trim $185 million."

All of which is merely prelude to the tax hikes that are soon to come: "The timing of the announcement suggests that Mr. Bloomberg may be seeking to soften the political fallout of a possible 7 percent property tax increase, which he disclosed on Monday. The spending cuts, aides said, showed that everyone, including government, will feel the pain from a slowing economy." You'll notice, there's no indication from the mayor that it's really risky-not to mention bad economic policy-to raise taxes during an economic downturn.

In fact, the mayor's basic approach is very much in line with standard liberal approaches that see maintaining government as the priority over encouraging greater investment in the private sector. As we have pointed out, it is the billionaire financial serves guys like Bloomberg and Buffet who are the least likely to adhere to a low tax, more economic growth philosophy-since this sector is least likely to be impacted by property or income tax hikes.

But if we remember clearly, when Freddy Ferrer supported a small tax on Wall Street investments. Mayor Mike was quick to oppose the so-called "transfer tax," citing the way it would hurt NYC's economy. No such luck with other forms of taxation-like the real estate fees- that cripple small store owners; or the summonses blitzes that hurt homeowners and businesses alike.

Instead Bloomberg takes a "principled" stand in favor of strong cutting measures now, and higher fees later, to support the maintenance of a government service infrastructure that remains the same from when John Lindsay was mayor. As the NY Post points out: "At a town hall meeting last night on the Upper East Side, the mayor said the city faces "tough times" that will force him to reduce expenses and raise revenues. "It won't make me popular, but that's the job," said Bloomberg. "It's going to be annoying, but it won't be so painful that we're cutting any services. We're just going to have to learn to do more with less."

This do more with less sounds all well and good, but it reflects the failure to really undertake a government reform program that would reduce the size of government because it reflects the fact that society as a whole does better when government does less-the "more" in this case being what the businesses and citizens in the private sector are able to do with less of a tax and regulatory burden. This , however, goes against the tax more crowd at the editorial page of the Times, and with our good buddies over at the Drum Major Institute who see higher taxes as the true sign of higher civilization.

Here's the DMI point of view: "With the Wall Street bailout about to push our federal deficit over the brink, it is time that Americans and politicians face up to reality and acknowledge the relationship between taxes and the ability of government to protect and strengthen our country. For, as Mayor Bloomberg pointed out, if we don't, what kind of country will we be handing to our children and grandchildren? "

We are facing some hard economic times; and if we follow the Drum beat we'll soon be back in the fiscal morass of the 1970s. It is the private sector that supports the ability of government to provide the basic services that some folks need and others require. When will NYC stop its golden goose-killing policies? Perhaps when we have a mayor who's truly an innovator, and who understands that business is not only Wall Street finance and billion dollar real estate companies.