The reification of the Bloomberg administration may be coming to an end, but the deification that's been integral to the process has created a difficult task for the current group of demystifiers. Take the idea that Mike Bloomberg's financial expertise helped to get the city back on its footing after the debacle of 9/11. The truth is somewhat less than the legend,
Some of this is underscored by E. J. McMahon in this morning's NY Post. McMahon, in his discussion of city tax policy, details how raising taxes during an economic downturn can lead to disaster-exactly what has happened for so much of New York's recent history: "In times of fiscal stress over the last four decades, city leaders repeatedly have resorted to raising income taxes - almost always with bad results. A whopping 75 percent increase in the income tax, enacted under then-Mayor John Lindsay when the economy began to sink in the early 1970s, failed to balance the budget and contributed to a fiscal death spiral that culminated in New York's near bankruptcy in 1975."
Raising taxes, of course, is exactly what the mayor and Speaker Quinn have been preparing us for. But, you ask, didn't the mayor and council raise taxes in 2002 and help get us through the crisis? The truth is less than the tale that has been spun by the mayor-$80 million spent to disinform in the last election cycle: "When a recession, the 9/11 attacks and a bear market on Wall Street combined to blow a huge hole in the city's financial plan early in Mayor Bloomberg's tenure, he responded by raising the income tax (as well as property and sales taxes) yet again. This time, however, Gotham got lucky: Bloomberg's tax hikes took effect the same day as President George W. Bush's much larger cuts in federal income taxes, which helped to ignite a strong Wall Street recovery."
What this meant was a windfall from Wall Street revenues, a cash influx that masked the real harm the hikes did to the local economy-particularly retailers who have reeled from the huge property tax hike. And what did Mayor Mike do to make government smaller and less efficient? Well, as hard as it may sound, this task appears to have been above the mayor's $1 a year pay grade.
The reality here is that the mayor is a political parvenu; one who is surrounded by deadwood that hasn't had an innovative idea since the Koch administration. And to make matters worse, Bloomberg's junior partner in government lacks any real understanding of these issues and is philosophically challenged to tackle the task of governing during a fiscal meltdown.
What's the speaker's solution? Here's McMahon's take on the mistaken path she's looking to take us on:
"New York City government has barely begun to bring its spending into line with post-meltdown reality - and Council Speaker Christine Quinn is already saying "we'll need to look at personal income-tax changes," among "other ideas," for closing budget gaps that are likely to swell beyond $8 billion over the next two years. If the best Quinn and the council can come up with is the paltry $210 million in potential cuts she cited in her Citizens Budget Commission speech last week, they need to explore a lot of other ideas. But an income-tax increase is the very last thing they should be thinking about at the moment."
Particularly since the likelihood of an Obama administration would probably mean that the tax payers that the city will target will be facing a double dose of abuse. You think Wall Street's having a hard time now, just what until Obama raises the capital gains tax. All of which will leave the city in quite a pickle; a challenge that the current mayor has already demonstrated an inability to address with any creativity.
As McMahon points out, Bloomberg's initial response to the critics of his tax policy was famous, and could well spell disaster if the mayor's able to buy his way into a third term: "In the past, Bloomberg has suggested that high taxes are less of a hindrance to economic development in New York than in other cities. New York, he says, "isn't Wal-Mart . . . It's a high-end product, maybe even a luxury product." The mayor's luxury-product analogy is actually an even stronger argument for tax restraint in troubled times. Staring down the barrel of a severe recession, employers and investors alike will now be thinking much harder about "luxury" purchases they once considered essential."
All of this means that we are in for a potential rude awakening-sort of like the kind the Dorothy experienced when the curtain was stripped aside and the Wizard of Oz was exposed as just a sad little man. Mike Bloomberg is not the mayor New York needs for the troubled times ahead. We need an innovator and a communicator in order to tackle the huge tax and governance issues we're going to be facing for the next few years. Nothing in the past seven years is any indication that Bloomberg is up to this kind of a challenge.