The Wages of Sins of Commission

Leave it to Nicole Gelinas to slice and dice Mike Bloomberg's faux tough guy persona. Writing this morning in the NY Post, Gelinas deconstructs the mayor's doomsday budget and finds a lot of posturing from someone who has been derelict for the better part of seven years: "With Wall Street self-destroyed, New York must get used to a vastly different future. Yet Bloomberg made only modest overtures toward acknowledging that things likely have changed forever."

And, as we have also pointed out, the private sector-businesses and tax payers-have been asked to make much greater sacrifices than the Bloomberg-bloated public sector: "Yes, he brought up the specter of municipal bankruptcy unless the city makes huge changes - but he's still asking for far greater sacrifice from the public and the ailing private sector than from the outsized public sector."

And there's a real simple reason for this mess-a Laurel and Hardy approach to governance that lacked any sensitivity to the impact of taxes and government growth on the vitality of the city's non Wall Street businesses. And grow city government did: "The deficit is so big because New York's spending growth since 2001 was simply unsustainable." How much so?

Take a look at the numbers and you'll see that the Bloombergistas have been spending money like drunken stockbrokers-and now we're tapped out: "From 2002 to today, city spending rose nearly 29 percent after inflation. All that kept us from drowning was an even more reckless Wall Street, whose tax revenues (temporarily) let the city indulge in booming Medicaid outlays and ever-costlier benefits for city workers. Now tax revenues are dropping at just as torrid a pace. They're on track to drop 13.5 percent between last year and the next fiscal year, which starts in July. Personal-income taxes will fall by 35 percent. Since 1971, when the city started keeping good records, New York has never seen a drop-off like this one. The money is gone."

The reason that we're in this situation goes straight to the mayor's inabilities-a complete lack of knowledge of government when he arrived, compounded by a personal philosophy that saw government expansion as good for its citizens. In effect, his nanny-like policies for calorie posting and trans fat elimination-and here comes the salt attack-are emblematic of his positive view of an interventionist government. For Mike Bloomberg, more and bigger government is better, because it has a bigger and better chance to intervene to help the folks.

This warped world view-as bankrupt as the Wall Street firms that Bloomberg identifies with-has had a withering effect on the city's small businesses and homeowners; and his budget continues to reflect this: "Second, there's Bloomberg's proposal to hike sales taxes by nearly $1 billion. This hike would push the rate up to where it was after the tech bubble burst. But that hike was proposed as temporary; this one isn't. Ending the tax exemption for clothes, as the mayor also proposes, would kill already suffering retailers...It's telling, anyway, that the mayor wants retailers to give back nearly twice as much as he's asking from his union workforce."

This all goes back to Mike Bloomberg's trained incapacities-calling NYC a, "luxury product," when the folks complained about the rising taxes and regulations. And now, instead of insisting that the bailout money be used for avoiding tax increases in the city and state, he's planning on taking the money for public sector purposes; and paving the way for the further erosion and deterioration of a local economy that will not be able to depend on Wall Street cash for the foreseeable future.

This approach is a recipe for a municipal calamity; and Gelinas gets the last word: "Finally, there's his inexplicable expectation of a huge improvement in the budget in just 16 months. Starting then, the mayor expects 8.4 percent growth in existing tax revenue, driven by a 20.1 percent gain from the personal-income tax...It's impossible to predict where the local economy will go. But the simple fact is that it's just as likely that today's drop in tax receipts is a return to normal - that revenues will never bounce back to the insane growth seen from the Wall Street bubble. So it would be safer to assume nothing. That, and not counting on a permanent sales-tax hike, would make the deficit balloon to nearly $7 billion by then, instead of $3.2 billion. Such numbers would make it harder for labor, the City Council (and everyone else, too) to dodge real reforms."