Thursday, April 05, 2007

Middle Class, Muddled Thought

The Drum Major Institute recently concluded a forum on the disappearing middle class in New York City. The Institute also released, at the same time, a survey and report of what it described as the attitudes/remedies of New York leaders on the problem. The survey, as well as the approach of DMI to the issue, is a predictable mixture of liberal bromides that, if adopted, would likely only exacerbate the disappearance that the Institute is lamenting.

The sharpest critique of the DMI can be found in today's NY Sun, where columnist and Manhattan Institute scholar Nicole Gelinas breaks down the fallacies in the DMI report. As she points out the report "is a bleak reminder that the city's leadership elite continues to embrace the kind of stale big government ideas that hurt the middle class instead of helping it."

For instance, Gelinas highlights the fact that the Drummers are continuing to march to the same rent regulation beat that has led to the shortage of affordable housing that they are concerned with. In addition, they are calling for a huge increase in the public funding of health care, a policy that would lead inevitably to the kind of tax increases that are driving middle class folks out of the city.

Oh, and yes, what would a forum like this be without the genuflection to increased educational funding, unmindful of the fact that school spending has increased in the Bloomberg term by 42% without any real appreciable increase in educational successes. In fact, only 27% of the survey's respondents thought that charter schools might help generate better educational outcomes.

Of course all of the DMI bromides come with a huge price tag, and that can only mean higher taxes in a city that is already reeling from the highest tax rates in the nation, 50% higher than the next highest city. It is this tax rate that is preventing the middle class job growth that we need to cultivate this demographic sector. Why else would our large financial houses look to locate their back office jobs elsewhere? It is simply too expensive for those workers to live and work here.

This tax burden is something that stale thinkers keep wanting to ignore Gelinas, however, hits the nail on the head when she points out that, "New York must make itself more attractive, not less so, to middle class employers. And it must attract entrepreneurs to start businesses here." Yet the DMI survey of leaders endorsed a tax hike on the wealthy and the closing of "loopholes" on businesses, ideas that will make things worse for the middle class.

And than there is the inevitable "tax on the wealthy." Well, since the Drummers feel that once a family of four earns over $135,000 a year it is no longer middle class, we can see where this tax increase is going to come from-and where the taxed-to-death folks are going to go as soon as they can afford the down payment on a house in the suburbs.

Why are we not surprised that cutting income taxes for everybody is the group's lowest priority. These are the same folks who see the entrepreneurial retail class, not as job generating economic engines in the neighborhoods of the city, but simply as cash cows to be exploited to feed a bloated government bureaucracy.

Which is why Gelinas ends her piece with the thought that "Voters had better hope that there's a mayoral candidate lurking out there who's willing to buck the worn-out ideas proposed in the Drum Major report. Otherwise New York's middle class, facing even higher taxes to pay for all this new spending, inevitably will give up and leave."