Monday, September 29, 2008

Lemmings Refuse to Jump

In yesterday's NY Post, Dave Seifman has an interesting column on the refusal of some of the candidates being supported by Mike Bloomberg to back the mayor's call for a property tax increase: "Every local candidate that Mayor Bloomberg has endorsed in the upcoming election is running away from his call to raise property taxes six months earlier than scheduled.
"I have enormous respect for Mayor Bloomberg's fiscal acumen and was proud to work with him to bring the city out of the 2001 downturn, but without much more information, I can't support raising taxes in the city at this time," said City Councilman Mike McMahon."

The mayor's call for the increase-especially if it comes on the heels of an overturning of the term limits law-is bound to roil every single council district where home owner neighborhoods predominate. The mayor's position is being heralded as both prudent and courageous-and there are those who hearken back to the 2002 real estate tax hike as a profile in courage.

It wasn't. It was a signal that the mayor really had little understanding about the way in which tax policy can help or hurt a local economy-and, of course, its tax paying citizens who foot the bill. 2002 was just the right moment for someone who actually understood all of this, to use the crisis to drastically streamline government and embark on the kind of efficiency program that any good CEO would seek to implement if her company was awash in red ink; instead, the rookie mayor went right to his philosophical wheelhouse, and raised taxes.

And he continues along these lines today. In his weekly radio address (via Liz) he tells New Yorkers the following: "Every single agency is going to have to do more with less. But we absolutely won't let City services suffer. We learned that lesson during the 1970s, when City government was on the brink of bankruptcy and failed to maintain our quality of life. Thousands of New Yorkers fled for greener pastures elsewhere, compounding an already desperate situation for the city."

Those thousands of fleeing New Yorkers were middle class tax payers who didn't want to keep paying for the city's attempt to recreate a municipal socialism on their backs-especially while the really vital city services like fire and police protection were being diminished. Read Ken Auletta's The Streets Were Paved with Gold for an understanding of what really went on; the mayor's obviously no historian, but seems quite adept at at least re-writing history.

One of the most significant variables spearheading NYC's decline was it's confiscatory tax policy, a policy making the city a poor place to do business. As Auletta said: "It was no surprise, then, that the Fantus company, the world's largest business location consultant, concluded in 1975 that New York had the worst business climate of the fifty states" (pg. 64)

Now pardon us, if we're not just a little taken aback by the mayor's current proposal to go to the tax well one more time. After all, wasn't it mayor Mike who, just a short few months ago, said that tax increases wouldn't be necessary even if the city was entering an economic down turn? Here's what he did say, according to the NY Sun's report at the time: "Defying expectations that the city would increase property taxes to help close a projected $3.1 billion budget gap, Mayor Bloomberg will argue today that the budget can be balanced without the pain of a tax hike. In his annual State of the City address, Mr. Bloomberg will propose extending the 7% property tax cut he instituted last year, initially presented as a one-time bonus, an aide familiar with the speech said."

Didn't our billionaire financial genius see the economic train wreck coming down the tracks? Aren't all of these folks bailing out of Lehman, Merrill and AIG his cohort of Good Old Boys? To us, the mayor's lack of foresight rivals that of Mayor Giuliani, who saw fit to put his bunker high up on the 23rd floor of 7 World Trade Center. You mean to say that our financial guru was actually blindsided by the collapse? We're wondering why any one would want to bring this guy back for a third term.