Thursday, October 02, 2008

Financial Acumen in Question

It is long past time to independently evaluate whether the mayor's leadership-particularly in the area of fiscal prudence-has been all it's been cracked up to be; it seems that the spin is much greater than the reality. As the NY Times tells us this morning. that while the mayor's short term budget solutions have been successful, the longer term picture is more problematic: "And it is Mr. Bloomberg’s handling of the city’s bigger, longer-term financial issues that has provoked some disappointment among experts and others. The mayor, they say, has failed to control the city’s growing pension and health care costs, and has allowed overall city spending to increase significantly. Those costs, they argue, will contribute to gaping budget deficits starting next year."

Now in our view the short term ain't so great either, because his tax policies were not complemented by a re-inventing government approach that could have begun to dramatically reduce the costs in the public sector. So what happened was the cost of doing business in the city was significantly increased-a particular hard hit on neighborhood businesses that saw their rents skyrocket along with their tax bills.

And Mayor Mike, reflecting his philosophy of giving the customers what they want, has failed to rein in pension costs and the size of municipal labor contracts-he's been non confrontational at a cost to the city; unlike the hated Giuliani who understood that sometimes you have to pick a fight to get good results. Here's the Times: "Some budget experts said another aspect of Mr. Bloomberg’s stewardship of the city’s finances had caused concerns: the recent contracts he has negotiated with the city’s teachers and police officers that could become problematic as the city enters tough economic times."

It appears that Bloomberg has been overly reliant on Wall Street revenues, something that is certain to diminish. This underscores the point we've been making since this blog was started: Mayor Mike has been tone deaf at nurturing the small business economic engine of the city. Here's the Financial Times on this issue: "But while New York is used to riding the Wall Street rollercoaster, this time it is probably different, as decades of expansion in financial services goes into reverse. “It used to be a cycle – people would gain jobs, then people would lose jobs,” William Thompson, city comptroller and also a prospective mayoral candidate, said on Wednesday."

So Wall Street Mike may be about to be hoisted, along with the rest of us, on his petard-the mindset that was much too Wall Street-centric. Nicole Gelinas gives us the money quote-it should be read alongside all of the paeans to Bloomberg that are gushing forth from all of his billionaire conspirators: "“The only thing that stood between us and a fiscal crisis five years ago was a Wall Street business model that is clearly unsustainable,” says Nicole Gelinas of the Manhattan Institute. “We have just finished with the biggest boom ever seen in modern history and we have not used that time to get costs under control. These jobs aren’t coming back to New York City.”