Friday, January 30, 2009

The Taxman Cometh

As the NY Times is reporting, Mike Bloomberg's budget message today will reveal what is quintessential about his political essence: a tax increase is on the way because the mayor has no other creative way to deal with the city's fiscal meltdown. As the Times tells us: "A month after imposing a property tax increase, Mayor Michael R. Bloomberg is expected to call for a $900 million increase in the city’s sales tax on Friday, as the city confronts a loss of revenue due to the economic downturn. New York City already has one of the highest sales taxes in the nation, at 8.375 percent, and retailers are likely to fight the increase."

So there you have it-once again; our Michael one-note doing what he does best: "City officials declined to offer specifics. But according to a budget plan discussed late last year by administration officials, the city could generate almost $900 million by increasing the sales tax to 8.75 percent. Under that plan, the city would also do away with the current exemption on some clothing purchases."

Of course, Bloomberg's hand into our pockets approach won't stop there: "In addition to the sales tax increase, Mr. Bloomberg would eliminate the $400 property tax rebate, for an approximate savings of $250 million. He also planned to renew his call for Albany to approve legislation that would charge customers a nickel for each new plastic bag they use at most stores. So far that measure has not gained great traction with the public, despite supporters’ claims that it is both environmentally friendly and good for the city’s bottom line. There may be other taxes or fees as well."

We have already shown how the Bloomberg approach has helped lead to the loss of stores in the neighborhood; and this continued tax and spend strategy will be a further nail-in-the coffin for the city's local economy. Adam Brodsky captures this in the NY Post this morning: "State and local levies here already top the nation. If taxes spike further, many firms that are just squeezing by won't be able to afford to do business here. That's not good news for a city battling a recession."

But what about downsizing government? Bloomberg gags on this approach-issuing Jeremiads about the return of the 1970s: "His third option, trimming costs, is a step in the right direction - but no game-changer. That's because Bloomberg is philosophically opposed to any serious downsizing of government."

Brodsky's remedy is unconventional for New York City; but, if done in the right way, could be the elixir local businesses need to survive and grow: "Bloomberg also vows - in full-throated demagogic tones - never to repeat the mistakes of the '70s, when the city rolled back services in response to the fiscal crisis. Yet only a wholesale budget-wide restructuring can pave the way for the shrewdest move, the one never mentioned: big-time, across-the-board tax cuts. The huge pluses of such a step are obvious: Deep cuts lure businesses by signaling that the city no longer views them and their workers as cash cows. And the extra money New Yorkers keep could help them weather the economic storm."

Just think what a rollback of the commercial real estate tax would be for retailers-stopping bankruptcies and the job losses that they entail. But did we ever hear Mike Bloomberg call for some of the federal stimulus money to go towards helping struggling local businesses? No, all of the cash is reserved for plugging holes in the never ending spiraling of government spending-an arena where all services are vital: "Nor would we need to hit "vital" services - like policing, fire-fighting and garbage collection, which make up government's core mission. Cuts in those areas would indeed degrade quality of life and hurt the city as much as tax hikes. But there's plenty else to chop: lavish health-care subsidies and other entitlements, runaway school funding - and, of course, compensation packages for municipal employees, including fringe benefits and base salaries."

For Brodsky, this is all about the Bloomberg legacy; but that is something that is already sealed for us. As far as government is concerned, Mike Bloomberg remains a farcical successor to the late John Lindsay-just with more money to buy silence and complicity. Unfortunately, we know the answer to Brodsky's almost rhetorical question: "Does Bloomberg want to be remembered as the mayor who wrecked New York's commercial supremacy by making heaviest-in-the-nation tax burdens heavier? Or would the man touted for his financial acumen rather be known for, once and for all, reining in Gotham's monstrous outlays, lowering taxes, bringing back business - and securing the city's future? In the short term, all that may be at stake is his re-election; in the long term, it's his legacy."

And, as the NY Daily News underscores with a quote from our tall friend Ed Skylar, the mayor remains a creature of his fossilized public philosophy: "In order to close this deficit without destroying the core services New Yorkers rely on, the mayor will need help from all of our partners, from the municipal unions to the leadership in both the state and nation's capitol," said Deputy Mayor Ed Skyler. "We all will have to do our part to get through these tough times," he said."

Mike Bloomberg will never transcend the prison of his limited worldview. It is up to the voters now to see through the smoke and mirrors of the Myth of Mike-finally awakening to the fact that he is no fiscal wizard, but simply the little man behind the curtain.

Out of Control

The debate over continued mayoral control of the schools has begun-with hearings starting in Queens yesterday. And from the looks of things, changes in the governance system may be in the works. As City Room reports: "If anyone thinks the debate on the mayor’s control of the schools is a staid affair, witness the crowd at the State Assembly’s first public hearing on the law, which comes up for renewal in Albany at the end of June."

And the Public Advocate is right in the middle of the debate: "Betsy Gotbaum, the city’s public advocate, was the first to testify, echoing many of the points made in a report her office released in September that endorsed mayoral control but called for more checks and balances, particularly from parent groups. Ms. Gotbaum said she was particularly concerned that the 32 school districts have, for all intents and purposes, been eliminated. She said it was hard for parents to get answers from central offices and often relied instead on her office or those of community elected officials."

The mayor's supporters would like everyone to see the debate as an all or nothing one between those who want the accountability of the mayor's rule versus those who want to revert back to the bad old days: "Deputy Mayor Dennis M. Walcott, who oversees the Education Department, testified on behalf of City Hall, continuing to push the message that things have never been better in the city schools. Much of his opening remarks recounted what life was like when the independent Board of Education was still in charge. “I remember the inequities inherent in 32 mini-school systems — some run capably, some corruptly,” Mr. Walcott said. “No systemwide curriculum, even in math or reading. A system where school funding was opaque and based more on politics than on needs. I remember a 27 percent lag behind the state in math and a 23 percent lag in English. Too many students who could not read promoted from grade to grade, with graduation rates below 50 percent and much lower for students of color.”

What's instructive here in Walcott's, "who are gonna believe, me or your own lying eyes" world, is how the idyllic picture he paints is unrecognizable to those closest to the system: teachers, parents and administrators: "Mr. Walcott’s testimony was occasionally punctuated by boos from parents in the back of the room who had come to the meeting with a group called “Campaign for Better Schools,” which is advocating changes in the way mayoral control is set up, including more checks and balances and public participation."

And as one City Room commenter says: "Ask the people working in the schools what they think…this myth of improvement is just that, a myth. The exams have been dumbed down so that people such as Klein and Bloomberg can brag about “improvements.” The morale of the professional staff has never been so low. Everybody who can gets out as soon as they’re eligible to retire. Everything is the fault of the staff. Even the idiotic topic they decided up for their strategy, Children First, shows how conceited they are."

Also of interest is how the mayor's vaunted lobbying effort is floundering: "When close allies of Mayor Michael R. Bloomberg banded together last summer to create a political organization to push for the renewal of a 2002 state law that gave New York City’s mayor control over its public schools, the initial buzz was that it would become a powerhouse lobbying group, raising as much as $20 million and helping shape the debate over the year. Instead the group, called Learn NY, has raised less than $3 million from several foundations. Rather than producing flashy television spots, it has placed simple ads on Web sites of news organizations and, and tried to spread its positions by posting on education and community listservs and blogs."

Not to get too excited, however. As soon as this gets the mayor's real attention-or that of Wolfson and Sheinkoff-watch how the money begins to flow in; flabbergasting as it might be to all of the floundering not-for-profits in the city. But watch out for the parent push back: "But in its early, largely low-key campaign, the leaders of Learn NY have drawn the ire of some of the most active and vocal parent-advocates in the city. When David M. Quintana, a Queens father whose blog features a clock counting down to the end of the mayor’s term, received an e-mail message this week asking him to post a letter introducing Learn NY to his readers, he instead sent it to a listserv that is often critical of Schools Chancellor Joel I. Klein. “I just suspected that they were sort of a Gal Friday for the mayor,” Mr. Quintana said in an interview. “They tried to recruit parents and they just picked the wrong parents to recruit.”

What the mayor and his minions resist in all of this back and forth, is any real oversight role for parents-or anyone not appointed by Mike Bloomberg: "Dennis M. Walcott, the deputy mayor who oversees education, said the administration opposed any change in the Panel for Education Policy, which is appointed by the mayor and largely serves as a rubber stamp, in part because it believes most of the mayor’s controversial initiatives would never have passed had he not had full control over the schools."

At the end of the day here, we hope that the legislature closely examines the reality vs. the spin in this debate over governance. As one Queens lawmaker points out: “No one wants to go back to the old system of finger pointing and no one being in charge and there’s an appreciation of the line of authority,” said Michael N. Gianaris, a Queens assemblyman. “That being said, there’s a wide belief that parents are real stakeholders, and that has not been appreciated as much as it should be, and too often parents are shut out of the process.”

Ultimately, however, the issue will be all about Mike Bloomberg-and the ire of so many folks is directed at his overturning of term limits; along with an animosity to the chancellor that grows stronger every year:

"Learn NY organizers said they hope lawmakers and the public could separate their views on Chancellor Klein from the concept of mayoral control, but such a distinction can be difficult to make in the political world. “If the mayor was not running for re-election, one could be more objective about it, but I think people see that the chancellor hasn’t made a lot of friends in the last several years and that’s part of what happens when you have one person having this level of authority,” said Randi Weingarten, the president of the teachers’ union, who has sparred with Mr. Klein repeatedly in recent years and is influential in Albany."

This fight is just getting started; and we can't wait to see the deconstruction of the Myth of Michael in the process. The more folks know, the less they appreciate Bloomberg's grandeur.

Thursday, January 29, 2009

The Real Main Street Crisis

As we have pointed out, the effort by the state's liquor stores to preserve their monopoly over wine sales employs the imagery of shops closing on "main street;" going so far as to call their coalition-"Last Store on Main Street." Well, setting aside self serving hyperbole, there is a real crisis on the city's commercial strips. and this whine is for real.

As Albor Ruiz underscores this morning: "Small, friendly and convenient, bodegas are more than businesses - they are veritable neighborhood institutions. Yet they are disappearing faster than you can say "stimulus package." Ramón Murphy, president of the Bodega Association of the United States, and a bodega owner, is sounding the alarm about the state of the business to which he has dedicated 24 years of his life - and that has allowed him to raise four children."Bodegas are family businesses, and every time one closes, two or three families suffer," he said at his Red Apple Grocery, at 134 Hamilton Place in Manhattan. "Last year, 137 of them went down only along Broadway from 230th St. to 197th St.," Murphy added. "Hundreds of bodegueros [bodega owners] are throwing in the towel. Every day, two or three bodegas close in New York."

The closing of bodegas-and green grocers fall into this category as well-is a calamity for New York; and is as severe a situation as the closing of the big banks and brokerages: "Lost in the din about hundreds of billions to bail out banks, the auto industry and financial institutions is the fact that the 9,000 New York bodegas are becoming a dying breed. If something is not done, it won't be long before they become extinct, leaving thousands without a means of support. The disappearance of bodegas is the economic crisis hitting at the most basic level, and its impact in human terms is very real. After all, since the mid-1980s, small businesses have been the creators of the majority of new jobs in the city."

What lies behind the threat? The recession is, of course, a major culprit; but there are other factors as well: "The recession has meant fewer customers spending less. For bodega owners dealing with skyrocketing rents, high taxes and often excessive regulations - typical of New York City - life has become harder."

This bodega crisis actually started when Mayor Bloomberg diverted half of their cigarette sales to the black market with his confiscatory tax increase of 2002. After that, over $250 million a year was lost to the stores, as illegal street sales flourished. As we told the NY Times then: "Richard Lipsky, a lobbyist for the owners of small delis, bodega owners and convenience stores, predicted in an interview that many neighborhood stores would not survive the higher tax as many smokers would buy their cigarettes over the Internet, from Indian reservations, from adjoining states or from smugglers."

Mike Bloomberg's response at the time was to call the situation a, "minor economic issue." But when seen in the context of the mayor's 20% commercial real estate increase-passed through to the stores as a rent hike-and the city's regulatory Jihad of fines and violations, we now face a crisis of the highest magnitude. In a recent survey, store owners cited, "operating costs," as the main reason their stores were at risk of closing.

In response, stores are asking for the passage of a rent protection bill: "Yet Murphy says the main reason bodegas keep crashing like rows of dominoes is the one-sided process of lease renewal ."Leases are the No. 1 problem," he said. "Landlords either do not renew them or want to raise the rent four or five times. Often, you have to give money under the table for the lease to be extended." That's why the Small Business Preservation Act, sponsored by City Councilman Robert Jackson (D-Washington Heights), is so vital, Murphy said. The bill, introduced last June, would provide relief from unfair evictions."

In the midst of all this economic hardship-and don't forget that the supermarkets in the city are a dying breed as well-comes the effort of some environmentalists to expand the responsibilities of local stores for bottle collection; adding water and juices to the deposit stream (a close to 50% increase in the amount of containers mandated to collect). With so many stores closing, this isn't the time to increase the regulatory costs of doing business in New York.

So let's drop the bottle bill expansion; and while we're at it, how about using some of the stimulus money to lower the cost of doing business in the neighborhoods-in the form of tax relief for local small businesses. We might even find a way to allow the bodegas to sell wine by lowering the licensing fees for small stores. Lowering costs and increasing business opportunities is the policy direction we should be taking at all levels of government in order to relieve the real crisis on main street.

Wining on Main Street

Crain's is reporting that the state's package stores have launched a grass roots PR effort to keep wine as their exclusive product: "Some 2,700 liquor store owners on Wednesday formed a coalition called The Last Store on Main Street to lobby state legislators. The group claims that 1,000 small businesses, representing 4,000 jobs, would fail if food stores are allowed to sell wine. The organization is also making the case to associations such as Mothers Against Drunk Driving that teenagers would have greater access to alcohol if wine were sold in supermarkets."

Well, what's wrong with a little competition? And, as far as the last store standing rhetoric is concerned, this sounds a bit overheated to us. Certainly, box stores selling wine in NYC won't kill the main street liquor stores-because we won't let that many of them in; and if the local C-Town or Key Food can sell wine, then those are Main Street Stores just like any local liquor store is. As we told Crain's: "The grocery industry maintains that liquor stores’ position is protectionism at its worst. “Why should anyone have a monopoly on the product?” said Richard Lipsky, a spokesman for small supermarkets in the city."

A position that was underscored by the National Supermarket Association, the group that represents Hispanic-owned independents: "According to the National Supermarket Association, fewer than 10 states forbid allow wine sales in grocery stores—a proposal to reverse that in Massachusetts failed to pass last year. Neighboring New Jersey allows wine sales in food stores, and there is no dearth of liquor shops in that state, said Nelson Eusebio, executive director of the National Supermarket Association, located in Queens. “The person who leaves his home to buy a bottle of wine is going to a liquor store,” said Mr. Eusebio. “We don’t feel that grocery stores will interfere with that [decision].”

The real issue here is the cost of the license; and to counteract the "Coalition" argument, there is a need to insure that the bill is cost effective for smaller stores-and let's not forget the 400 beverage centers that service so many neighborhoods and towns. It appears to us, that this is one monopoly that has lasted for way too long.

Wednesday, January 28, 2009

Take the Money and Run

Who would have ever thought that our old friend Hank Sheinkoff would be staring in a re-make of the old Woody Allen movie, "Take the Money and Run." Well, what else to make, then, of the following from today's NY Daily News: "Mayor Bloomberg snatched another high-profile political consultant from his rivals Tuesday, hiring veteran Democratic operative Hank Sheinkopf. "No one knows more about New York City politics and campaigns than Hank," said Howard Wolfson, Bloomberg's campaign communications director."

Quite a turn of events-but if any one can make a silk's purse of the mayoral sow's ear. it's Hammerin' Hank. We do wish him well, and can't wait to see the W-2 on this gig. Salud!

Strong Governor Needed

In today's NY Daily News, Michael Goodwin decides that, for all his recent foibles, we really need Governor Paterson to step up his game and resolve the current budget mess without too much whacking of the state's tax payers: "He's erratic and is getting a reputation for being loose with the truth. But here's the really bad news: Gov. Paterson remains our best hope for reform in Albany. Paterson's rocky performance, especially in the botched contest to replace Hillary Clinton, is fueling talk that he's toast. Things are so bad that a reporter's question yesterday about whether he intends to run in 2010 was fair game. Paterson's response was quick - he absolutely intends to run - but his slumping body language and somber tone were striking. This is a beaten man, hanging on to the ropes."

Still, the state desperately needs leadership-and the mixed signals from the governor need to be clarified; he has talked a moderate, lower tax game, but his budget certainly doesn't reflect the rhetoric-and the myriad of new fees need to be sent into the waste basket: "Paterson sounded an early warning about what was first called a housing crisis and then a banking crisis. He saw the potential for another Great Depression, a view that is now conventional wisdom. His failure was an inability to force the Legislature to do anything about it. Eschewing the legendary advice from Teddy Roosevelt to "speak softly and carry a big stick," Paterson has spoken loudly but not once shown a stick. It hasn't worked. Indeed, Paterson caved into the tax-and-spenders, proposing to increase or initiate 137 fees and taxes to raise $4 billion."

But Paterson also promised that, if federal bailout money came in, he would reduce and/or eliminate the higher levies: "Yet his good instincts are reflected in a letter he wrote to the Daily News earlier this month. After I warned about the incoherence of the federal government cutting taxes as part of a stimulus package while the city and state were planning to hike taxes, Paterson hailed my "very good point" and added: "I want to assure the readers of the Daily News - and all New Yorkers - that we hope to eliminate many of the tax and fee proposals put forth in my budget if we can secure a significant amount of federal aid to help close our deficit."

Well that money is on the way, and all the while the governor is still looking to tax obesity and not really cut the fat in state spending: "That's the right answer, and his putting it on the record matters now that the state is slated to get over $10 billion from Washington. Paterson can strike a blow for fairness as well as economic growth by letting New York families keep more of what they earn instead of having the state gobble up a bigger slice of the pie."

And then Goodwin goes further; proposing that federal aid to cities and state's have restrictions-just as the big companies are held in check by requirements that the public's money be spent in profitable ways: "Mayor Bloomberg ought to also promise no tax hikes, and the feds should make a moratorium on local taxes a condition for any bailout, just as financial firms face restrictions in exchange for help."

That's a great idea. The stimulus windfall should be directed towards helping beleaguered "working families," who have seen their incomes shrink as their tax bills have either stayed the same or even gone up-per the city's property tax hike. And, while President Obama has promised to eliminate programs that don't work, Mike Bloomberg can't seem to find any local program that needs to have an axe taken to it. Change in NYC is as vital as any change in the composition of the national government.

So we'll be watching the governor's actions over the next few weeks. Will his actions reflect his sober fiscal analysis? Walking the walk is the watchword for the duration of this session.

Long Knives Come Out

David Paterson has had better weeks, we're sure. Yesterday, the press really took off the gloves and hammered him; with Fred Dicker calling him an outright liar: "Gov. Paterson yesterday insisted he had no idea who did the slime job on Caroline Kennedy - although the source of the information is about as close to him during the day as his wife is at night. He's a liar."

And the NY Daily News' Bill Hammond wasn't much kinder: "Gov. Paterson doesn't set out to mislead and confuse.It's just that he has a bad habit of saying whatever he thinks the person in front of him wants to hear at that moment - even if that means completely contradicting what he said two minutes before. Before long, he has said so many things to so many people that he loses track of what the real truth is. It's a personality flaw that finally caught up with him in the Caroline Kennedy fiasco."

But at least he cancelled his Davos junket; which didn't stop the NY Daily News from editorializing: "Gov. Paterson has thought better than to jaunt off to Davos, Switzerland, to confab with the rich and fabulous while New York and his poll numbers are in the pits. Well, duh.
The governor belongs at his desk with a renewed sense that New Yorkers actually expect him to get things done. For example: to solve the budget crises he has been talking about."

And then the NY Post chimes in as well: "Now, New Yorkers aren't naive. They expect pols to lie. But they also expect pols to lie with some finesse. And they certainly don't expect politicians to take a slam-dunk positive-PR opportunity like the appointment of a United States senator and turn it into a circus sideshow. Now New York looks dumber than Illinois, for Pete's sake.
Is that even possible?"

So where does all this leave Paterson? That all depends, perhaps, on how well he navigates the budget crisis. As Hammond points out: "But his own credibility took the worst hit. At this point, people will understandably question every word that comes out of Paterson's mouth. Which is a scary situation, because New York really does face a massive budget crisis. Trust or no trust, Paterson will have to see us through it."

The problem here, however, is that the governor has left himself no margin for error-all of his goodwill has been eroded, and the folks (not to mention the political sharks) are not going to be suspending their disbelief any time soon. He needs to have a picture perfect landing on this fiscal crisis-muddling through will not be enough.

Tuesday, January 27, 2009

Looking a Gift Horse in the Mouth

The old saw about not looking a gift horse in the mouth refers, of course to the Trojan Horse; and in analyzing the benefits of the $17 billion stimulus gift from the Feds, the reference is indeed apt. As EJ McMahon tells us: "The House of Representatives this week is expected to pass a federal stimulus package that could pump at least $17 billion of noncapital funding directly into New York's state and local government coffers over the next two years. But what Sen. Charles Schumer is touting as a "shot in the arm" for New York looks more like a sock in the face to the state's taxpayers."

Why's the money bad for us? EJ tells it like it is; pointing out how the largess only enables feckless pols to shuck and duck the hard budget decisions-postponing the inevitable until the situation simply deteriorates further: "The stimulus bills would temporarily offset Gov. Paterson's planned cuts in Albany's projected spending on education and Medicaid - the operative word here being "temporarily," since the extra cash is only for 2009 and 2010. As a result, the federal bailout will do painfully little to forestall the massive tax hikes now being cooked up in Albany and City Hall. Nor will it do much to "stimulate" New York's economy (unless, like Schumer and too many other leading New York politicians, you pretend public-sector unions and Medicaid providers are engines of economic growth)."

The delay of the inevitable, however, will prove deadly for New York's long term stability: "By delaying any serious reform or restructuring of New York's most costly programs, the "stimulus" would actually make the state's long-term financial outlook even worse. If the current versions of the stimulus bills become law, bond-raters might as well downgrade New York's paper right away - because when two years are up, the state budget hole will probably be as big as ever, and the economic outlook may not be much brighter."

And unfortunately, once the package is dissected, all of the federal money will not do much to mitigate any of the governor's proposed tax increases: "When all's said and done, a small amount of the state stimulus, perhaps as much as $1.5 billion over two years, would come without strings tightly attached. That's only enough to undo a small portion of the $8 billion in tax hikes that Paterson has proposed for the same period. The stimulus bills seem likely to breeze through the House, but Senate action will take a little longer. If Paterson really wants to avoid economically damaging tax hikes, he needs to join with other governors in insisting on greater flexibility in how states can use these funds."

Real economic relief for tax unhappy New Yorkers would be for the stimulus money to be used to keep any new taxes down; and, as McMahon points out, this is a good test for our new junior senator: "It's also a test for New York's new junior senator. In the House, Rep. Kirsten Gillibrand lined up with fiscally moderate "Blue Dog" Democrats (although her voting record on a key index of tax-and-spending issues was indistinguishable from ultraliberal Rep. Barney Frank's). This is Sen. Gillibrand's chance to stand up for a more financially responsible package and a better deal for New York taxpayers - even if it pits her against New York's senior senator."

Tax cuts, not hikes, are the key to economic growth-particularly for small businesses that are being beleaguered by taxes, fees and regulations. Yet Washington seems hell bent on subsidizing failing big businesses at the expense of their more entrepreneurial and smaller competitors. As Tristan Yates tells us:

"What should be done to help small business fuel an economic recovery? Clearly, we need Barney Frank to lead a House oversight committee, a $700B rescue program to buy failing small businesses, a progressive Small Business Czar — maybe Naomi Klein or Andrew Sullivan — and, of course, new carbon taxes to ensure that entrepreneurs living in polar regions don’t drown as the arctic ice melts. But if you’re a little skeptical of that approach, may I present another. Stop the planned tax hikes that disproportionately hit small businesses and their owners. Stop turning small businesses into tax collectors and social workers. And stop the bailouts — after all, new businesses can never succeed if their competitors are subsidized indefinitely."

Bottle bill expansion, soda taxes, real estate tax hikes-everything that's bad for economic growth is on the table; and now we have "free money" to spend for all kinds of unstimulating stuff. We're waiting for our elected officials to stand up for small business and economic growth-but we're not holding our breath.

Bloomberg Hearing Footsteps

According to the latest NY1 poll, the upcoming mayoral race may turn out to be a real barn burner: "Nine months before the 2009 NYC Mayoral Election, incumbent Michael Bloomberg leads his two top potential opponents in his quest for a third term, but the Mayor does not top the crucial 50% mark against either. The fact that the Mayor is not at 50% is surprising, given his high approval ratings and his 2005 landslide victory."

Bloomberg holds a slim seven point lead over Anthony Weiner, who himself polls slightly ahead of Comptroller Thompson in the Democratic primary: "In the Democratic Primary contest, the race is far from decided, with a plurality (36%) of Democratic voters unsure about their support. At this point, Anthony Weiner leads at 31% , with Thompson at 22%, and Councilman Tony Avella at only 4%. In addition to the 36% undecided, another 6% of Democrats say they won’t bother to vote in the democratic Primary."

This poll does give many of us some cause for a degree of optimism that Mike Bloomberg, particularly after spitting in the face of the electorate on term limits, may have over stayed his welcome. As the NY Post reports: "Mayor Bloomberg leads his closest Democratic challenger, Rep. Anthony Weiner, by a wobbly 7 points, a new poll shows - an unexpectedly close margin certain to send a jolt through the mayor's third-term re-election campaign."

And term limits just might be a tipping point: "Privately, mayoral aides are concerned that last year's bruising battle over term limits - in which the mayor reversed his own earlier position and convinced the City Council to change the rules through legislation - may carry over to Election Day. "The poll numbers have to make you think term limits is having some effect," said the analyst."

The mayor's slippage, especially when seen in the light of his failure to yet capture any major party ballot line, means that potential donors could be about to open their wallets in anticipation that this mayor-in spite of his great wealth, and willingness to spend it-could be upset in November. What a pleasant thought: arrogance may actually have a price for Mike Bloomberg.

From our vantage, Mike Bloomberg's political passing is long overdue. There has never been a more over hyped mayor in our memory-and never one who was more indifferent, or even hostile, to the neighborhood businesses of this city. Put simply, Mike Bloomberg has been the best friend that the big real estate interests have ever had-simply because his ability to appear not to be beholden to them, has given him the leeway to be their apotheosis.

Mike Bloomberg is now the country's biggest philanthropic giver. He should continue this trend by giving a big gift to the citizens of New York-just walk away from a third term bid and leave the city with a new chief executive. Now that would really demonstrate selflessness.

Antonio Pagan: R.I.P

Antonio Pagan died on Sunday, he was only fifty years old-and even though he hasn't been in office since the late nineties, he will still be sorely missed. Quite simply, Antonio was the fiercest fighter for Hispanic and small business that this city has ever known. As we told City Room: "Richard Lipsky, a lobbyist who worked with Mr. Pagán on issues affecting small businesses, called Mr. Pagán an “incredible force.” “Whether it was fighting for independent supermarket operators in East Harlem against a subsidized Pathmark, or battling the discriminatory pricing policies of Anheuser Busch on behalf of local beer distributors, Pagán was always there to fight on behalf of the little guys,” Mr. Lipsky said."

Pagan took on all of the tough fights-leading the successful effort to derail Giuliani's megastore plan. And, although he was criticized by activists for his controversial views on gay rights (although gay himself) and housing (some Lower East Siders didn't like his support for gentrification efforts), there is no small business leader who would say a single negative thing about Antonio.

Pagan was fiercely passionate about the fights he undertook-circulating petitions and getting in the face of critics; and none more so then Guillermo Linaris, a councilman from Washington Heights during the Pathmark fight. Pagan never trusted Linaris, someone who was Dominican just like the store owners who were threatened by the subsidized supermarket. And when Linaris switched his vote at the last minute( he had been the "leader" of the opposition up until that point), Pagan nearly leaped across the table down at the borough board hearing, calling Linaris a "vendido," or sellout.

There's a line we always use when discussing Linaris-it actually comes from Pagan. Antonio said that he always knew that Guillermo would ultimately stand up for his people; but until that crucial vote, he just didn't know who his people were. Pagan, unlike the traidor Linaris, would never be a vendido; and we sorely miss his brand of uncompromising representation today when over forty percent of the city's small business are Hispanic owned-and are being treated as beneath contempt by Bloomberg's small business commissioner, an oxymoron if there ever was one, Rob Walsh.

So let the psychologically unbalanced and hateful bless Pagan's passing-check out the psychotic ravings of some of the commenters on City Room's blog-but for us, there has never been, and probably never will be again, a fighter for the little guy with the kind of uncompromising zeal that Antonio Pagan brought to any fight. May he rest in peace.

Monday, January 26, 2009

Bodegas Begone

We have written extensively about how supermarkets are disappearing in NYC; and now it appears that the city's bodegas are also closing up shop in record numbers. As the NY Daily News reported yesterday: "Freddy Fernandez's bodega on 138th St. in the South Bronx was in the family for 20 years, and business had never been worse. Food and beer prices rose sharply, Fernandez said, and demand for many products plummeted. After watching several nearby stores close down recently - a bakery, a donut shop and the fish market next door - Fernandez finally had to close his bodega, too.'

Why the trend? Well, just like it is for supermarkets, the rising cost of doing business is making the store owner's life difficult: "Bodega owners like Fernandez are struggling to survive the deepening recession as their costs rise and customers pull back on their spending. To get by, owners are stocking fewer products, changing their hours and letting workers go.
"Electricity, gas, everything - we can't cover," said Fernandez, 42, who locked the doors at his Caribbean Deli-Grocery earlier this month. "We can't pay."

In addition, rising food prices and falling incomes are also taking its toll: "Behind the cash register, a case of Goya extra virgin olive oil had gathered dust for four months. In the past, customers went through two to three cases a month, he said. "We only get the inventory people want," Fernandez said before deciding to close the store. "They want to buy everything cheaper."

And, of course, the hard times effects employment in the neighborhood as well: "Other bodegas are laying off workers. Fernandez cut his staff down from eight to four workers just a few months ago, but it wasn't enough. Revenue has dropped by 25% since last year. "Now is the worst," said Ramon Murphy, a bodega owner for 24 years and president of the Bodega Association of the United States."

In the midst of all of this small business calamity, Mike Bloomberg has raised taxes and added payroll-thus exacerbating the problems at the neighborhood level. As the NY Post opined yesterday, pointing to the public employee issue: "As is, for that matter, Hizzoner's apparent belief that New York can weather the economic downturn without scaling back the public workforce: Insufficient state aid, Mayor Mike said, is a recipe for - sit tight - layoffs. Uh, hello?
The whole world is engaged in layoffs these days."

Of course, Mike has no clue about the correlation between public spending, higher taxes, and burdensome regulations-and the plight of the bodegas has its genesis, at least in part, in the failure of government to rein in its costs. Regulatory burdens function just like unfunded mandates do for local government-making it more difficult for their objects to operate efficiently.

And the recession comes on top of the rising rents that had already forced many stores to the brink of bankruptcy. All of which is why adding regulatory burdens like an expanded bottle bill makes little sense in these dire economic times. More costs equal less profit, equal fewer stores, and a real loss of neighborhood jobs. We should be looking to cut costs for local stores-not add to them through higher taxes and regulations.

Strange Bedfellows

News was made a couple of weeks ago when it was announced that Mike Bloomberg and Tom Golisano were going into business together-political business, that is. The NY Post described the union as a tag team: "Mayor Bloomberg is teaming up with upstate billionaire Tom Golisano to revamp the state Independence Party as an "issues oriented" group focusing on government reform, The Post has learned. "They want to combine their resources," said Golisano adviser Steve Pigeon of the effort, which is expected to be a multimillion-dollar endeavor. "It means a lot in New York state politics to have them come together."

If, as the old saw suggests, politics makes strange bedfellows, than these two billionaires-united by little else but money-have to be the political odd couple of the year. The incongruity of the union was underscored last week by the following news: "Upstate New York's economy every year is drained of a hefty amount of cash in the form of property taxes, said B. Thomas Golisano.To slow that drain, the Paychex Inc. founder turned political activist has started a petition drive through his Responsible New York political reform advocacy organization to register support for cutting property taxes, as well as an advertising blitz to promote the drive."

So, let's get this straight. In the first foray since the two announced an unlikely alliance, one of the big bucksters announces a petition drive that places him diametrically opposed to his partner; since Mike Bloomberg is the consummate taxer and big government advocate. This incongruity is underscored by the following: "Golisano made property tax cuts a centerpiece of his most recent gubernatorial campaign."

We are now awaiting the Golisano-led drive to get NYC to reform its government and lower local property taxes. Mike Bloomberg has taken exception to the new senator-select because of her stand on gun control; now let him do the right thing-dissolve the Golisano partnership because of irreconcilable philosophical differences.

Paterson Faces Challenge

In the wake of the Caroline Kennedy fiasco, Governor Paterson is facing a continued onslaught of criticism-but he won't be here to counter any of it. Why? Because he's on the way to Davos for an elite world economic forum. This, on top of everything else from last week isn't sitting well with a lot of folks. It's gotten so bad that the NY Post has become wistful for Eliot Spitzer: "This circus needs a ringmaster. That's why we're nostalgic for Client 9. Sure, old Eliot could be a little prickly at times. But you can't balance a budget without breaking a few yeggs, and the Albany Legislature has a superabundance of them - in the newly reconstituted state Senate especially. Yet also in the Assembly - where Speaker Sheldon Silver is, as always, patiently assessing his opportunities. Fact is, Paterson should just stay in Davos. Nobody will notice, and the outcome won't be any different."

And Errol Louis goes off after Paterson yesterday-calling him "Dithering Dave." Louis disagrees with our assessment of the Gillerbrand pick; but he's right in the fact that the new senator will invite challenges from the left wing of the Democratic party-something that weakens the governor as well. Leave it to Mike Lupica, however, to really slice and dice the governor: "In the end, it wasn't Caroline Kennedy who was out of her weight class. It was Gov. David Paterson.
The coverage on this now is that it was Ms. Kennedy who somehow wasn't ready for "prime time." No. It is the governor of the State of New York who wasn't ready, and now can prove it."

So Paterson manged to make Caroline into the martyr that she certainly didn't deserve to be seen as-not with all of the swells backing her no resume candidacy. But now, as the NY Daily News reports this morning, Paterson's future is on life supports: "Democrats are increasingly pessimistic about Gov. Paterson's political survival. Paterson's handling of the U.S. Senate appointment has even his allies critical of the governor - and fearful that erosion in public confidence in him could impact efforts next year by Democrats to keep their tenuous control over the state Senate as well as the controller's office."

This isn't looking good; but Paterson has the ability to turn things around-if he manages to navigate the state through the current budget process: "Assembly Speaker Sheldon Silver said Paterson ultimately will be judged on how the state handles the fiscal crisis. "Do we do a budget on time, does he provide the leadership that he has provided so far? Silver said. "I think so far he's done an excellent job."

Given the legion of skeptics that he has created, however, this is begging to seem like a Herculean task. What he has accomplished, is to create a situation where all of his missteps will be magnified-and he can ill afford any more, especially any ones of some magnitude, if he is planning to survive an election bid next year.

Paterson's Self Made Mess

It would be extremely hard to see how any one could top Caroline Kennedy's disastrous maiden voyage into politics, and to shift the focus in a different direction-but Governor Paterson managed to do just that-and the damage to his political future is beginning to become clearer in the aftermath of the selection fiasco. As Fred Dicker opines: "Gov. Paterson sealed his own fate yesterday as he insulted state Attorney General Andrew Cuomo with his bizarre selection of little-known upstate Rep. Kirsten Gillibrand as Hillary Rodham Clinton's successor. The only question being asked in state Democratic circles was not if - but when - Cuomo, who did not attend yesterday's press conference, will announce his candidacy to challenge Paterson in next year's primary."

And Paterson made Cuomo's job easier by selecting someone to succeed Hillary Clinton who will rile the party base against the governor next year. As the NY Times pointed out on Saturday: "Before the governor had even announced that he had selected Ms. Gillibrand, the pick ignited turmoil within the party, especially among more liberal downstate Democrats. Representative Carolyn McCarthy, an ardent gun-control activist who was elected to Congress after her husband was killed in a gunman’s rampage on the Long Island Rail Road in 1993, said Friday that she would start raising money next week for a potential primary challenge to Ms. Gillibrand, a centrist Democrat endorsed by the National Rifle Association."

The NY Daily News captures the almost perfect nature of the governor's maladroitness in this matter: "A civil war erupted among Democrats Friday when Gov. Paterson named a little-known upstate congresswoman to replace Hillary Clinton in the Senate. Senator-designate Kirsten Gillibrand's conservative positions on gun control, immigration and prisons put her at odds with the party's liberal downstate wing."

And the continued backbiting against Kennedy has manged to turn an entitled ingenue into a kind of Joan of Arc. How else to explain these comments: "In meetings, the governor and his aides decided she had no political depth, the source said. She had no firmly held views and little idea about why she wanted the job, the source said. Her abysmal public rollout cemented the governor's fears that she had no political instincts. The governor felt the sheltered Kennedy had no communication skills and absolutely no empathy with the voters, the source said."

All true, but besides the point; it was the governor's handling-or dithering, if you will-that allowed the situation to deteriorate. If in fact he felt that; "The nonstop Kennedy coverage, at the expense of the others Paterson was considering, also irked the governor, friends said.
He felt it made the other candidates look like they were second-best. He also felt she lacked the ambassadorial skills to make the case for New York," he needed to act with all deliberate speed.

So, as the NY Post editorialized on Saturday, the governor made a mess that he must now somehow overcome-but it won't be easy:

"All of this surely has a lot of Democrats gaping in amazement - assuming there was anything left to be amazed at after the humiliating farce surrounding Caroline Kennedy's aborted candidacy. Still, at least Paterson has made an appointment. As we have previously noted, this now-concluded sordid spectacle is but a sideshow to Albany's real drama: the state's ever-mounting budget deficit, which now stand at $15 billion through next year. It's a crisis that's needed Paterson's wholly undivided attention for weeks now, but which hasn't gotten it - thanks to his preoccupation with "intentionally misleading" people about his Senate pick so as to "keep up the suspense." Well, it worked - New Yorkers are in suspense. They're wondering how their state is going to keep from sinking in the national economic turmoil with a minimum of pain for every household."

David Paterson's choice to replace Hillary was unlikely to boost his election chances;but the key goal should have been to limit any damages. The opposite occurred. We'll give the acerbic Dicker the last word: "The insiders anticipate the situation at the Capitol worsening for Paterson, whose popularity has been sliding in recent polls, in the coming weeks and months. It's an open secret at the Capitol that his administration has been devolving into chaos, bumbling and paranoia since October. That's when Charles O'Byrne, the ex-priest who was Paterson's chief of staff-cum-personal adviser and confessor, resigned amid a tax-evasion scandal, leaving the governor without the skilled confidant he clearly needs. For a governor with limited management skills and a substandard work ethic (two months to pick a senator?), the coming grind of budget cuts and tax hikes could be enough to convince him to gracefully bow out of office at the end of his term."

Friday, January 23, 2009

Alphonse and Gaston

The governor has managed to turn the entire senate selection process into a vaudeville act-reminiscent of the indecisive Alphonse and Gaston characters; and the press is started to let him have it. In this morning's NY Daily News, Bill Hammond lets loose: "Caroline Kennedy may not deserve to be a U.S. senator, but she doesn't deserve to be slimed by the Paterson administration, either...She should not have to see her famous name and family dragged through the mud by vindictive aides to an embarrassed Gov. Paterson. Whether Kennedy withdrew because of an alleged "tax problem and a nanny issue," as sources close to Paterson anonymously claimed, they had no legitimate cause to make that public."

Ouch! And in the Post, Jacob Gershman also excoriates Paterson-even claiming that Governor Balogovich did a getter job selecting a new senator: "As the ashes of Caroline Kennedy's brief foray into politics are shoveled away, New Yorkers are left with a sad irony: Battling corruption charges and staring down certain impeachment, Gov. Rod Blagojevich did a better job of picking a US senator than did David Paterson."

The question for us is, why did Paterson's folks even have the need to trash Kennedy ex post facto? Kennedy was doing such a good job of this herself-and if left alone to flounder would have continued to do so unaided; after all, her midnight madness act was going to spur ridiculous levels of rumor and innuendo. Now, however, Paterson's made himself the issue when it was totally unnecessary: "Blago may be headed to prison, but in executing the same responsibility that rests on Paterson, the Illinois governor was confident, shrewd, and decisive - the very qualities absent from our governor. Today Paterson will put the Senate selection process out of its misery. He'll then have to deal with an aftermath of confusion, bitter feelings and outrage for which the governor has only himself to blame."

All of this can't do the governor's political fortunes any favors. As Hammond remarks: "The ones not ready for prime time are Team Paterson, the Washington Generals of politics, who have thoroughly botched the job of selecting a replacement for Secretary of State Clinton." And Gershman comes back with the following cut: "A Democratic operative familiar with the selection process summed it up like this: "The governor's handling - or rather, mishandling - of the selection process has been a circus from start to finish. With his dithering, leaks and abrupt 180s, he's managed to demean the candidates, the office and himself in the process."

So while Gillibrand gets center stage today-and the pick, however accidental, is indeed a good one-it is the governor who will have to repair his damaged image, As the Post editorializes: "All the high drama undermines public confidence in Paterson's ability to do the heavy lifting needed to balance a budget that is billions out of whack." All of which makes for an interesting election cycle in 2010.

Hello, I Must Be Going

The announcement that Governor Paterson will appoint Kirsten Gillerbrand to the empty senate seat, will not dampen speculation surrounding the abrupt departure of Carolyn Kennedy from contention early yesterday. The whole episode was bizarre; and the reasons for her leaving remain opaque-raising speculation as to why she really took her name out of contention. As the NY Daily News reports: "A nasty war of words erupted Thursday between loyalists to Gov. Paterson and supporters of Caroline Kennedy after she abruptly dropped out of the scramble to succeed Hillary Clinton as New York's junior senator. The Paterson camp contended Kennedy withdrew her name because of a "tax problem" and a "potential nanny issue" - while adding that the governor never really intended to name her because she wasn't ready for "prime time." "She was facing some potentially embarrassing personal issues" that came up in the vetting process, a source close to the governor said."

Now we're not sure why the governor's folks needed to comment on the Kennedy withdrawal, and the bitter tone of the remarks indicates that there is more here than meets the eye; and her midnight departure conjures up images of Cinderella and pumpkins. To us, however, all of this underscores just how unready Kennedy was for all of this. As the NY Times tells us: "There was incredulity in Democratic circles on Thursday afternoon after the governor’s camp engaged in a ferocious public back-and-forth with Ms. Kennedy’s side, reaching out to numerous news organizations to disparage her qualifications; one person close to the governor said that her candidacy had been derailed by problems involving taxes and a household employee, but declined to provide details."

And this: "The person close to the governor also said emphatically that Mr. Paterson “never had any intention of picking Kennedy” because he had come to consider her unready for the job." Why the piling on now? This is something that is usually left for us to do. The News follows in the same nasty vein: "The Paterson camp fired the first salvo in the war of words - and the message was particularly bitter. One source close to Paterson said the governor never intended to choose her for the Senate seat once held by her uncle, Robert F. Kennedy. The source cited her lack of policy experience and her poorly received dealings with the media, which showed "how not cool she was under pressure." "It was clear she wasn't ready for prime time after her botched rollout," the source said. "The events of the last day just prove why he wasn't going to pick her."

Of course, the guy who comes out of this looking the most foolish is Mike Bloomberg-someone who actually created the Caroline campaign and then tried to deny his own involvement in the effort-as well as his self interest in her elevation. He now becomes a candidate for "The Biggest Loser" show; and compounds it all, by trying to deny, even against all of the evidential fingerprints, that he had anything whatsoever to do with the Kennedy debacle.

So Caroline departs, and leaves the elites somewhat less grandiose. But we are waiting for more of the back story on this to emerge. And we come back to our question from yesterday: Was she pushed, or did she jump?

Brand X?

For most New Yorkers, the governor's likely choice for the Hillary Clinton US Senate seat, upstater Kirsten Gillibrand, is an x factor-someone not well known and a bit out of the liberal mainstream that characterizes downstate politics. As the NY Post reports this morning: "Gov. Paterson, defying the liberal wing of his Democratic Party, has chosen little-known, NRA-backed, upstate Congresswoman Kirsten Gillibrand to succeed Hillary Rodham Clinton as New York's junior senator, it was learned last night."

The Gillibrand selection probably sets up a bruising primary next year, with Representative Carolyn McCarthy sating she just might challenge the Paterson selection: "Sources said "at least five" members of the state's Democratic congressional delegation called Paterson to protest the possibility of Gillibrand's selection. One, Rep. Carolyn McCarthy of Nassau County, even threatened a primary challenge. Gillibrand faces a special election in 2010."

Still, from our vantage, Gillibrand is a breathe of fresh air-someone who is from the moderate wing of the party and appears to be a maverick. As the NY Times points out: "Ms. Gillibrand is largely unknown to New Yorkers statewide, but is considered an up-and-coming and forceful lawmaker in her district and has gained considerable attention from Democratic leaders in Washington." Her decision to oppose the bank bailout certainly caught our eye-and is an indication that she not someone who will meekly follow any part orthodoxy."

What this means is that the senate designee must begin at once to start a campaign for the seat that was handed to her-and the long knives will be out from those who were passed over-and from those who feel that she's not "representative" of the views of most New Yorkers; particularly on the issue of gun control. As the Times reminds us: "If Mr. Paterson was hoping to quiet the tumult over the selection process by picking Ms. Gillibrand, there were indications that he may not get his wish. Ms. Gillibrand, who has been endorsed by the National Rifle Association, is controversial among some of the party’s more liberal leaders downstate."

So let the process begin, and if McCarthy or, don't laugh, Scott Stringer want to challenge Gillibrand-and by extension the governor-let them. It should make for an interesting campaign. But from what we have seen so far, Gillibrand is potentially just the right kind of senator that New York needs in this time of crisis.

Thursday, January 22, 2009

Bottling Up Supermarkets

The battle over the expansion of the bottle bill is heating up-with the new chair of the senate Encon Committee, Antonie Thompson, announcing his support for the measure: "A key Senate Democrat is backing the expansion of the bottle bill, which most likely means that before the summer New Yorkers will be paying nickel deposits on water, juice and sport-drink cans and bottles. I'm supportive of it," new Environmental Conservation Committee Chairman Antoine Thompson, D-Buffalo, said. "This is a step we need to take." Expanding the 27-year-old bottle bill that now covers only beer and soda containers has been blocked for the last few years by the Senate Republicans, who lost their majority in November. Passing the bottle-bill expansion could be the first significant policy shift caused by the flip in control of the Senate to the Democrats this year."

The senate will be the major battleground on this fight-and it's not certain if there are 32 votes in the body in favor of the measure: "Thompson's support doesn't guarantee Senate passage, and a spokesman for Senate Majority Leader Malcolm Smith, D-Queens, said the leader hasn't taken a position on it yet."

That being said, the opinions expressed by the DEC commissioner are badly off key: "State Environmental Conservation Commissioner Pete Grannis said Wednesday enacting the bottle-bill expansion may be the easiest decision lawmakers have to make as they grapple with how to close a $15.4 billion budget deficit. "As Gov. Paterson has made clear, New York is facing a staggering budget deficit and must make many hard choices," Grannis said at a press conference in Syracuse. "But updating New York's 27-year-old Bottle Bill is not one of them."

What an affront to all of the food store owners working in the city where Commissioner Grannis lives! It's never difficult for someone like Grannis, who has to our knowledge ever owned or operated a retail business, to call for impositions on entrepreneurs-ignorant, or perhaps callous, as he is about costs of operating in NYC.

As the state's Business Council says: "We think it's a hidden tax," Business Council spokesman Michael Moran said today. He said the business group also fears it will take valuable materials out of municipal recycling programs and impose a burden on supermarkets, convenience stores and other retail outlets that will have to store and process the cans and bottles."

And it is a burden that is, not only opposed by store owners, but by the workers whose jobs are contingent on the profitability of enterprises that have been going out of business in the city at an alarming rate. Our view-a close vote, with the opposition prevailing.

More on WFP's Tax Mania

EJ McMahon called our attention to his own post on the personal income tax fracas. Here's the money quote, referring to a graph that highlights the trend on taxes paid by high income New Yorkers: "As shown, the share paid by the wealthiest one percent peaked at 41 percent of all New York State income taxes in 2007. The projected drop in the share starting in 2008 reflects the Budget Division’s expectation of a sharp, ongoing drop in incomes among the wealthiest New Yorkers. But even with the steep downturn, the share of taxes paid by the wealthiest New Yorkers is expected to be higher than the 30 percent level of 1996 —when the top rate was higher." (emphasis added)

So, as has been said, everyone's entitled to their own opinion, just not to their own set of facts-and the NY trend here mirrors the national one: "And on the federal level, there is no question that the wealthiest Americans have been paying a rising share of income taxes for most of the past 30 years, despite tax rate cuts during that period."

So the WFP folks are plain wrong about their notion of fair share-and, when seen in the light of all of the evidence, it amounts to little more than the standard "soak the rich" nostrum that the Pete Seegers of the world have been advocating for years. That this is counterproductive is also revealed by the evidence.

Here's how McMahon explains it: "This seeming paradox—lower tax rates resulting in larger tax shares for the wealthiest Americans—confirms one of the principal supply-side arguments advanced for President Ronald Reagan’s tax cut package in the early 1980s. As Reagan expected, taxpayers in the highest brackets responded to lower tax rates by working more, taking more financial risks and sheltering less of their income. Amid a general growth in affluence, the booming stock market, rising real estate values and rising compensation for corporate executives also gave an extra push to personal wealth in the top tax brackets."

What New York has done-at both the state and city levels-is to allow public sector spending and expansion to go forward without regard to the consequences; and now the fiscal chickens have come home to roost: "New York’s growing dependence on high-income taxpayers is a major reason why the Empire State is now in such big fiscal trouble. Schneiderman and his fellow lawmakers budgeted huge, unsustainable spending increases when incomes among the wealthiest taxpayers were soaring, even though the trend clearly couldn’t go on forever."

So what's the end game here for the WFP and it allies? The maintainence of a public sector that supports the jobs of its constituent unions-all of which is certainly righteous politically, but may prove to be a killing of the goose that laid the golden egg; as unsupportable government drains the energy from any potential economic recovery.

But the "millionaire's tax" is a ruse; and, as we have said before, the tax threshold is never static-the legislature has its sights set on a whole lot of folks that you wouldn't characterize as millionaires: "The tax hike now being discussed in the Capitol would be much larger and further reaching, reportedly kicking in at taxable incomes as low as $250,000. That would make even more damaging to the state’s long-term recovery prospects, especially given the likelihood that a state tax hike will be compounded, sooner or later, by a sharp increase in federal tax rates."

So let's hope that the tax moderates are able to rein in the soakers; The issue isn't about fairness, it's about keeping the state's economic engine running at its greatest peak efficiency. The governor is right, this is the worst time to cede policy making to the redistributors.

Attax on Free Enterprise

As the NY Times reported yesterday, the campaign to raise taxes on New Yorkers is gaining some momentum-with our state senator, Eric Schneiderman, leading the way: "There are a lot of us who feel that for the last 30 years we’ve been shifting the tax burden from the wealthy to middle-class families,” Mr. Schneiderman said on Tuesday. “Our conference is operating through consultation and discussion, and I expect we’ll be talking about restoring some additional tax brackets for upper-income New Yorkers as well as a lot of other options.”

With NY having the ignominious distinction as one of the country's highest taxed environs, it hard to see how there has been any great shift; but in proposing this measure, Schneiderman is echoing the calls of the Working Families Party (as far as euphemisms go, this party label is one of the best): "“We are going to be running a full-throated campaign to make the case that it would be wiser to tax the very wealthiest New Yorkers rather than cut spending on the elderly, children and the disabled,” said Dan Cantor, executive director of the Working Families Party."

In our view, "working families," are those who own homes and pay a great deal of taxes already; and although the WFP will start with some of the highest income New Yorkers, it's just a matter of time before that threshold gives way to the reality of even larger budget gaps. We eagerly await the WFP proposals to reduce the size of government, so that all New Yorkers aren't forced to pony up for worthless public sector boondoggles that, by their very taxing presence, drain the vitality from private sector innovation and vitality.

Thankfully, it appears that Majority Leader Smith is reluctant to follow the Schneiderman path: "Malcolm A. Smith, the new Senate majority leader, said he was not enthusiastic about the idea but looked forward to a vigorous debate in his caucus. “I know that recent surveys have come back and shown that it is very popular among the people of the city and state, but I’m not sure at this present time it’s the right course of action,” he said, referring to polls showing support for increased taxes on the wealthy. “The conference members are split on the issue and are discussing it, but it’s my belief that it’s the last course of action we should take.”

And btw, isn't it no accident that the WFP is using Pete Seeger to raise money for its activities? As Liz B reports: "WFP Executive Director Dan Cantor sent out an e-mail fundraising appeal earlier this week entitled "Mr. Springsteen, Mr. Seeger, Mr. Lincoln" that included a clip of the "This Land Is You Land" performance that kicked off President Obama's inauguration celebration...This isn't the first time the WFP has employed Seeger to rally its backers. Last year, he recorded a Web video in honor of the labor-backed party's 10th anniversary that urged voters to pull the lever for Barack Obama on Row E, the WFP's line, adding: "If enough of us do just that, then Barack will know that he people of New York expect him to take on the big boys of the health care industry, that he stand up against the Wall Street Gang and that he end this stupid war; nothing less."

Now we have always been big fans of Seeger's music, so much so that we often overlooked is atrocious political judgment. After all, for the better part of four decades, Seeger enthusiastically parroted the Stalinist part line: "Seeger was a prominent campaigner in the struggle for African-American civil rights, and his legacy there ought be applauded. But racial equality was not the only cause to which Seeger committed himself. International communism, and in particular its Stalinist variant, was an equal, if not more, significant cause in Seeger’s public life. He was “Stalin’s songbird,” as David Boaz describes, writing about how Seeger zigged and zagged, with the rest of American communists in the 1930’s and 1940’s, in blind obedience to orders from Moscow."

Seeger was so smitten that he apparently suspended all independent thought while trashing FDR's war preparations. As Ron Radosh has pointed out: "In the “John Doe” album, Mr. Seeger accused FDR of being a warmongering fascist working for J.P. Morgan. He sang, “I hate war, and so does Eleanor, and we won’t be safe till everybody’s dead.” Another song, to the tune of “Cripple Creek” and the sound of Mr. Seeger’s galloping banjo, said, “Franklin D., Franklin D., You ain’t a-gonna send us across the sea,” and “Wendell Willkie and Franklin D., both agree on killing me.”

So it appears to us, that Seeger isn't the icon that any party should be using to trumpet its poitical-especially one that, suspiciously in our view, wants to take on that "Wall Street gang." The use of Seeger dramatizes the extent to which the WFP proposals run counter to those principles that makes America that great productive place that it is.

It's a good thing that Smith isn't buying in to this ideological pap-and, given Republican opposition, we don't think there are 32 senate votes for this measure. As the Times tells us: "Democrats would have to largely unite behind the proposal, because there are probably not many Republicans who would support a budget with income tax increases. Pending the outcome of a contested Queens race, Democrats are expected to have a 32-30 majority in the Senate. “We are not going to support increases in income taxes,” said John McArdle, a spokesman for the Senate minority leader, Dean G. Skelos, a Long Island Republican. “We aren’t going to support increases in business taxes, we aren’t going to support raising taxes on people’s insurance policies, their soda, their cable television, their satellite television, you name it,” he added, referring to some of the 137 individual new or increased taxes the governor proposed in his budget last month."