Monday, January 25, 2010

And We Elected This Mayor Because...?

The NY Post's editorial page is probably the best example of cognitive dissidence we've ever seen exhibited in local media. On the one hand, they shamelessly shill for a third term for Mike Bloomberg, lauding his educational reform edifice while, at the same time praising his economic acumen as the tonic needed to get the city out of its budget challenges and the recession the has pushed unemployment passed 10% (and climbing with no let up in sight).

On the other hand, it prints a wide range of intelligent critiques demonstrating that-as per Diane Ravitch-the very same educational experiment is a fraudulent house of cards, built on bogus and inflated test scores that hide the fact the, for all the extra money the city has spent in this area, nothing has really improved dramatically-if it has improved at all.

It also prints excellent analyses from E. J. McMahon, Nicole Gelinas and Steve Malanga-along with other like minded editorials-that demonstrate irrefutably how the mayor's own tax and spend big government policies have exacerbated the city's current economic plight-raising questions about just why we needed to overturn the voter's will on term limits to give a third chance to a mediocre incumbent.

And just yesterday, the Post allows Steve Malanga to once again lay waste to the Myth of Mike-placing responsibility for the city's current dire plight right at the mayor's feet: "Defending an increase in real estate taxes in 2003, Mayor Bloomberg described New York City as a “luxury product” that businesses were willing to pay more for. “It isn’t Wal-Mart,” the Mayor said, “it isn’t trying to be the lowest-priced product on the market.” But the mayor was ignoring the tens of thousands of businesses outside of Wall Street that operate throughout the city on low profit margins in highly competitive markets, businesses that struggle to cope with the city’s high costs and are especially vulnerable to a steep recession. And now New Yorkers are seeing what happens to a “luxury product” in a steep recession. The Bureau of Labor Statistics’ most recent data show that the unemployment rate in the city has exceeded the nation’s, jumping to 10.6%, with nearly 425,000 people looking for work — the most in the 33 years since records have been kept."

Which brings us-along with Malanga-right back to the lame State of the City address that we commented on last week; one that didn't receive the derision that it truly deserved: "In his state of the city speech last week, Mayor Bloomberg listed a series of modest steps to help firms survive and the unemployed find work. But unless the city tackles the big cost disadvantages for businesses, nothing short of a major, unexpected revival on Wall Street will bring back the jobs the city is now losing."

Malanga is way too kind to the mayor-and we would add that his Hizzoner's enablers at the editorial boards of all three local papers deserve opprobrium for their own myopia. Here's the key point: "The city lost an estimated 80,000 jobs last year and, the data show, those losses go well beyond struggling financial firms. Hard-hit manufacturers, many of which perpetually struggle to survive in expensive New York, shed 12,000 jobs in 2009. The city’s retailers eliminated some 10,000 positions, while core industries like publishing, legal services and real estate all contracted by thousands of jobs."

Which is precisely why we derided all of the concern for the "lost jobs" at the Kingsbridge Armory-demonstrating an almost psychotic break kind of view of the reality in the Bronx that has seen the continual loss of manufacturing jobs with little response from a mayor afflicted with an edifice complex. Does anyone remember the mayor's concern for the closing of the Stella D'Oro plant?

No the attention needs to be paid to the horrid business climate that the mayor-while he didn't create it-certainly did his damnedest to perpetuate: "Let’s start with property taxes. Thanks to the mayor’s tax increases, as well as sharp boosts in assessments, firms located in Midtown Manhattan pay, on average, $15.20 a square foot in property taxes, up 53% since 2001, according to research by the Studley real estate firm. That bite is more than triple the national average of $4.48 a square foot for major cities, and it’s five times the average of commercial property taxes per square foot in northern New Jersey, resulting in millions of dollars of extra taxes for big companies The bottom line: Since 2002, total real estate tax collections in New York have almost doubled, from $8.6 billion to $16.1 billion — a rate of growth nearly three times the rate of inflation."

But, as Malanga points out, these short term gains for temporary budgetary relief have long term negative repercussions, as firms like JetBlue look to flee to tax friendlier climes. But real estate taxes aren't the entire story by any means: "Real estate taxes only begin to tell the story of New York’s competitive disadvantage, however. A 2007 Independent Budget Office study of the overall tax burden in America’s largest cities calculated that the local tax bite in Gotham is 90% higher than the average in America’s other large cities. Taxes on business make up a large part of the difference."

The Bloomberg story is one of profligacy, with the mayor playing the role of the grasshopper to the city's struggling small business ants. More importantly, however, is that this was a story that was purposefully hidden during the last campaign by a NY Post that should have known better-and should have been truer to its core convictions. If the incumbent was anyone other than billionaire Mike, would the paper had been as kind?

Here's the budgetary horror show under the reign of error: "Even more troubling is that the city taxes have grown under Bloomberg, who constructed the city’s budget as if the housing and finance bubbles of a few years ago would go on forever. A previous IBO study estimated that the local tax burden in 1997 was 79% higher than other cities, but the burden then shrank because of tax cuts enacted by the Giuliani administration and the City Council in the late 1990s. Between 1997 and 2000, the burden declined by about 8%, before starting to rise again under Bloomberg."

And has continued to rise-along with an unconscionable regulatory burden that Bloomberg finds to be unacceptable only when it is applied to his beloved Wall Street. And the concomitant business loss has lead directly to the rising unemployment rate. Something has got to give: "This can’t go on. In a post-meltdown city that no longer can harness the enormous earning power that Wall Street, New York will have to find ways to make itself more competitive by cutting taxes and other levies on businesses, which it can only do if it also restrains spending, which is the highest on a per capita basis among major cities, and far higher than most suburban locations."

So, NYC has re-elected the very same mayor-on a platform of a recycled "Five Borough Economic Plan-whose policies are directly responsible for the city's current dire straights. All that's missing now is for the NY Post to re-channel its inner Giuliani and give Mike Bloomberg the performance review he-and its readers-richly deserves.