NEW YORK'S FUTURE COULD PREVIEW AMERICA'S, FOR BETTER OR WORSE
July 14, 2009
New York State and City are caught in a downward spiral that the rest of the country should view as a warning, says Brian Anderson, editor of the Manhattan Institute's City Journal. This vicious spiral isn't supernatural, but rather "tangible consequences of tangible mistakes and misfortunes."
The Wall Street meltdown has made apparent huge problems that were masked to some degree by the financial boom of recent years:
- State and local spending in New York, with its vast empire of government services and "progressive" programs, is a staggering $12,505 per capita, the second highest in the nation (after anomalous Alaska); and it keeps on rising, and will again this year, in the teeth of a terrible economic downturn.
- Funding the spending has required prosperity stifling taxation; a 2007 Independent Budget Office study found that New York City's tax bite was 90 percent larger than the American big-city average.
- The combined state and local tax burden in New York is the heaviest in the U.S., a major reason why upstate New York is now impoverished and bleeding population, says Anderson.
That the tax and spend regime could sustain itself at all, however, was due to Wall Street's success. At the peak of the recent boom, the securities industry generated 20 percent of the state's tax revenues, and a larger proportion still of the city's tax haul, says Anderson.
Without supersize financial sector profits and bonuses to tax -- and nobody knows when or if Wall Street will come back -- New York's profligacy now means vertigo-inducing budget deficits and massive new taxes, says Anderson.
Always a recipe for decline, this liberal New York model is completely unaffordable in a post-Wall Street boom era. New York needs a re-imagining of its future, explains Anderson.
Source: Brian C. Anderson, "New York's Future Could Preview America's, For Better or Worse," Examiner, July 8, 2009.
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