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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (297120)	10/19/2009 12:35:06 PM
From: TimF	Respond to of 793843

The decline of New York City Fred Siegel writes today about what has been happening in New York City. It's not a pretty picture. In the boom times, Mayor Bloomberg supported big development and huge payouts to the public service employees. Under Mayor Bloomberg, city expenditures grew 40% faster than the rate of inflation even as he imposed record property-tax increases and the city's coffers overflowed with revenues culled from the booming stock and real-estate markets. To keep the politically powerful public-sector happy, Mr. Bloomberg bestowed raises two to three times the rate of inflation on the city's unionized workers. To keep politically wired developers happy, Mr. Bloomberg showered subsidies on economically dubious megaprojects including two new major league baseball stadiums and plans for a basketball arena in Brooklyn. And to keep would-be critics of the megaprojects happy, community groups were plied with government grants, Mr. Bloomberg's own money, and promises of jobs and subsidized housing in the new developments. The boom times are over. The financial industry has contracted. The real estate industry is cratering. To finance all that growth, New York has raised taxes. The results are not pretty. And the new power in the city is held by the public sector unions. The result is that New York, even as it's losing the luster of Wall Street, taxes small businesses the way California taxes millionaires. That dynamic is manifest in Manhattan's new monoculture. Gone, on their way out or being pushed to smaller, confined spaces are the flower district, the fur district, the garment center, the meatpacking district and the famed Fulton Fish Market. Even the diamond district is being nudged out of its 47th Street storefronts and into a city-subsidized new office tower. The hollowed out city as "luxury product"—as Mr. Bloomberg once described his vision for a New York in which the wealthy subsidize the city's work force—is unsustainable because Wall Street's decline has coincided with the rise of the city's public-sector unions as the dominant force in local politics. With Albany crippled, and the city's Democratic Party atrophied by 16 years of backbiting while trying to wait out Mayors Giuliani and Bloomberg, unions have filled the vacuum with a political party of their own: the Working Families Party (WFP). We are now seeing the insidious results of what happens when politicians unite with public service unions. The politicians are happy to vote for benefits for the unions which then supply the political muscle to keep the politicians in power. Unlike private sector unions, the politicians don't have to worry about a balance sheet or pleasing stockholders. They can just raise taxes to finance the benefits that they've approved for the unions. During the peak years of 2003 to mid-2008, wages outside of Manhattan were essentially stagnant for the middle class, while the costs of housing, electricity, water and phone service rose sharply under Mayor Bloomberg. A report by the liberal Center for the Urban Future, "Reviving the City of Aspiration," reports that a person can live in Houston for $50,000 a year at the same standard as he or she would in Manhattan with a $123,000 income. "Astonishingly," the report notes, more residents left the five boroughs for other locales in each of the five years between 2002 and 2006 "than in 1993, when the city," suffering from staggering job losses and high crime, "was in seemingly far worse shape." Meantime, the city's fixed pension obligations to its workers—which Albany hikes in good times and bad—have hit a projected $6.6 billion at last count, up from $1.6 billion in 2003. Barring a sharp recovery, the city's tax-funded pension contributions are likely to double or triple over the next five years, with higher taxes on a declining private sector picking up the tab. "We don't want to lose people who work on Wall Street," Mr. Bloomberg said recently, neatly summing up the dynamic in which high taxes on the rich pay for a padded public-sector work force while squeezing out entrepreneurs. "We need the tax base. Our teachers need to get paid." But that millionaire base isn't what it was during the boom years. But the politicians are spending as if the boom never ended. It's an impossible dynamic to continue. A city can't be run solely for the benefit of its public sector employees. Yet with alliance between the unions and the politicians, that is where they're headed. betsyspage.blogspot.com