The New York Connection

Thursday, May 05, 2005

Bloomberg's Balanced Budget BS: Calm Before the Storm

Mayor Bloomberg is cutting taxes during a real estate bubble.

In 2004, according to the mayor's Office of Management and Budget, wage earnings in the city grew by 6.8 percent, the highest rate of increase since before the World Trade Center attacks.

And since 1994, the average price of housing in the city has surged from $160,000 to $399,450, according to the budget office. Prices have more than doubled since 1998.

Come on, people. These types of increases are unsustainable, and if the city's budget is balanced now, when real estate prices or incomes stop rising at ridiculously inflated rates, it will fall into deficit. Let's not cut taxes when the roof is leaky.

I'm not being picky, either. Gifford Miller is right to say that if you have a choice between spending or tax cuts, you spend. The reason is simple; if you give cash back, people will spend it on consumer goods or put it into financial instruments (like US debt), neither of which helps increase the ability of New York to generate revenue. If you invest extra tax revene while the sun shines, you can create better subways, schools, health servces etc. All of these pay back immensely in the long run. Think about it this way. In a few years, with gas prices at $5/gallon (which works out to oil at $105/barrel as Goldman Sachs predicts), a cross-town cab will cost $40 and the pressure to cut subway maintenance will be intense. I guarantee you're going to wish you had done the work now to make sure that getting to work in a year or two is, well, workable.


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