Larry Littlefield's blog
A back of the envelope comparison between the average income of those living in metro New York and the average price of existing houses that sell here shows the standard of living is quite low. Housing prices soared during the housing bubble, and didn’t fall back to normal in the New York area to the extent they did in most of the U.S. Unregulated rents are up. Those who purchased houses years ago at lower prices, or have lived for years in rent regulated or subsidized housing, are less affected. But for young people looking to move out on their own, and for people seeking to come here from elsewhere in the U.S. and all over the world, the personal standard of living is relatively low by U.S. standards, and going down. That is the bad news.
And, according to one theory, the good news. Because people keep coming here anyway, and something must be drawing them, something that offsets, for the moment, that low personal standard of living. A full discussion of this, with a couple of spreadsheets, may be found on Saying the Unsaid in New York.
Compared with the U.S. average, the gap has started to close, and because poverty is far grayer in the city than the U.S. as a whole, that gap may close some more. For now, read more and grab some spreadsheets here. http://larrylittlefield.wordpress.com/
It seems I can get posts here after all. Anyway, my series examining the extent to which New York City has recovered from the 1970s continues over at Saying the Unsaid in New York. I'll repost here once the new Room Eight, with attachment capabilities, is operating.
I have also been posting elsewhere while the old Room Eight has been in a coma. I expect to continue doing so during this temporary resurrection, as the new Room Eight is expected to have its spreadsheet attachment function restored. More recently, I've been posting a series on the extent to which New York City has recovered from the 1970s. The latest installment was posted this morning. You can read it and download the spreadsheet to see the charts here.
Since the financial crisis morphed into the Great Recession in 2008, Americans have been told to pay more for government, accept less, or both. That has been true in New York City as well, with ongoing service cuts in every budget despite a 7.0% property tax increase, a state income tax increase, and a new MTA tax on all workers (but not the retired or investment income). Along with fare increases, toll increases, and other increases. The recession, as officially measured, is long over, and New York City’s private employment is not only higher than it had been before the recession started, but also probably reached a historic high in 2012, finally surpassing the level of 1969. And yet New Yorkers are still being told to accept less and/or pay more to the government. This post and those after are about the reasons why.
As anyone reading this is aware, Room Eight has had periodic technical difficulties recently. So for Christmas my older daughter set up an alternate blog for me to use if I wish. So from now on what I post, or try to post, on Room Eight I will also post on the alternate site, in the hope that it will actually be available somewhere. The alternate blog is called “Saying the Unsaid in New York.”
The new site has two advantages. First, the “attachment” function still works, so it will be easier for me to provide spreadsheets with data for the reader’s use. You just click on the link right in the text to download. Second in addition to the ongoing blog, the site allows the creation of “pages” for information that I want people to have access to all the time. In addition to “About” I have created two of them. The “Helpful Background and Greatest Hits” page contains a series MS Word files with posts or series of posts with my basic worldview, the most all-encompassing “foundation” essays I have written. And “The Latest Public Finance Spreadsheets” page contains just that, always available with Background essays on where the data comes from and how I compiled it in MS Word format, the spreadsheets themselves, and MS Word documents with my analyses of them. Much of this was written for and still is on Room Eight.
You think that Bloomberg might be different. That Spitzer might be different. That Andrew Cuomo might be different. But in the end they do the same things. The Governor proposes to drastically underfund the state pension funds, which also cover local government (and school) employees in the rest of New York State, and make up the money later. Comptroller DiNapoli had pushed through a proposal to do the same a few years ago, but the higher payments from that deal are now due. Now Cuomo wants to pay for yesterday's pensions over up to 45 years, with disaster if optimistic assumptions do not come true. For reality, read the comments from outraged taxpayers and public employees, not just the article.
I guess the kind of tax burden we have, and declining quality of services we have, in New York City (for the second time) is not acceptable in the rest of the state.
New York's pension rules automatically allow the taxpayer contributions that are theoretically required today to be put off until tomorrow, through "smoothing." That makes it easier to, among other things, retroactively enhance pensions while deferring the costs until they could be blamed on something else. But that wasn't enough for State Comptroller Thomas DiNapoli, who proposed that the pension contributions by the State of New York and local governments outside New York City be re-smoothed – by borrowing money from the pension funds to defer costs until the stock market went back up. Then-Governor Paterson and the State Legislature readily agreed back in 2010. Well, the stock market went back up and now it’s time to pay back the pension funds under the DiNapoli deal, but guess what? No one wants to do that. So now-Governor Andrew Cuomo has proposed re- re-smoothing by having school districts borrow against the pension funds yet again. This will be counted as state school aid.
It seems like only yesterday that Jay Walder left his post as Chairman of the MTA, and I wrote a sarcastic “job posting” for his replacement. The job of the MTA Chairman, I asserted, was to preside over the re-destruction of the metro New York mass transit system, and eventually therefore its economy, while shielding those responsible for it from blame and providing rationalizations. At first by denying it was occurring, and then by taking the blame for it. It is no surprise that like Jay Walder, Joe Lhota has decided to leave that job to someone else.
So this time I’m going to say what the job of the MTA Chairman actually should be, given the situation that has been created by the decisions, non-decisions and deals of the past, if the transit system – or at least some weaker, worse version of it, is to be saved. The job of the MTA Chairman should be to tell people to go to hell. The transit unions, the riders’ advocates, the construction unions and contractors, taxpayers, the state legislature, the City Council, the Mayor and even the Governor. To always bring up the past when discussing the future. As in “you or those who preceded you decided to hand out these benefits to your interest group then, and shift the cost to a future that has now arrived. And any attempt to avoid your share of the resulting pain now is simply a social injustice against everyone else.” The job would consist of a desperate, angry battle with no friends and as many enemies as possible, a constant and much resented attempt to break down any sense of entitlement. That is what would be required to save not only the mass transit system, but also any other institution, in the public or private sectors, in the wake of Generation Greed.
Bet you didn’t you see this one coming. Merry Christmas. “Just over 200 years since traders first met under a buttonwood tree on Wall Street, the institution they created, the New York Stock Exchange, was acquired by an upstart electronic marketplace, the IntercontintalExchange (ICE), nominally based in Atlanta, Georgia, but more accurately located in the electronic stratosphere,” according to The Economist magazine.
“The deal was announced on December 20th, with little advance leakage, possibly because the participants did a particularly good job of keeping it a secret, or possibly because the importance of the exchange, owned by NYSE Euronext, has faded so much that few cared.” The stock exchange was already merged into Euronext in a “merger of equals.” No such fig leaf now.
State budget crisis.org, the Ravitch/Volker group, has just released its report on New York State's financial situation. Among the findings (p. 28) is yet another analysis showing the New York State pension plans, which also cover local employees outside NYC, are among the best funded in the country, with the NYC plans among the worst -- worse than New Jersey. Even though NYC taxpayers have paid far more into the plans over the decades as a percent of employee wages, according to data from the U.S. Census Bureau.
The report is a disappointment, in that it doesn't explain this. No one else had either. And the text is almost exclusively about the state plans, not the city plans. How taxpayer contribution levels fell to zero around 2000, how they are now soaring (to a level far below NYC but they don't say so), etc.
In my previous post, I rehashed some arguments that were made when federal tax policies now in effect were first proposed, and showed that the promises of the time were not realized. Yet the same arguments are still made for the same policies, by national Republicans and certain economists. Without much thought about why things went wrong, and with no thought of adjustment. The Republican era at the federal level, now seemingly coming to a close, was not without its successes, but even in those cases lessons were not learned.
Let me join the "fiscal cliff" negotiations. That is sure to lessen the hostility between the supposedly two irreconcilable sides. Because after hearing from me, it would be clear that the two are mostly on the same side.
This may be hard for anyone under age 40 to believe, but at one time in the recent past the Republican Party was the party of ideas. While older generations of Democrats simply repeated nostrums from the 1930s, and younger generations of Democrats chanted slogans from the 1960s, Republicans were examining evidence of what did and did not work, and proposing solutions. And many of those solutions were implemented during the 30 years of Republican political dominance, often with the support or at least acquiescence of Democrats who couldn’t come up with anything better.
Times sure have changed. Some of those Republican/Conservative/Free Market ideas worked as promised. But most others have failed miserably, except as means to redistribute income upward, and from worse off younger generations to older generations that voted Republican, which is NOT what was promised. So, are Republicans examining the evidence and proposing alternatives? Hardly. They are simply saying the same things over and over, but shouting instead of speaking reasonably. I’m not just talking about Tea Party fools, and spinning candidates for office. I’m talking about think tanks and PhD’s, such as R Glenn Hubbard and Greg Mankiw. Those with conservative leanings but open eyes, such as David Frum, are no longer welcome. This isn’t an ideology anymore. It’s a cult. Since they won’t, let’s get in the wayback machine, look at some of the promises, and some of the results.
State and local government employment has been falling, and the propaganda machine has noticed. “There is something historically different about this recession and its aftermath: in the past, local government employment has been almost recession-proof. This time it’s not. Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. But since the latest recession began, local government employment has fallen by 3 percent, and is still falling.” And why is that? Tax cuts? Republicans in Congress? “Note that a Republican was president after the 1981, 1990 and 2000 recessions. Public-sector austerity looks a lot better to conservatives when they’re out of power than when they’re in it.”
Austerity, huh? So state and local taxes, not just federal taxes, have been falling as a share of the economy? And therefore we deserve less in public services in return? Is that what is going on? I’ve seen several reports implying this is so. But let’s look a little closer at what this austerity constitutes.