Against tax cuts: the NYC example

The New York Times editorial board got it right today, in "Getting Tough in Washington:" Obama must be much more aggressive in defending the stimulus plan. At times, his desire for bipartisanship has seemed to be more an end than a means. But we are in no position to wait for the farthest-right Republican ideologues to step on the road to Damascus.  New York City, where I’ve lived for the past six years, provides a case study in the failure of tax cuts directed toward the wealthy to accomplish lasting good.  If supply-side economics was to work anywhere, it should have worked in the city boasting some of the deepest pockets in the world, right?

It didn’t. The NYC budget report released from Mayor Bloomberg’s office on January 30, 2009 unwittingly offers proof that tax cuts do significant damage over the long term to infrastructure and public services—the very areas that, not surprisingly, most need our investment now. The report read in part: “Wall Street firms are expected to lose a total of $47.2 billion in 2008 and further losses are expected in 2009. Those losses can be carried forward, potentially exempting those firms from paying business taxes for potentially [sic] years to come.”  The report then details all the areas our Mayor is cutting back: the numbers of policemen and firemen (job losses), children’s services (child welfare positions, “low priority” child care services and foster care), senior center funding, parks, and libraries. (As if the publishing business isn’t hurting enough already— now people who can’t afford to buy books won’t be able to read them in public libraries, either). These cuts amount to $142M, a small percentage of the revenue that would be brought in annually if not for the tax cuts that have relieved corporations and the extremely wealthy of their civic duty for the past few decades.

Not convinced? Here is recent news from the Manhattan Transit Authority: “The MTA is facing ...in 2009, a projected US$1.2 billion shortfall... The deficit was caused by fallen revenues from real estate and corporate taxes.” Meanwhile, MTA services are being cut, trains are packed beyond capacity, infrastructure repairs are delayed, and the fourth busiest subway system in the world is increasingly prone to flooding from ordinary rainfalls. As the bridges in Minneapolis, the levees in New Orleans, and the report of the American Society of Civil Engineers indicate, we are hardly alone in our decrepitude. But the worst of it is that the consequences of the spending cuts on our services and infrastructure disproportionately (and sometimes exclusively) affect the middle class and the poor, and not just through job losses. Civic goods such as schools and hospitals, parks and libraries, subways and potable water are preconditions for civic life. Without them, we destroy communities, and the very possibility of community. 

Civic goods cannot, and should not, depend on cause-specific philanthropy to thrive.  What billionaire really wants his name plastered across the entrance to a sewage treatment plant? The fact is, there are some things that only governments can do well.  Opposition to the stimulus package is not economic but political: it stands for a theory of government that has been derided for so long that the public (and, apparently, some Democrats) need to be re-educated. President Obama should play to his strengths: he needs to proclaim his philosophy of good government to the public in the same inspiring way he spoke of race. Then he needs to look over the 2008 budget, figure out how much federal support went to the red states, face those Republican ideologues who maintain they don’t want government handouts and say:

Okay.  Then give it back.


* * * * * * * * * * * * * * * *

Related articles from The New York Times, Friday Feb 6, 2009:

A terrific piece by the Netflix CEO: "Please Raise My Taxes"

Paul Krugman: "On the Edge"