New York Legislators Pile on the Tax Burden

With its new package of whopping tax increases, New York State’s Democratic-controlled legislature has crossed over a metaphorical fiscal Rubicon. Over the last century, Albany has legislated its way to the nation’s highest tax burden largely during times when governors and legislators pleaded fiscal emergencies as their rationale for steadily higher taxes. Now, however, the legislature’s Democratic caucus, which back in November captured super-majority control over Albany, is raising taxes not because it claims it needs to but simply because it can. Given that the pandemic has increased the already-massive disincentives for doing business and living in New York, this latest round of increases, designed to funnel another $4.3 billion out of the state’s private sector and into government, will test the progressive notion that taxes don’t influence people’s decisions on where to live or do business.

New York State created its income tax in 1919, after the federal Wartime Prohibition Act followed by the Eighteenth Amendment to the Constitution banned the sale of alcohol, depriving the state of a valuable excise tax. Income taxes filled the fiscal gap, but the end of Prohibition in 1933 and the resumption of liquor sales didn’t bring an end to the income levy. Instead, pleading necessity amid the Great Depression, New York raised the income tax rate to a heady 8 percent. And so it has gone for decades, with some of the state’s biggest increases coming during periods of fiscal emergency, like tax hikes following the back-to-back recessions of the late 1960s and early 1970s, when the state chose higher taxes over reduced government to fill fiscal gaps created by its own free spending. Occasionally the tax boosters, ranging from liberal Republicans to moderate Democrats, would acknowledge the worrying trend of ever higher levies, as when Governor David Paterson said back in 2008 that friends of his in the business community had told him in response to Albany’s latest tax increases, “Good luck in New York state, but we can’t pay the taxes. The opportunities aren’t there.”

But now legislators aren’t even pretending that New York is in a fiscal crisis. Instead, the latest tax increase is designed to fund a wish list of progressive ideas, from more school aid (for a state that already spends more per pupil than any other) to higher Medicaid spending (in a state that already runs the most expensive program in the country). The new, high-tax-fueled budget also includes funds to aid illegal immigrants and bail out tenants behind on their rent.

The only good news, if one can call it that, is that the original legislative proposal would have raised taxes by even more—$7 billion. Beyond hiking the income tax and the corporate tax, which is what the legislature has settled for, the original proposal would have also increased the inheritance tax, established a new tax on New York City “mansions,” and imposed a higher capital gains tax. The bad news is that all these taxes are on the table the next time the legislature wants to boost levies, which almost certainly will be next year.

The original idea of a tax increase arose in the depths of the Covid pandemic, when entire parts of the state’s economy were shut down. By the time Governor Andrew Cuomo proposed what now seems like a modest $1.5 billion in additional income taxes back in January, the need for any increase was already disappearing as tax collection came in higher than expected and the new Biden administration pledged massive stimulus aid. That package ultimately provided some $12.5 billion in budget aid to the state, billions more for local governments and school districts, and tens of billions of dollars in direct aid to New York residents. Amid that bounty, Kathryn Wylde, the chief executive of the business group the Partnership for New York City, told the New York Post: “If the state acts to raise taxes, it is a political statement aimed at punishing the rich—not a reflection of economic need.”

The New York tax burden is already punishing enough. New Yorkers pay a greater percentage of their earnings to the state than residents of any other state. The total tax burden, on top of federal taxes, amounts to 12.79 percent of income, according to a new study. Opponents of the latest tax increases claim that the state’s punishing rates are responsible for driving high earners and businesses away, and indeed the state consistently faced massive levels of net outmigration to other states even before the pandemic. That migration has included thousands of jobs in areas like financial services. Among the firms that have relocated significant jobs away from the city are Credit Suisse, Barclays, UBS, and AllianceBernstein, according to a recent Forbes article. Goldman Sachs has moved a big-money management division to Florida, and hedge fund manager Carl Icahn has decamped there as well. The Empire State’s taxes are one reason that former hedge fund manager Leon Cooperman said, “I suspect Florida will soon rival New York as a finance hub.”

Progressive advocates of higher taxes say that they don’t drive high earners away. Legislators point to tax-filing statistics showing that the number of millionaires living in New York increased in the last decade. Much of that growth in wealthy households, however, is a function of the soaring stock market, which helped mint hundreds of thousands of new millionaires across the country. But New York is no longer getting a significant share of those new wealthy. From 2009 through 2018, the number of millionaire households in the U.S. grew at a rate 40 percent faster than the number in New York State, according to an Empire Center report. Migration statistics make clear that as people become wealthier they are more likely to leave.

Indeed, even as tax advocates claim that higher levies don’t matter to rich New Yorkers, state officials are pleading with the Biden administration to reinstate the deductions for state and local taxes that President Donald Trump’s 2017 tax package put limits on. Rescinding those limitations on state and local deductions would ameliorate the bite that New Yorkers face under the new law’s higher state taxes because residents would get to deduct those higher levies on their federal income taxes. But the Biden administration, looking for ways to pay for a massive new infrastructure spending program, is unlikely to go along.

New York’s new, bigger tax bite comes at a time when the state’s main economic engine, New York City, faces enormous challenges retaining businesses and workers in a post-pandemic economy. New York City’s office vacancy rate has soared to 15 percent, and surveys show that employers of office firms, which form the backbone of Manhattan’s economy, may allow anywhere from 10 percent to a quarter of their employees to work remotely even after Covid lockdowns end. That would make the recovery of the city’s economy, which has lost half a million private-sector jobs (or 13 percent of its pre-pandemic total), exceedingly difficult. On top of that, city residents—battered by the pandemic, growing social unrest, and high taxes—are increasingly unsettled about the city. A Manhattan Institute survey last summer found that 40 percent of residents were considering leaving New York. A majority said that they didn’t think the taxes they paid were worth the services they received. It’s unlikely that yet another tax increase will change those sentiments.

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Progressive Parents v. Teachers’ Unions in New Jersey

While the fights to reopen schools in San Francisco and Chicago have garnered national headlines, some of the most telling battles are being fought in small, wealthy, progressive New Jersey suburbs, where teachers’ unions have flatly refused to return to school, prompting what one local resident described as “chaos.” Parents complain that the intransigence of unions and local officials amounts to a betrayal of progressive values, and they grumble about the lack of support from Governor Phil Murphy, who relied on backing by the state teachers’ union in his election campaign four years ago.

Case in point: Montclair, New Jersey, an affluent bedroom community of New York City, home to many Gotham transplants, including influential media figures from the New York Times, Wall Street Journal, and Newsweek. Nearly 70 percent of adults in the town are college-educated, and median household income is an impressive $126,844, according to the U.S. Census. As is increasingly typical of such suburbs, its residents vote reliably progressive. Fewer than 10 percent of the town’s residents are registered Republicans, and in 2017, 77 percent voted for Murphy against Republican challenger Kim Guadagno—22 percentage points more than he received in the statewide vote. In 2016, 85 percent of residents voted for Hillary Clinton over Donald Trump.

Perhaps because Montclair is so reliably left-leaning, the state teachers’ union, the powerful New Jersey Education Association, targeted it as a place to increase its political clout, as part of a statewide strategy to get union members elected to office. “It’s no longer enough to lobby decision-makers. We must become decision-makers,” the NJEA wrote in a strategy paper. To that end, the union developed a political leadership academy to recruit members for local offices, according to a report by the Sunlight Policy Center of New Jersey. The “most famous graduate” of that political academy, according to Sunlight, is Sean Spiller, current mayor of Montclair and vice president of the state teachers’ union. Some Montclair parents are angry with Spiller because their schools have remained closed for in-person instruction for a year.

“Why is the mayor standing with teachers?” a headline in the New Jersey Star-Ledger asked in February, describing a “nasty tug of war with parents.” The piece, written by Montclair resident Matthew Frankel, who is also a board member of the town’s local newspaper, slammed Spiller for backing the union’s position that “vaccinations remain the only way to guarantee safety,” despite the Centers for Disease Control’s advisory that schools can resume in-person instruction well before everyone is vaccinated. Frankel also criticized Spiller for branding those who have noted his conflicts of interest in being both mayor and union vice president as “neoconservative.” In Montclair, those are fighting words.

Montclair voters have known about the mayor’s divided loyalties for years, however. A year after he was elected to the town council in 2012, he also won the race to become secretary-treasurer of the state teachers’ union. A few years later, he generated controversy by seeking a role on the town’s Board of School Estimate, which oversees the school budget. After parents sued, a county judge removed him from that position, saying his appointment violated state rules. When he ran for mayor several years later, a local newspaper pointed out the potential conflict of interest, given that the mayor of Montclair appoints school board members. The town elected him anyway.

Frustrations boiled over earlier this month when parents in Montclair and neighboring towns, including those from South Orange, a community with an even higher median family income than Montclair’s, came together for a demonstration. Parents in both towns had already sued their own school districts to prompt reopening. The complaint from parents in the joint district of South Orange and Maplewood listed numerous examples of children falling behind on their education and suffering emotionally because of extended absence from school. “Families need to earn a living, pay their bills, create a positive relationship with their children, and the strain [of closed schools] on families is unacceptable,” one parent told the press. “And the risks for in-school learning are small in comparison.” One big reason parents are upset: typical school budgets in suburban Jersey are huge. The Montclair school system’s budget totals $136 million, or about $21,000 per student. And it has received about $6.6 million from the new Biden administration stimulus to cope with Covid costs. That’s a lot of money to stay closed.

Some parents brought their children along to the protest. One child said: “Sitting in front of a computer for—how many?—five hours a day is not real education. . . . It’s like brainwashing. I’m not learning. I’m not picking up information. My main goal when I start school is to just be done.” Parents told the press the whole affair had made them question their progressive votes. “I don’t want to diverge from my progressive values and vote for someone who doesn’t stand for them, but I don’t think that keeping schools closed is progressive,” one said.

Teachers in both towns have agreed to a slow reopening on some days, but parents note that schools have been on the verge of reopening before, only to be told mere hours before that they would remain closed.

The problem extends far beyond these wealthy communities. Throughout the state, fewer than 15 percent of school districts are back to full-time in-person instruction, 65 percent are operating under a hybrid of in-person instruction and remote learning, and 10 percent are still all-remote. By contrast, Florida reopened all of its public schools last fall after Governor Ron DeSantis threatened to cut state funding for school districts that resisted, and they have remained open.

Some parents say that the fault lies with more than just school boards and teachers’ unions. “Aside from our [superintendents] and our board of ed, the person that I blame ultimately for this is Gov. Murphy,” one parent said at the Montclair protest. Rather than use the considerable power of the state, Murphy has done little more until now than meekly suggest that parents and teachers work out their differences. Finally, last week, Murphy mandated that schools must return to in-person instruction—but not until the fall.

The governor’s weak stance on schools puts him in an election year quandary. Suburban parents care heavily about schools, and they tend to vote that way. On the other hand, as everyone in New Jersey politics knows, Murphy also needs the political support of the teachers’ union—desperately.

Photo by Arturo Holmes/Getty Images

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New York’s Budget Reckoning: 10 Blocks podcast

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks Podcast. This is Brian Anderson, the editor of City Journal. Joining me on the show today is my colleague and friend Steve Malanga. Steve is our senior editor at City Journal and a senior fellow at the Manhattan Institute. We’ve invited him to come on the show today to discuss his new essay, “The Bill Comes Due,” which details New York City’s budget dilemmas and the fiscal challenges facing its next mayor. Steve’s essay is featured in our new special issue, called New York City Reborn, which we’ve just released. The issue includes essays by long-time City Journal writers and others, on how New York City can regain order and prosperity as it rebuilds, following the COVID-19 pandemic. You can find the issue and request print copy on our website. Thanks very much for joining us as always, Steve.

Steven Malanga: My pleasure.

Brian Anderson: You write, in this essay, that Mayor de Blasio, from the time he took office in 2013, through the formation of his actual 2020 budget, boosted city spending by $25 billion. This is a very significant 34% growth rate. He added something on the order of 30,000 full-time positions to the city staff. This was the largest increase in municipal workers in 40 years. New York City provides its employees, of course, generous pensions and fringe benefits. And the mayor’s concessions to unions, as you note, including retroactive pay increases, have boosted the city’s personnel costs by billions. So, could you describe some of the policies that have contributed to the city’s bloated payroll, and offer your take on how these personnel costs could start being pared back?

Steven Malanga: Yeah, so, I mean, it basically falls into two categories, giving those who work for the city more, and making more of them, hiring more of them. There was an unprecedented, really, expansion of the city workforce by about the 30,000 full-time workers, that was about an 11% increase. We haven’t seen anything like that since back in the days, in the aftermath of the fiscal crisis of the 1970s, when the city had been forced to cut its workforce, really cut to the bone. We had gone down to only 200,000 workers in the city at that time, and afterwards, when the city recovered, it was allowed, of course, to finally build back up, especially its police force and its… The fire department too, both of which had been cut back dramatically. But de Blasio came in, and at a time when the city’s force was already at a significant high, he added 30,000 workers.

If you consider that the cost, the average cost of employing a city worker… Now, not high-end city workers, but the average city worker, it costs about $151,000, counting salaries and benefits. That’s what the average worker costs. Those are enormous costs, just expanding the size of the workforce that much. Now, some of that came because of individual programs. He had a lot of programs that were somewhat controversial and remain controversial. Certainly, his mental health initiative is one of those, it’s been highly criticized by people within the city council, for instance, because spent an awful lot of money. But in addition to that, there seems to be very little payback, and anyone who wants to understand, in great detail, why that’s the case, should read the City Journal law articles that we’ve published on the program. But there were thousands of workers added to some departments there.

The other big area, of course, was the board of education, and especially pre-K. The mayor started off with the idea that we wanted to have free pre-K for kids, lower income kids who were four years old, and he started with that. It’s somewhat controversial. [Kehan 00:04:12] Woods has written extensively about how there have been studies of pre-K, going back all the way to the 1970s, showing that the payoff, in terms of educational achievement, is very, very small, if anything at all. But beyond that, he started that modestly, but then expanded it to, kind of, universal pre-K, and then down into three-year-olds. And he even argued that, for the sake of equity, a word that’s thrown around a lot these days, we had to expand the program, not just to lower income kids, but to middle-class kids, because it was a matter of equity now. I mean, this is a kind of perversion of the word equity. Just imagine if every program we have for the poor and now every social program has to be expended to the middle class [crosstalk 00:04:58].

Brian Anderson: It becomes the universal entitlement.

Steven Malanga: Exactly. So, but what that did was, it created this huge jump in the workforce. At the same time, we talk about giving those workers that were already working, more. He did something else that was unprecedented, in Bloomberg’s final term, he had tried to negotiate significant givebacks from the city unions, particularly on healthcare, because they have… Their healthcare is not only premium, compared to those in the private sector, including those working at Fortune 500 companies in the private sector, but it’s even at a premium to those working at other cities and its State government in New York, they pay… Senior employees pay virtually nothing. And we also offer almost that same exact deal to retirees. So it’s if we’re paying for two workforces in the most expensive way possible, for healthcare. Bloomberg had tried to get that back. The employees… The unions had balked at at, and therefore did not even sign the contract.

They decided that they would outlast Bloomberg, hoping that they could get somebody better in the next election, and they hit the jackpot. What de Blasio did was, he not only didn’t ask for these givebacks, but instead, he gave them a retroactive pay increases for the Bloomberg years. So, for much of de Blasio’s eight years in office, we actually been paying workers bonuses and raises for work they did during the Bloomberg years. That’s, kind of, the definition, of course, of inefficient government, and it’s not something that anyone does regularly. And in fact, it’s so expensive that, even in the pandemic year, we were scheduled to make… The city was scheduled to make a $900 million payment to teachers.

Again, because of this retroactive pay, which these payments have been stripped out over eight years, the union was kind to the city, they said, “Well, we’ll only take half this year, and you’ll have to pay the half the next year.” But this is how long this has gone on for. So, these areas, in particular, vastly increase the spending, and more so than increase the spending, what they did was they increased what we call the baseline of the budget. Meaning the next mayor who comes in has to deal with all of this. It’s not like these were one-time expenditures that disappear. These are people who work for the city now. These are benefits and pay levels that are in contract right now. So, the next mayor will face this. And that’s part of the challenge that I say in my piece, which is really about the fiscal challenge that the next mayor is going to face. That’s part of the challenge.

Brian Anderson: Now, there’s a considerable amount of money in the stimulus, the new federal stimulus bill that will be sent to States and cities across the country, including New York City, in effect to, kind of, a bail out of the city’s current situation. I think New York City is facing a $5 billion or $5.25 billion budget deficit this year. How is that going to be affected by the stimulus?

Steven Malanga: Yes. So, first of all, I would call a generous amount of money an understatement. People have called this a bailout for dysfunctional governments in States and cities around America because everybody is getting a nice little piece, but it’s particularly helpful to places that were in trouble, not principally because of the pandemic. There’s no denying that the pandemic has created extraordinary expenses, but we’ve seen, around the country, that the economy has bounced back so fast that in many places, California, for instance, they’re actually running budget surpluses now, even without the Biden money. The larger issue is that there are places like New York, that had spent so much that they were just incapable of absorbing even a short time hit to their revenues. So, what the Biden money does is, it basically says that it allows de Blasio to not have to cut much his final year in office.

What happens is, he, right now, is crafting a budget which goes into effect on July 1st. And it’s… The new mayor takes all over next January, and a half of the year, this first half of year is actually de Blasio’s budget. But de Blasio was allowed. He doesn’t have to really cut any more in the middle of this fiscal year. And he can create a budget next year, that isn’t under a lot of pressure. But if you look at the accumulated deficits that are projected by the city itself, and by some of the fiscal monitors of the city, there we’re talking about as much as 13 to $14 billion in deficits in the next three to four years. Now, again, the Biden stimulus money is not continuing money, although I would imagine that Biden would try to continue it in the Democratic Congress, might look for ways to continue it, but they’ll probably, at some point, run out of good excuses for why they should be sending this much money to the States and cities.

So, because it’s not continuous money, because it’s one time money, the accumulated deficits that people are projecting in the next couple of years, far outstrip the money that the city is actually going to get. So, at some point, in the next mayor’s term, he’s going to face, I think, perhaps a significant budget challenge. A lot of what he faces will depend on to what extent the city’s economy rebounds. Even with an economy getting back to where it was heading before the pandemic, people were already projecting, and even de Blasio was saying, “Well, we’re going to have a problem here in 2020, and we have to deal with that.” Then the pandemic came along and the problems became much worse.

If the city’s economy, and there’s a lot of uncertainty here, doesn’t bounce back even to the pre pandemic levels, and there are reasons to think that might be the case, including remote work and these lawsuits that are going on from other States, saying, “You have to stop taxing our workers like in New Jersey and Connecticut because they’re no longer working in your city, they’re working remotely anymore.” Because of things like that, the next mayor could face significant budget problems, which were exacerbated by the fact that de Blasio increased the budget so much.

Brian Anderson: Now, de Blasio and some of his allies have proposed hiking taxes on wealthier residents in the cities, the city, to bring in revenue. But as you know, New York already is one of the most heavily taxed big cities in the U.S., if not the most heavily taxed, I’m wondering, what’s your view on the likelihood of a tax rate increase, and how that would affect the city’s budget, the city’s population? Would it indeed bring in more revenue?

Steven Malanga: Well, first of all, perversely, one of the good outcomes of the Biden stimulus is, I think that it mutes some of that discussion, even though there are a lot of far left progressives, both in the New York State legislature and in New York City Council, who would like to tax anyway, just because it’s fun. I don’t think they… I think that the Biden stimulus has somewhat muted that discussion. The Manhattan Institute did a survey of New York City residents, back in August and September, asking them about the condition of the city, asking them about what they thought were some of the best ways to get the city back on track. And Manhattan residents, who are hardly the most conservative voters in the world by any means, said, by an overwhelming amount, that they already pay much more in taxes than they get in services.

And a significant percentage of those we surveyed said they were thinking of leaving New York for a whole host of reasons, many of them actually having to do with the pandemic. But regardless of what reason people are saying, they are thinking of leaving the city. Even if it’s not specifically for taxes, when you have a large part of the population saying that they’re overtaxed, relative to the benefits they think they’re getting already, then taxing them only exacerbates potential of exodus of people from New York, that we’re very much watching closely because we just don’t know how this is going to play out. And we do know that during the pandemic, many, many people left the city, people with aware of all left the city, and some of them are not coming back.

Brian Anderson: We’ve gone through two previous recent crises in the city, 9/11 and then the financial crisis. How does the current situation, post pandemic, compare with those two earlier catastrophes that struck New York?

Steven Malanga: Well, one of the things I would say is that the pandemic is unprecedented because it does create something that people were talking about months ago, and they stopped talking to you about it now, but it’s still out there, and that’s the, kind of, the V-shaped recovery. The thing is that the recovery from 2008, which was a very deep financial driven recession, financial services driven recession, and even the recovery from 2002, which there were two things going on. Of course, you had 9/11, but you also had this nationwide economic decline and stock market decline that was driven by different factors, including the meltdown of NASDAQ and technology stocks in 2000 and 2001. In retrospect, of course, the city actually recovered from 9/11, far quicker than people thought it was going to, considering all of these uncertainties about New York City as a target city.

The recovery from 2008 was aided by the fact that the federal government, though they didn’t send a lot of money in stimulus money to cities and States after that, they did send $800 billion to financial services firms, many of which were located in New York City. So, that… You know what? Essentially, what happened is, while a place like Detroit saw its General Motors just collapse in the wake of 2008, we had a couple of Wall Street firms, like, obviously, Lehman Brothers collapse, but the rest of the firms actually picked up the slack, if you will. And also, the city, under Bloomberg, really tightened spending at that particular point and focused on making the city more efficient. So, this is so different. It’s just so hard to predict.

The economy around the country is already rapidly recovering, and more importantly, tax revenues are recovering. Now, this is crucial. After 2008, we had a very slow recovery of State and local tax revenues, so that it actually took States and cities to about 2016, on a inflation adjusted scale, to get back to where they were in 2007 and 2008 before the crash. Right now, we’re seeing States around the country already reporting, not just far beyond what their expectations were, but getting back to where they were before the pandemic. But for New York City, the comparison is just completely different, because it was the center of the pandemic, the real issue is whether all of those office jobs will come back. And the city officially has a 15% vacancy rate right now, but that means 85%… it’s 85% occupied rate, and yet, everybody knows that there aren’t 85% of the people who are supposed to be working in office towers in New York, actually in those office towers, they’re still working remotely.

So, the city is, I think, uniquely vulnerable because of the kind of office market it is, the kind of density it has, its reliance on its mass transit system. And so, it’s hard to compare at this point. Needless to say, caution and pro growth strategies, caution and spending, and pro growth, pro development strategies, pro economic development strategies are the things that are in order right now, but this is New York City we’re talking about, and the leadership there doesn’t always act as if New York is one of the financial capitals of the world, which of course it is.

Brian Anderson: All right. So, that leads to a final question. We’ve got a mayoral race coming up, and any number of candidates have thrown their hat into the ring. What advice would you give the next mayor of New York City to confront this situation? And what might be the single best measure that, that next mayor could take to bring the city’s economy back to where it was?

Steven Malanga: So, first of all, the mayor has far more control over the budget itself even than he has over the economy, not that mayors can’t do damage to the economy, they certainly can by their long range policies. But the real issue perhaps is keeping the city government effective and efficient, while at the same time, being able to deal with any shortfalls in revenues that might cause a budget crunch or a budget crash. This is not something that’s being discussed during the election. As you can imagine, the election is largely about the pandemic and how the city reacted. This is what the campaign debates are about. But inevitably, people always forget, in New York City elections in particular, they always forget that the number one task of a mayor is the budget. The budget controls everything.

That’s what the mayor is does in New York City. And so, there are… I guess the good news is that de Blasio expanded spending so much and so cavalierly that there’s a lot of rooms for cuts. There are a couple of things. Number one, you have to begin through attrition, meaning not hiring people, to get the city workforce down to a more manageable level. You do that partially through attrition. You also do that by looking at the programs he expanded, that had been highly criticized and not effective, like the mental health program, like the continued layer after layer expansion of the pre-K program. And you look at which of those can be pared back. So, but you have to cut back the workforce. The workforce is expensive, not just now, but it’s expensive in the future because retirement benefits are so expensive that once you get people into this workforce and they become part of the retirement system, they are very expensive to accommodate.

So, that’s number one. Number two is, you have to look at the benefits. There’s a tremendous amount of room, any number of people have studied this, including the Manhattan Institute, there’s a tremendous amount of room to save money, nearly by doing what the State is doing with its workers, and what other cities, big cities like Boston, Chicago, Washington, Los Angeles, are doing with their workers. Having them, first of all, contribute more to… Again, they contribute virtually nothing. So, to their own healthcare. Having retirees, we what we even do in New York is, once you qualify for Medicare as a city worker, a retired city worker, everybody in America who gets Medicare, you have to pay premiums. They’re very modest, but you have to pay premiums for Medicare B, it’s called. It’s just a couple of thousand dollars a year. But we even pay the premiums for the Medicare B of retirees, which is just something that you don’t see in the private sector or in much of government.

So, just having workers contribute 10% towards their healthcare costs, and making retirees pay for that Medicare premium themselves, or even pay just half of it, right? Would save hundreds of millions of dollars. We’re spending $2.5 billion a year on healthcare, just for retirees, just for people who aren’t even working in the city anymore, and none of that is typical. So, there’s a lot of saving there. There’s also savings in the pension system, which remains among the most generous and expensive in the country. And the Manhattan Institute actually produced a paper in the fall, which you can find on our website, about many different ways to save money there. Among other things, we know, because the Manhattan Institute itself has done surveys of city workers, for instance, teachers, in which, as many as 30 to 40% of teachers said, if there were a defined contribution option.

Meaning, of course, not a defined benefit, but a savings account where the city puts in a certain amount of money, and the worker puts in a certain amount of money, about 30 or 40% of teachers said they would choose that option because it’s portable and it has certain advantages, most especially just the idea that if you’re not committed to working for the city for the rest of your life, you can take that money with you. Whereas if you’re in a defined benefit plan, like the one the city uses, you only really benefit if you stay for 30 years, otherwise, it’s a lousy deal. So, these are all things which would actually create savings by giving workers choice, and ironically, the unions don’t want us to give workers choices because they want the most expensive plan and they want to make sure the most expensive plan is in place.

It’s a little bit like the same thing with the battle against school choice. They don’t want those choices out there. So, those are some things you could do. The other thing you could and should do is, one of the things de Blasio eliminated was something called the Program to Eliminate the Gap or the budget deficit, it was called PEG. Four different mayors going all the way back to Koch had used this program, and basically what this program does is, it requires city agencies, every year, to put out plans for how they’re going to be more efficient and save money. Some of the money savings are really small, like on food items and stuff like that. But when you do it every year, it accumulates, and over the years, it saves billions of billions of dollars.

Really very much in his kind of mode, as a progressive who thinks big government is fine, he eliminated this program for any number of years and just said to city agencies, “Well, if you can find some savings, find them.” And the actual savings that were recorded, many of them were not really even savings, they were just, kind of, budget gimmicks, but beyond that, they fell far beyond the, kind of, money that for just the Bloomberg administration and the Giuliani administrations would save through the program to eliminate the deficit. Now, that that program is finally brought back under pressure in the last year or so by Bloomberg… By de Blasio, but it’s not really saving much. So, that’s something else that the next mayor needs… That tradition has to be put back in office. Finally, I would say, New York State law makes it very hard to enact some kinds of savings, particularly personnel savings, other than firing people, which you can always do but it’s a, kind of, brute way of saving money.

New York City’s State laws make it difficult to save money because it gives unions the advantage in contract negotiations for a whole bunch of reasons, which is probably the subject of another podcast at some point. Because of that though, there is one way out, and certainly, given the pandemic and the situation that created, it’s something the next mayor should consider. There is a financial control board which was instituted in the 1970s in order to essentially oversee New York City’s budget because of the crises in the seventies. A mayor does have the option of asking the governor of New York State to institute that board, in other words, bring the board back. It’s already exists, but bring it back into active control of New York City, and that board does have the ability to aggregate contracts and to impose settlements.

And so, I would say, if they’re really emerges a crisis in the next administration because the city does not bounce back, I think I would advise the next mayor to consider invoking that board and getting some of these changes that the unions have been able to resist, because New York State law basically makes it hard to reform and reduce any kind of benefit once you’ve given it in a place like New York City. I would suggest the new mayor consider invoking the financial control board.

Brian Anderson: Thanks Steve, very much, for the illuminating discussion and for joining us today on the podcast. Don’t forget to check out Steve Malanga’s essay, it’s called “The Bill Comes Due,” it’s in our special issue, New York City: Reborn, which you can find on our website, and we’ll link to it in the description. You can follow City Journal on Twitter @CityJournal and on Instagram @CityJournal_MI. And as always, if you like what you’ve heard on the podcast, please give us ratings on iTunes. So, thanks for listening and thanks, Steve, again, for joining us.

Steven Malanga: Thank you.

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Cancel Culture Comes for Dr. Seuss

Theodor Geisel’s Dr. Seuss books are so popular, and printed and reprinted in so many editions, that you can find used copies of classics like The Cat in the Hat on for under $5—shipping included. You can typically even snap up a first edition of something like Hooray for Diffendoofer Day! for just $4.99, plus $3.45 shipping. Yet on Tuesday, sellers suddenly inundated with new, pricey Seuss listings. A 1964 edition of And to Think That I Saw It on Mulberry Street went onto the site at an astonishing $400!

Though that sounded expensive, within an hour some 140 would-be sellers had examined the listing. A newer, less prestigious Grolier Book Club edition of the same book was offered for a more modest $80. By 11:30 Tuesday morning, someone had already snapped it up. The buyer must have considered himself fortunate, because by noon a similar edition of the book had already received 17 offers, in the process getting bid up to $127, with four days left to go in the auction. Potentially the biggest jackpot of the day, however, would go to the person listing an edition of 13 stories of Dr. Seuss, all packaged together. Several hours and 20 bids later, the price had hit $162, with six days of bidding left.

Book collectors are an enterprising lot. The sudden online Seuss surge was the result of news that Geisel’s descendants, who have controlled the rights to his books since his death in 1991, had decided to stop publishing six of his titles (Mulberry Street, If I Ran the Zoo, McElligot’s Pool, On Beyond Zebra!, Scrambled Eggs Super!, and The Cat’s Quizzer) because critics allege that they contain racist or insensitive imagery. An academic journal, Research on Diversity in Youth Literature, has even accused Geisel of white supremacy for a “preponderant influence or authority demonstrated by White characters over others” in his books and for Orientalism, defined as distorting “differences between Middle Eastern, Southeast Asians, South Asians, and East Asians” and portraying these “cultures as exotic, backward, uncivilized.”

It’s hard to know what was more shocking: that the beloved Seuss and his seemingly innocent narratives had become the subject of the cancellation cult, or that there was a journal apparently devoted to ferreting out racist imagery in children’s books. The books haven’t exactly been hiding somewhere, unread. Publishers have sold an estimated 600 million copies of Seuss, many of them presumably read by parents, teachers, librarians, and assorted other educated and tolerant people over many decades and lauded by prominent politicians, including Barack Obama and Kamala Harris. It took a peer-reviewed academic journal to persuade us—or at least to persuade Geisel’s family—that the children’s book master was in fact a bad influence. (Not missing a beat, the Biden administration subsequently declined to mention the author’s books on Read Across America Day, held annually on Geisel’s birthday.)

One irony of this latest cancel-culture episode is that Geisel himself was a man of the Left, a progressive who opposed fascism, decried “red baiting” in the 1950s, and devoted an entire book to educating kids about the budding environmental movement of the early 1970s, as described in a 2011 article, “Dr. Seuss’s Progressive Politics.” With the outbreak of World War II, Geisel even put aside writing children’s books and worked as an editorial cartoonist for PM, a liberal New York newspaper published during the war and noteworthy for refusing to accept advertising so as not to compromise its values. Geisel’s cartoons from that era revealed a man who vigorously opposed fascism, steadfastly supported Franklin Delano Roosevelt’s prosecution of the war, and lambasted the president’s congressional opponents, especially Republicans.

When Geisel resumed writing children’s books after the war, it was with an eye toward shaping young minds. As entertaining as the Seuss books are, you don’t need to be a literary critic to see the messages in many of them. Horton Hears a Who!, a book about an elephant who persuades his neighbors to protect a small, vulnerable group of people known as the Whos, is seen as a “parable about protecting minority rights,” a plausible reading of a book by a man who, in a 1947 university lecture, urged writers to avoid racist stereotypes. In Yertle the Turtle, an arrogant king of his local pond is indifferent to the suffering of his subjects, who complain, “I know up on top / You are seeing great sights / But down at the bottom / We, too, should have rights.” The Lorax, adapted by Hollywood as both a TV series and a movie, tells the story of the Once-ler, a creature who finds and cuts down a precious tree to sell and is warned by the Lorax, who “speaks for the trees,” of the consequences of a business built on using up natural resources. Geisel himself called the book, published in 1971 in the wake of the first Earth Day, “propaganda.”

Not surprisingly, social media became a battleground over the family’s decision to cancel the six Seuss books. One defender of the move said that it was time for critics to “evolve.” But Geisel has hardly had that opportunity himself. The academic attack on him in Research on Diversity in Youth Literature includes a section on cartoons he published during his college years in the 1920s deemed anti-Semitic and anti-black. It apparently counts for nothing that, for the rest of his life, he pursued progressive causes, decried the targeting of Jews in Germany, criticized the segregationist policies of the U.S. armed forces during World War II, and became an early supporter of the Civil Rights Movement. The Geisel episode is further evidence that, these days, anything remotely suggesting an unacceptable opinion by twenty-first-century standards, issued at any point in an artist’s life, is sufficient cause for cancellation.

In a sensible world, Geisel’s heirs would leave it to parents, educators, and librarians to determine whether Dr. Seuss books should remain available to kids. After all, it’s not as if five-year-olds are logging onto eBay and ordering copies of And to Think That I Saw It on Mulberry Street on their own—especially not at today’s prices.

Photo Illustration by Scott Olson/Getty Images

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