Neil deMause: The Website

My first article for the relaunched City Limits, about the doomsday budgets proposed for New York city and state, is up. (It’s actually the second article I wrote for them, but is running first — I blame the suits at Fox.)

Economists say the nation’s recession is technically over, but whether or not the economy is actually on the mend, the recession’s impact on New York City and state budgets is only just beginning. Over the last three months, Gov. Paterson and Mayor Bloomberg have mapped out a set of austerity budgets that would slash billions in spending – with many of the reductions coming from education and social services.

This year marks a watershed for both City Hall and Albany, but for different reasons, says James Parrott, chief economist at the left-leaning Fiscal Policy Institute, which earlier this month issued extensive briefings on both the state and city budgets… [read more]

Health Savings Accounts, the Bush-spawned health insurance plans that have been derided as a mere tax dodge for the rich, are either in danger of being phased out under health reform, or likely to carry on unimpeded. You make the call:

While Washington wrangles over health care, the nation’s last big reform innovation faces an uncertain future. Health Savings Accounts, the hybrid of flex spending accounts and IRAs that President Bush created in 2003, are an afterthought in the current proposals on Capitol Hill — with strenuous debate over whether their demise would be a disaster or a welcome end to a program that never lived up to its promise…. [read more]

The great Emmanuel Saez has done it again:

Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.

The truly stunning part of this: If you look at CBPP’s accompanying chart, the disparity in who’s getting the embiggened piece of the pie was way higher during the ’00s than during the ’90s or ’80s — basically, the Aughts saw the rich getting richer while everyone else treaded water in a way that hasn’t been seen since the days of Ponzi himself. And while Saez sees the wealthy coming back to earth a bit thanks to the Great Recession, it may not last long, notes CBPP: “Whether the highest income households will once more capture a highly disproportionate share of income gains as the economy begins to recover is uncertain, but Saez, along with Harvard economist Lawrence Katz, points to previous recessions and notes that only major policy shifts like the New Deal have prevented income concentration from ‘bouncing back’ after a decline.”

Major policy shifts like the New Deal? Oh yeah, I remember when we used to still dream about those…

Under the guise of tax reform, New York’s mayor and city council speaker are trying to push through a loophole for large interstate corporations:

You might think that the middle of a recession spawned by massive corporate malfeasance wouldn’t be the best time to propose a giant tax break for corporations. But then, if you’re Mayor Mike Bloomberg and Council Speaker Christine Quinn, you might not. Crain’s reports today that the dynamic duo of City Hall has begun a major push to cut taxes for city corporations by $2.7 billion over the next decade, a gift that could eventually be worth more than half a billion dollars a year to city businesses.”… [read more]

Note: Obviously the last line of this article became outdated after the 3 p.m. coup in Albany.

The New York City Independent Budget Office has released its eagerly awaited budget options report - okay, eagerly awaited by some people - and I break down the highlights Hint: When raising income taxes looks like the good option, you know things aren’t going well.

This morning the city’s Independent Budget Office issued its annual Budget Options document, a sprawling list of ways for the city to either save money or raise revenue. In past years, this was the kind of thing that only got policy wonks’ hearts a-flutter; now, with the city staring down the barrel of $5 billion budget deficits, and Congress looking more interested in tax cuts than in riding to local governments’ rescue, some of the ideas in the IBO report may end up becoming reality quicker than you’d think.

The first thing that’s clear: There’s just not all that much to easily cut. While the IBO throws out plenty of ideas for savings - from “eliminate grass clippings from trash collection” to “replace late-night service on the Staten Island Ferry with buses” - most of these would save only a few million dollars, not even enough to pay more than a few hours’ worth of the city’s looming deficits… [read more]

Geared toward small-business owners, but a worthwhile overview of coming legislation for the general public as well. I tackle health care, taxes, and credit cards:

Health care: Still on the critical list

Last year: The cost of providing health insurance to employees continued to skyrocket, jumping by an average of 5.7% per employee after a 6.1% hike in 2007, according to a study by consulting firm Mercer. A survey by the National Federation of Independent Businesses found that health care was the number-one concern of small business owners, prompting the NFIB to become a major backer of an advertising campaign calling on the presidential candidates to make health reform a priority.

This year: President-elect Obama has endorsed a sweeping reform plan that would create a new National Health Insurance Exchange to allow more businesses access to insurance pools…[read more]

The short answer: Only if your business is netting more than a quarter-mil a year. Which pretty much rules out any American businesses this year.

Joe the Plumber must be pleased: President-elect Barack Obama has recently hinted he’ll delay his plan to raise taxes on individuals earning more than $250,000 a year. But what will this reprieve really mean for small business owners - should they prepare for an eventual tax hike?

That depends, say tax experts, on how your business is incorporated, and how much money it makes… [read more]

Barack Obama hasn’t talked much about tax policy since his run-in with Joe the Plumber, but one of his biggest challenges will be fixing a system where the tax burden is increasingly skewed toward the little guy:

Barack Obama, it’s fair to say, has a lot on his plate right now: Halt the economic freefall, reform health insurance, extricate our troops from Iraq, stop SUV drivers from turning the Earth into a hellish postapocalyptic wasteland. Then there’s one of our country’s biggest, if less mentioned, messes: tax policy.

In recent decades, it seems, no matter how much money we as a nation produce, it all ends up in the pockets of about twelve people. Since the mid-’80s, the average income of the bottom nine-tenths of Americans has gone up about 6 percent; for the rich, it’s nearly doubled… [read more]

Crain’s New York Business jumped into the Obama news fest today with an article on what his presidency will mean for us, New York City. Notwithstanding the balance-for-balance’s-sake subhead (”Barack Obama’s urban-centric policies will be a help to the New York area, but his tax plan could more than offset the potential benefit from some of his other policies”), the article by Erik Engquist actually lays out the counterarguments to the conservative “if you take a walk, he’ll tax your feet” argument:

E.J. McMahon, a senior fellow at the conservative Manhattan Institute, calculates that over two years, the Obama tax cuts would be worth $13 billion to some state residents but increases would cost others $16 billion.

“The income redistribution would bleed off $3 billion to other states,” Mr. McMahon says. In 2007, New York sent $86.9 billion more to federal government than it got back, the largest discrepancy of any state.

Democratic officials predict that even if the tax outflow increases under the Obama plan, the local economy will gain because people with lower incomes will spend their tax breaks here. The rich “are not folks who were putting money back into our economy necessarily,” says Rep. Yvette Clarke, D-Brooklyn.

There’s a problem with McMahon’s argument, though, that even Rep. Clarke doesn’t quite get into. The Manhattan Institute line essentially comes down to: New York has lots of rich people. Rich people will pay more in taxes under Obama’s plan. Therefore, Obama is bad for New York. But why should it help non-rich New Yorkers (”non-rich” here defined as earning less than $250,000 a year, the cutoff for Obama’s repeal of Bush’s upper-income tax cuts) if rich New Yorkers have more money? Not only do the rich spend a greater share of their income on vacation homes in the Caribbean rather than cans of soup from bodegas, but when they do spend locally, they often use their cash to drive up the price of local commodities beyond what regular folk can afford - as you’ll know if you’ve tried to find an affordable apartment or an affordable restaurant in Manhattan the last ten years or so.

When McMahon complains that “we” are sending more money to the government than we’re getting back, he’s appealing to us to think of ourselves as fellow New Yorkers, getting it stuck to us by The Man. If we think of ourselves as fellow non-rich people, though, the repeal of the Bush tax cuts for the rich (coupled with new tax cuts for everyone else) would ensure that more of the money they are sending to Washington would come back to us. Conservatives believe in class consciousness after all, apparently - they just want to be the one to pick which class to be conscious of.

Congressman Dennis Kucinich finally got New York City and Yankees officials to testify before his subcommittee investigating the Yanks’ stadium deal today, and I liveblogged the proceedings. Relive the excitement now!

9:01 am: An hour to go, and Seth Pinsky’s testimony just arrived over the email transom. After much lengthy back-patting (”The benefits of this project have been validated in one of the most thorough and transparent approval processes in the history of New York City, New York State, and likely the nation”), Pinsky finally gets to the point of today’s hearing: Those wildly divergent land assessments for the parkland now buried under the Yanks’ new grandstand.

His explanation: The higher figure ($175 million) assessed the value of the land once a stadium was built on it; the lower one ($21 million) the value if low-income housing were built there… [read more]