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Bailout Bill

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Bailout Bill

Mayor de Blasio can’t conceive of solutions to New York City’s problems that don’t involve massive federal assistance. December 11, 2020
New York
Politics and law
Economy, finance, and budgets

New York mayor Bill de Blasio remains unable to conceive of any real solution to the city’s bleak fiscal and economic position short of a massive bailout from the federal government—ideally in conjunction with a massive tax hike on the rich.

“Obviously, the number-one thing we’re fighting for is a stimulus,” de Blasio told business owners in an address to the Manhattan Chamber of Commerce. As a measure of how few solutions he has to offer, he reviewed the kinds of bailouts that the government might provide, and in what priority he’d prefer them. “I think a stimulus should absolutely involve direct relief for small business,” he said. “I think that’s going to be tough to achieve perhaps in the first stimulus, the one that’s being debated right now. I think there could be some, but probably limited. I think the bigger question is when President Biden comes into office with a goal of a much more substantial stimulus, how we can all work together to push for a much more real direct relief to small business to tide folks over.”

The mayor’s zeal for federal help stands in sharp contrast with his apparent indifference to doing what only New York can do for itself—make its own business climate more promising, starting with restoring public order. In September, the Partnership for New York City, also representing local business interests, albeit on a larger scale than the Manhattan Chamber of Commerce, sent de Blasio a letter expressing concern about the city’s apparent lack of determination to get the economy humming again, and noting the deterioration of public order on streets and subways. The Partnership suggested that the mayor’s failure to address “concerns about security and the livability of our communities” would undermine New York’s position as “a thriving global center of commerce, innovation and opportunity.”

When asked for a response to the letter, de Blasio deflected its main point, instead calling on the Partnership to “use your power and influence in Albany to help us get long-term borrowing. You say you want to help New York City recover, the thing we need immediately is the long-term borrowing capacity so that we can, in fact, bring back some of the services that have been cut back because of the fiscal crisis.” De Blasio’s request for borrowing power—essentially, to issue debt to fund operations—absent strict financial controls or the implementation of a real savings plan would be tantamount to giving a compulsive spender a new credit card.

De Blasio simply cannot be trusted to borrow responsibly. In seven years as mayor, he has expanded city government broadly, increasing spending at three times the rate of inflation. And what are the “services that have been cut back because of the fiscal crisis?” The mayor has not laid off a single city employee; on the contrary, he has made it clear that he intends to preserve every municipal job, even though laying off workers in April would have shifted them onto the federal rolls at a time when Washington had made available trillions of dollars of support for the newly unemployed.

The mayor’s other solution to closing the city’s $9 billion loss in revenue is a massive tax hike on the wealthy, who “have literally gotten richer while everyone else is suffering.” He also calls for a “reconsideration” of the city’s inert stock transfer tax, which levies a small fee on every stock transaction but has been fully rebated since 1981.

De Blasio is incapable of recognizing that old ways of doing business may be gone for good. Goldman Sachs Asset Management has announced that it will relocate to Florida, which could mean hundreds, or possibly thousands, of high-paying jobs leaving the New York region. NASDAQ and the NYSE have indicated that they would be willing to leave the area, too, if stock transfer taxes are imposed in New Jersey. “Proximity to New York City is no longer relevant in today’s trading environment,” said Hope Jarkowski, a top NYSE executive.

More than 300,000 New York City households have filed change-of-address forms with the Post Office indicating out-of-state destinations. Many more are eyeing the exits. The mayor can bluster about how tough “real” New Yorkers are, but real New Yorkers are also unsentimental and willing to cut their losses. Given de Blasio’s unwillingness to face these realities, it will likely fall to a new mayor to stem New York’s slide.

Photo by Scott Heins/Getty Images

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