From Washington we get unrealistic tax cuts and ballooning deficits, from the Mayor we get reduced services, layoffs and tax increases. Where is the wisdom?
After heated debates, the U.S. Congress has passed legislation to cut taxes by $350 billion dollars over the next 10 years. In order to keep within these bounds, Republican leaders from both houses of Congress resorted to a cunning move. They arranged it so that the popular tax cuts on children and married couples would end by 2005.
No one on Capitol Hill believes that in just two years taxes will once again be levied at their former level. Once taxes have been lowered, it is almost impossible to raise them again. If the taxes being lowered by Congress right now remain so in the future as well, then, according to estimates by the liberal Center for Budget Priorities, the overall cost of the new law will be not $350 billion dollars, but $800 billion dollars over 10 years. The budget office of Congress already expects a treasury deficit of about $400 billion dollars for the current fiscal year (through October 1st)!
This August, working families will receive a tax return of $400 per child. At the end of June, all workers in the USA will see some federal income tax reduction, depending on the salary.
In order to push this law through the Senate, the White House had to call out the “heavy artillery”—Vice President Dick Cheney. Despite fierce resistance on the part of Democrats, who predict that the national debt will rise to $1 trillion, and serious problems with Social Security funds and Medicare, the voting results (51:50) suited President George Bush. In order to console the opposition somewhat, Republicans agreed to extend the six-month period of unemployment benefits by 13 weeks overall and by 26 weeks in the states of Alaska, Connecticut, Pennsylvania, Massachusetts, Oregon and Washington. Meanwhile, California and New York have suffered the highest unemployment rates in the country.
The President didn’t achieve all of the tax cuts that he had been pushing for, but the majority of them. However, a public opinion survey conducted last week by the Wall Street Journal and NBC showed that 64 percent of Americans feel that tax cuts are not a panacea for economic problems and that there are better ways to get out of the recession.
Meanwhile, New York State finally received its budget, though in a very unusual form. Governor George Pataki placed 120 vetoes on expenditure items. These expenditures provided for maintaining the former level of basic subsidies, for healthcare (Medicaid) and education, while simultaneously upping taxes.
In response, the state legislature overturned the governor’s 120 vetoes with a two-thirds majority. Among the programs that were saved are day centers for the elderly (“elder gardens”), retirement homes, preschool programs and extended day in schools. State and city income taxes were raised for married couples with an annual income above $150 thousand and for singles with an annual income above $100 thousand.
Officials are promising that this tax will be returned to its former amount in three years. The sales tax has been increased: in New York City it is now 8.625 percent (from 8.25). Several other taxes were raised (for car wheels, for example) along with the fee for driver license photos. Cigarette taxes have again gone up.
Mayor Michael Bloomberg is happy about the new federal and state laws. In his words, the tax discounts for New Yorkers from the federal government came at the right time and will mitigate the blow from increased city and state taxes. However, Bloomberg does not feel that help from Washington and Albany is enough to solve the city’s budget problems. Despite fierce resistance on the part of city council and social activists, the mayor closed six fire stations, as promised—in Brooklyn, Queens and Manhattan. He continues his campaign of fining New Yorkers on every possible occasion and firing municipal workers. In New York, in the last nine months alone, $3.5 million fines have been issued including many to owners of small businesses.
It is clear that the terrorist attacks of September 11th did serious damage to the New York economy. It is understood that the war on terrorism and the recession have had a negative effect on city residents’ wellbeing. Nevertheless, residents of the world’s capital expected untraditional solutions from the mayor, a seasoned businessman. Raising taxes and cutting back on services to the population do not require great wisdom.
