DiNapoli throws cold water on Budget hysteria while Hammond fans the flames. Stiglitz and Jones weigh in.

State Comptroller Tom DiNapoli threw some refreshing cold water on state budget hysteria. From today’s Daily News:

"The state's top moneyman Monday gave the Legislature a pass on Gov. Paterson's push to cut $600 million from the state budget later this month. State Controller Thomas DiNapoli said $630 million in planned administrative cuts by Paterson should be enough to balance the current year's budget. Paterson wants the Legislature to cut the budget an additional $600 million during a special session he called for Aug.19."

Speaking of elected officials who get it, Assemblyman Rory Lancman (D-Queens) has taken an even keeled view on the budget gap, telling Danny Hakim of the New York Times:

“I don’t think there’s a real crisis. There’s a modest shortfall which requires some modifications,”

“Lots of us had high hopes when [Paterson] became governor that the same progressive senator and lieutenant governor would become a progressive governor, But the entire construct of this conversation he has created has been from the right. Well, which programs are we going to cut and how many employees are we going to lay off?”

Bill Hammond at the Daily News, however, isn't buying any calls for ration and calm:

“It would be easy for Gov. Paterson to play down the gravity of New York State's fiscal quagmire. It would be easy to ignore the steep slide in tax receipts, to pretend that Wall Street will bounce back in a couple of months…”

He goes on to bash calls for raising taxes on the wealthy as part of the solution to the budget gap:

“[Paterson] could just go along with the easiest of easy fixes - hiking taxes on the wealthy, further pummeling the state's battered economy.”

That’s an interesting argument, considering that the last time New York asked its most fortunate citizens to contribute a little more to keeping society running (2003 – 2005), the economy kept right on growing. In fact, although Governor Pataki had predicted a negative impact on the economy and on the number of high income earners in New York during the last budget battle, tax filers with incomes above $200,000 continued to grow steadily.

But Hammond raises the right question - what would be better for the state's economy, raising taxes on the wealthy or cutting spending?

Lucky for us, Joseph Stiglitz, Nobel Prize winning economist, has weighed in on exactly that topic, telling Albany leaders in a March 17^th letter:

“New York, like most states, is now facing an unenviable choice: either taxes have to be raised, or expenditures cut…When faced with such an unpleasant choice, economic theory and evidence gives a clear and unambiguous answer: it is economically preferable to raise taxes on those with high incomes than to cut state expenditures.”

“The reasoning is straightforward: in a recession you want to raise (or not decrease) the total level of spending – by households, business, and government – in the economy.”

Bill, you may want to slash New York’s healthcare and education spending for ideological reasons, but most New Yorkers don’t want to use the economic downturn as an excuse for more Bush-enomics.

If advice from one of the world’s leading economists wasn't enough to make the case for shared sacrifice as the guiding principle in the budget battle, David Jones from the Community Service Society reminds us what’s at stake for New York's most vulnerable:

“Low-income New Yorkers are already reeling from the current economic slowdown, squeezed by rising health care and housing costs. Worse, many are suffering from food insecurity; the New York Coalition Against Hunger reports that 1.3 million New York City residents live in households that can't afford an adequate and consistent supply of food.

…[D]ata from the Community Service Society's own "Unheard Third" annual survey of low-income New Yorkers reflect growing economic hardships and concerns, including the findings that 1 in 5 residents near the poverty line either did not get, or postponed, medical care or surgery because of a lack of money or insurance; 1 in 4 couldn't fill a needed prescription because of lack of money or insurance; and 1 in 4 fell behind on rent or mortgage payments."

He closes:

“When the budget-cutters get together in Albany on August 19, they must be aware of the implications of their choices.”

Amen!