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!

Lebrun: We're Pretty Nice to our Millionaires, Brodsky: Shared Sacrifice, Goodwin Needs a Fact Checker

Some common sense from the pages of today's New York Times and the Times Union, and the Daily News' Michael Goodwin reveals his need for a fact checker.

In the TU columnist Fred Lebrun weighs in on the budget gap. Lebrun writes:

"I've called some of the more active fiscal minds around town who deal with state finance. The consensus is the governor has to come up with a profound revenue source that isn't Wall Street, not just advocate for cuts in expenditures.

The only logical way for the governor to get his makeup revenues in a hurry, as well as deal with the looming out-years deficit … is to bring back a temporary tax surcharge on our wealthiest.

From 2003 to 2005, a .85 percent increase for those making $500,000 or more raised the highest tax bracket to 7.7 percent. New York's current highest tax rate is back down to 6.85 percent. We're pretty nice to our millionaires.

Assembly Speaker Sheldon Silver wants to bring back a fractional surcharge for those earning $1 million or more. New Jersey has done something similar, raising its highest tax bracket to 8.9 percent.

Will this work? Conservatively, a tax surcharge on our wealthiest will bring in $2.1 billion to $2.4 billion a year. That washes away a lot of red ink. Critics insist such a surcharge will only chase away our millionaires, who will flee New York in droves for friendlier turf. Well, it didn't happen from 2003 to 2005. We gained rather than lost millionaires, in substantial numbers.

Certainly there is always a risk, but I am reasonably certain of one thing: Those millionaires won't be setting up shop in New Jersey any time soon."

Thankfully members of the legislature agree. The quote of the day goes to Assembly member Richard Brodsky in today's New York Times putting the deficit in a historical context. Brodsky on the Assembly's response to the Governor's plan: "What I think you'll see the Legislature do is force a debate about fairness and shared sacrifice."

And about that shared sacrifice, over at the Daily News budget cuts must have forced them to lay off their fact checkers. Goodwin writes in his hosanna to budget cutting:

"But a sluggish economy isn't the biggest reason New York is where it is. The state actually outspent the boom years, with the budget nearly doubling since 1995, sustained only by exorbitant tax hikes and unsustainable levels of debt."

Goodwin's right that spending is up - but he fails to point out why. It's high because we - all of us -- decided that we wanted to have smaller schools and lower class size. We instituted universal Pre-K, so New Yorkers everywhere would be able to give their children the head start they need. And we expanded healthcare coverage for thousands of New York's children. That's why spending is up. And that's what we're going to have to put on the chopping block if the Governor plans to balance this budget through cuts alone. Food for thought for Daily News readers.

But Michael, exorbitant tax hikes? Did we miss something? Large multiyear tax cuts enacted in Governor Cuomo's last year in office and Governor Pataki's first six years - tax cuts largely targeted at the wealthiest New Yorkers - will cost the state more than $16 billion this year alone. New York State has cut the tax rate on the wealthiest 1% of New Yorkers by more than 50%. Our top marginal tax rate is now lower than in California, New Jersey and ten other states. If we had merely kept in place the high income tax surcharge from 2003 we'd be well on our way to solving the state's budget problems. You can't give away the store without ending up in a hole in hard times.

I know Goodwin is fond of a challenge (see his duel over bagels with Albany D.A. David Soares). So here's one of our own - debate me on taxes. Venue of your choice. I'll bring the bagels.