The Two-Percent Solution: Solving New York's Budget Crisis

Jan 25, 2011 | Updated May 25, 2011

You would think that, as educated New Yorkers, Governor Andrew Cuomo and Mayor Michael Bloomberg would read The New York Times. Apparently they don't. In their state of the state and state of the city addresses they speak about responsible government, but they have both ruled out tax increases, including tax increases on the banks that created the current national economic crisis and wealthy people who have managed to prosper despite the economic downturn.

They are really more concerned with showing how tough they can be with supposedly pampered public sector workers (How many pothole repairmen, health aides, and elementary school teachers get to fly to the Bahamas to avoid snow storms?) and poor people who they claim take advantage of the governments beneficence (Do welfare queens still drive Cadillacs? Did they ever?). Both "your excellencies" are busy using their public platforms to establish fiscally conservative credentials for Presidential runs, even when it means ignoring the facts and unfairly attacking state employees, unions, and unemployed people desperate for work. Shame on them!

But there is another solution to the state and city budget shortfalls -- the two-percent solution.
Illinois temporarily raised the income tax rate to 5 percent, from 3 percent. In Minnesota and California governors have proposed or extending tax increases. According to The New York Times , an increase of only two percentage points in the New York state income tax could yield about $9 billion in additional revenue and actually tip the state budget into a surplus. It would mean we would not have to cut state funding for schools, hospitals, health care, public transportation, road repair, police and fire protection, and other essential services.

Most people do not want to pay additional taxes, but for most of us, we would not actually be paying any more. That is because as part of the compromise federal tax reduction package adopted in December, the compromise which allowed wealthy Americans to keep lower Bush era tax rates, payroll taxes on incomes below $106,800 were reduced by two-percent -- the same two-percent the state needs to keep its budget afloat. And if the state insists that wealthy New Yorkers pay their fair share, there will even be additional money for infrastructure repairs and jobs programs.

Instead of representing and fighting for the needs of all New Yorkers, Cuomo and Bloomberg have allied with wealthy business interests who want to protect their own privileges at the expense of everyone else. They are working with the euphemistically named political lobby called the Committee to Save New York, which wants to cut state and city spending and cap taxes. Its members include the Real Estate Board of New York, the state Business Council, and the presidents of the business Partnership for New York City and of the powerful real estate firm Tishman Speyer.

Cuomo, Bloomberg, and their business allies are threatening sizeable lay-offs, pension and benefit reductions for public employees lucky enough to keep their jobs, and rewritten work rules that will eliminate future hiring. There is little concern for the impact of their program on public services, the lives of the people who are let go, or what will happen in communities where people can no longer pay mortgages or shop in local stores.

There is another way.

From 1929 to 1933, Franklin D. Roosevelt was Governor of New York before becoming President of the United States. When the Great Depression started in 1929, FDR used the state government to pioneer relief, pubic works, and jobs programs that later became the model for the New Deal. After Herbert Hoover's failed cutbacks and delays, FDR's New Deal provided Americans with an active government committed to directly solving national problems instead of waiting for market conditions to magically improve. Roosevelt later defined his philosophy as providing American's with freedom from want -- which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere in the world. FDR expanded on this vision for the future in his 1944 State of the Union address. He demanded a second "economic Bill of Rights."

According to Roosevelt, the United States cannot be content "if some fraction of our people -- whether it be one-third or one-fifth or one-tenth -- is ill-fed, ill-clothed, ill-housed, and insecure... We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence." The second or economic bill of rights was supposed to include "the right to a useful and remunerative job"; "the right to earn enough to provide adequate food and clothing and recreation"; "the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment"; and the right of every individual to a "decent home," "adequate medical care," and a "good education."

New York City and State, and the United States, need a new FDR, another New Deal, and the implementation of the Second Bill of Rights. Right now Cuomo, Bloomberg, and Obama fall far short of providing the leadership and vision that will end the economic crisis and improve conditions for all Americans. They need to either step up to the plate or get out of the way. At a minimum, they need to read The New York Times.