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Mayor Bloomberg Gets Away; Will Wall Street Get Away Too?

Listening to Mayor Bloomberg deliver his sixth State of the City speech last week, I heard a picture of New York’s future more in line with the mayor’s 70% approval rating than with the serious difficulties New York still faces. [You can see my immediate response on the Brian Lehrer show by clicking here and scrolling forward to 39:00.]

Two years from now, term limits mean New York will have a new mayor who will immediately be confronted with tremendous challenges—an education system widely deemed a failure that’s shown little improvement since coming under mayoral control, a public sector payroll that the city can barely afford even with its unhealthy dependence on Wall Street, which itself is facing challenges to its position as a global financial capital, and is far less tied to the city than it once was.

Though you’d never know it listening to the State of the City address, there’s reason for general alarm on this point. A new report on the financial sector’s future commissioned by the mayor and Senator Chuck Schumer reports that businesses are continuing to shift dollars and operations to London “because of its more attractive legal and regulatory environment,” and that New York could lose as many as seven percent, or 60,000, of its Wall Street jobs over the next five years—and $25 billion of revenue with them.

The irony is that the mayor’s speech received headlines mostly for his proposal for a billion dollars in temporary tax cuts the city can afford mostly because of the taxes culled from the market’s bull year. That $750 million of these savings would come from a property tax cut that’s not permanent, that would still leave property owners with far higher property taxes than when Bloomberg took office, and that the savings would be mostly set off by last month’s increase in assessments seems to have largely escaped the attention of the press, which rewarded the plan with a bevy of Billion Dollar Tax Cut headlines.

In the speech, the mayor boasted that “rather than increasing spending in good times, that needs to be cut in bad times -- and thus hurting New Yorkers in the process, I believe that a good portion of the surplus revenues we anticipate in the current fiscal year should go back to the New Yorkers who made sure that the city's recovery from 9/11 exceeded our wildest dreams and who we want to continue living, working, and investing in New York.” But he’s done just what he’s warned against—doing nothing to reduce the size and cost of government so that we can afford to lower taxes in any long-term or systematic way. To be fair, it still beats just spending the greater than anticipated revenues, but that’s a small consolation.

The rest of the speech was similarly divorced from reality, a luxury Bloomberg can afford. At no point did he mention the Sean Bell case, in which police shot an unarmed man the night before his wedding, and then in an attempt to justify doing so, appear to have invented a fourth (armed) member of his party, never mentioned by the police at the time on the 9/11 tapes or any other documented recording. This is pertinent not because the Bell shooting is indicative of an out-of-control police department, but rather to give an example of how Mayor Mike’s style and extraordinarily deep pockets—his private contributions to every major interest group in the city have made him a Teflon mayor. Since the shooting, Police Commissioner Raymond Kelly has seen his popularity dip to an all-time low, while Bloomberg’s has been entirely unaffected by the highest profile police shooting since Amadou Diallo.

And this failure to hold the mayor to account extends to more systemically troubled areas, most notably the mayor’s failure to turn around the city schools since gaining mayoral control. Rather, he used the speech to zig-zag erratically from his earlier push for centralization to a new plan for decentralization, without so much as acknowledging the change in direction, let alone the failure of his earlier move to turn the schools around.

He also used the speech to call for reforming tenure for school teachers. “Reforming the tenure process - which we'll undertake with the help of the United Federation of Teachers - will allow us to reward teacher excellence and begin to eliminate mediocrity. The UFT shares my view that improving the number of quality teachers is the most critical element of all in driving reform.” All of which sounds good, until—in a pattern of claiming mutual understanding with the city unions and then getting fleeced or fought by them—teachers head Randi Weingarten promptly came out against the plan, against the reform, which it turns out had been mentioned to her for the first time only a few hours before the speech.

The mayor also briefly touched on, and the expanded a few days later on a new funding formula for city schools that would ensure fairer funding by creating a baseline for per pupil aid with an add-on for each special needs student. He seemed unaware that this would be taken as party of a broader push to water down and take money away from the magnet schools that help keep middle class families in the public school system.

It keeps going—as E.J. McMahon wrote today, the mayor’s plan to depoliticize ever-rising public pension plans by collectively bargaining over them is as absurd an idea as it sounds, “an invitation to union mischief.” And the mayor’s notion of having the city fill out and mail out Earned Income Tax Credit paperwork to people who haven’t done so for themselves is a rather bizarre approach to a program intended to create incentives for personal independence, if those incentives are such that people can’t or won’t so much as fill out their own forms to collect the money.

In the meantime, the mayor who’s twice opted out of the city’s campaign finance reform program has now declared his intention to further tighten the program, a move that’s drawn on-the-record snickers even from such usually conciliatory voices as City Comptroller Bill Thompson.

Bloomberg also announced a promising new plan to create day, afternoon and evening tracksfor CUNY students to help working students can get a college degree. He claimed that “the demands of their jobs prevent far too many [CUNY students] from completing their studies and without degrees, they often remain among our working poor.” What's missing from Bloomberg's vision of the luxury city is any approach to creating or maintaining private sector jobs for people without college degrees. At present, the mayor seems to think that the best we can do for the working class and the working poor is affordable housing and having the city fill out their EITC paperwork (which of course raises real questions about the efficacy of the program in encouraging work).

In some ways, Mayor Bloomberg is a victim of his own success in guiding a recovery from 9/11 that as he said "exceeded our wildest dreams." He's kept crime down, and his ambitious rezoning and rethinking of the city's infrastructure and architecture has helped leverage the real estate boom to bring developer's money to outer borough communities that have never had access to these funds.

When Mayor Bloomberg took office, he had one immediate and three long-term tasks necessary to ensure the city's future: recovering from 9/11, maintaining Giuliani's success in reducing crime and improving quality of life, diversifying the city's economy to lessen our dependence on Wall Street, and reducing a city workforce far larger and more expensive than we can afford, especially when Wall Street sags.

Unfortunately, the mayor's success with crime notwithstanding, he has yet to address the other two outstanding problems that threaten to undo us. We can afford no more than a temporary (and not very large) tax cut in boom times because much the city workforce is a de facto job program to compensate for the missing private sector jobs stifled by the taxes needed to pay city workers. And even with those taxes, we can still only afford our government when Wall Street booms. Unless Bloomberg addresses these problems, it’s not clear his gains can survive an economic downturn, let alone the dangers to New York's financial supremacy coming from SarbOx, a raft of newly energized challengers, and the continued diffusion of financial services since 2001.