So it’s official.
The country is plunging headlong into a recession and not even New York City, home of Wall Street and the last bastion of prosperity in the plummeting real-estate market, is exempt.
Last week, Mayor Mike Bloomberg announced that the city would be slashing its budget for the new year as a result of the market’s recent troubles. The numbers speak for themselves. In June of last year, the city projected $16.8 billion in revenues for Wall Street firms. Current estimates put estimated revenues for 2008 at $2.8 billion – a 600% decrease. If that’s not a recession, tell me what is.
If the richest of the rich are feeling the effects of the market crash, then what about the rest of us, left behind in this age of record inequality? As a result of the subprime mortgage crisis (which is mushrooming into a broader credit crisis), millions of working poor or lower-middle class Americans will be put out of a home by year’s end, or hanging on by the skin of their teeth. Hundreds of thousands have already lost their homes, largely in majority-minority neighborhoods from the Outer Boroughs to Inland Empire.
So what is the solution? Does the government increase taxes for the top 10% of Americans, who reap the majority of this country’s wealth? Think again. The Federal government opts to enact a stimulus package that does nothing, I repeat, nothing for the growing number of working poor – there isn’t even an increase for food stamp allowances at a time when biofuels and international market pressures are pushing food prices steadily upwards. President Bush wants to make his infamous tax cuts, which disproportionately benefit the wealth, permanent.
So how do struggling municipalities stay attractive to businesses and the wealthy without demanding they give up a greater share of their income to balance out the vagaries of the market?
New York is at the forefront of this initiative. Mayor Bloomberg’s much-touted congestion pricing initiative hurts everyone but the small segments of New Yorkers wealthy or lucky enough to live below 86th street in Manhattan. Outer Borough residents and business owners who rely on cars rather than far-flung subways, as well as those driving in from New Jersey, Long Island, and Upstate New York (where almost all of the city’s bulk merchandise comes from).
The recent subway fare hike, vigorously opposed by riders and the subject of an incessent Daily News campaign, passed even though the spectacularly inept (whisper it, corrupt) Metropolitan Transit Authority was running a budget surplus. Base fare stayed constant at $2, which is terrific for the legions of tourists here for the day, but does not help everyday commuters who can’t afford $81 monthly passes and live on $10 and $20 Metrocards, which now provide fewer free rides.
More outlandishly, Governor Eliot Spitzer raised the sales tax on sales of malt liquor and cigarillos, and enacted a stamp tax on drugs seized by police. That’s correct – not only is it more expensive to drink away your sorrows legally, but New York State will now tax you $3.50 for every gram of weed they seize from you. It’s not legal to possess, and you still will face narcotics charges, but at least the state got some cash out of you!
There is no comparable tax on caviar, Cristal, or imported cigars.
Things are no better on the West Coast. Rocked by record foreclosures and fearful of a statewide recession, some California politicians are moving to ease the fiscal burden on landlords and allow them to reap greater profits by repealing the state’s rent control laws. 1.2 million Californians live in rent-controlled properties. On the cusp of a recession, the country’s largest state could very well expose over a million residents to higher rents and possible homelessness.
All this in a “classless” society. It’s only a matter of time before something gives and people snap out of their American Idol-induced stupors. Without a new crop of mind-numbing sitcoms, that could be sooner rather than later. At least some good could come from the writer’s strike…
–written by Ali Winston