The tradeoff: services or taxes

Once Just Threats, Cutbacks Sink in Among New Yorkers
By JENNIFER STEINHAUER

For many New Yorkers, the budget blues have come on slowly, like a bad, unkickable cold that finally becomes a miserable sinus infection. A street on Staten Island looks a bit dirtier; an Upper West Side subway station seems to have a few more homeless people.

It is as if people are already starting to see their city crumble ever so slightly — even when statistics defy their perceptions — because they finally believe government when it says that it is out of money. The mayor's budget, which he released on Tuesday, portrays a city where firehouses would close, where teachers would lose their classroom assistants and where there would be far fewer places to take children come next summer.

Hearing about the privation on the horizon, many people seem to think it has already arrived, and they are starting to debate in earnest how the city's fiscal problem should be solved.

"There were predictions of these things a year ago," said Lee Goldman, 75, who lives in Brooklyn Heights. "But it seems to have become stronger. I have a sense that there has been a decline in services, especially in safety. From what I hear, the public schools are terrible. I guess I need to listen more."

Wade Golden, who worked as a florist in the World Trade Center and has been unemployed since Sept. 11, may have an exaggerated view of the facts, but a not untypical sense of doom. "You're playing with people's lives right now," Mr. Golden said of Mayor Michael R. Bloomberg's latest budget plans. "By closing down the Fire Department, people are being affected," he said at the Fulton Mall in Brooklyn. "This is their lives."

News of the city's dire fiscal problems has not been secret. Since the day he took office, Mr. Bloomberg has warned about massive budget gaps, impending cuts, shared sacrifices

As June 30th approches (usually the end of the fiscal year), states are facing crunch time. Either they drasticly cut services or raise taxes. This is a choice facing nearly every governor without regard to party.

The question is a fundamental one: do tax cuts benefit average workers less than maintaining services, even with higher taxes?

For 20 years, neo-con economic dogma has suggested that we can manage our way to fiscal responsibility. Keep the tax base low for the upper income brackets, kick back money to the lower brackets and use targeted incentives for the middle class. At the same time, with better management, services can be kept at the same level.

Well, that worked when the economy was booming, but now, with a war, deficits in most states, and not only a double dip recession, but the wholesale retraction of investment capital and the loss of hundreds of thousand high wage jobs, this theory is proving to be wrong.

There simply isn't enough to be saved by management alone. Either the state has to reduce services or raise taxes, usually both.

Yet, there is little coherent defense of the need of the state to provide services. You get argument after argument about the need to keep taxes low. No one explains, however, how the reduction of services can have a pernicious effect on the economy. A low tax, dangerous downtown is not going to get more business than a safe, higher taxed downtown.

There are economic consequences to budget decisions. I think it can be argued, as New York's Mayor Bloomberg has had to, that at a certain point, lower taxes benefit no one without decent services.

The question I have is when do people defend services as a legitmate use of government spending. That at times, it may just be smarter to pay more to keep the library open five days a week and stocked with new books and videos. That maintaining a stable quality of life has advantages to comapnies looking to have a decent community to build a business in. Why is it that paying more for quality is accepted in business, but everyone expects government to do everything on the cheap?

Steve Gilliard

Posted April 18, 2003 02:23 PM | Comments (66)