Big New Infrastructure For New York

Christine Quinn is probably the leading candidate to succeed Mike Bloomberg for mayor.  She is relatively sane compared to the other Democratic candidates, and is thought to have Bloomberg's backing.  (Currently she is Speaker of the City Council, and represents our district in the West Village.)

Yesterday Quinn gave a big speech before the Association for a Better New York.  As reported in this morning's Wall Street Journal, she used the occasion to call for a major new infrastructure project to put some kind of storm surge barrier up across the harbor to protect the city from future storms.  She mentioned total price tags for the barriers and other protections in the range of $20 billion.

That's all very nice.  What she didn't mention is that New York is out of money for big infrastructure projects because we overspend on the things I mentioned yesterday:  public employee pensions, education and Medicaid.  Back in the days before public employee pensions and Medicaid, and when costs of the public schools were reasonable, New York City built the water system, the subways, the big bridges and tunnels. Today we're building two small subway extensions with a total of four stations, about a 1% addition to the system, with much of the cost paid by the Federal government, and even that is of questionable affordability.  Meanwhile, there are plenty of other infrastructure projects that should be built and aren't. They have been squeezed out.

So Christine, please answer the question, if you want to build these storm barriers,  how exactly are you going to get the existing unproductive overspending under control first?

One final thing:  The WSJ article doesn't say exactly where these storm barriers would go, but the proposals I have seen would run the barriers from the western tip of the Rockaway peninsula over to Sandy Hook New Jersey, and maybe another smaller piece across Hell's Gate to guard against water from Long Island Sound coming in from the northeast.   These barriers would protect Manhattan Island first and foremost, and all of the harbor waterfront in Brooklyn and New Jersey, and even Staten Island.  But they would not protect the barrier islands of either Long Island or New Jersey:  the Rockaways, Long Beach, Jones Beach, Fire Island, or the New Jersey shore.  In other words, of the worst-hit areas from this recent storm, really only Staten Island and Coney Island would be protected.

In the map below the pin shows the location of Quinn's proposed barrier.  All those Long Island beaches to the east, and the Jersey shore to the south, are left out.  Not that there's really anything that can be done to protect them, but we should realize what our money can and cannot buy.

 

Why New York City Is A High Tax Jurisdiction

Our mayor Mike Bloomberg likes to call New York a "luxury good" when defending our high taxes.  And progressive New Yorkers seem to take pride in paying high taxes, convincing themselves that the taxes pay for a higher and more compassionate level of services to the children and the needy.  Unfortunately, they are completely being taken in.

There are really three places where almost all of the differential in spending between New York and other jurisdictions can be found:

(1) Public employee pensions are way out of line in New York.  Current spending by the City on public employee pensions is $8.4 billion per year, 12 % of the total budget.  That's because we let City workers retire after 20 (police and fire), 25 (transit) or 30 (teachers) years of work, and spend 25 or more years of fully-paid leisure.  The $8.4 billion is about $5 billion above a reasonable amount for pension expenses.

(2) The cost of education is also way out of line in New York. City.  According to census bureau figures cited here, New York City school spending was about $19,000 per student in 2009.  That's about double the nationwide average of $10,615 per student cited here for 2010.  What do we get for double the cost per student?  Worse test scores than the national average.  The double cost has nothing to do with providing better education to the kids, and everything to do with a restrictive union contract that makes us hire twice as many people to do the same work.  With over a million school children, the extra $8000 per student is an $8 billion budget item.

(3)  In New York, we pay between double and triple the amount per Medicaid beneficiary as they pay in other large states like California and Texas.  According to statistics here (statehealthfacts.org), California's2009 Medicaid payments per enrolee were $3,527; Texas $4,884; and New York$8,960. With over two million enrolees in New York City, that's a differential of about $10 billion that we're spending above what California would spend for the same number of people. The Feds pick up about half of the $10 billion, and the state a quarter, so for the New York City budget this is about a $2.5 billion number.

These three items account for over $15 billion of excessive spending in a budget of about $70 billion.  Do the taxpayers get anything for this extra $15 billion?  For comparison, the entire take of the City income tax is about $8 billion.

How To End The Drug War

Now that Colorado and Washington have legalized recreational use of marijuana, the big question is, will the Federal government continue prosecutions against sellers of marijuana in those states -- or for that matter, in any state?

Federal prosecutions against California medical marijuana distributors have continued under a regime where the prosecutors have convinced the Federal judges not to allow the defendants to mention before the jury that their activities are legal under California law as passed by a referendum of the people.  State officials have not taken the next step.

How about this, Colorado and Washington:  assuming there are any prosecutions, assign state employees to stand outside the Federal courthouses where a prosecution takes place and hand out flyers containing information that (1) under state law passed by a referendum, marijuana is legal, and (2) jurors can vote to acquit in any case for any or no reason and there is nothing the prosecutor can do about it (sometimes known as "jury nullification").

In 2011 when activist Julien Heicklen tried handing out flyers like that in front of the Federal courthouse in New York, he was arrested by the Feds and prosecuted for "jury tampering."  Federal judge Kimba Wood threw out the indictment.  However, despite the obvious issue of suppression of free speech, she ducked the First Amendment issue, instead saying that the Federal jury tampering statute did not apply where no specific case was at issue.

Anyway, are the Feds really going to arrest the Governors of Colorado or Washington for exercising their First Amendment rights and informing the people accurately about the law?

The Big Picture

Looks like the Federal deficit for the fiscal year ended September 30, 2012, is coming in at just over $1 trillion.  That's actually a small improvement over the prior years of the Obama administration.  At the bottom of this post is a deficit chart from the Wall Street Journal in October.

But does the improvement represent something headed back toward stability?  Don't bank on it.  On the positive side, the cost of the Iraq war is way down, and the cost of the Afghanistan war is starting to come down, which hopefully will continue.   Without tax increases, revenue has recovered from a recession low of about $2.2 trillion, and is back up to around $2.7 trillion at an annual rate.

But overall spending continues at over $3.7 trillion per year.  What is filling in as the war costs decrease?  Obviously, the entitlements.  The CBO baseline projections for Medicare spending show $569.4 billion in fiscal 2012 (just ended) rising to $830.6 billion by 2019 and $1,047 billion by 2022.  Hey, that's less than a 7% compound annual growth rate -- pretty good!  Don't believe it.  For one thing, they've always been overly optimistic since day one of the program.  For another, they have assumed that all the Medicare cuts under Obamacare take effect without any problem.  Good luck with that.  How about if you assume that the Obamacare cuts will not happen or will be evaded?  Then according to the Kaiser Family Foundation the number rises to $935 billion by 2019.  That puts the CAGR back around the 8% we all know and love.

And that's just the start.  The CBO Medicaid spending baseline shows Federal spending on the program going from $275 billion in fiscal 2011 to $622 billion in fiscal 2022 - a 7+% CAGR that is also probably way optimistic absent fundamental program reform.

And then there are other exploding programs of the hand-out state, including social security disability and food stamps.  And don't forget the cost of Obamacare itself, already predicted by this site to be a Ponzi scheme in the making.

The proposals for tax increases limited to high income people cannot remotely keep up with the increases in the entitlements alone.  Advocates for ending Bush-era tax rates on income over $250,000 put forth optimistic projections that that change alone could generate almost$1 trillion in revenue over ten years. I don't believe it, but suppose it is true.  That's $100 billion per year on average.  The increase in annual Medicare and Medicaid spending during the same time period is projected at $700 billion -- and that is also optimistic.  Where is the other $600 billion per year coming from?

I'd kind of like to see some kind of a plan from the president.  I don't think we will ever see one.  I predict that in the next four years, we will see no proposal from the administration that would reform the big entitlement programs to get their growth rates down under the growth rate of the economy.  It will be, continue the Ponzi scheme and apres moi le deluge.

How To Buy An Election

New report from the Bureau of Labor Statistics on food stamp usage for July. By just some coincidence, the report would normally have come out just before the election, but was delayed to just after the election.   Here's a report from ZeroHedge.

Check out this chart of food stamp usage during the Obama administration and monthly changes.

Food stamp usage was at about 31 million in January2009 when Barack Obama assumed office.  Now its 47.1 million. The explosion has slowed some in the past year, but how about that increase of over 400,000 in July, the most recent month reported?  Can't wait to see what September and October look like. 

Do you think that the 16 million or so additional food stamp recipients during Obama's time were more or less likely to vote for him after joining the hand-out state?  Also, if the economy is improving, shouldn't the number be going down,in fact dramatically down?

What Do We Say To The 60,000 Dead?

The  Washington Post reports on the new dilemma facing Mexico: How much effort are they going to put into continuing to support the American war on drugs now that marijuana for recreational use has been legalized by referendum in Colorado and Washington?

Mexico spends billions of dollars each year confronting violent trafficking organizations that threaten the security of the country but whose main market is the United States, the largest consumer of drugs in the world.

Has it all been for  naught? The drug war has taken an unbelievable toll on Mexico over the past several years:

About 60,000 Mexicans have been killed in drug-related violence, and tens of thousands have been arrested and incarcerated. The drug violence and the state response to narcotics trafficking and organized crime have consumed the administration of outgoing President Felipe Calderon.

Of course, what we don't know is whether the Federal government in its wisdom will honor the verdict of the voters in Colorado and Washington.  We do know that the Feds have continued prosecutions even of state-licensed medical marijuana purveyors in California since medical marijuana was legalized by referendum in that state.  Here's the court decision in United States v. Stacy (S.D. Cal Mar. 2, 2010) rejecting the effort of a California-licensed medical marijuana dealer to get his Federal indictment dismissed.  Oh, by the way, if you are a medical marijuana dealer and the Feds prosecute you, you are not even allowed to mention to the jury that your conduct is legal under the law of California as passed in a referendum of the people.

Sooner or later these drug agents and prosecutors will be packed off to new jobs.  How many people have to die in the drug wars first?