Here in New York City we have a race for mayor getting underway, and the Manhattan Contrarian thinks it may be time to turn our attention away from national affairs to see what's happening on the local scene. We hold our mayoral elections in the odd off years, so this year Mr. Bloomberg leaves after 12 years in office, term limited, and the election to replace him is in November. The primary is September 10. Main candidates for the Democratic nomination include Christine Quinn (Speaker of the City Council), Bill de Blasio (Public Advocate), Bill Thompson (former Comptroller), and John Liu (current Comptroller). Today I will consider Mr. Liu.
The Comptroller of New York City has major responsibilities for oversight of the City's money, handling bond issuances, auditing agency expenditures, and acting as trustee of employee pension funds. Anyone holding that office automatically becomes a serious contender to replace the mayor, and indeed the Democratic nominee last time around was Thompson, who at the time was the sitting Comptroller.
But other than that, it's very hard to think of anything positive to say about Mr. Liu. To me, the fact that Liu is considered a credible candidate illustrates everything that is wrong with New York City politics.
I'll start by mentioning Liu's ongoing scandal. About a year ago, Liu's campaign treasurer Jia Hou was indicted by the Feds for alleged use of "straw donors" to evade campaign finance restrictions. Her trial has not yet occurred. So far the case has not touched Liu directly, but campaign treasurer is not a minor office. I'm not a fan of these campaign finance laws, so I won't mention it further, but the investigation is casting a big shadow over his effort.
Meanwhile, Liu soldiers on. He is known as the darling of the city employee unions, and won the endorsement of their political arm, the Working Families Party, in his race for Comptroller in 2009. So far they have not made an endorsement for mayor this time around.
A couple of days ago Liu released what he called the "People's Budget" to set forth his priorities in the campaign. Where did he release this campaign document? On the New York City Comptroller's web site, of course. That's a little shameless for a guy under a serious ethical cloud already. The same day he showed up at a breakfast of the Association for a Better New York at the Roosevelt Hotel to talk about it. Here's a report on his performance from Capital New York. The gist of the proposal: lots of new programs, from universal pre-K (where did he get that one?) to 5000 new police officers, to 100,000 units of "affordable housing." How to pay for it? Raise taxes on the "rich" (aka, high income) of course, as well as on businesses and insurance companies, and toll the Harlem and East River bridges for non-residents only.
Capital New York reports the following exchange between Liu and real estate magnate Bill Rudin at the breakfast:
"This idea that well, everybody's going to leave New York City, I don't think--you're not going to leave, Bill," Liu said to Bill Rudin, the association's famously civic-minded president and head of a big New York real estate family, who had joined him on stage to moderate the question-and-answer session.
"My tenants will," Rudin replied.
"You're not going to leave," Liu scoffed.
So for starters Liu demonstrates his ignorance of New York City's history of hemorrhaging population and businesses in the 1970s when its taxes got way out of line with the other states. But that's just the beginning. Liu is the trustee of all the city employee pension funds. Does he know anything about the disastrous state they are in, and the huge increase in pension costs that the City is facing? At this post, I estimated that the five City pension funds are short by some $250 - 300 billion, a level that will mean that we can expect rapid acceleration of pension contributions from a current $8 billion per year and 12% of the budget to easily double those figures in a few years. Liu is the guy currently in charge of this, and I honestly don't think he knows the first thing about it.
Well, but let's consider Liu's proposal that all of his new programs can be funded by increased taxes on a handful of "the rich." I wonder if he knows that the entire take of the City income tax is just over $8 billion per year, only 12% of the budget and just barely enough to pay for the employees who don't work for the City any more. The Feds just raised their income tax rates on these people by about 4%, and New York State just made permanent a sur-tax on the incomes of the same people of 2%, so now they are paying over 50% of their income in tax. John, what is the total Adjusted Gross Income of New York City taxpayers whose income exceeds $500,000? Data from the Tax Foundation for 2010 has the total AGI for New York State for people with income of $200,000 and above at $252 billion. A good guesstimate for AGI of people with income over $500,000 in New York City would be around $60 billion. Over half of that already goes to income tax to all government levels. You've got an $8 billion or so annual pension cost increase staring you in the face. Do you really think there is any real money to be had by raising yet a third level of income tax rates on this same very limited pool of income? Well, our Comptroller can't do much math, but what else is new?
Dare I mention the proposal to toll the bridges for non-residents only? Seems he hasn't heard of the Federal Constitution either.
Only in New York City could this guy be a credible candidate for anything.