On Marc's Mind: A Modest Proposal
Friday, November 30, 2001
Marc Baum
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We are in a moment that America is tuned in to world events, and the media is willing to oblige by providing us with hard news instead of the usual celebrity fluff stories. The problem is that our new passion for news may be deep, but it’s not very wide-ranging. If a story doesn’t have to do with the war in Afghanistan or anthrax scares back home, it doesn’t seem to be getting much play. If you want proof, look at the coverage of the shortfall in federal aid to New York. Unless you live around here, you’re probably thinking, "What shortfall?"
In the days after September 11, President Bush promised to provide the federal funds needed to rebuild New York. The figure of $20 billion soon became attached to this effort. This wasn't a real estimate of what the actual costs would be; rather, it was simply one-half of the $40 billion Bush proposed for his anti-terrorism bill. The general feeling was that the government would provide whatever was necessary to get New York up and running again. Not surprisingly, this was a popular position.
But it didn't take long for things to start to unravel. By asking for an aid package that was, perhaps, unreasonably large, Governor Pataki turned off many politicians to the whole idea of helping a city they hadn’t much cared for before. Then the bombing started in Afghanistan, and New York quickly slipped out of the headlines. As a result, politicians started thinking less about rebuilding and more about paying the bills. It's gotten so bad that New York's Congressional Republicans had to beg their superiors to get a bump up in the city's funding from $9 billion to $11 billion. It now appears that if the $20 billion ever shows up, it will come slowly and only after a struggle.
Never mind that New York, where the scope of what happened in September still remains unthinkable and the local economy continues to deteriorate, surely needs the $20 billion, and then some. Never mind that a newly vibrant metropolis would prove the strongest proof possible of the ultimate ineffectiveness of terrorism. Instead, let's look at this purely in terms of revenues. New York, like most Northeastern states, pays much more in federal taxes than it receives in federal programs. In 1999, that surplus amounted to more than $16 billion. For the 17 years ending in 1999, it topped $250 billion. This is partly because our federal governmental structure is tilted in favor of small states, partly because the South is relatively poor and partly because the Midwest (excluding the Great Lakes states) is a large recipient of federal farm subsidies. It is also true that New Yorkers have relatively high per-capita incomes and end up in higher tax brackets. (Of course, the high cost of living means that most people here don’t actually live better than much of the rest of the country.)
Still, whatever the cause, the result is that New York is not getting a fair shake. While cities like Denver and Houston are awash in federal dollars for their new and unproven transportation systems, New York gets no help in building a new subway line to ease the horrendous overcrowding on the East Side of Manhattan. Now, when national sympathy for New York is at an all time high and the need for financial support is gaping and obvious, Washington is balking at providing the help the city deserves.
The good news is that there's a simple solution. Don't send us billions of dollars in aid; just let us keep what we produce. We'll pay to Washington whatever the government provides for us in federal programs. Any tax revenue above that amount will go to rebuild New York City. As soon as we're back on our feet, we'll start subsidizing the rest of the country again. It's simple and surely should appeal to the anti-federalists from those states that depend on federal largesse. I'm not suggesting a secession movement here – I'm just asking, in good Republican style, that we be allowed to keep more of what we earn and rely on the wisdom of local government.
We're going to need some serious money to make it through this. Our economy is already in a much worse tailspin than the rest of the country. Unemployment is growing. And although Lower Manhattan has already rebounded to a remarkable degree, too many companies have fled the area, taking jobs with them. If they're ever going to come back, it will require some serious coaxing and even more serious tax breaks.
For two months, people have been paying tribute to the courage and fortitude shown by average New Yorkers. Now it's time to turn those kind words into what we really need. Show us the money.
Marc Baum, Chief Executive Officer, IPO.com. Click here to view the On Marc's Mind archive.
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