25 June 2009

New York Politics: Damn Entertaining

The Objectivist
New York Legislature: More Entertainment, Less Performance
Dunkirk-Fredonia Observer
June 22, 2009

The New York State Legislature is both more entertaining and worse than ever.

It is worth following the procedure in the recent coup because it is a window into how control of the New York Senate rests on a legal morass and a wild cast of characters. On June 8, 2009, as set out in the Wikipedia.com, New York Times, and the Albany Times Union, Republican Senator Thomas Libous made a motion to elect a new Senate leader. All thirty Republicans and two turncoat Democrats (Pedro Espada and Hiram Monserrate) voted for the motion. After the motion was passed, Democratic Senator, Jeffrey Klein, moved for adjournment. Officiating senator, Democrat Neil Breslin granted Klein’s motion and thus did not recognize the vote. Republicans quickly objected noting that a majority of senators didn’t vote to adjourn as required by the Senate’s rule. Nevertheless, Klein declared the meeting adjourned and all but four Democrats walked out.

The remaining senators then voted to replace the current majority leader and Senate President, Malcolm Smith, with two people. Former minority leader, Dean Skelos became majority leader and one of the Democratic turncoats, Espada, became Senate President. Because there is no lieutenant governor, Espada as Senate President would become Acting Governor if Governor David Paterson died, resigned, was removed from office, or left the state.

Hiram Monserrate later decided that he would rejoin the Democrats leaving the Senate divided 31-31. Usually in the event of a tie, the Lieutenant Governor of New York would break the tie but because the position is vacant, there is no one to fill this role. The position is vacant because the person elected to the office (David Paterson) became Governor when Eliot Spitzer left office as a result of a prostitution scandal.

The Republicans claimed that the transfer of power took place on the basis of two arguments. First, New York Senate’s rules (Robert’s Rules of Order) prevented the adjournment because a body cannot adjourn when there is a motion on the floor. Second, there was never a vote on adjournment. Malcolm Smith responded that the Republican attempt to gain control is illegal because he was elected to a two-year term and that term was not yet over.

The people involved in the case are wild and wooly. The former governor left after being found to have patronized a prostitute. Upon assuming office, Paterson promptly admitted to having an affair with a state employee. There was also some evidence that state funds were misused in connection to the affair. Apparently, having an affair with a state employee is not a removable offense, but having one with a hot prostitute is. Paterson later admitted that when he was younger he used cocaine and marijuana. No word on which he enjoyed more.

Senator Monserrate has been indicted for felony assault. In March 2009, he allegedly cut his girlfriend’s face with broken glass. If convicted, he’ll have to leave office. Senator Espada is accused of a wide number of campaign violations and other conflicts of interest. He owes $13,000 in fines for campaign-related violations for a 2008 race and $60,000 for a 2001 race in which he ran to be Bronx Borough President. He is also under investigation for siphoning money designed for a health clinic to his campaigns and for living outside of the Bronx despite claiming residency there. Former Senate Leader Malcolm Smith, 49, who is married, was recently slapped with a paternity suit by an unidentified woman. He promised that if the child is his, he will do the right thing. Clearly, these guys could hang with the Kennedy family.

Now this state government has long been stupid and destructive. In one study by the Tax Foundation in October 2008, New York had the second highest state and local taxes and the second worst business tax climate in the U.S. Sadly, for New Yorkers, a burst of effort by New Jersey has displaced New York’s traditional top ranking. Across the U.S. in 2008, people paid 9.7% of their income to state and local governments, but overachiever New York took 21% more (11.7%) of its residents’ income. Sadly, New Jersey beat us because it takes 11.8%. Along with Connecticut, these were the only states taking more than 11%. In dollars, the average New Yorker pays $7,206 in taxes to the states and localities. This is roughly $3,000 more than the average U.S. resident pays. As of January 1, 2009, New York was the leader in both gas taxes ($.413/gallon), cigarette taxes ($2.75/pack), and a number of its counties have some of the highest property taxes in the country.

Next consider the recent budget. In April 2009, New York passed a budget. Despite an estimated $17 billion deficit and the fact that it is hemorrhaging jobs (150,000 jobs lost between summer ’08 and April ’09), New York increased its spending by roughly $11 billion (approximately 9%). This ramped up total spending to $132 billion. In justifying this spending, state leaders noted that the federal government gave them an additional $6.2 billion as part of the federal stimulus, so there was really no reason to stop spending. This budget contained the usual pork, in this case $170 million. This included spending on such important groups as the Urban Yoga Foundation, Brooklyn Cricket League, Utica Curling Club, and the Harlem Honeys and Bears senior citizen swim club. The budget also contained $350 million in tax credits for the television and film industry, which were big contributors to Democrats.

New York is incredibly dependent on the rich and the securities industry (i.e., Wall Street). In the past, Wall Street generated 20% of the state’s tax revenues, which is more than Michigan takes from the auto industry and Texas takes from gas and oil. E. J. McMahon of the Manhattan Institute points out that in 2010, the top 1% of income earners are expected to pay 36% of the income taxes. In gratitude for the rich carrying so much weight, New York punished them by raising taxes on those earning up to $500,000 by 15% (6.85% to 7.85%) and on those making more than that by 31% (6.85% to 8.97%). Economists Arthur Laffer and Stephen Moore argue that when states soak the rich, the rich leave those states, report less income on their tax returns, and choose not to locate in them. For example, a study by McMahon indicated that when states jacked up taxes on the rich, they got the slowest increase in wealthy taxpayers.

Laffer and Moore also found that that from 1998 to 2007, large numbers of people, both rich and not rich, moved from the highest income-tax states (e.g., New Jersey, New York, and California) to no-income-tax states (e.g., Florida, Nevada, and Texas). They also found that the latter states created 89% more jobs and had 32% faster income-tax growth than the former.

One solution is to vote out all incumbent, both in the primaries and in the general election. This might be an agreement that to which Democrats and Republicans can agree. If there is a push is to vote out only those legislators who voted for the recent budget, and Gov. Paterson as well, too many Democrats might balk. Instead there can be an agreement that the current legislature while awfully entertaining, is too dysfunctional and destructive to remain in place.


The Objectivist said...

Note that the legislators who voted for the 8.7% increase in spending in times of an economic downturn are quite something.

If the increased spending adds to the baseline spending, and I believe it does, and if in 2010-2011, the federal government doesn't give another massive supplement, revenue will be need to be found to plug the $6.2 billion dollary hole.

The Objectivist said...

There is an interesting question as to why NY, NJ, and CT take the highest percentage of their citizens' income (11.8%, 11.7%, and 11.1%), with no one else taking 11% or more.

They also have some of the biggest budget problems of any states and too many of the most far-left legislators (Schumer, Dodd, DeLauro, and Slaughter).

I wonder why this is.