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After NYC Primary, Dems are Betting the Ranch on Wall Street

Bill de Blasio’s win in New York City’s mayoral primary has Democratic interest groups rushing to offer their endorsement. Josh Gold, political director of the Hotel Trades Council, said, “It’s time for working people and Democrats to unite behind our next mayor, Bill de Blasio.” An endorsement from the prominent labor group indicates that the Dem machine has its man.

So what does de Blasio’s agenda look like? It entails ambitious spending plans, and conspicuously omits any reform of the job-killing regulatory jungle that has smothered the middle class in New York. We appear to be getting a candidate whose plan is basically to extract more wealth from the Wall Street money machine. Bloomberg reports:

Days before next week’s primary election, de Blasio, 52, has seized the lead decrying economic inequality….

De Blasio’s plan would raise the marginal tax rate on incomes above $500,000 to 4.4 percent from almost 3.9 percent. For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency.

For those making $1 million to $5 million, the average extra bite would rise to $7,793, the budget office said. At incomes of $5 million to $10 million, it would climb to $33,518, and for those earning more than $10 million, it would mean paying $182,893 more.

You don’t have to be an acolyte of Ayn Rand to think this is not a very good approach. It makes the city even more dependent on the financial overlords that Democrats claim to hate but secretly rely on. But the biggest problem with de Blasio’s agenda isn’t that he wants to tax the rich; the State Legislature will make it hard for him to do that anyway.

The big problem with the Democrats’ new candidate is that he isn’t going to do anything about the miserable tangle of job-killing regulations and city bureaucracies that make New York a hard place to set up the kinds of businesses that can create the kinds of jobs in which relatively unskilled people can make a living wage. New York these days is much too hoity-toity to make it possible for industrial jobs to come back, or other kinds of metal-bashing enterprises to be welcome.

New York Democrats are going to tighten the city’s dependency on a handful of industries (Wall Street chief among them) that don’t much care about high taxes and tough regulations. Thanks to what Dems cluelessly tell themselves are “progressive” policies, New York is going to be less and less hospitable to the middle class. It’s going to become an increasingly unequal city of investment bankers and hotel maids, while liberals weep and wail and gnash their teeth about an unequal economy their own policies help to create.

And sooner or later the Wall Street growth engine will slow down. Employment in finance and profits in the I-banking world can’t go up forever. Wall Street sucked in hundreds of billions of dollars in ‘stimulus’ funds and TARP money, while the Fed’s QE program represents an immense subsidy for the rentier class that Democrats affect to despise. Those conditions aren’t going to last and as revenues slide, even rich Wall Street firms will start cutting costs. They won’t employ as many Ivy Leaguers, and they’ll start to worry about the high costs of doing business in New York. They will outsource work to foreign countries, they will automate their back offices even faster, and they will demand bigger tax breaks or threaten to move to cheaper, greener pastures where New York progressives can’t get at them.

In the past, New York voters have kept enough common sense to keep the Democratic Party’s liberal tendencies somewhat in check. Mayors like Ed Koch, Rudy Giuliani and Michael Bloomberg have had their flaws, but all of them understood that too many liberal nostrums would put even New York’s economy under an insupportable burden. Voters seem ready to forget those lessons now; the Big Apple could be cruising for a bruising as a result.


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  • Ulysses4033

    But this worked so well for Hollande.

  • USNK2

    Mr. Mead needs to learn more about Brooklyn-based Working Families Party, the ideological & GOTV support behind deBlasio, the still undecided Public Advocate contest Letitia James, and, even more important, the force behind seven new City Council seats in Brooklyn.
    The “Dem machine” in NYC is fracturing over the WFP’s emergence as a force, no longer willing to be handmaidens for the Dem machine.
    Dem turnout was 20%, due to lack of interest in the Dem pallette.
    Guess this is why GOP nominee Joe Lhota is now forming a “Democrats for Lhota” base.

    • f1b0nacc1

      I still think that Lhota will lose (the sheer number of Dems (particularly the LIVs) who will pull the lever for whoever the Dems nominate no matter what shouldn’t be underestimated. With that said, you are quite right that there is potential here for a real surprise, if nothing else in the margin of victory.

      • USNK2
        “Some Disaffected Democrats Turning to Joe Lhota”
        By Jill Colvin 9/08/13 7:48pm
        btw, the Democratic nominee for NYC mayor has lost the last five elections. And none of them were running to neuter the NYPD, or raise taxes solely to pay for pre-school, two of deBlasio’s main ‘promises’.
        Anyone watching NY1 election returns heard Joe Lhota’s speech first. Very impressive speech. Noting the mayor manages a 70BIL budget, with 300,000 employees, a projected TWOBILUSD deficit for 2014, and municipal labor contracts that ‘expired’ four years ago.
        The Brooklyn-based Working Families Party focusses on economic justice, a worthy goal in an ideal world. The WFP was also the organizing force behind Occupy Wall Street.
        A deBlasio/James ticket is a WFP ticket.

        • f1b0nacc1

          I don’t disagree with your characterisations of deBlasio or the WFP, nor do I think you are incorrect in your respect for Lhota. My point here is that Lhota is not a Guliani (who had a semi-legendary reputation as a crime-buster before running for Mayor), nor Bloomberg (a billionaire who could bury his opponents with his money), and deBlasio (whatever I may think of him) is certainly a more formidable candidate than the parade of low-rent nonentities that the Democrats have run for the last 20 years.
          deBlasio doesn’t have to be someone either you or I are impressed with (and I am sure that we both agree that we are NOT impressed with him…other than our resident troll, I don’t know of anyone stupid enough to take his nonsense seriously), he merely has to be good enough not to scare away the upper-west side swells and the bridge and tunnel crowd that he will need to add to the LIVs and professional identity voters (ah, but I repeat myself!) to win a majority. He is good enough to do that, much as we might regret that.
          Was it Mencken who said “Americans love democracy, and they shoudl get it good and hard”? It seems like a suitable quote here…

  • wigwag

    New York City has many extraordinary assets. It’s harbor that Walt Whitman described so hauntingly in “Crossing Brooklyn Ferry” is one of the largest natural harbors in the world. It’s home to numerous enticing tourist attractions as diverse as the Statue of Liberty and the United Nations and the Metropolitan Museum of Art and the Metropolitan Opera. Several industries are headquartered here including America’s fashion industry, it’s advertising industry and, of course, the financial industry.

    But none of those museums or theaters are New York’s most important resource and neither are the great companies headquartered here. Contrary to popular belief, the New York Stock Exchange (which is currently owned by a European company, “Euronext”), isn’t the City’s most valuable resource either.

    New York City’s most important resource is the billionaires and near billionaires who call the City home.

    According to Forbes (which makes a living tracking these things) 70 billionaires are currently New York City residents. New York sports more billionaires as citizens than any other city in the world. There are probably about three times as many near billionaires residing in New York and several hundred multimillionaires. It is the extraordinary wealthy and the phenomenally wealthy who are New York City’s most important resource.

    Why you ask? The answer is simple; they pay a disproportionate amount of the taxes and the company’s they run provide a large percentage of the very high paying jobs. As it happens, billionaires employ a lot of millionaires and the millionaires who work for the billionaires also contribute in a disproportionate manner to the City’s tax base.

    Many people wonder why so many billionaires would chose to live in New York City where the taxes are so high. After all, they would pay many millions of dollars left in taxes if they moved to the New York suburbs where there is no city income tax and they would save even more money in taxes if they moved to New Jersey or Connecticut. From any of these places, the commute into New York is short and easy yet these billionaires pay millions more than they have to for the privilege of living in New York City.

    The reason they do is quite simple really; they like living in New York and when your net worth is denominated in the billions you can generally do as you like. The millions of dollars they pay in City taxes is no disincentive because to a billionaire, paying millions of dollars in taxes while annoying, really isn’t that onerous.

    New York’s billionaires are a diverse lot. Some of them are quite progressive like George Soros, many of them are economically conservative but socially liberal (often at the insistence of their wives or mistresses) and some of them are full-on conservatives. Rupert Murdoch lives in New York (on Fifth Avenue in the 60s); he bought Laurence Rockefeller’s apartment when Laurence died. Many people are surprised to learn that the ultra conservative energy billionaire, David Koch resides not in Texas and not in the Dakotas, but right here in New York City. He’s active in many New York philanthropies including the Museum of Natural History, The Memorial Sloan Kettering Cancer Center and the Hospital for Special Surgery. Koch has said he loves living in New York City.

    While paying millions of dollars in municipal taxes doesn’t mean a lot to these billionaires, collectively, what they pay, and what the wealthy people who work for them pay, makes a world of difference to New York City. It’s one of the things that differentiates New York from the numerous less successful cities in the United States. It’s the presence of billionaires, near billionaires and multi millionaires that makes New York City’s tax base robust.

    While these billionaires view the millions that they pay in municipal taxes as a mere annoyance, there is one thing that they will not tolerate; disrespect. The idea of class warfare repulses them and offends their sensibilities. They are not going to pay millions of dollars in taxes and gives millions, tens of millions and sometimes hundreds of millions of dollars to New York charities only to be insulted for it. Ed Koch, Rudolph Giuliani and Michael Bloomberg all understood this and did everything they could to make New York City an attractive place to live for this crowd; the current democratic nominee for mayor, Bill de Blasio is coming from a different place.

    It’s more than his class warfare rhetoric and his desire to raise their taxes which is likely to offend New York’s uber rich. There are other things that are also very important to this class of people. They virtually all own private jets; Gulf Streams, Hawkers and sometimes even converted Boeing Jets that are hangered in the region’s general aviation airport in Teeterboro, New Jersey.

    Most of them also own helicopters that they can fly from one of three New York heliports (one in the 50s on the West Side, one on 34th street on the East side and one near the South Street Seaport near Wall Street). Getting to Teeterboro from New York City when traffic is bad can take 90 minutes, flying from any of New York’s heliports takes less than ten minutes. Almost all of them also own palatial homes in the Hamptons. Driving on a Friday afternoon can take three hours; by helicopter on a clear day, they can make it in 30 minutes.

    As it happens, the residents on the East Side and the West Side who live near the heliports don’t like helicopters very much. You see, these people are merely upper Middle Class and they can’t afford to own helicopters. As it happens, helicopters are extraordinarily noisy. For years, these neighbors have been trying to close the heliports down. Koch, Giuliani and Bloomberg (who owns his own helicopter), all knew how important the billionaires were to the financial viability of the City and they refused; de Blasio supports closing down the heliports.

    Many of these billionaires supported Obama in the 2008 election; as it happens, by in large they are a pretty liberal group of people. Then Obama started with the class warfare stuff and they abandoned him in droves; in 2012 most of New York’s billionaires, including many who had supported Obama before, rushed to support Romney. This is a group not used to being trifled with.

    Asking them to pay a little more in taxes will hardly cause your New York billionaire to take any notice at all; publically disrespecting them or tampering with their amenities like the heliports will infuriate them and could easily entice them to move to the suburbs in New York, New Jersey or Connecticut. If this happens, it will be catastrophic for New York City, yet this is precisely what the new democratic mayoral nomine wants to encourage. He hates rich people and he wants other people to hate rich people; this is simply unwise when its rich people who are paying most of the bill.

    Unfortunately, this tragedy in the making for New York may simply be unavoidable. it’s no one’s fault really; to some extent its a social phenomenon out of anyone’s control. The economy is changing in ways that make economic mobility more difficult and economic inequality a intransigent feature of the social landscape. When Bill Clinton was president, he promised to fight hard for people who worked hard and played by the rules. Working hard and playing by the rules is no longer enough in the new economy. It is hardly surprising that the millions of New Yorkers who are not millionaires are moving massively to the left of the political spectrum; from their perspective things are looking increasingly desperate and where else do they have to move?

    Peter Beinart, (who I generally dislike) has a fascinating piece up at the Daily Beast about the Democratic New York Mayoral primary. His thesis is that de Blasio’s victory may be a harbinger of a move to the left in the American electorate in general. He points out that young people have a more leftist orientation today than they have in years. Superimpose the move of the young voters to the left end of the Democratic Party on the hostility of black, Asian, Jewish and especially Latino voters towards Republicans and it becomes apparent that a political earthquake just might be on the horizon. And this is even before the huge gender gap is taken into account.

    Beinart’s article is a must read, though it is hard to read without becoming very depressed.

  • Pete

    The public sector parasites in NYC will not stop until they do kill the goose that lays the golden eggs.

  • Anthony

    “Democrats have found it easier to forge relationships with the conservative worlds of big business and high finance because they have not faced much countervailing pressure from an independent movement of the left.” Does Bill de Blasio’s yet to be finalized primary victory change that narrative WRM?

    • Kavanna

      The financial sector is not “conservative.” The sector today depends on a permanent, open-ended bailout policy from the Fed — asset inflation without end — instead of productive progress in the real economy. That’s why Wall Street supported Obama so massively in 2008 and, to a lesser degree, in 2012.

      Here’s the heart of wealth inequality in the US, and why the Dems don’t care. Their standing policy is dependency, not recovery.

      • Anthony

        Wall street did not support Obama in 2012.

        • Corlyss

          That’s contrary to EVERYTHING I’ve heard about their politics. So I have to ask you what’s your source for your statement?

          • Anthony

            They did support him in 08, but they flipped hard.


            “Wall Street made a huge bet on Mitt Romney and lost. The financial
            services sector contributed $61 million to Mitt Romney’s campaign
            compared to giving only $18.7 million to Barack Obama, according to the Center for Responsive Politics.” This comes from Forbes magazine.


          • Corlyss

            Thanks! That’s all I was looking for. Perhaps that explains why suddenly the federal lawsuits are rolling down like a river and vengeance like an unending stream, to paraphrase someone. 😉

          • bpuharic

            Yep…and I’m willing to bet fewer than 1 percent of conservatives know this

      • Anthony

        Your disagreement is with author of quote; my use as context to Quick Take’s narrative. Yet given how system works, conservative description applies (major force helping to shape political life and how it operates).

      • Corlyss

        Agreed, and since most of them live in NYC and environs, they are more likely than not to be the kind of liberals we love to ridicule here. The idea that coastal money is ipso facto conservative is disproven by the statistics and voting habits. IMO the real danger for nation and for the interior states is when telework for these very Blue occupations becomes the norm and they move into traditionally conservative states, like Colorado, they are going to up-end the politics in those states and not in a good way. One has only to look at the Silicon Valley billionaires who moved into Colorado with a gay rights agenda specifically to oust conservatives from office and replace them with gay-friendly liberals to see what can happen. Californians in particular, having created a dystopia they can’t fix more to their liking, are fleeing to nearby states and bringing their execrable politics with them.

        • f1b0nacc1

          The phenomenon you describe has come to be named ‘Californication’

          • Corlyss

            I know, but I wasn’t sure I could say that without getting the moderator all exercised. My moderated comments disappear into the cyberspace round file.

  • Corlyss

    “Voters seem ready to forget those lessons now; the Big Apple could be cruising for a bruising as a result.”
    The Ca legislature, with Dem majorities in both houses thanks to all those illegal aliens living on the dole there, have just voted to increase their minimum wage to $10+/hr. Same song, different chorus.

  • Corlyss

    “Democrats have found it easier to forge relationships with the conservative worlds of big business and high finance”

    I bet they did it by bribing them or threatening them. The SEC & DOJ began bringing cases only after the 2012 election. I bet Jamie Dimon was shocked when they served him papers.

    • f1b0nacc1

      Lenin’s comment about the last capitalist being hung with the rope that he sold us seems especially apt here.

  • bpuharic

    Hmmm…wonder how WRM explains the 30 year stagnation in middle class wages across the USA. Most folks don’t live in NY yet we’ve had 3 decades of zero growth in middle class incomes.

    And Wall Street will slow down only when it wants to. The right wing has given it unlimited access to public funds (AKA TARP), so they can gamble with public money. If they win, they keep the money. They lose, the middle class bails ’em out.

    Wall Street, according to a poll released yesterday, is one of the most despised instituions in America. Yet the right insists we do NOTHING to regulate it, all the while encouraging moral hazard that we saw with TARP.

    And it’s risible that ‘taxing the rich’ means people are dependent on Wall Street. You tax where the money is, to paraphrase Willy Sutton.

    • Corlyss

      Your calculation of stagnation over the last 30 years probably fails to take into account transfer payments that the middle class has managed successfully to engineer for itself thru their voting and issue selection. Mostly they want to free-ride off generous programs designed for the poor. The concept of transfer payments to both the poor and the middle class has only recently become a focus of research, but it has already revealed the extent of “hidden” wealth in America that straight out analysis of wages and salaries alone don’t. I just bet wasteful spending habits had a lot to do with what you think of as declining income in the middle class.

      • bpuharic

        Yeah the 1 percent have none of those…like the carried interest deduction, or lower capital gains taxes, right?

        And again we see the typical right wing hatred for the middle class. THey deny they hate us, then tell us we’re moochers and free riders even though America isn’t America without its middle class.

        I notice you’re engaged in special pleading…BEGGING us to pretend the middle class has untapped and unspecified billions.

        I hate to tell you but the 1 percent has set a record this year both for share of national weatlh AND share of national income it’s taken

        But you go ahead. Tell us how the middle class is a bunch of thieves and what Wall Street did in 2007 was just good business.

        TYpical right winger

  • Kavanna

    The dependency of the tri-state Dems on the bloated and over leveraged financial sector helps to explain some otherwise curious facts about the Clinton-Obama Democratic Party.

    Just as the Dems formed a cronyistic alliance with Hollywood and Silicon Valley glitterati, the party is also highly dependent on a Wall Street that helps issue government debt, manage (or mismanage) public employee pensions, and make up the bulk of tax revenue in some states. The Dems are this era’s party of cronyistic plutocracy. The connection is epitomized by Jon Corzine, Obama’s Wall Street überbundler, who headed Goldman Sachs and later bankrupted MF Global.

    But there’s no “might” about it. Wall Street is already shrinking and leaving for lower-tax locales. NYC will have to consider, for the first time in decades, an economy based on the real economy, not financial services.

    • ljgude

      Yeah, I can’t see why anyone needs the financial district when so much is being done by computer. Of course it is harder in these days of limitless surveillance to do the real business of Wall Street which is insider trading on a Titanic scale. (pun intended)

      • f1b0nacc1

        I know that this sounds utterly ridiculous, but some of the high-frequency innovations trading that are being would actually be disrupted by moving the computers that do them outside of NYC. Now mind you, that doesn’t convince me that it shouldn’t be done, but there are rational (marginally so, but rational) reasons as to why some might resist it.

    • bpuharic

      Rather strange, isn’t it, that the GOP ran a Wall Street banker for pres, and Wall Street gave more money, in 2012, to the GOP.

      Almost as if they knew what to expect

      • Anthony

        See report: Beyond the Low Wage Social Contract

        • bpuharic

          Try again. Busted link

          • Anthony

            Try New America Foundation – Joshua Freedman, Michael Lind (Reports authors). Above URL no longer operative???

  • Jacksonian_Libertarian

    There is no reason why the computerized stock exchange can’t move to a low tax, business friendly place like Houston, Texas.

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