Why the city is headed for collapse.
Shortly, New York may be ruled by a governor who helped cause the financial meltdown, while New York City may have a mayor who was forced to resign from Congress and its comptroller will be a former governor who was forced to resign for transporting a prostitute across state lines. He will be replacing the current comptroller who may go to jail for campaign finance fraud.
All of that sounds like an elaborate setup to a punch line. And it is.
New York State has the 33rd highest unemployment rate in the country. New York City’s unemployment rate is even higher at 8.3%. In June, New York City, with a population of 8 million, added just 3,100 jobs. Most of those jobs were in the city’s tourism trade which bulks up during the summer.
While Bloomberg was playing hooky, using city resources to push gun laws in other states, the specter of Motown was creeping over the Big Apple.
New York City comes in second on the list of cities with the largest unfunded pensions. After Detroit.
A New York household is on the hook for $14,302 in unfunded city employee pensions and $22,857 in unfunded city worker health care costs. Since much of the city doesn’t actually pay taxes, that breakdown is mostly fictional.
When City Council Speaker Quinn, the front runner to replace Bloomberg after Weiner’s texting scandal, proposed to hike taxes, Mayor Bloomberg pointed out that 40,000 people already pay 50% of the taxes.
In one of his strangely lucid moments, Bloomberg said, “If a handful left, any raise would make it revenue neutral.” If even a few of the golden 40,000 subsidizing half of New York City are pushed out by the tax hike, it will offset the extra tax revenue.
It’s peculiar to think of 40,000 people holding up a city of 8 million, but that’s how shaky the Big Apple is. And if a Democrat walks into Gracie Mansion after this election, many of those 40,000 might just hit the road.
Bloomberg has just enough business skills to understand how precarious a position he put the city in. An unpopular cold fish, he bought his way into office by using portions of his own fortune and a much bigger pile of public money.
New York City debt doubled under Bloomberg to $110 billion. That’s nearly four times Bloomberg’s own net worth. The interest on that debt is at $6 billion. Three years of interest on New York City’s debt equals the debt that drove Detroit into bankruptcy court.
None of the Democratic candidates scurrying to replace Bloomberg has given any serious thought to dealing with these issues. Instead New Yorkers have been treated to a campaign of clowns with each candidate doing his best to embarrass him or herself.
Quinn, the lesbian City Council speaker, who developed a reputation for toadying to Bloomberg, recently turned an intern’s heatstroke fainting spell into a dramatic production worthy of Broadway. Weiner has given the race the worst national profile imaginable. John Liu might go to jail for campaign finance fraud. Bill de Blasio is a left-wing radical whose family life makes Weiner’s seem normal.
Forget about dealing with that $110 billion debt and the mounting billions in interest each year. New Yorkers are being given a choice between a candidate who disgraced himself in public twice and Quinn and de Blasio who want to fill their kitchens with rotting garbage through their support for Bloomberg’s mandatory composting proposal.
Why settle for having candidates who are little better than compost, when the entire city can be turned into a giant compost heap?
“When New York makes composting part of everyday life, every other city will follow through,” Quinn declared. It’s more likely that other cities will follow it into the trash, before they follow it into packing bags full of rotting garbage.
The real action in the race isn’t happening with Weiner’s partners, but as Weiner, Quinn, de Blasio and the rest of the gang of clowns rush to lock down union endorsements. Some of the SEIU unions have split between Quinn and de Blasio. The United Federation of Teachers has backed Bill Thompson, the candidate everyone is ignoring because unlike the rest of them he hasn’t done anything horrible.
The UFT endorsement is highly significant. New York recently put the benefits of retired teachers under a privacy shield. And there’s good reason for that.
"Bernie Madoff pretended he was getting 8% returns on his clients' investments—and he's in jail for running a Ponzi scheme. But in the public sector that kind of make-believe is common," Joel Klein, the former New York City school chancellor, wrote.
"The city pension plan offered teachers and administrators guaranteed an 8.25% return, regardless of what the investments actually earned in the market."
New York City public employee pensions, the cement shoes around the city, are the real threat to its survival. Union contracts have not been renegotiated in years as unions wait for a friendly Democrat to show up in Gracie Mansion and give away the entire store. If any Democrat wins, whether it’s Quinn, Weiner or Thompson, their payoffs to the unions will doom New York City to end up like Detroit.
The only difference is how long it will take.
With $90 billion in unfunded pensions and more retired city workers, in some branches of public employment, than active workers, the train is heading deep into the tunnel.
New York City’s total liabilities exceed its assets by $125 billion. In a serious city, that would be front page news. Instead the front pages are filled with Weiner and Spitzer’s latest shenanigans or the antics of the lesbian City Council speaker or De Blasio’s ex-lesbian wife. The bread is almost eaten, but the circuses are everywhere.
Bloomberg distracted New Yorkers and non-New Yorkers from the crisis by upselling the urban brand, inviting more of the members of that golden 40,000 to come and live here and pay the bills. Many of his Nanny State gimmicks were a fraud intended to create the impression that all the major problems had been solved and only the minor problems of too much salt and not enough bike lanes remained.
With the scam complete, Bloomberg is hitting the exits and plotting to become a national social reformer. His Democratic replacement will probably fail to keep the charade going.
Taxes will go up, so will crime, as police forces are cut and successful policing tactics are outlawed, more members of the golden 40,000 will flee and the city will sink back into what it was in the pre-Giuliani era. A dangerous unstable place on the road to financial ruin.
By then the name of the mayor will not matter. No more than the name of the mayor of Detroit does. But numbers like $125 billion will be remembered for a very long time.
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