Put Their Mouths Where The Money Is
April 23, 2001

By Heather Mac Donald

Lean economic times are threatening the city and the nation. No one knows if the slump will intensify or when it will end. A potential recession looms. So does a mayoral election. The candidates must articulate how they would keep spending down and taxes under control. This will be a key test for the campaign.

Despite last week's market upswing, signs of continued softening abound: Consumer confidence is at an eight-year low. Jobless claims haven't been as high since 1996. Layoffs are common. The Federal Reserve — rightly — continues slashing rates amid a shaky business outlook and Wall Street unease.

Confronting this uncertainty head on, Mayor Giuliani is seeking meaningful spending reductions over the next 14 months. His tax cut plan, which will be expanded this week to include lowering the city's personal income tax, deserves support.

As for the four Democratic mayoral hopefuls — and possible Republican aspirants Michael Bloomberg and Herman Badillo — they must explain how they would cope with a weakening economy and resist making unwise promises to unions and special interests. We need no repetition of the fiscal missteps that deepened the 1989-'92 local recession.

Here's how the candidates stack up:

• Fernando Ferrer wants a 30% raise for teachers. Price tag: $1.1 billion. He wants smaller classes, perhaps another $1 billion. Both, he says, the Board of Ed can fund. Hope that doesn't mean more taxes.
• Mark Green favors modest spending cuts and would repeal the 2% gross receipts tax on energy to help small business. Not bad. But he'd hollow out several of Giuliani's proposed tax cuts and delay both a further sales tax reduction and elimination of the commercial rent tax. Not good.
• Alan Hevesi wants a "zero-based spending review" in which agencies justify every buck. Makes sense. Which is why his idea of slapping a 12.5% personal income tax surcharge on high-income New Yorkers to fund schools is troubling.
• Peter Vallone, who has successfully partnered with Giuliani on seven responsible city budgets, wants to comb through the budget "agency by agency," seeking "across-the-board" cuts. But he'd also dedicate $4.1 billion in residential property taxes to schools. Bad idea, since it could cause gaps elsewhere and trigger tax increases.
• Bloomberg, under wraps until now, believes increasing taxes is bad policy but that trimming taxes, when done right, creates jobs. A promising start, but devoid of all numbers and specifics.
• Badillo would continue Giuliani's tax cutting and attack city spending by focusing on inefficient programs such as special education. Smart. But who knows whether his bid is for real.

The candidates have time to refine their fiscal plans. But they must embrace conservative budgeting and avoid tax increases. They also must find ways to make the city more efficient through agency consolidations, less bureaucracy and more privatization.

These men seek nothing less than the stewardship of a $39 billion enterprise. Voters deserve to know how each intends to run it.

Doing the Right Thing

After three years of legal wrangling, the pharmaceutical industry has doffed its black hat and donned a white one. On Wednesday, with self-congratulatory largess, the powerful drug firms dropped their lawsuit aimed at keeping low-cost AIDS drugs out of South Africa. That's definitely a good-guy move.

But before the 39 companies — including firms from the U.S., Great Britain and Germany — ride off into the sunset like Hollywood heroes, there's a bit of background to consider.

Public opinion had a huge role in bringing about the industry's concession. No surprise. While drug firms bleated about patent protection, the AIDS pandemic continued to ravage the Third World. According to a UN study, more than 2 million Africans died of the scourge last year. People or profits? The choice was no choice at all.

Private industry is clearly entitled to safeguard its research, production and profits. Drug development is costly. But in allowing the bottom line to define their image, the big pharmaceuticals branded themselves as heartless. By dropping the lawsuit, they demonstrate a much-needed sensitivity to world opinion.

Attention now must be focused where it belongs: on getting potentially lifesaving drugs to those who are suffering.

©2001 New York Daily News

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