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The New York Sun


What the Middle Class Needs

April 05, 2007

By Nicole Gelinas

A report out this week on "Saving Our Middle Class" doesn't present any real news on how hard it is for regular New Yorkers to raise families here. Rather, it's a bleak reminder that the city's leadership elite continues to embrace the kind of stale big-government ideas that hurt the middle class instead of helping it.

The Drum Major Institute unveiled its findings on Monday at a conference attended by several future mayoral candidates, including Brooklyn Congressman Anthony Weiner, Bronx Borough President Adolfo Carrion, and Comptroller William Thompson. The study presented the opinions of 101 city "leaders" drawn from academia, social advocacy, unions, politics, business, and so forth.

Participants agreed that it's harder to become middle class in New York than it was a decade ago, and that middle-class families with kids need to bring home at least $75,000 a year to live in reasonable comfort within the five boroughs. They also said that it's hard to find a decent apartment or public school here.

Few New Yorkers would quibble with those findings. But the group doesn't offer any real solutions—only more spending.

On housing, for example, respondents put "building more government-funded, permanent affordable housing" at the top of the study's list of "effective" tools to strengthen the middle class. Not far behind were "increasing [public-school] funding," "reducing class sizes in public schools," and strengthening rent regulations. And a full 92% of participants thought that extending Medicaid-style health care to more middle-class New Yorkers would be "beneficial."

But if a government-run housing market, lavish school spending, and high Medicaid participation were the keys to a thriving middle class, New York would be a middle-class paradise.

Consider this: New York has regulated most of its rental apartments for much of the past century, and the Bloomberg administration will wind up adding 165,000 more units to the ranks of government-controlled apartments during his two terms. As for school spending, it's up 42% since Bloomberg took office. And for Medicaid, one out of every four New Yorkers is already enrolled in the program.

The real obstacle to a thriving middle class in New York is too much government involvement in people's lives. In housing, for example, reasonable economists from across the political spectrum agree that constricting the supply of apartments through regulation makes rents, on average, more expensive, not less.

As for schools, Medicaid, and other government programs, all of the $58 billion Gotham spends annually must come from somewhere, and it comes from high taxes.

As the city's independent budget office noted in February, state and local taxes within the five boroughs are the highest in the nation, nearly 50% higher than in the average city. Due in large part to these high taxes, big corporations and small businesses alike have a hard time locating middle-class jobs here.

Banks like Goldman Sachs and Citigroup don't mind shelling out extra to keep star workers in the city; those employees make so much money for the firm that they justify their high costs. But it's hard for a Citigroup to justify keeping a five-figure back office job in high-cost New York. Just last week, in fact, Citi was firming up plans to move some middle-class jobs in New York City to lower-cost areas like Buffalo, according to press reports.

New York must make itself more attractive, not less so, to middle-class employers. And it must attract entrepreneurs to start businesses here. But the "leaders" surveyed by the Drum Major participants would rather do the opposite.

More than 70% of respondents thought that the city should hike income taxes on the "wealthy" to pay for all of the new subsidized housing and health care they propose, while nearly 90% think it's a good idea to hike business taxes by closing "loopholes." In contrast, "cutting income taxes for everyone" was the group's lowest priority.

And who are those "wealthy" taxpayers who should be paying more to fund these programs, anyway? Most participants said that once a family of four earns $135,000, it's "no longer middle class." That would come as a surprise to, say, an executive assistant and an auto mechanic working overtime to earn between them in the low six figures and struggling to afford a modest house in Queens.

And to see further how out of touch the participants are with regular New Yorkers, just look at their responses to a question on charter schools. "Leaders" split evenly on whether creating more such schools will have a "positive" or a "negative" impact on the middle class, with 29% saying "positive" and 27% saying "negative." Others said charter schools had no impact, or they had no opinion.

But New Yorkers have already voiced their own opinion here: charter schools must hold lotteries for admissions because so many working-class and middleclass parents want to enroll their kids in them.

Voters had better hope that there's a mayoral candidate lurking out there who's willing to buck the worn-out ideas proposed in the Drum Major report. Otherwise, New York's middle class, facing even higher taxes to pay for all this new spending, inevitably will give up and leave.

Original Source:



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