Yesterday Christine Quinn -- Speaker of the City Council and a leading contender to be the next mayor -- delivered a "State of the City" speech. I don't find a transcript anywhere, but the Gothamist web site has one of the more detailed accounts, as well as a link to a video if you want to watch the whole thing, and also another link to a report issued at the same time by Ms. Quinn titled "The Middle Class Squeeze."
A fair summary of Ms. Quinn's speech is that the City must "help" the middle class by passing out one after another of various grants, subsidies, tax breaks, handouts, free stuff and other goodies and graft from our benevolent masters. Front and center was her proposal to have the City finance the building of 40,000 new "middle income" apartments per year for the next decade. Next in significance was her proposal for tax breaks for landlords who make their apartments "affordable" for middle income families. For both these purposes, middle income is defined as going well above $100,000 per year.
Completely lacking from the speech was any recognition that these kinds of proposals have a cost, and that the payment of the cost must inevitably come primarily from the very "middle income" people who are supposed to benefit. It is not possible for anything close to a majority of them to come out ahead -- the programs are just transfers from most of them to a small minority of the politically connected. Of course, a prime idea behind these sorts of programs is to keep the cost as opaque as possible so that no one can figure out that they are getting screwed. But to take just the top example, the 40,000 units of middle income housing per year is completely unachievable; a realistic number might be around 10,000. After ten years of that, you'd have 100,000 units that might house about 3 - 5% of the population. If you assume that the "middle class" is half the population, that leaves 45% that get nothing from this program and must pay.
Of course, the other leading candidates for the Democratic party nomination immediately came out criticizing Quinn for not proposing enough handouts and subsidies. Hey, this is New York.
But don't worry, because there is a very nasty surprise coming down the road for whoever is the next mayor, in the form of vastly increased pension contributions. The state legislature has passed one pension sweetener after another over the past 20 years for the municipal unions, the cost of which has been largely hidden by adoption of deceptive 8% returns assumptions by the pension plans. Failure to meet those return assumptions has led the City's annual contributions to the pension plans to go from about $1 billion per year in 2002 to $8.4 billion in 2012. That number may hold for a while given good stock market performance in the past 12 months, but the chance of achieving 8% annual returns indefinitely is about nil. So the $8.4 billion per year could easily shoot upwards by multiple billions during the next mayor's term. That will wipe any new spending initiatives right off the agenda.
I don't think that any of the Democratic candidates for mayor understands the pension plans well enough to know what is coming. (One of the Republican candidates, Joe Lhota, probably does. He may even have a chance to win!)
Meanwhile, there is another obvious way to benefit the middle class far more than the subsidy/handout/tax break/free stuff model of Quinn and her compatriots. And that is, lower costs for everyone, by some combination of reducing taxes and reducing the restrictions on building that limit the supply of housing in New York. Even as that would benefit the middle class far more, it would also have far less opportunity for graft for the politicians. This is not a model that Democratic politicians in New York find acceptable.