When Bill de Blasio became Mayor of New York a little over a year ago, many on the right predicted some kind of imminent disaster for the City. But not me. These things don't happen that fast. It takes a long time to undo the good work in public safety and (to a lesser degree) in budget control bequeathed to de Blasio by his two predecessors; and yet another long time for the incentive effects of bad policy to have noticeable impacts on the economy and success of the City.
So walking around the streets of New York you won't notice that much has changed. In fact, there's something of a boomlet going on in housing construction, and job creation continues to be decent if not strong. Still, it's worthwhile making a few comments on de Blasio's recently-articulated housing and budget plans.
De Blasio continues to flog "affordable housing" as his signature initiative, supposedly to address the "tale of two cities" and income inequality -- although how construction of subsidized housing is supposed to alleviate income inequality is never actually spelled out. Here's what de Blasio had to say about housing on February 3 in his "State of the City" address:
[W]e are following through on a plan to build and preserve affordable housing on an unprecedented scale. We’ve committed to the construction of 80,000 new units of affordable housing by 2024. . . . Increasing the overall supply of housing is critical to serving New Yorkers at all income levels — and to assuring we can accommodate the work force who will continue to grow our economy. So we plan for the construction of 160,000 market rate units as well.
Let's put this in a little perspective. According to data from the NYC Comptroller's Office here, the number of housing units in New York City exceeds 3.2 million. De Blasio proposes 80,000 affordable units to be built over 10 years -- that's 8,000 per year, or 0.25% of current stock per year. Barely enough to notice. Except, as I have pointed out many times, we're talking about annual subsidies of something in the range of $50,000 to $100,000 per family for every family that gets in on the boondoggle. Plus, these families are then stuck in the apartment they get in their first draw, and remain as officially-designated second-class citizens for the rest of their lives.
And how about that 160,000 units of market rate housing? De Blasio gives no indication of where he came up with that one, or what if anything his initiatives will have to do with it. Does it sound like a lot? Actually, it's pitiful -- It's over 10 years, so about 0.5% of current stock per year. Those familiar with New York housing history know that in the decade of the 1920s New York built over 800,000 units of housing. That's 80,000 per year, five times the pace suggested by de Blasio, and in a city just over half the size (although rapidly growing). And that was without any of the subsidies, tax breaks, rent regulation, landmarking and any of the other crazy quilt of restrictions and incentives we deal with today.
Well, how about pensions? As with last year's speech by de Blasio, I can't find a mention of the subject. In his February 2015 Financial Plan, if you make it all the way to page 44, you'll find a chart that projects total pension expense for the City for the years 2015 through 2019 at basically a flat $8.5 billion per year. No explanation of how they come up with that, although they do say that future contributions have been somewhat reduced due to the good stock market returns of 2014. Over at the site for the New York City actuary, I can't find anything to back up these numbers. Are they paying any attention at all? I don't have any reason to think they are. But again, these things play out over a very long time horizon.