Please Defund New York!

I live in New York City. The City government in New York — and to a lesser extent, the government of New York State — are currently in severe financial distress as tax revenues have plunged in the aftermath of the coronavirus and of state-imposed economic lockdowns. Both the City and State governments are loudly demanding bailouts from the federal government to cover all their financial shortfalls.

Do you think that, as a New York City resident, I would want the federal government to meet these demands and bail out the City and State? Absolutely not! They shouldn’t get one additional dime of federal taxpayer money.

The best thing that could happen to New York City and State would be to get zero additional federal bailouts and be forced to get some of their ridiculous costs under control for the first time in human memory.

It was back in mid-May that the House passed the so-called “HEROES Act,” a $3 trillion blow-out spending bill on top of the three previous coronavirus blow-out spending bills. According to an analysis in Forbes on May 15, the “cornerstone” of that bill was some $875 billion in funding to cover shortfalls in state and local government revenues. Forbes called the $875 billion “a major Democratic priority that has been vehemently opposed by Republicans.”

Perhaps you are wondering why this particular item of funding may be a priority for Democrats but opposed by Republicans. If so, consider this: Republican-governed Florida and Democrat-governed New York are two seemingly comparable states, with similar populations. Indeed, Florida’s population has recently surpassed that of New York, and now stands at over 21 million (and growing) to New York’s less than 20 million (and shrinking). Yet Florida consistently shows up New York in government competence. Florida’s state and local government spending is actually only about one-half that of New York, and Florida has no state income tax.

Like every state, Florida has had some decline in state revenue in the aftermath of the virus. According to a piece in the Sarasota Herald Tribune on August 14, Florida state economists were projecting a loss of $5.4 billion in state revenue as a result of the virus, of which $3.4 billion would occur in the current fiscal year, and the remainder next year. For comparison, the total Florida state budget for the current year is $92.2 billion. Florida is clearly in a position to weather the virus crisis with some modest trims in already disciplined state spending, and without federal bailouts.

New York State’s annual budget is now $177 billion; and New York City is spending an additional $98 billion. On August 6 New York’s Governor Cuomo demanded that the federal government hand over some $30 billion in bailout money, failing which New York would make what he called “devastating” budget cuts.

It’s funny, but as you can see, even after $30 billion in budget cuts, New York State would still be spending far, far more than Florida spends — $147 billion to Florida’s $90 billion or so, and Florida has the larger population. Why exactly should the taxpayers of Florida hand over a dime to bail New York out of its fiscal problem?

It is now almost four months after the House passed the “HEROES Act,” but the bill has failed to move in the Senate. Apparently, negotiations continue. Yesterday, President Trump doubled down, signing a Memorandum directing all federal agencies to “review” federal funding going to jurisdictions like New York that “permit anarchy [and] violence”:

“To ensure that Federal funds are neither unduly wasted nor spent in a manner that directly violates our Government’s promise to protect life, liberty, and property, it is imperative that the Federal Government review the use of Federal funds by jurisdictions that permit anarchy, violence, and destruction in America’s cities.”

Needless to say, Chuck Schumer immediately went apoplectic. As for Cuomo, here is his response as reported in USA Today:

New York Gov. Andrew Cuomo angrily responded late Wednesday to President Donald Trump's threat to "defund" New York City and other Democratic cities that have seen violent protests, warning Trump he would "need an army" if he returned to the city of his birth.

Sadly, I suspect that much of this is negotiation posturing, and that some compromise will be reached. But meanwhile, I urge President Trump and the Republican Senators to hold firm. Any money you hand over to New York will just go to fund bureaucratic parasites, and will only perpetuate New York’s wildly excessive cost structure. This is the one chance we will have this generation to get some of New York’s costs under control. Let’s not blow it.