November 22, 2012 | 363 views
So, what’s the problem? The economy
I believe David Brooks described what we are witnessing best in a recent New York Times column dealing with two apparent economies. One, he named the ‘tradable sector’ that requires continuous innovation and streamlining to survive. Economy II takes into consideration primarily “government–sector’ entities that do not have the sword of Damocles hanging over them and as a result “tend to get bloated and inefficient over time.” He cites health care spending, which has increased twice as fast as the G.D.P with no comparable gains in health outcomes and, education spending/results as two prime examples. He concludes, the “bloated Economy II has become a burden that Economy I, can no longer afford.”
On October 12th, the state comptroller released an assessment of the state’s financial condition that can be used to assess the ability of the government to meet current and future financial and service obligations.
The report identifies a wide range of serious concerns, including evidence that while tax receipts have increased $17.4 billion since 2008, spending during the same period of time, almost doubled the rate of inflation.
New York has the third highest combined State and local taxes as a percentage of personal income in the nation with local taxes ranking first. New York relies more on personal income taxes as a source of revenue (our share 40 percent) than most states.
This report is not gaining the attention it should. Newsday posted a ‘clip’ notice with the heading “State Spending on New Yorkers is down.” The amount is 1 percent from the prior year, to a current level of $133.5 billion. No mention was made of $3.8 billion of borrowing used to offset current spending; or, projected budget gaps of $3.6 billion and $4.4 billion in the fiscal years starting in 2014 and 2015, respectively.