Five Borough Report June 2003
Beyond Fiscal Crisis
the bursting bubble of the new economy, the stagnant and now deflating real
economy has ravaged city and state finances nationwide. Plummeting revenues
combined with expanded debt obligations have left governments with enormous
and catastrophic budget shortfalls.
place of a large surplus and the promise of unlimited growth, we now have
austerity, cutbacks, layoffs, price increases, etc., all of which are
imposed in the name of fiscal necessity. But this is yesterday’s news.
it is clear that spending cuts that seem impossible either to prevent or to
accept represent only the beginning of a deep and lingering budget
nightmare. More than 30 states, including New York, California,
Pennsylvania, Arizona, Washington, Wyoming and Alaska are expected to
experience long-term budget shortfalls for years into the future.
and the labor movement are unprepared to oppose this bleak scenario. What
is really a crisis of economic planning, allocation and development has
been mislabeled and misperceived to be a fiscal crisis. America does not
lack the financial capacity to address its domestic priorities, but our
affairs, debates and organizing efforts are conducted as if we do.
resources will be needed to rebuild our infrastructure and to restart our
productive economy. These could be made available through demilitarization
(see accompanying article, Building
Weapons of Mass Construction) and by taxation of speculation.
Finding the Resources
order to raise much-needed state and city revenues from non-Federal
sources, taxation of speculative activity must be embraced to be as
legitimate as raising the cost to shop, smoke, cross the bridge, or take
the subway. Examples abound.
a cooperative tri-state tax on all equity transactions, currency swaps,
derivative deals, securitizations, and other financial products initiated,
undertaken or routed through the metropolitan area, would be an obvious,
practical and substantial source of funding for social programs in New
York, New Jersey and Connecticut. Collection and sharing of these taxes
could be governed via interstate pacts and any state could choose to
all of the wealth generated by New York City’s biggest industry, real
estate, it does not pay nearly its fair share for the upkeep of the City.
There is no reason why a large real estate transaction that represents a
change of title only (which is most often the case), could not be taxed at
a significantly higher rate than a purchase or re-financing that results in
the actual construction or rehabilitation of a building.
and many other potential taxes on speculative activities are both viable
and enforceable. For too long, ingrained ideology, misplaced support and an
unspoken compact have allowed serious consideration of speculation taxes to
be placed strictly off limits. Now, we need to discuss, debate, and analyze
the issue with integrity, insight, passion and persistence.
forced austerity and a permanent war footing, the room available for a
meaningful and effective progressive political response has narrowed.
Without new, equitable and significant sources of non-Federal revenue,
further contraction and impoverishment of local government is inevitable.
military procurement and unchecked speculation re-enforce the need and
possibility of the other. They destabilize and weaken. Both are
incompatible with economic development, shared prosperity, and social
achieve a New New Deal for New York and America, our task is to bring these
destructive activities under control.