Following 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.
In 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.
Today, 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.
Progressives
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.
Considerable
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
In 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.
Implementing 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 participate.
For 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.
These 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.
With 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.
Unlimited
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 justice.
To achieve a
New New Deal for New York and America, our task is to bring these destructive
activities under control.