DE BLASIO | The Income Inequality Issue

Bill de Blasio with wife Chirlane and their son Dante.

September 4, 2013–It wasn't supposed to happen this way.

A year ago, the accepted wisdom was that Christine Quinn would at this point be leading the pack, followed by Bill Thompson. In the runoff, Thompson would attract most of the male and underpolled minority voters, and he would probably win.

It is hard to believe today that the Thompson-winning-the-runoff scenario will in fact pan out–now that Public Advocate Bill de Blasio has pierced the crucial 40 percent line in a Quinnipiac poll one week before the primary election. Thompson had a better chance in 2009, when he finished close behind Bloomberg, who arranged a  change in NYC law to allow himself to run for a third term.

If de Blasio does win more than 40 percent of the primary vote, he would walk to the November election without a runoff. Thompson is running second and Quinn third. The difference between second and third place in the poll is not significant. But the difference between first place (43 percent) and the average of #2 and #3 (19 percent) is highly significant. There is still the unknown of the underpolling of black voters, but a majority of those polled say they prefer de Blasio to Thompson.

Gail Robinson,

reporter for City 

Limits

What should we credit for de Blasio's surge in the polls?

• Seriously, one factor is Dante de Blasio's Afro and his warm words about his father in a television ad. He and his mother have pulled votes from Thompson. 
• But the New Republic thinks that de Blasio has picked out a perfect theme for NYC Democratic primary voters, i.e., the issue of inequality.

A brave reporter for City Limits, Gail Robinson, has attempted to dig into the issue and she contacted me for my thoughts. Certainly, incomes in NYC are unequal. I told Gail that my reading of economic history is that attempts to make incomes equal have worked best in a negative direction, by lowering the incomes of the top earners:

• The idealists who led the Decembrist revolt in Russia in 1825 wanted to raise the status and income of the serfs. They failed. 
• The Bolsheviks had a more manageable plan–force the rich farmers into collective farms. Stalin slaughtered the ones who protested. Worked perfectly. The farmers who survived became equally poor.

Ironically the case for income inequality in NYC that de Blasio is hammering at was best developed last year by the candidate who is at the bottom of the polls, John Liu. The staff of the NYC Comptroller's Office reported to him that:

• The top 1 percent of earners in NYC accounted for more than one-third of the income reported by NYC residents in 2009–twice the national share.
• These 34,500 households all earned at least $500,000. Together, they paid 43.2 percent of NYC's income taxes. Progressive taxation of income is alive and well in New York City.
• At the other extreme, 53 percent of households, those earning less than $30,000, owed no state or city income tax, although anyone working has to pay the Federal payroll tax. 

It is hard to make the case that the 1 percent in NYC are not paying their "fair share" of NYC income taxes.

Digression: The figures would look distinctly different from the Federal perspective, including payroll taxes. The 12.4 percent regressive FICA payroll tax on labor stops being collected at $113,700, though the smaller Medicare tax of 2.9 percent stays and a surtax of 0.9 percent kicks in at $200,000 or $250,000. The basic taxes are paid half by employer and half by employee. Payroll amounts to 85 percent of the income of the bottom 99 percent, vs. 40 percent of the top 1 percent, whose other incomes are on average less rigorously taxed than payroll is (the key point being that there is that $113,700 ceiling on incomes subject to the payroll tax).

When I was working at the NYC Comptroller's Office, a political aide to one of the Comptrollers asked me if I could write a report to be used for a speech in which the Comptroller would argue that rich people didn't pay their "fair share" of City taxes. I provided the data showing numbers like the ones above and the project was abandoned. It was picked up again by Liu.

The problem is not that a surtax on the rich would make them all leave New York. Only a few of the 34,500 households that make up the top 1 percent would leave. But they would not go gently into that good burb. Once officials in Connecticut, New Jersey or Florida (or Westchester) get wind of such moves, they would actively recruit movers. The departure of 500 households could seem like a mass exodus.

Restoring New York City's middle class remains an admirable goal. Taxes are too high on the working poor. But solutions must be sought in an intergovernmental context. When President Clinton imposed a surtax on people earning more than $200,000 a year, there was no moving or squawking about moving because no one could escape the tax except by leaving the United States.

If he wins the Democratic primary, Bill de Blasio will need to recalibrate his political antennae to the more conservative electorate of the General Election. Significantly higher taxes on the 1 percent will prompt some people to avoid the higher tax by moving out of NYC–i.e., by selling or giving up their home or office or both. If a lot of people decide to start doing this all at once, it will be bad for NYC real estate and business generally.

DE BLASIO | #1, Passes 43%, Quinn #3

Sept. 3, 2013–At 43 percent and rising, de Blasio may win the Democratic nomination outright, with no runoff.

Thompson and Quinn are competing for the runoff spot–if there is a runoff. Thompson is flat at 20 percent; he did not pick up any votes from the falling stars. The memory is still fresh of his close finish behind Bloomberg in Bloomberg's third election to the mayoralty. That is the closest Thompson has come to being Mayor.

Quinn fell below Thompson for the first time since the polling started in July.

Wiener and Liu are competing for the bottom spot, with 7 and 4 percent. Wiener's role in the election may have been to start off tall he surprises by coming in first at the beginning.

Bill de Blasio and his son (under

the Afro) Dante.

The Quinnipiac Poll cites a campaign ad featuring de Blasio's charming son Dante with a big Afro as helping pump up de Blasio's popularity. De Blasio not only leads Speaker Christine Quinn among women, he also leads former Comptroller Bill Thompson among black voters.

In a runoff, the projected vote as of the date of the poll would be
De Blasio over Quinn, 66-25 percent;
De Blasio over Thompson, 56-36 percent;
Thompson over Quinn, 59-33 percent.

With seven days left, only 24 percent of likely Democratic primary voters now say there is a good chance they will change their mind. The Thompson voters (61 percent, i.e., 12 percent of all those polled) and de Blasio voters (59 percent) are more loyal than Quinn supporters (56 percent).

De Blasio oriented his campaign for the Democratic nomination around the theme of income inequality–a good issue for the likely Democratic voters in New York, who tend to favor strongly progressive positions.

NYC MAYOR | Can Catsimatidis Get GOP Nod?

John Catsimatidis campaigning for the GOP nomination for Mayor
of New York City. Unexpected developments in the Democratic primary
are making people take a second look at GOP candidates. Photo: Cats site.

I was invited to breakfast meeting last week to hear from a candidate for the GOP nomination for mayor of NYC, John Catsimatidis.

There was no charge for the event. He doesn't need to raise funds. He ranks 132nd on the Forbes 400 and 458th on a global list of billionaires, with a net worth of $2 billion.

That may make him look like a piker by Bloomberg standards, but Cats doesn't need to take six-to-one matching funds from the City of New York. All NYC taxpayers should be grateful for that.

The thrust of Cats's pitch to the group of 75 people who came to hear him was that he was a self-made man who worked his way in a few years from being a grocery store clerk on 137th Street in Harlem, to running ten stores with a yearly volume of $25 million, generating income to him of $1 million. This has become the Gristedes grocery chain.

He has also made investments of approximately $1 billion in real estate, and owns interests in aviation and a Hellenic newspaper among other businesses. He has been a major player in getting the Greek Orthodox churches to work together. Anyone who knows about political fundraising in the United States respects the commitment of Greek-Americans to their candidates.

Cats describes himself as a GOP liberal–pro-business but interested in helping others, young and old. Sounds like Bloomberg. He is pro-safety and would reappoint Ray Kelly as Police Commissioner. He likes trade schools where graduates can go straight into jobs–electrical, carpentry, nursing, other health care services. He would bring in a Deputy Mayor who would recruit high-tech companies to come to New York City.

How would Cats differentiate himself from the other main GOP contender, Joe Lhota? He has the backing of former Mayor Giuliani and is more widely known as a government executive than John Catsimatidis.

Cats's response:

• Joe Lhota has a bad temper.
• He called Mayor Bloomberg "an idiot".
• He called the Port Authority police "mall cops".
• Lhota can't raise enough money to win. Cats would put his own money into the race. (Both Lhota and de Blasio will abide by spending limits to qualify for matching funds.)

L to R: Nick Sakellariadis, Harry Wilson and John Catsimatidis.

A mid-August Quinnipiac poll of likely GOP voters showed Lhota - former deputy to Mayor Giuliani and former MTA chairman - with 43 percent of likely primary voters, versus 37 percent for John Catsimatidis. The margin of error for this poll is 9.4 percentage points, which means that Lhota and Catsimatidis are in a statistical dead heat. Compared with the month before, Lhota lost 6 percentage points while John Catsimatidis increased his support by 2 percentage points. George McDonald is in third place with 9 percent.

My prediction is that Cats's potential as a candidate will be directly dependent on whether or not he does what he says he will do, i.e., hire people who are "better than me". He needs to rein in his impulses.

As an example, Cats promises to dig up all the concrete barriers (or, from a pedestrian point of view, islands). Citing the situation on 7th Avenue, he sees the battle as one between motorists and bicyclists. Sure, the Citibikes would have to be evicted from a lot of the areas where they are now protected by concrete islands. But pedestrians, especially seniors and children (for whom Cats has special concern), and parents of young children, and dog-walkers, have also become enamored of the greater ease of crossing the wide avenues with an island as a refuge on the way. The avenues are scary places to cross, especially for older people and people with disabilities. Those islands are lifesavers. Wholesale destruction of the islands would be a huge setback for NYC.

John Catsamitidis at this event and at others I have attended came across as hugely likeable. However, he needs someone to buy him a bigger-sized jacket and shirts with vertical stripes to disguise his Santa Claus figure. He should assemble a team of people with experience in different aspects of New York City government. He should announce who they are. Then he should listen hard to them before he announces with a wave of his hand what he is going to do. He had me eating out of his hand and then, like the 13th cuckoo of the cuckoo clock, he loses my confidence with a grand statement that appears to reflect his personal self-interest as CEO of a large grocery chain.

His chances of becoming mayor when Christine Quinn was the front-runner were remote. But NYC's business establishment is not going to be enthusiastic about a Bill de Blasio mayoralty and they will be looking for a Republican to support. When Cats first started campaigning, he did not convey seriousness about his candidacy - too ready with the wisecrack. He has taken a few steps towards being taken seriously, picking up a few allies. In the volatile atmosphere of the 2013 elections he just might be able to win the GOP nomination. In this crazy year, voters for the first time have to choose a successor to a 12-year mayor who looks better to many than the people who want to replace him. As the negatives of each of the candidates are ferreted out, Cats's prospects of winning in September and November have risen.

To find out more about candidates you hadn't paid any attention before, go to the Campaign Finance Board, which has an on-line Primary Election Voter Guide now available here or here.

DeBlasio's Leap to #1

De Blasio's hugely successful ad 

features his appealing son Dante.

De Blasio's spurt to a decided lead in the race for the Democratic nomination has huge implications. He is ahead in two independent polls - leading by 32% vs. 18% for Thompson in the NYTimes-Siena College poll (with Quinn #3) and by 36% in the Quinnipiac poll, which despite its name put Quinn in second place with 21%. The possibility that de Blasio could win 40% of the vote and avoid a runoff now presents itself.

De Blasio's appeal to the Democratic primary electorate has been twofold -

1. His "al Dante" (my term) campaign appeals to the minority vote (taking away from Thompson) by featuring his charming afro-topped son Dante giving him an unmistakably sincere endorsement as a father. De Blasio is now being attacked for using his son in this way. That may work - or it may be seen as a desperate move by his opponents and may backfire.

2. His fix-the-tax-mix approach appeals to the soul of the Democratic primary electorate by noting the high degree of income inequality in New York City and the fact that it has been increasing. Valid concerns, but hard to do much about at the local level. The biggest problem is that the Federal payroll tax is regressive, taxing the first dollar of payroll and cutting out at $113,700. NYC has hungry competitors to the north, west, east and south who have numerous Tax Foundation charts (both fair and unfair) to point to if NYC tries to fix income inequality on its own.

De Blasio leads the other candidates in every main category - among both men and women, both young and old, and both the optimists and pessimists about NYC. Of likely Democratic voters, the NYTimes-Siena College poll indicates that 45 percent view Quinn unfavorably (the de Blasio and Thompson figures are 17 and 16 percent), perhaps thanks to the well-financed anti-Quinn campaign.

I'm a Registered Democrat.  However, I try to be objective when I am asked by friends to comment on the implications of the new NYC polls for possible political outcomes. Quinn and Thompson have been keeping the tone of the campaign fairly somber. The new polls suggest this isn't working, and with ten days to go till the election, it's hard to change the strategy. Attacking de Blasio's son for supporting his father, or vice versa (#GoWiththeFro), doesn't sound to me a good way to turn the tide. If the battleground is who can do the most for young people and black youth in particular, it seems to me de Blasio wins.

What it means for November in my view  is that if the de Blasio lead in the polls continues to hold up, the GOP candidate (Catsimatidis and Lhota are the two most likely to be nominated) has a better chance now than any of them had any right to expect hitherto.

To find out more about candidates you hadn't paid any attention to  heretofore, go to the Campaign Finance Board, which has an on-line Primary Election Voter Guide now available here or here.

NYC Speaker Quinn's Five Fiscal Reforms

The New York State Financial Control Board (FCB), created in 1975 to oversee New York City's finances, sunsets in less than a year. City Council Speaker Christine Quinn this morning addressed the City's fiscal reporting (full text here). She has a five-point fiscal-reform program. All of her points are good ones. She is making one of them effective on her own authority (#4) and is recommending the others to the Mayor, Governor, state legislature and her own City Council colleagues:

1. More accountable independent public entities. The Transit Authority, the Health and Hospitals Corporation, the Economic Development Corporation and the NYC Housing Authority have increased their reporting. Oversight should be even stronger.

2. More accountable budgeting. Short-term debt should be watched because in 1975 the City had $6 billion of it. Oversight over City borrowing should be the responsibility of the City Comptroller. In addition, the city’s tax collection and spending numbers should be reported by the Mayor to the City Council, City Comptroller and the Independent Budget Office.

3. A “rainy day fund.” Surplus revenues can be diverted in good times for use in leaner ones. years. State legislative approval is needed for this. (The averaging of property assessments over five years is in itself a form of rainy day fund. The problem with actual rainy-day funds historically is that they are tempting - they get used up fast at the first sign of morning dew. The criteria for adding to and drawing from the fund need to be automatic.)

4. Disclosure of sponsors of capital projects. Names of council members will now be disclosed along with the capital projects they sponsor. Speaker Quinn is introducing this reform on her own authority.

5. Program budgeting. Department budgets need to be informative and linked to the Mayor's Management Report. This fifth proposal is of particular interest to me. When I was Chief Economist at the NYC Comptroller's Office, I attempted a reorganization of the City's budget - with the help of the Chief Accountant - to conform to the categories of the Mayor's Management Report.