Tag: City Journal

They Came, They Saw, They Taxed

Mary Pat Campbell

Link: https://www.city-journal.org/ny-legislators-pile-on-tax-burden

Excerpt:

The New York tax burden is already punishing enough. New Yorkers pay a greater percentage of their earnings to the state than residents of any other state. The total tax burden, on top of federal taxes, amounts to 12.79 percent of income, according to a new study. Opponents of the latest tax increases claim that the state’s punishing rates are responsible for driving high earners and businesses away, and indeed the state consistently faced massive levels of net outmigration to other states even before the pandemic. That migration has included thousands of jobs in areas like financial services. Among the firms that have relocated significant jobs away from the city are Credit Suisse, Barclays, UBS, and AllianceBernstein, according to a recent Forbes article. Goldman Sachs has moved a big-money management division to Florida, and hedge fund manager Carl Icahn has decamped there as well. The Empire State’s taxes are one reason that former hedge fund manager Leon Cooperman said, “I suspect Florida will soon rival New York as a finance hub.”

Author(s): Steven Malanga

Publication Date: 6 April 2021

Publication Site: City Journal

Death and Lockdowns

Mary Pat Campbell

Link: https://www.city-journal.org/death-and-lockdowns

Excerpt:

The number of excess deaths not involving Covid-19 has been especially high in U.S. counties with more low-income households and minority residents, who were disproportionately affected by lockdowns. Nearly 40 percent of workers in low-income households lost their jobs during the spring, triple the rate in high-income households. Minority-owned small businesses suffered more, too. During the spring, when it was estimated that 22 percent of all small businesses closed, 32 percent of Hispanic owners and 41 percent of black owners shut down. Martin Kulldorff, a professor at Harvard Medical School, summarized the impact: “Lockdowns have protected the laptop class of young low-risk journalists, scientists, teachers, politicians and lawyers, while throwing children, the working class and high-risk older people under the bus.”

The deadly impact of lockdowns will grow in future years, due to the lasting economic and educational consequences. The United States will experience more than 1 million excess deaths in the United States during the next two decades as a result of the massive “unemployment shock” last year, according to a team of researchers from Johns Hopkins and Duke, who analyzed the effects of past recessions on mortality. Other researchers, noting how educational levels affect income and life expectancy, have projected that the “learning loss” from school closures will ultimately cost this generation of students more years of life than have been lost by all the victims of the coronavirus.

Author(s): John Tierney

Publication Date: 21 March 2021

Publication Site: City Journal

Nudge Off: The pandemic has exposed the flaws in the belief that people need to be manipulated into making smarter choices.

Mary Pat Campbell

Link: https://www.city-journal.org/pandemic-has-undermined-our-sense-of-risk

Excerpt:

Perhaps most damaging, however, has been the idea arising in the last few years that people simply can’t be trusted to make sensible risk assessments—that they must be guided or even manipulated into making smarter choices. The idea that we need to be “tricked” into good behavior was pervasive throughout the pandemic. First, we were told masks weren’t effective, in what turned out to be an attempt to protect supplies for health-care workers. Last spring, we were told that coming into contact with others in just about any environment was unsafe, despite data showing the risk of outdoor transmission was very low. Over the holidays, rather than telling people that they should reduce their risks at holiday gatherings by taking steps like getting a test beforehand, public-health officials said that we should all just stay home, because tests can’t guarantee safety. Even today, the FDA refuses to approve cheap, at-home rapid tests without a prescription because the government doesn’t trust individuals to assess risks based on good, albeit imperfect, information.

The worst, most consequential failure in risk communication concerns the current vaccine rollout. The media constantly instruct us that, even weeks after receiving the second shot, it’s still not safe to socialize without masks. President Biden and Anthony Fauci have warned that we may not be able to resume “normal” life for another year. Fauci recently counseled against vaccinated people eating in indoor restaurants or playing mahjong together. Public-health officials today gave the green light for vaccinated people to gather together—but only after weeks of confusing and contradictory guidance.

Author(s): Allison Schrager

Publication Date: 8 March 2021

Publication Site: City Journal

A National Disgrace

Mary Pat Campbell

Link: https://www.city-journal.org/federal-budget-process-disaster-in-waiting

Excerpt:

The Budget Control Act of 1974 is the most misnamed congressional act in American history. Far from “controlling” anything, its passage caused the federal budget process to spin out of control. In the six years preceding the act, with the Vietnam War raging, annual deficits averaged $11.3 billion. In the first six years after the Budget Control Act, with the war over, they averaged $54 billion.

What happened? The Budget Control Act cut the president out of the budget process by removing his political leverage, leaving Congress in near-total control of the budget. Congressmen have a strong incentive to bring home the bacon, both to their voters and, increasingly, to their donors. Logrolling—you vote for my project and I’ll vote for yours—is, all too often, how Congress works.

Before 1920, there was no unified budget process. Executive departments simply submitted their budget requests directly to Congress. What kept spending under control was a strong political consensus across both parties that the budget should be balanced if at all possible. That idea only began to erode in the 1960s, with a misuse of Keynesian theory.

Author(s): John Steele Gordon

Publication Date: 19 February 2021

Publication Site: City Journal

State and local government revenues have recovered from the pandemic, and further federal aid is unnecessary

Mary Pat Campbell

Link: https://www.city-journal.org/state-and-local-revenue-has-rebounded-to-pre-pandemic-levels

Excerpt:

“California is not only poised for recovery, but we’re seeing real signs of recovery in our state,” Governor Gavin Newsom announced in early January, as he unveiled a state budget with record spending fueled by a $15 billion budget surplus. Yet two weeks later, Newsom sent a letter to President Biden expressing support for his plan to give an additional $350 billion in aid to state and local governments.

Similar stories have played out in other states. “We’re going to need a robust federal support system to help our states and economies recover beyond the federal CARES funds that expire at the end of the year,” said Wisconsin governor Tony Evers in November. Yet within weeks, the state was projecting a budget surplus, and by January it had revised that estimate up to $1.8 billion. Rather than drawing on these reserves, Wisconsin added to its “rainy day” fund, the balance of which is expected to hit nearly $1 billion this year.

Author(s): Noah Williams

Publication Date: 11 February 2021

Publication Site: City Journal

False Hero of the Pandemic

Mary Pat Campbell

Link: https://www.city-journal.org/cuomo-under-fire-for-hiding-nursing-home-deaths

Excerpt:

Between March 25 and May 10, 2020, an advisory from Cuomo’s Department of Health (DOH) compelled nursing homes to readmit hospitalized Covid-19 patients without checking if they still had active infection. Health experts cautioned that the policy could lead to additional deaths by introducing infected people into closed facilities where those most vulnerable to the disease—the elderly and infirm—live. Cuomo’s responses ranged from the devil—aka the Trump administration—made me do it; to we didn’t force anything—facilities had discretion to turn down admissions; to “nothing to see here”—the policy didn’t increase the number of deaths; to “who cares” where they died.

Cuomo repeatedly and falsely claimed that the policy was directed by federal guidance. A July DOH report (now revised) also claimed that the nursing-home admission policy was following federal guidance that homes “should accept residents with COVID-19.” In fact, the federal guidance was permissive, not proscriptive: “A nursing home can accept a resident diagnosed with COVID-19 . . . as long as the facility can follow CDC guidance for Transmission-Based Precautions” (emphasis added).

Author(s): Joel Zinberg

Publication Date: 16 February 2021

Publication Site: City Journal

Cuomo Unmasked

Mary Pat Campbell

Link: https://www.city-journal.org/cuomo-hid-ny-state-nursing-home-deaths-in-spring-2020

Excerpt:

Cuomo ducked press demands for nursing-home mortality data throughout 2020, even as every other state made the information public. While New York admitted to about 7,000 nursing home deaths, informed estimates put the real count at around 12,000; the state refused to confirm the numbers. Last month, Attorney General Letitia James released a report acknowledging that the real death toll was close to 13,000. In reaction to this news, Cuomo snapped, “Who cares? 33 [percent], 28 [percent]. Died in a hospital. Died in a nursing home. They died.”

What this episode reveals is Andrew Cuomo’s massive egotism. He was elevated by a fawning national media into a preposterously salvific role last spring and summer. Throughout the course of the pandemic, the governor gave daily televised briefings in which he hailed his own performance as a beacon of leadership. Cuomo delivered such apothegms as, “It’s going to be hard, there is no doubt. But at the same time it is going to be OK.” He also made a point, continuously, of calling the novel coronavirus the “European virus,” presumably in counterpoint to Trump’s calling it the “China virus,” though it is widely recognized that the virus originated in China, even if some infected people may have caught it in Italy before bringing it to America.

Author(s): Seth Barron

Publication Date: 12 February 2021

Publication Site: City Journal

Deficits Don’t Matter—Until They Do

Mary Pat Campbell

Link: https://www.city-journal.org/deficits-dont-matter-until-they-do

Excerpt:

The big misunderstanding here is that, though structural changes are certainly persistent and less responsive to policy, they are not permanent. Conditions are always changing. Productivity transforms economies, and so do shifting age structures and demographics. Foreigners are already losing their appetite for U.S. debt; much of it is now bought by the Fed or by banks required to hold it for regulatory reasons. Thus prices may not be as revealing as we think.

And we can’t be sure that debt monetization won’t unleash inflation or higher interest rates. The Fed buys bonds from the banks and credits them with reserves. Eventually banks may want to spend their reserves, and the Fed will need to sell some bonds—which could increase interest rates, or increase inflation, or both. The world could also discover a new safe asset, like German stocks. For many years, gold was considered the only safe asset, and it was unimaginable that a fiat currency could be safe.

Structural changes happen more often and much faster than people realize. We could come out of the pandemic in a new regime of less trade and more reliance on tech that could change debt and price dynamics in ways that we don’t yet understand.

Author(s): Allison Schrager

Publication Date: 12 February 2021

Publication Site: City Journal

Cities and regions are betting that working from home is the next big thing in economic development.

Mary Pat Campbell

Link: https://www.city-journal.org/cities-betting-big-on-remote-work-trend

Excerpt:

After decades of expert predictions that technological change would reshape the nature of employment, in just ten months the Covid-19 economic shutdowns have made full-time corporate employment from home a reality for tens of millions of American workers. Just how many of these workers will remain employed at home after the pandemic ends remains an open question, but it’s clear that many workers have become convinced that there’s little reason to go back to the old model of everyone in the office all the time. In a Gallup poll in the initial stages of the shutdown last April, 46 percent of workers said that they were working full-time out of their homes. Millions have since gone back to the office, but 33 percent of respondents told Gallup that they were still working from home last fall. More to the point, about a third of all those who worked remotely told Gallup that they would like to do so permanently, even after the pandemic. In another poll, taken by the consulting firm PricewaterhouseCoopers, 29 percent of workers said that they wanted to work permanently from home.

Author(s): Steven Malanga

Publication Date: 1 February 2021

Publication Site: City Journal