Can a Liberal Mayor Be Financially Responsible?
The simplest path to a career in the punditocracy is via the trick of pretend contrarianism. I say “pretend” because it’s really a political game of mirrors. The idea is to appear contrarian while simultaneously embracing an established media narrative. The crucial line to walk is allowing oneself to go beyond available evidence while at the same time confirming the unspoken prejudice of media and political insiders. When it comes to economic issues, this is rarely a challenge, as few journalists got beyond Econ 101 in college. Most simply repeat our conservative conventional wisdom, which demonizes progressive tax rates, government services and, most of all, unions.
Nicole Gelinas, a fellow at the conservative Manhattan Institute, may be a cautionary tale in this category. She recently rocketed from near-total obscurity to local media stardom on the basis of her “sky is falling” analysis of New York Mayor Bill de Blasio’s deal with the teachers union and its alleged implications for the city’s budget and fiscal future—only to be discredited just as quickly when contrary evidence inconveniently showed up.
Gelinas, who boasts a BA in English literature (and no graduate degrees), managed to tally up an op-ed in The Wall Street Journal (with Fred Siegel) titled “Taking New York Back to the Bad Old Days” and another in City & State called “De Blasio’s Fiscal Bubble.” She was quoted in The New York Times calling the deal “troublesome and unprecedented,” and in Politico’s “Capital Journal” calling it irresponsible. She has also appeared as a solo guest on WNYC in a lengthy interview with veteran host Brian Lehrer, where she opined about de Blasio: “The bottom line is, these are his deficits that he has created.”
The “return to the bad old days/giving away the store to the unions” meme was a feature of the mayoral election campaign, whispered by aides of the outgoing mayor, Michael Bloomberg (who failed to come to terms with the teachers union for nearly the last five years of his twelve-year reign), and, of course, Republican candidate Joe Lhota, whom de Blasio defeated by almost a fifty-point margin. It has been repeated ad infinitum by conservative pundits and Republican politicians who drop in to the city regularly to raise money. It keeps smacking its head against reality but somehow continues on, bloodied but unbowed.
Here’s the reality. According to the Fiscal Policy Institute’s James Parrott, de Blasio “inherited an unprecedented challenge: every single one of over 150 labor contracts was unsettled, some for over four years.” The teachers’ deal includes what Parrott terms “modest, below-inflation wage increases over a seven-year period setting a new pattern, with much of that paid for through employee healthcare savings.” The contract promises two 4 percent back-pay increases, based on the pattern negotiated with other unions by Bloomberg at the time of the 2008 financial catastrophe. The increases from the last round will be spread out over the next four years in 2 percent increments, and new increases totaling 10 percent in six installments, plus a $1,000 payment following ratification. The union announced on June 3 that the contract was ratified with 77 percent of its members voting in favor, while a vocal minority denounced the deal as too austere. De Blasio, moreover, secured a promise from the city’s Municipal Labor Committee to find $3.4 billion in healthcare savings over the next four years to help pay for the raises. The agreement is enforceable through binding arbitration, if necessary. Taken altogether, according to Parrott, it is “by far the most significant labor deal in city history, potentially affecting the entire 350,000-person unionized city workforce for seven years, and 150,000 of those workers for an additional two years going back to 2009 and 2010.”
The business community appears quite pleasantly surprised. As Capital New York reported, Kathy Wylde, president and CEO of the powerful Partnership for New York City, said after a meeting between her group and the mayor, “The teachers’ contract is a pattern that the city can support if we continue to enjoy robust economic growth.” Carol Kellermann of the Citizens Budget Commission said, “The prospective raises are fair and reasonable.” She quoted Marc Shaw, a veteran of the Giuliani and Bloomberg administrations and a self-described “fiscal conservative,” as happily terming the contract “fairly conservative—as in not breaking-the-bank expensive.”
Such talk, you may say, is cheap, but so too, it turns out, are the city’s borrowing terms and this is even truer after the deal’s announcement than before. The bond agencies have all given the city’s paper strong ratings, and in its most recent round for long-term loans, the city received an interest rate well below its March rate, before the deal had been announced. Note also that de Blasio, the alleged left-wing radical, has achieved this level of fiscal health in a manner that contrasts decidedly with that of his predecessor, Bloomberg, who, upon taking office, attempted to raise property taxes in the city by 25 percent and was forced by his City Council to settle for a mere 18.5 percent.
There’s no doubt that de Blasio is lucky, too. New revenue forecasts are $6 billion higher for the coming four years than they were just six months ago. These may improve even further on the basis of de Blasio’s success in setting a course for city employees likely to last a full seven years, as investors almost always embrace stability. It’s easy to make fun of Gelinas for betting so heavily on a horse still stuck at the starting gate, but a better question to ask is: Why was her flawed analysis so widely embraced in the media? Is it merely the mindless embrace of contrarianism in all matters, or could it be that a mayor who calls himself “unapologetically progressive” and has made addressing economic inequality his central priority is simply assumed to be in the business of giveaways to public unions, evidence be damned?
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