Crains New York - April 22, 2013 - (Page 11)

Straight talk needed on cutting deficit O nce upon a time not so long ago,the federal budget was running a surplus. President Bill Clinton accomplished this good deed, bequeathing to his successor, George W. Bush, black ink for years into the future. When Federal Reserve Chairman Alan Greenspan testified in January 2001 before Congress, he cited projections by the Congressional Budget Office that the surplus in fiscal year 2011 would be $500 billion. “The highly desirable goal of paying off the federal debt is in reach before the end of the decade,” Mr. Greenspan said. But, he warned, running surpluses after the debt is paid off implies “a major accumulation of private assets by the federal government.” To avoid this terrible turn of events, he advised reducing surpluses by cutting taxes,not raising spending. Mr. Bush happily obliged. The Economic Growth and Tax Relief Reconciliation Act of 2001 cut revenue from 2001 to 2011 by a total of $1.35 trillion, according to CBO estimates at the time. He didn’t stop there. He undertook wars in Iraq and Afghanistan without proposing measures to pay for them. He supported enactment of Medicare prescription-drug benefits, which the CBO estimated would have a net cost of $395 billion over the 2004-2013 period. ALAIR TOWNSEND Mr. Bush was an overachiever in addressing the potential problem Mr. Greenspan worried about. The surplus morphed into a deficit in the first budget for which he was responsible. Even while the Fed chairman was testifying about the possibility of eliminating all federal debt,the CBO and others were warning that the fat For Bloomberg, a dish served ice cold N o City Hall regime has been more appreciative of and helpful for private investment in New York than the Bloomberg administration. One would think that spending $1 billion to renovate Madison Square Garden, creating hundreds of jobs and keeping one of the world’s most famous arenas competitive would earn a thank you. Instead, the mayor-controlled City Planning Commission is giving MSG a hard time over renewal of the permit it needs to operate the Garden. Oh, I forgot: James Dolan runs the Garden. It’s payback time. Remember 2005, when the Bloomberg administration was using every lever at its command to build a stadium on the West Side in time to host the 2012 Olympics— an effort that would jump-start development in all five boroughs and solidify New York’s position as the leading city in the world? Mr. Dolan, who saw the stadium as a potential rival to the Garden, threw untold millions into the effort to frustrate the mayor’s ambitions. For the first time in the city’s history, community groups opposed to a project suddenly had money for TV ad campaigns. He even refused to al- GREG DAVID low pro-stadium ads on Cablevision. The mayor called him “selfish, uncooperative and the worst businessman in the city.” Mr. Dolan replied in kind. He won, too, and the years would end all by themselves. The chief culprits would be the Social Security and Medicare costs when baby boomers began to retire, the increases in longevity that allow people to retire for longer periods and rapidly rising health care costs. The CBO projected that health and retirement benefits would grow to unsustainable levels sometime around 2020. The train was hurtling down the track. So here we are, with a deficit of nearly $1 trillion. Before sequestration, the CBO estimated that “by 2023,if current laws remain in place, debt will equal 77% of GDP and be on an upward path.” Several points should be clear to any unbiased observer.We can’t solve this problem by spending cuts alone or tax increases alone. The solution isn’t whacking Head Start; we must lower health care spending and raise revenue.Those facts make GOP and Democratic members of Congress crazy, because they challenge their basic political postures. Listen to the caterwauling from Democrats about the president’s proposed cuts in Social Security and Medicare.Listen to the Republican refusal to consider further inroads in the Bush tax cuts or other revenue-raising efforts. Unemployment is stubbornly high, and the economic recovery is weak. Many families are suffering. There is good reason to be concerned about any measure that would crimp job creation in the short term. But there is no good reason not to talk frankly about where we are and where we’re going, and the extreme danger of not planning for long-term fixes. scars have never healed. The mini-controversy over the Garden is a little complicated, but it can be boiled down to this: To construct the Garden on 33rd Street, the beloved old Penn Station was torn down, and many people regret that decision as passionately today as they did then. Today’s Penn Station is no one’s idea of a good facility. To right these wrongs, many well-meaning people are desperate to find some way to move the Garden and reimagine Penn Station. Renewing the Garden permit for a limited time,say 10 years, would provide a cudgel to do this. The mayor knows this is all crazy talk. There have been countless schemes over the past decade to move the Garden, many of them involving the still-moribund Farley Post Office across Eighth Avenue, and all have failed because they are simply too costly and too impractical. He also knows that the Dolans will demand the sun and the moon to move—a point that the advocates of moving the Garden have ignored. The city subsidies for Yankee Stadium, Citi Field and the Barclays Center would pale in comparison. In the fiscally constrained future in Washington, Albany and at City Hall, there will be no way to pay for a new Garden or even a new Penn Station. So why not have a little satisfaction on the way out the door nonetheless? Remembering 2005 and what might have been, I don’t begrudge the mayor, either. April 22, 2013 | Crain’s New York Business | 11 http://www.crainsnewyork.com/podcasts http://www.crainsnewyork.com/pulse http://www.crainsnewyork.com/pulse

Table of Contents for the Digital Edition of Crains New York - April 22, 2013

Crains New York - April 22, 2013
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
REAL ESTATE DEALS
OPINION
ALAIR TOWNSEND
GREG DAVID
REPORT: GREEN NEW YORK
THE LIST
FOR THE RECORD
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - April 22, 2013