New York Governor Warns Of
Economic Crisis
Mike "Mish" Shedlock
Jul 30, 2008
The New York Times is
reporting Paterson
Warns of Economic Crisis.
In a rare, brief televised
address, Gov. David A. Paterson announced on Tuesday afternoon
that he would call the Legislature into an emergency session
on Aug. 19 to address what he called an economic and budget crisis
confronting New York State as a result of plummeting revenues
and rising costs.
The new governor avoided
any mention of new taxes, instead arguing forcefully for austerity.
He said he was calling on the Legislature to reduce the size
of the state workforce; cut agency spending; reduce property
taxes for homeowners; aid New Yorkers with the soaring costs
of home energy; and even consider public-private partnerships
that would take over state assets.
"Revenues are dropping
dramatically," the governor added. At the start of May,
the state budget office projected a cumulative deficit of $21.5
billion over the next three years. Now, just two months later,
that estimate has risen to $26.2 billion - "a staggering
22 percent increase in less than 90 days."
Mr. Paterson offered another
example of the rapid deterioration in the state's finances. In
June 2007, he said, the 16 banks that pay the most on their business
profits remitted $173 million to the state treasury. "This
June, just a month ago, they sent us $5 million - a 97 percent
decrease," he said.
He vowed, "We will
cut spending. Government will learn to do more with less."
He called for help from business and labor leaders and New York's
representatives in Washington to support him.
He added, "It is time
for New York and other governments to cut up our credit cards.
The era of 'buy now and pay later, and later' is over. The faster
we address this crisis, the faster and stronger we will emerge
from it."
Era of 'buy now and pay later, and
later' is over
New York is the second state
in five days to declare a fiscal emergency. See Schwarzenegger
Announced Intention To Slash State Workers' Pay Till Budget
Passes for more on the crisis in California.
The most stunning thing about
Paterson's announcement is how rational it is. He is not begging
Washington for handouts, asking for higher taxes, or praying
for miracles.
This is pretty stunning too:
In June 2007, the 16 banks that pay the most on their business
profits remitted $173 million to the state treasury. "This
June, just a month ago, they sent us $5 million - a 97 percent
decrease."
Unlike Schwarzenegger who has
for years resorted to floating bond or proposing various lottery
schemes to "fix" the budget, Paterson has the correct
solution.
Of course Schwarzenegger has
at times vowed to "cut up the credit cards" but in
the end has delivered nothing but promises and schemes of floating
$500 billion in bonds to "rebuild California the way it
needs to be rebuilt".
Can Paterson Deliver?
I hope Patterson can, but the
state legislature is likely to resist all the way.
The Right Mindset
- Cutting spending
- Learning to do with less
- Austerity
- Reduce the size of the government
workforce
- Reduce property taxes
Patterson had the courage to
say exactly what I asked Senator Obama to say in Open
Letter To Obama. However, saying these things is one
thing, and doing them is another.
Regardless, of whether or not
all of those things happen, some forced austerity is all but
assured. The same goes for California as well.
And the word that describes
the process best is the one word nearly everyone is in denial
over: deflation.
Jul 29, 2008
Mike Shedlock / Mish
blog: http://globaleconomicanalysis.blogspot.com/
email: Mish
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