How Liberalism Ruins Economies: New York State

New York State is a Detroit-like wasteland thanks to Liberal rule.

New York Seal

The Deseret News has run an eye-opening story: “How high taxes and regulation are killing one of the most prosperous states in the nation.”

Upstate New York is becoming Detroit with grass.

Binghamton, New York — once a powerhouse of industry — is now approaching Detroit in many economic measures, according to the U.S. Census. In Binghamton, more than 31 percent of city residents are at or below the federal poverty level compared to 38 percent in Detroit. Average household income in Binghamton at $30,179 in 2012 barely outpaces Detroit’s $26,955. By some metrics, Binghamton is behind Detroit. Some 45 percent of Binghamton residents own their dwellings while more than 52 percent of Detroit residents are homeowners. Both “Rust Belt” cities have lost more than 2 percent of their populations.

Binghamton is not alone. Upstate New York — that vast 50,000-square mile region north of New York City — seems to be in an economic death spiral.

The toxic combination is modern political liberalism powered by a major port city that thinks it is immortal. It is not immortal. It needed a bailout in the seventies and will eventually demand one again. Hopefully there will be the political will to tell the parasite to drop dead.

But in the meantime, it provides protection to Albany to stay the course. No one cares about the countryside because they have the Big Apple—a gilded distraction from the loathsome situation in the rest of the state.

“Basically what you’ve got in New York is a state tax code and regulatory regimen written for New York City,” says Joseph Henchman, vice president for state projects at the Tax Foundation in Washington. “Legislators say, `Look, New York is a center of world commerce. Businesses have to be here. It doesn’t matter how high we tax them.’ I hear that a lot. But when you apply that same logic to upstate, the impact is devastating.”

The article covers several facets of New York’s arrangement including the way they have arranged their government to be a self-perpetuating cartel of corruptocrats.

The economic woes of the Empire State trace back to Albany, and a state government that is legendary for its ability to tax and spend. Strict election laws insulate incumbents of both parties, making the state legislature the longest-tenured in the nation. Petitions to put insurgent candidates on the ballot require tens of thousands of signatures and are regularly rebuffed by the courts on technical grounds. Ballot initiatives that have led to tax reform in other states are not permitted. Politicians are protected from voters and have built a spending machine unmatched in virtually any other state. New York, despite its shrinking population, spends more money than all but a handful of states.

One of the laws this legislature has passed is a requirement that all counties and cities contribute to Medicaid. New York is the only state that does this to its local governments. The result is a horrible burden and a nightmare of corruption.

“New York spends $53 billion to serve 5.6 million people, which is twice the national average,” finds a 2012 report from the New York State Department of Health. That is $9,800 per recipient in a state where 40 percent of the population under 65 is on Medicaid. Meanwhile, California, with double the population, spends only $47 billion while serving 11.5 million people. That is $4,100 per recipient — less than half the New York rate.

Even so, New York’s Health Department admits that California’s Medicaid program, Medi-Cal, provides far superior service.

Governments in New York’s hinterland groan under this unique taxing burden. “A little more than half our $23 million property tax revenues go to Medicaid,” says R.C. Woodruff, clerk to the board of supervisors in rural Chenango County. “That money goes directly to Albany. We have absolutely no control over how it’s spent.”

The city of Buffalo tried to disincorporate itself in 2004, so it could shift its Medicaid burden onto surrounding Erie County. The state wouldn’t allow it. It’s probably just as well, say county officials. “Our entire property tax goes to supporting Medicaid,” says Erie County executive Mark Poloncarz.

This gives you a real idea why many New Yorkers want to secede from the state.

What are the chances that the Medicaid disbursements will ever be really audited?

There is a lot more in the article. It is a frightening glimpse of where liberalism (in both parties) wants to take us.

(hat tip: Gateway Pundit)