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Mayor Cuts Wrong Areas

To the Editor:

The Mayor's proposed tax increases and budget cuts are unnecessary and will prove harmful to the New York City economy.

Any escalation of taxes combined with canceling promised homeowner rebates is bound to have a deleterious effect on consumer spending and, consequently, a drop in sales volume at stores and restaurants, mushrooming into layoffs and closings. That is the so-called multiplier effect, which was responsible for the 1937-1938 recession in the United States, which did not recover until rearmament spending picked up in 1940.

If the Mayor examines his own New York City Comprehensive Annual Financial Reports (CAFR) carefully, he will find that city contract costs surged from $5.6 billion in 2000 to $8.8 billion in 2007, city pension contributions soared from $615 million in 2000 to $4.7 billion in 2007 and the city workforce, which totaled 250,856 in 2000, rose to 280,649 in 2008. Mayor Bloomberg should carefully examine these financial reports as part of the oversight obligations of his office.

Substantial savings are easily achievable. In contracting, for example, Public Advocate Betsy Gotbaum as Commissioner of Parks during the David Dinkins administration made a study comparing the costs of tree-pruning between contractors and civil service employees. Gotbaum found the civil servants did the job at a cost of 75 percent of what the contractors charged the city.

Gotbaum was told to "lay off" but her study leaked out and appeared in the New York Times. Properly implemented, the Gotbaum study could save the city conservatively $4 billion annually. With respect to pensions, calling a halt to the five city pension funds' trustees' practice of speculating in the stock market might bring about an additional $5 billion in savings. The 2007 CAFR showed that the $26.5 billion invested in bonds returned almost $1.8 billion in interest payments while the much larger $61 billion in speculative investments, i.e. stocks, brought in only slightly more than $2.0 billion in dividends.

GEORGE N. SPITZ