Manhattan Institute Economist: Bloomberg Budgets Like It's 1992, Paterson Doesn't

“Michael Bloomberg is budgeting like it’s 1992 or 2002,” said Nicole Gelinas, an economist a financial analyst with the conservative Manhattan Institute.

After looking over Michael Bloomberg’s plan to help close the budget gap, Gelinas said the mayor is making small budget changes “around the edges, trying to raise taxes marginally.” In essence, she said, he's waiting “until everything gets better. That could be catastrophic.”

(She also laid out the argument in the Wall Street Journal last weekend.)

Gelinas said the economic turmoil the city faced in 1992 and 2002 was difficult, but at those times, it was clear Wall Street would roar back to fuel the city’s economy.

This time, it’s different, with major financial institutions completely wiped out and others turning from investing banking firms into more traditional holding banks, which generate less profit.

“It seems reasonable to think that he thinks this is going to get better in two years,” said Gelinas.

The executive with the real fiscal discipline in New York, she said, isn't the mayor, but the governor.

“David Paterson has been very brave in saying we need to ask the unions to open up their contracts,” she said. “Instead [at City Hall], we have the mayor signing new contracts with four percent raises, which makes no sense. The mayor could do nothing and have them work under their old contracts.” The unions aren‘t in a position to demand much at the moment, Gelinas said. “They’re not going to quit their jobs.”

Earlier today, the mayor said he is potentially supportive of a new pension tier for public employees or some other downward adjustment, but also that savings might not be realized for years.

Gelinas said that explanation highlights her frustration with Bloomberg.

“The administration in general has been a missed opportunity,” she said. Referring to the possibility of a new pension tier, or reducing union benefits, Gelinas said, “The mayor could have done it five years ago and we’d be seeing significant savings now. You do see benefits sooner than you think.”

The real problem she said isn’t Wall Street's recent downturn, but its earlier boom.

“Look at how little we spent on infrastructure, and real reform. We just breezed through it. Now, we’re stuck with a huge problem, and the reality is nobody could have anticipated how well Wall Street did.”

During his tenure, she said, “Bloomberg never fought very hard on pension reform, benefits reform, debt reform.”