Goodbye New York City

Start spreading the news
I’m leaving today…

– Frank Sinatra, “New York, New York”

The cities of Seattle, New York, Portland, Minneapolis, and Chicago continue to experience riots and racial protests in addition to enduring heavy restrictions imposed for fear of COVID-19. The mayors in each of these cities are exacerbating these problems rather than combating them. It will take a lot for these cities to recover. This will be extraordinarily more difficult to accomplish under the policies of their current administrations. We believe one metropolis in particular, New York City, will never recover, and it won’t be because of riots and/or the ravages of COVID-19.

Before the COVID-19 virus or any BLM protestors arrived, New York City was already in a slow downward spiral. People who live and work in the city are subject to the highest state tax burden in the country (the proportion of total personal income paid toward state and local taxes). That burden became worse for high earners when the federal tax code was changed in 2018 limiting the federal deduction for state income taxes.

As a result, it should not have been surprising or unexpected that some high-income residents would begin leaving the city (and the state) to relocate somewhere more tax friendly. But “surprise” is exactly what New York Governor Andrew Cuomo expressed when the exodus became obvious in the winter of 2019. In February of that year Cuomo was quoted as saying, “This is the flip side. Tax the rich, tax the rich, tax the rich. The rich leave, and now what do you do?” The city needed an infusion of new residents with good paying jobs to replace the tax revenue lost from those moving out. A ready solution appeared imminent in the form of a second headquarters facility for Amazon, Inc. to be constructed in Queens. This project was to bring roughly 25,000 new jobs to the city.

Then, as if to accelerate NYC’s descent, progressive city politicians, including new Congresswoman Alexandria Ocasio-Cortez, railed against the Amazon plan and poisoned the deal. Amazon withdrew and instead decided to use Crystal City, Virginia as its main location for its second headquarters with an accompanying smaller facility in Nashville, Tennessee. Those 25,000 high paying jobs Amazon would have brought to New York were lost. The city and state tax revenue that would have resulted could have offset some lost revenues from those leaving the city. The verbal carpet-bombing of this deal by AOC, and its collapse in consequence, made the city and state leaders look short-sighted and inept.

It didn’t help that the relationship between New York City Mayor Bill DeBlasio and the police department had deteriorated into acrimony. This antipathy had been festering since at least 2014.  Remember when police turned their backs to Mayor DeBlasio during the funeral of officer Rafael Ramos? Ramos and another NYPD officer were murdered as revenge for the death of Eric Garner. Police were livid at DeBlasio for disparaging comments he made about the police in the aftermath of the deaths of Eric Garner and Michael Brown. By the time 2020 rolled around, the relationship between the Mayor and the New York City Police was at rock-bottom.

It was against this backdrop of oppressive local taxation and low morale within the city police force that COVID-19 came to New York. Violent racial protests in the city followed a short time later in the aftermath of the death of George Floyd. Simultaneous calamities like these would prove to be a challenge for any big city mayor and state governor. Even so, in the early spring of this year, the right set of leadership decisions might have allowed New York City to pull through each predicament and set itself on the path to full recovery. This didn’t happen. In fact, it is hard to imagine a worse set of leadership decisions than those that Cuomo and DeBlasio chose to make during that crucial time.

It started with Governor Cuomo’s nearly criminal decision to force over 6,000 people known to be infected with COVID-19 into nursing homes. The patients in these facilities are among the most defenseless against the virus, a vulnerability well known at the time. No single act by any politician in any state or at the federal level resulted in more direct deaths from COVID-19 than Cuomo’s edict. While the liberal media glossed over this clearly preventable tragedy to protect Cuomo, they couldn’t completely hide the devastating number of unnecessary nursing home deaths in New York that resulted from the Governor’s ill-fated order. Public confidence that the state was being governed by any kind of reasoned logic eroded further.

Just when you thought it couldn’t possibly get any worse, Mayor DeBlasio then responded in an unthinkable way to the racial riots and violent protests that exploded in the city. Rather than empower and beef up the police force to stem the violence and prevent physical destruction in the city, he immediately called for a one-billion-dollar reduction in funding for the city police force. The city’s response was further hobbled by the fact that the police were told to use a soft touch approach to the violence. Unsurprisingly, New York City police officers began putting in retirement applications at such an increased rate (a 400% surge from the previous year) that the city had to cap the number of retirement requests to no more than 40 per day.

Predictably, crime spiked in the city. In the months of May and June, the New York City murder rate more than doubled compared to the same period last year. Shootings were up 50%. Crimes of opportunity spread throughout the city, adding to the wreckage left from BLM protestors. Iconic stores such as Macy’s, Chanel, Rolex, and Apple were looted with little if any police resistance. Smaller family owned and operated establishments were also indiscriminately pillaged. Mayor DeBlasio’s own daughter was arrested while participating in the mayhem. Famous 5^th Avenue stores like Saks, Cartier, Harry Winston and Dolce & Gabbana had to board up their storefronts and use their own private security personnel (Saks used guard dogs) to help protect themselves. Smaller businesses, without the wherewithal to hire protection, fared worse.

While this was unfolding in the late spring and early summer, many people across the country had begun working remotely, mainly from home. Most companies and schools were not prepared technically for this paradigm shift, but they ramped up astonishingly quickly to make it work. This was a perfect solution for complying with social distancing restrictions in the workplace. Interestingly, some companies were finding that worker productivity increased with this arrangement. In short order, what was supposed to be a temporary working arrangement looked like it was going to become semi-permanent, at least for Tech oriented companies. Many tech companies were already using work-from-home arrangements for portions of their workforce, so a more permanent switch to remote work was not a big stretch. Almost overnight, a new swath of the population discovered they didn’t need to be physically close to their employer’s office building to keep their job and their income.

For many residents of New York City who had not yet fled the high taxes and increased crime, being able to work remotely tipped the value scale towards moving out. Since June, moving companies in the city have reported being overwhelmed as residents are leaving the city in droves. These people will no longer be paying city taxes, which increases their personal net income and reduces the city revenue. Unless they are replaced by an equal number of people moving into the city, that local tax revenue can only be replaced by raising the city tax rate on the remaining residents. Of course, that will lead to an even larger exodus. Governor Cuomo seems to recognize this quandary, although he has not come up with any practical solutions.

On the other hand, Mayor DeBlasio displays no concern or awareness whatsoever regarding this larger context problem enveloping the City. He announces through his actions and public discourse that the city is a helpless victim of both a killer virus and violent protests. His solution is to keep the city only partially “open” to prevent the spread of COVID-19, while appeasing rather than confronting the violent protestors.

We are well aware that with the election approaching, there is politicking in play here. DeBlasio and other far-left Mayors in Seattle, Portland, Minneapolis, and Chicago believe that the visible deterioration of their cities somehow reflects poorly on President Trump. As usual, the news media aids them in promoting this view. We don’t believe these Mayors really want their respective cities to completely deteriorate, if for no other reason than they themselves would be out of a job. Their plan appears to be to do what is necessary to help get Trump out of office, then immediately reverse course and repair their cities with a federal bailout after the election. All the credit for that recovery would then go to the new Democrat President, boosting his popularity. What these Mayors have totally lost sight of is that there is a point of no return beyond which a city can’t recover. An indicator that New York City is circling this drain is that national chains such as J.C. Penney, Kate Spade, Subway and Le Pain Quotidien have just closed their stores within the city for good. Victoria’s Secret and the Gap are keeping their Manhattan stores closed for now, while reopening them in other states.

We think New York City has already crossed the point of no return. Absent a wholesale transformation in city leadership, tax policy, and crime prevention, New York City will never return to its former prominence, or to what it was just one year ago. Even if a dramatic change for the better in city/state leadership were to occur, it would take years for corrective measures to bear any fruit. Former residents, now happily ensconced in the city suburbs or in other states, would have to see genuine “value” in a return to the city. Currently there is none.

Regrettably for New York City and its citizens, Mayor DeBlasio’s term isn’t up until 2022. Knowing he will be in office after the upcoming election in November, DeBlasio is doubling down on his hopes that if the Democrats win the Presidency, federal aid money will quickly flow to New York City in a big way. But there is no guarantee of federal rescue money for the City even if Biden does win. The Democrats will need to retain control of the House to pass a bill for such aid. They would also have to flip control of the Senate (a tall order), so that body would agree to pass any state aid legislation forwarded by the House. Even if Biden wins, there is now the reality that his newly chosen running mate has all of her roots in California, another state with cities in desperate need of federal aid for many of the same reasons as New York City. Should any federal money become available under a Biden/Harris administration to bail out these poorly managed cities, New York City would likely not be at the top of the list.

Ironically, the one person who could potentially help New York City the most is also the person most reviled by the city Mayor, the Governor, and other local politicians. Donald Trump was born and raised in Queens, New York and has deep roots in the city. Many of his signature construction projects are in the city, including several bearing his name. If the Mayor and City Council took a position of partnering with Trump as opposed to constantly vilifying him, the city would engage, rather than alienate, its greatest potential advocate for recovery. Shamefully, the current New York City leadership is so crippled by their own hatred and stupidity, this propitious path for recovery won’t even be considered.

The terrible fate of New York City was avoidable. Neither the virus nor the protests caused the disastrous plight it now finds itself in. Gross mismanagement and unspeakably poor governance did this. Is this what voters in New York City really voted for? We’re certain that when proud New Yorkers cast their ballots for their current state and city leaders, they didn’t expect that unthinkable incompetence combined with blind partisan hatred would run Gotham into the ground.