News Brief

By James Parrott

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Things are really starting to get ugly in our nation’s capital. The adoption by the House and Senate of a budget resolution moves the day of reckoning a big step closer.

It is hard to overstate the danger posed to the nation’s social fabric by the Robin Hood-in-reverse agenda advanced by this fiscal plan, especially when combined with the tax framework offered by the White House with Republican congressional leadership and the President’s latest actions to sabotage the Affordable Care Act.

Some of the worst-hit states would be those that turned out in force to put Donald Trump in the White House and are aligned with the GOP congressional majority.

But dollar for dollar, no state stands to suffer more from the 1-2-3 budget-tax-health care punch than Trump’s home state of New York. While very wealthy New Yorkers might benefit, the middle class and poor here would suffer mightily.

Follow the dollars. The budget resolution opens the door for at least $1.5 trillion in tax cuts and allows Republicans to adopt both these and unprecedented budget cuts via partisan “reconciliation” — with only a simple majority in the Senate rather than a filibuster-proof 60 votes.

To give fat tax cuts to rich donors, Republicans seek to slash nondefense domestic spending and entitlements, whatever the effects on their constituents. They know they need the reconciliation authority to get their way on taxes and avoid having to compromise with Democrats.

Under the Trump-Republican leadership tax-cutting framework, the richest Americans would benefit lavishly . Corporate and top individual tax rates would be slashed, the estate tax eliminated, and tax rates on business “pass-through” income received by wealthy hedge fund and real estate investors sharply reduced.

Some changes would provide modest benefits to some middle- and lower-income families, but overall the wealthiest are by far the biggest winners.

The Institute on Taxation and Economic Policy finds that 84% of the tax cuts received by New York State residents would go to the richest 1% of households here — those with income of at least $872,000. The one-percenters would get an average tax break of nearly $104,000, or 314 times the $330 that a middle-income New York household would receive.

Meantime, an estimated 22% of New York households, almost all of them middle class, would face higher federal taxes, mainly because of the proposed elimination of the deduction for state and local taxes.

The average tax hike would be greater here than in any state except for California.

Then there’s health care. Trump recently acted to sabotage health insurance coverage by allowing cheap, low-coverage plans, and proposing to eliminating federal health insurance subsidies — jeopardizing in New York alone care for 680,000 covered by this state’s Essential Plan, which provides free or low-cost health insurance to low-income households.

But huge budget cuts coming down the pike, made inevitable given this week’s resolution, remain the most imminent threat to New Yorkers. And it is children who are likely to bear the brunt of these deeply damaging cuts, which will likely target Medicaid, food and public assistance, housing, child care, Head Start and education.

On a per-voter basis, federal spending on public assistance is greater here than in any other state.

Medicaid alone could account for 70% or more of federal budget cuts over the coming decade. Only New Mexico receives a higher amount of Medicaid spending per voter than New York, although red states including Arkansas, West Virginia and Kentucky are not far behind. Few large cities are more vulnerable than New York City, where 43% of residents depend on Medicaid.

Excluding perhaps the President, it’s hard to see how any New Yorker thinks the current Washington agenda moves us forward.

The richest New Yorkers have endured higher state and local income taxes precisely because the economic advantages, quality of life and cultural amenities are worth it. Taking away health insurance and ripping the social fabric put all that in jeopardy.

All New Yorkers should stand together, and beside our fellow citizens throughout the country, and demand that Washington reject actions that harm our families, our economy and the future.


James Parrott is director of economic and fiscal policies at the Center for New York City Affairs at The New School.This piece is the first in an ongoing project to examine how federal budget cuts may affect children and families in New York. We'll track proposed budget and regulatory changes, provide information for local providers and policymakers, and inform state and local responses to expected changes in federal policy and resources. 

This piece was first published on Oct. 27 as an op-ed in the New York Daily News