It’s the time of year when our leaders in Washington and Albany take stock of the state of the nation and New York. If we see our country and state with a clear eye — and look to the next decade with common sense — the future for both is bright.
It’s easy for naysayers to find fault with the state of the economy, but it is showing great progress. President Trump deserves a good share of credit for keeping it growing. Federal tax relief and regulatory reforms have led to steady improvements in the financial situation of Americans. Unemployment is at historic lows, wages are up, and the stock market is at an all-time high.
More members of America’s minority communities are employed than at any time in recent history. Successful trade agreements with Canada, Mexico and China have given the economy even more confidence. The boom in the nation’s energy production means that we’re no longer dependent on the volatile Middle East to power our economy. In fact, the United States is now on track to become a net energy exporter.
We lead the world in technological development, feed the world with our agricultural surpluses, and help keep peace around the world with our unequaled military forces.
Peace and prosperity aren’t a bad way to begin the new decade, but there’s still work that must be done to secure these “blessings of freedom” for our future. That’s where common sense comes in. If we want to keep America on an upward path, we must find ways to rein in federal spending to reduce future budget deficits. Simply raising taxes to close these projected gaps — which some on the political left feverously promote — will stymie economic growth and threaten another recession.
That means taking a hard look at all areas of the federal budget, including entitlement spending. I know from my own time in Washington that containing even the future cost of Social Security and Medicare is politically perilous for members of Congress. But modest adjustments — including raising the retirement age for future beneficiaries — will help keep these vital safety-net programs fiscally sound beyond the next decade.
The same common-sense approach to public spending and taxing is needed in New York, too. Today the state is riding high on the tide of national prosperity. Our economy is strong and growing, our businesses and workforce are highly productive, and as financial markets climb higher, New York’s treasury benefits from increased revenue.
But our state’s future prosperity hangs on keeping our own fiscal house in order. Gov. Andrew Cuomo deserves credit for trying to hold the line on state and local taxes. He has wisely resisted pressure from his party’s far left wing to raise state income taxes, and has championed local property-tax caps.
The key to a strong economy in New York is realizing that our state doesn’t tax too little; it spends too much — by a lot. A vast amount of the state budget is consumed by spending on education and health care. Our Medicaid program spends nearly twice as much per recipient as California’s. Our schools spend a third more than California.
In his recent State of the State address, the governor pointed to an accumulated $6.5 billion deficit in New York’s $75 billion Medicaid program. Already, cries are rising on his left to raise state taxes to close this gap. But tax increases of that magnitude would simply drive more people out of New York to lower-taxed states. That exodus could leave New York in a death spiral of higher costs and fewer taxpayers to foot the bill. The rush to the exits could turn into a stampede.
As with the federal Social Security and Medicare programs, New York’s Medicaid program needs structural reforms to contain its future growth. I’m not talking about reforms that would gut Medicaid, just modest cost adjustments to slow the upward spending climb. A little bit of restraint spread over the state’s entire $75 billion Medicaid program — with all stakeholders chipping in — could close the gap without hurting anyone.
The same goes for New York’s ever-increasing education spending. The state has regularly contributed additional billions each year to schools that need to do more to control high spending. Again, I’m not talking about big state cuts in school aid, just some restraint on future spending increases.
All that’s needed is common sense.
Al D’Amato, a former U.S. senator from New York, is the founder of Park Strategies LLC, a public policy and business development firm. Comments about this column? ADAmato@liherald.com.