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Cuomo’s New Clothes?

If you want evidence that the Occupy Wall Street protests have already had a salutary effect on politics and policy making in the US, look no further than the state where the movement was born: New York. In a surprising development, Gov. Andrew Cuomo will convene a special legislative session this week to work toward progressive tax reform, increased infrastructure spending, and job training programs for inner-city youth.

Those who live outside the state may not understand how potentially significant a shift this is. In last year’s gubernatorial race, Cuomo campaigned as the kinder, gentler Tea Party candidate. He ran on a sharply neoliberal program that called for tax and spending cuts and attacks on the state’s public sector labor unions. His positions were virtually indistinguishable from those of his GOP opponent, the truly cretinous teabagger Carl Paladino, whose campaign ran aground on bestiality jokes and calls to house welfare recipients in the state’s prison system. He single-handedly organized an executive committee of the state’s ruling class to support his campaign and his legislative program. Once in office, he danced the classic neoliberal two-step – fighting for the legalization for same-sex marriage while slashing social spending and extracting significant concessions from the state’s public sector workers – disorienting and demobilizing the state’s progressive forces in the process. Cuomo consistently portrays himself as a reluctant neoliberal forced to pursue a regressive agenda by the state’s chronic fiscal crisis. His mantra is “I’m a progressive Democrat who’s broke,” which may be more accurately rendered as “I’m a craven opportunist who doesn’t want to pick a fight with the financial elite.” That didn’t stop the Working Families Party from endorsing him, a controversial move that likely cost it support from many of its traditional voters.

But a lot has changed over the last few months. Tax receipts from the financial sector are lower than expected, and last month state officials announced that next year’s budget gap will be $3.5 billion instead of $2.4 billion, as originally projected. At the same time, Occupy Wall Street has emboldened progressives whose opposition to Cuomo’s policies hitherto consisted of little more than half-hearted grousing from the sidelines. In the new political and discursive environment, New Yorkers won’t accept another draconian budget while the state’s grotesquely regressive tax system remains unchanged, and Cuomo knows it. Hence his belated embrace of tax reform and stimulus spending.

Just how regressive is New York’s tax system? As James Parrott and Frank Mauro of the Fiscal Policy Institute point out,

If the state’s current income tax surcharge expires, New York will be left with a compressed five-rate structure with the top rate of 6.85% applying to taxable incomes over $40,000. Thus, a moderate income family would be subject to the same marginal rate as the family with a $10 million income.

Cuomo opposes extending past December 31 the temporary “millionaires’ tax” surcharge on individuals with annual income over $200,000 and couples with annual income over $300,000, but has floated the idea of raising rates at the top and cutting them for New Yorkers further down the distribution. This would be a good thing. As Parrott and Mauro note, a “middle income family pays 11.6% of its income in state and local taxes while those lucky enough to be in the top 1% pay 8.4%, and that’s with the current income tax surcharge.” The new top rates Cuomo envisions would be lower than what they are under the surcharge, but would be higher than those under the current tax system. Ostensibly, the revenues raised from the higher rates on top earners would be plowed back into infrastructure spending and job training.

It should be noted that the plan is not all sweetness and light. It needs to make its way through the state legislature, which is split between a Democratic Assembly and a Republican Senate. Cuomo’s historic fealty to the state’s bourgeoisie doesn’t inspire much confidence, and Albany being what it is (a cesspool of corruption and log-rolling), who knows what the final result might look like? It includes a proposal to legalize resort-style gambling, a questionable economic development strategy that ultimately amounts to a regressive tax on the working class and the poor. And the infrastructure spending piece, while useful and necessary, smacks of a quid pro quo between Cuomo and the New York building and construction trades council. As a member of the Committee to Save New York, it has offered crucial support to Cuomo’s attacks on public sector unions. As a bonus, it opposes the adoption of a living wage bill in the city because of their beef with the retail workers’ union over a scuttled development project in the Bronx. Solidarity forever!

Occupiers around the country would do well to follow the battles over taxes and spending that will unfold in New York over the coming months. They’ll be an important test of Occupy Wall Street’s ability to influence politics and policy making, and they’ll offer insights into the man who will almost certainly be one of the leading contenders for the Democratic presidential nomination in 2016.