Thread: Cuomo: 'New York State is Functionally Bankrupt'

Cuomo on Cuts: 'New York State is Functionally Bankrupt'

Wednesday, 02 Feb 2011 09:15 AM

New York Governor Andrew Cuomo proposed laying off nearly 10,000 state workers and cutting billions from education and Medicaid as he laid out his first budget on Tuesday, designed to close a $10 billion deficit.

The Democratic governor proposed no new or increased taxes in the $132.9 billion budget plan, which would shrink the current budget ending March 31 by 2.7 percent. If the budget plan holds, it would mark the first spending decrease since 1997.

"New York state is functionally bankrupt. We have to think in terms of restructuring because New York doesn't work anymore," Cuomo told legislators, who must approve the budget plan.

New York is one of many states battling multibillion-dollar deficits due largely to the sluggish economy, which has created a nationwide fiscal crisis that has added risk to the historically stable $2.8 trillion U.S. municipal bond market.

Cuomo said New York's finances have been hammered by a budget process that he labeled a "sham," with automatic increases for expensive programs such as education and Medicaid, the state-federal health plan for the poor that led to runaway spending.

"In a down economy, this is a death spiral and that's where we are now," Cuomo said. "If the state continues doing what we're doing, we're heading down the road to ruin."

Cuomo's budget proposal includes spending cuts of $1.5 billion from education and $1 billion from Medicaid, as opposed to previous automatic increases of 13 percent that would have amounted to additional spending of $2.85 billion each.

The austere budget plan could enhance Cuomo's standing as a fiscal conservative nationally at a time when growing deficits and dwindling tax receipts are affecting states and cities across the country.

Cuomo had vowed to make New York "a business-friendly state" shortly after taking office on Jan. 1.

His austere approach to his first budget prompted a comparison to New Jersey Governor Chris Christie, who has emerged as a national Republican leader by promoting spending cuts and putting a cap on taxes.

Cuomo "is taking a page from Christie, which is interesting given that he's a Democrat. I think it's a positive if it materializes," said Evan Rourke, a portfolio manager with Eaton Vance in New York.

The Cuomo budget, which requires legislative approval, could strengthen his position with the Republican-controlled Senate.

The Democratic-controlled Assembly, however, might reject the spending cuts. Democrats may also seek to derail Cuomo's plan to let expire a temporary income tax surcharge on millionaires, though any Assembly bill to extend the tax would likely die in the Senate.

New York City would be hit particularly hard under the budget proposal, with a $580 million reduction in school aid, though the cut is less than the $1 billion reduction that Mayor Michael Bloomberg had feared. Bloomberg had said a $1 billion cut would translate into 15,000 teacher layoffs.

"There's going to be balancing the budget on the backs of local communities," said Howard Cure, managing director for municipal research at Evercore Wealth Management LLC in New York. "This is just the beginning of what I would expect would be a long negotiation."

Cuomo revealed little during last year's low-risk election campaign in which he faced a weak opponent, though he had called for an end to waste and fraud in state government while saying taxes were too high and spending needed to be cut. Since Cuomo's Jan. 1 swearing-in, he has taken a decidedly conservative bent.

Cuomo is the son of former New York Governor Mario Cuomo, who was a liberal hero during the era of Republican President Ronald Reagan.

http://www.moneynews.com/StreetTalk/Cuo ... ode=B96B-1

'Black Swan' Author: ‘Very Nervous’ About US

Taleb: ‘Nervous’ About China, ‘Very Nervous’ About US

Wednesday, 02 Feb 2011 11:33 AM

Nassim Taleb, author of the “Black Swan,â€

Faber: Global Inflation Far Higher Than Official Data

Wednesday, 02 Feb 2011 10:21 AM
By Dan Weil

The latest official inflation data show that consumer prices rose 1.5 percent in the U.S. last year, while they increased 2.4 percent in the euro zone for the year ended in January. Marc Faber, publisher of the Gloom, Boom and Doom report, says don’t believe those numbers.

Inflation totals 5 percent to 8 percent in the United States and slightly lower in Europe, he tells CNBC.

“I guarantee you … the annual (U.S.) cost of living increases are more than 5 percent, and the Bureau of Labor Statistics (which computes the consumer price index) is lying,â€

Meanwhile, moron Bloomberg is busy doing 'stings' at Arizona gun shows. How does this pr!ck keep getting elected?

I think they are morally bankrupt too...

Meanwhile, moron Bloomberg is busy doing 'stings' at Arizona gun shows. How does this pr!ck keep getting elected? Rolling Eyes

Haaa Elected..heck....Bloomberg even got himself an extension on his term a while back...isn't that special...


Kathyet

Tuesday, February 01, 2011 6:52 PM

Governor Cuomo Declares New York "Functionally Bankrupt", Seeks Spending Cuts; California Governor Jerry Brown Cites Egypt, Demand Tax Hikes

In an interesting compare and contrast scenario, democratic governors from the two largest states have vastly differing ideas regarding what to do about huge budget gaps. New York Governor Andrew Cuomo seeks spending cuts on schools and Medicaid, while California Governor Jerry Brown wants to ram through tax hikes.

The LA Times reports Brown cites unrest in Egypt to make his case for budget vote http://latimesblogs.latimes.com/califor ... -vote.html

Citing the pro-democracy unrest in Egypt and Tunisia, Gov. Jerry Brown called it “unconscionableâ€

Meanwhile, Governor Moonbeam remains in outer space in regards to addressing California's problems.

Yes, one wonders how pr!ck #2 keeps 'getting' elected too!