Tag: new york city

Turning New York City into Detroit?

I recently speculated whether Detroit’s fiscal problems should be a warning sign for the crowd in Washington.

The answer, of course, is yes, though it’s not a perfect analogy. The federal government is in deep trouble because of unsustainable entitlement programs while Detroit got in trouble because of a combination of too much compensation for bureaucrats and too many taxpayers escaping the city.

A better analogy might be to compare Detroit to other local governments. Some large cities in California already have declared bankruptcy, for instance, and you can find the same pattern of overcompensated bureaucrats and escaping taxpayers.

And the same thing may happen to New York City if the next mayor is successful in pushing for more class-warfare tax policy. Here are some excerpts from an excellent New York Post column by Nicole Gelinas:

Mayoral candidate Bill de Blasio…thinks New York can hike taxes on the rich and not suffer… De Blasio’s scheme is this: Hike income taxes by 13.8 percent on New Yorkers making above half a million dollars annually….After five years, de Blasio would let this tax surcharge lapse, and — he says — find another way to pay.

But there’s a big problem with de Blasio’s plan. Rich people are not fatted calves meekly awaiting slaughter.

In 2009, the top 1 percent of taxpayers (the 34,598 households making above $493,439 annually) paid 43.2 percent of city income taxes (they made 33.9 percent of income), according to the city’s Independent Budget Office. Each of these families paid an average $75,477. No, most people won’t up and leave (though if 20 percent did, they’d leave New York with less money than before the tax hike). But they can rearrange their incomes. Unlike most of us, folks making, say, $10 million have considerable control over how and when they get paid. That’s because much of their money comes from cashing out a partnership, or selling stock or a house or a painting. To avoid a tax hike, it’s easy enough for them to pay themselves earlier by selling their stuff earlier — before the tax hike. The city made $800 million in extra taxes last year because rich people sold their stuff before President Obama increased investment taxes in December. Or, people can pay themselves later — after the five years’ worth of higher taxes are up.

Gelinas makes some very important points. She warns that the city would have less money if just 20 percent of rich people escaped. She doesn’t think that will happen, but she does explain that rich people can stay but take some simple steps to reduce their taxable income.

Send This Napoleon Back, Waiter: Appeals Court Flunks NYC Soda Ban

Welcome news from New York: a unanimous four-judge appeals court has confirmed a trial court order striking down the New York Department of Health’s attempt to ban large soda portions. The decision is here, Newsday coverage here, and our earlier coverage here.

The appeals court ruled that in enacting the ban the NYC department of health had overstepped its legally granted powers. As I observed in this Commentary article in March, New York has its own distinctive body of law by which courts step in to prevent administrative agencies from claiming quasi-legislative powers not clearly delegated to them, the rules laid out in a 1987 case called Boreali v. Axelrod. The appeals court agreed with trial court judge Milton Tingling that Boreali was directly controlling, and that the department had clearly overstepped Boreali’s ban on essentially legislative action by an administrative agency. (Why, you ask, don’t federal courts apply as tough a standard to keep administrative agencies in Washington, D.C. from arrogating to themselves essentially legislative functions? Good question…)

Although the appeals court did not reach the issue of whether the Bloomberg rules were “arbitrary and capricious,” and although neither it nor Judge Tingling reached the underlying issues of individual consumer choice that are at stake, this was far more than just a “win on a technicality.” The rule that government agencies cannot overstep their lawfully granted powers is a vital one in protecting the liberty of the citizen. On this issue, and not this alone, Mayor Michael Bloomberg has acted more as a Napoleon issuing peremptory dictates than as an elected executive carrying out the will of legislators on the City Council and in Albany. 

Napoleons of the political class are a good bit more dangerous to us all than the sugar-laden Napoleons of the bakery shelf. We should rejoice that this one is getting sent back to the kitchen.

When Government Is The False Advertiser, Cont’d

Mayor Bloomberg’s New York City health department has come in for repeated criticism in this space and elsewhere for crusading against salty and fattening foods through ad campaigns that manipulate viewer reactions in ways that border on the misleading and deceptive (“What can we get away with?” famously asked one official). They’re at it again. On January 9, Gotham’s for-your-own-good crew unveiled a new ad warning “Portions have grown. So has Type 2 diabetes, which can lead to amputations,” dramatically illustrated with a photo of an obese man with a stump where his leg had been. But as the New York Times reports, city officials “did not let on that the man shown — whose photo came from a company that supplies stock images to advertising firms and others — was not an amputee and may not have had diabetes.” Instead, they just Photoshopped his leg off, which certainly got the effect they were looking for, albeit at the cost of photographic reality. At an agency developing an ad campaign for a private company, someone might have advised adding a little fine print taking note that the picture was of a model and had been altered, lest the manipulation turn into the story itself, or even attract the interest of federal truth-in-advertising regulators. But the Bloomberg crew probably isn’t worried about the latter, given that their constant stream of hectic propaganda is fueled by generous grants from the federal government itself. Such grants also helped enable a contemplated booze crackdown exposed by the New York Post this month—quickly backed off from after a public outcry—that would have sought to reduce the number of establishments selling alcohol in New York City.

While on the topic of nannyism, the Times also reported this week that Penn State researchers found that the fad for banning so-called junk food in schools had no apparent effect: “No matter how the researchers looked at the data, they could find no correlation at all between obesity and attending a school where sweets and salty snacks were available.” Number of “food policy” types quoted in the article admitting “maybe we were wrong”: zero.

Obama and Military Tribunals

Yesterday, Obama’s attorney general, Eric Holder, held a press conference and announced that Khalid Shaik Mohammed (KSM) would be prosecuted for war crimes before a military tribunal.   It’s probably fair to say, as some newspapers have noted, that the idea of bringing KSM to New York City to be tried in civilian court for the 9/11 atrocity was Holder’s “signature” decision since becoming attorney general–and that that idea is now dead.    However, Obama and Holder conceded a place for tribunals more than a year ago and they could never really offer a good explanation as to why some persons would go to civilian court and why others would go before tribunals.  Like Bush, Cheney, and Rumsfeld, Obama and his people would just sorta decide case-by-case.

Conservatives are chortling over Obama’s apparent embrace of Bush policies, such as keeping Guantanamo open and reviving trials before tribunals.  Like the escalation of the war in Afghanistan, however, Obama has not stumbled on to the correct path.  He has instead shown exceptionally poor judgment yet again.  Two questions are now looming on the horizon.  First, prosecutors are anxious to have a lengthy 9/11 trial, but what if KSM calls the tribunal a farce and decides to skip the trial,  plead guilty, and then demands to be executed so he can become a martyr?  The tribunal might grant the wish, but the legitimacy of the military system may be called into question again–especially in the Muslim world.  Second, the Pentagon has made it pretty clear that anyone acquitted by a tribunal will remain a prisoner at Guantanamo (pdf).  There may be a legal rationale for that, but, again, how is that going to be perceived by the world?   As a start, one might consider how we would react if an American were acquitted by a court abroad, but was nonetheless returned to his prison cell to be detained indefinitely. 

There is no need to go there.  Obama should close Gitmo and transfer the prisoners to Bagram and hold them there, but with full transparency.  The Bush policies of secret prisons, secret interrogation methods, and secret trials before special military courts were wrongheaded and remain so.

For additional background, go here.

The CPSC’s Defective New Complaints Database

We are told constantly that government can play a beneficial role in the marketplace by taking steps to make sure consumers are more fully informed about the risks of the goods and services they use. But what happens when the government itself helps spread health and safety information that is false or misleading? That question came up recently in the controversy over New York City’s misleading nutrition-scare ad campaign, and it now comes up again in a controversy over a new database of complaints about consumer products sponsored by the federal Consumer Product Safety Commission (CPSC).

As part of the Consumer Product Safety Improvement Act of 2008 (CPSIA), Congress mandated that the CPSC create a “publicly available consumer product safety information database” compiling consumer complaints about the safety of products. Last week, by a 3-2 majority, the commission voted to adopt regulations that have dismayed many in the business community by ensuring that the database will needlessly include a wide range of secondhand, false, unfounded or tactical reports. The Washington Times editorializes:

…[Under the regulations as adopted last week] anybody who wants to trash a product, for whatever reason, can do so. The commission can leave a complaint on the database indefinitely without investigating its merits “even if a manufacturer has already provided evidence the claim is inaccurate,” as noted by Carter Wood of the National Association of Manufacturers’ “Shopfloor” blog….

Trial lawyers pushing class-action suits could gin up hundreds of anonymous complaints, then point the jurors to those complaints at the “official” CPSC website as [support for] their theories that a product in question caused vast harm. “The agency does not appear to be concerned about fairness and does not care that unfounded complaints could damage the reputation of a company,” said [Commissioner Nancy] Nord.

Commissioners Nord and Anne Northup introduced an alternative proposal (PDF) aimed at making the contents of the database more reliable and accurate but were outvoted by the Democratic commission majority led by Chairman Inez Tenenbaum. Nord: “under the majority’s approach, the database will not differentiate between complaints entered by lawyers, competitors, labor unions and advocacy groups who may have their own reasons to ‘salt’ the database, from those of actual consumers with firsthand experience with a product.” Commissioner Northup has published posts criticizing the regulations for their definitions of who can submit a report, who counts as a consumer, and who counts as a public safety entity.

For those interested in reading further, Rick Woldenberg, a leading private critic of the law who blogs at AmendTheCPSIA.com, has critically commented on the politics of the proposal here, here, here, here, and here. More coverage: ShopFloor with followups here and here, New York Times, Sean Wajert/Mass Tort Defense. I’ve been blogging for the past two years at my website Overlawyered about the wider problems with the CPSIA law, including its effects on books published before 1985, thrift stores, natural wooden toys, ballpoint pens, bicycles, plush animals, Irish dance costumes, rocks used in science class and many more. Most of these problems remain unresolved thanks to the inflexible wording of the law as well as, sometimes, the unsympathetic attitude of the commission majority. I’ve heard that bringing overdue investigative oversight to the ongoing CPSIA disaster is shaping up as a priority for many incoming lawmakers on the (newly Republican-led) House Energy and Commerce Committee, whose outgoing chair, California Democrat Henry Waxman, is closely identified with the law and its consumer-group backers.

First Amendment Victory in Second Circuit

As the legal battle against Obamacare continues, we got good constitutional news today in another aspect of health care law.  The Second Circuit Court of Appeals, based in New York City, ruled that statutes restricting commercial speech about prescription drug-related data gathering are unconstitutional.  The court emphasized that the First Amendment protects “[e]ven dry information, devoid of advocacy, political relevance, or artistic expression.”

The case, IMS Health v. Sorrell, concerned a Vermont law that sought to constrain various aspects of prescriber-identifiable data gathering, dissemination, and use. The state argued that such information collection and exchange could induce doctors to alter their prescribing practices in ways that impose additional costs on the state’s budget. Most notably, the law outlawed the transfer of doctors’ prescription history to facilitate drug companies’ one-on-one marketing—a practice known as “detailing” —because the state believed detailing drives up brand-name drug sales and, in turn, health care costs.  Thus, the Vermont law would have eliminated a key part of the market by hindering economic incentives to comprehensively gather the data. The state argued that the data sharing isn’t “traditional journalistic activity,” it’s not protected by the First Amendment.

Cato joined the Pacific Legal Foundation, the Progress & Freedom Foundation, and two trade associations to file an amicus brief in the case in support of the plaintiffs challenging the law. The Vermont Prescription Restraint Law (and the similar laws enacted in New Hampshire and Maine) imposed unprecedented censorship on a broad swath of socially important information. We are gratified that the Second Circuit upheld First Amendment protections here and congratulate the plaintiffs on their victory.

You can read Cato’s brief here and the Second Circuit’s decision here.

The Strategic Dimension of the Mosque Debate

There are many facets to the debate about the Muslim community center and mosque proposed for the site of a former Burlington Coat Factory near Ground Zero in southern Manhattan. My colleague David Boaz’s observation on the United States pluralist founding tradition was a delight. Important as they are, I’m put off by the domestic political ramifications (1, 2, 3, 4), if only because of the crassness and opportunism that inhabit all politics.

There is a strategic dimension to the story. This episode is signaling to audiences around the world the current relationship between the United States and Islam. These audiences might support or oppose the United States and act accordingly to undermine or support terrorist groups. For these people, knowledge of a Muslim community, active in New York and proximate to Ground Zero, would help put the lie to the “clash of civilizations” narrative sought by al-Qaeda and its franchises, undercutting their support.

The debate itself sends signals: If the United States were predominantly anti-Muslim, this debate wouldn’t be happening. If our political leaders had the power to decide matters of religious observance, this debate wouldn’t be happening. The debate is helping to show Muslim populations around the world—who might not know otherwise—that we think and debate about these things, that we are a functioning democratic republic, and that our country is undecided about the position of Muslims in the United States or, at worst, weakly anti-Muslim. 

In the video clip after the jump, conservative icon Ted Olson expresses well, I think, how standing by our constitutional values is good counterterrorist signaling.

These strategic considerations may not be dispositive, but my preference is for this project to go forward and communicate to worldwide audiences that we are still the pluralistic, welcoming, confident society we have been in the past.

Islam did not attack the United States on 9/11. It is simple collectivism—the denial of individual agency that libertarians reject—to believe that the tiny band of thugs who perpetrated the 9/11 attacks speak for an entire religion, culture, or creed. Our sympathy to families of 9/11 victims and our vestigial fears should not allow us to indulge gross and wrong generalizations about individuals of any faith.

A recent Cato Capitol Hill briefing is relevant to all this. You can review “Strategic Counterterrorism: The Signals We Send” on the Cato web site. Cato’s recent publication, “Terrorizing Ourselves: Why U.S. Counterterrorism Policy Is Failing and How to Fix It,” addresses many dimensions of the terrorism and homeland security problems, including the strategic logic of terrorism, to which we respond (whether we mean to or not) during debates about Muslims in America.