Three Years of Rebuilding:
Independent Budget Office Estimate of where aid money will go. |
Soon after the attacks, President George Bush promised $21 billion in aid to help clean up and rebuild New York City. These funds were designed to come through a variety of channel s to achieve several goals. In a recent study, the city's Independent Budget Office outlined (in pdf format) where this aid was intended to go.
New York has received over half of this $20 billion. But some worry that the city is in danger of never getting the entire amount.
Because a lot of this money is tied to long-term projects, it will not be actually received for five to ten years. The Independent Budget Office believes that "the Bush Administration and Congress are now in the process of making good on the initial promise of $20 billion in aid"; the city comptroller's office, on the other hand, believes that over a quarter of the money promised may never show up. In a recent report (in pdf format), the comptroller decries the lack of any way to track the promised cash. (see chart, below right)
Of the $21 billion, there is about $870 million left in discretionary funding. The Lower Manhattan Development Corporation formally controls the money, but different groups have very different ideas of how this money should be spent. Governor Pataki has supported using the funds to build a rail link between lower Manhattan, JFK airport, and the Long Island Rail Road. Community groups would like to see the money directed towards housing and local economic development, which they feel have gotten the short shrift with previous spending.
Next Page: Security
Year after year, more than three million American families file their federal and state tax returns and learn a sad truth. Because of the Alternative Minimum Tax (AMT), and President George W. Bush's support of it, middle-class families - particularly New Yorkers - are being punished for not being millionaires.
Listening to President George W. Bush, one could be led to think his tax policies are good for the middle class. Nothing could be further from the truth. In August 2003, the Congressional Budget Office confirmed what thousands of New Yorkers have known -- that the Bush tax cuts are causing middle class families to shoulder a larger tax burden than the wealthy, reversing the way things were before Bush took office. And for New Yorkers, the biggest tax bite can come from the Alternative Minimum Tax (AMT).
The Alternative Minimum Tax was first created in 1969 when it was discovered that the super wealthy were avoiding paying any federal income taxes by using tax shelters and deductions. To reform this, Congress created the alternative tax to insure that all Americans pay their fair share of taxes.
However, the threshold for having to use the tax has never been indexed to keep up with inflation. This means that over the past 30 years, as incomes have gone up along with the cost of living, the number of families being drawn into this tax has gone up as well -- an estimated 400,000 more in 2003 than in 2002. So, a well-to-do family making $60,000 and paying the alternative tax in 1969 has today become a middle-class family making $60,000 and now getting unfairly slammed this tax.
Fixing the Alternative Minimum Tax is essential for New Yorkers because it hits New Yorkers at a higher rate than most other states. In fact, close to 10 percent of the U.S. taxpayers who earn $50,000 to $75,000 and must pay the tax live in New York City. This is because residents of the Empire State pay higher state income taxes than most states, and the Alternative Minimum Tax eliminates any federal deduction for state taxes.
President Bush came into office promising tax relief and continues to campaign across the country saying that he has passed tax cuts for average Americans. But, if the President and the Republicans in Congress really wanted to provide tax cuts for average Americans in New York and elsewhere, they would have dealt with the growing problem of the Alternative Minimum Tax. Instead, they made the federal deficit balloon by enacting tax cuts for millionaires and for corporations that use overseas office fronts to avoid paying their taxes here in the United States.
Looking at which Americans have benefited from President Bush's tax cuts paints a very clear picture of who this Administration is watching out for. Upon entering office, the Bush Administration advocated a permanent end to the estate tax that only affected 49,000 of America's wealthiest families rather than fixing the Alternative Minimum Tax that affects 3 million middle-class families.
America's priorities should be just the opposite. This nation should reform the Alternative Minimum Tax before an estimated 41 million families are drawn into it in 2013. Sadly, the Republican-controlled Congress is using the income generated by the alternative tax to pay for tax cuts for the wealthy.
Our leaders in Washington should concentrate on relief for working people in New York and around the country. Today all over New York, middle-class families are feeling the squeeze of higher prices, unemployment, lower retirement earnings, and a strained economy.
Instead of using average Americans as a political football, President Bush should have provided real leadership during the past four years and ed the alternative minimum tax for good. That way, working would be keeping more of their earnings and our federal deficit would not be a burden on the backs of New York’s children and grandchildren.
Eliot Engel, a Democrat, is the U.S. Representative from the 17th Congressional District in the Bronx.
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Three Years of Rebuilding: |
New York's economy had already been in recession for nine months by the time the Twin Towers were attacked. While it is difficult to separate the economic impact of the attack itself from the wider economic downturn, it is clear that 9/11 had a serious effect on the city's economy.
The Partnership for New York City, a business organization in the city, recently estimated that the city suffered an $87 billion economic loss because of the attacks.
In total, the city's tax revenue dropped $1.5 billion, or about 6.4 percent between fiscal years 2001 and 2002; personal income tax revenues dropped $1.2 billion, or about 26 percent over the same period. New Yorkers lost $2.8 billion in wages. And when the city's tax revenue rose above pre 9/11 levels in fiscal 2003, it had as much to do with the mayor's property tax hike in November 2002 as it did with a general economic recovery.
Lower Manhattan suffered most severely. Small retail businesses, which lost customers as foot traffic in the area declined and generally have more trouble than larger businesses taking losses, were hit especially hard. But the impact of the attack spread across the city. The outer boroughs, especially Queens with its heavy reliance on its airports, all lost jobs in the wake of the attacks.
In late 2003, the city pulled out of a two-and-a-half year recession but signs of recovery remain mixed. Eighty percent of jobs lost due to 9/11 have returned to the city, but the unemployment rate remains above pre 9/11 levels. According to the city's tourism bureau, in 2003 more visitors came to New York than ever before, even as the number of international visitors was the lowest number since records have been kept.
Many feared that after 9/11 businesses would be eager to leave Manhattan, or at least reluctant to start large new operations in the city. Indeed, few companies have expressed interest in the Freedom Tower on the World Trade Center site. But across the street, buoyed by federal Liberty Bonds designed to encourage development in the city, Goldman Saks is planning a new office tower. The New York Times and Bank of America are also using Liberty Bonds to construct office towers in midtown.
But the flow of jobs to New Jersey, one that existed before 9/11, has not ceased. Since the attacks, JP Morgan Chase, UBS Financial Services, and Citigroup, are among the companies that have crossed the river. While this has arguably made the financial system less vulnerable to terrorist attacks, it has also taken a significant amount of tax revenue from the city's coffers.
Meanwhile, the ongoing threat of terrorism has made doing business in the city more expensive. The Partnership for New York City estimates that major downtown businesses are spending up to ten times as much on insurance and security than they were before 9/11, even if, as a New York Times article recently reported, many companies are not actually paying for the plans that they draw up.
For more, see the Economic Rebuilding section of Rebuilding
Next Page: Federal Aid