NY confronts limits of soaking the rich as budget woes mount

New York’s elected officials have embraced their inner Margaret Thatcher, in explicit acknowledgment of the limits of using other people’s money to stabilize budgetary red ink.

Why it matters: Both the Big Apple and the Empire State are facing serious post-pandemic fiscal challenges. A COVID-era population exodus — many of those citizens being in the top tax bracket — is making the budget outlook increasingly grim.

However, New York’s progressive Democratic establishment — where taxing the wealthy is far more popular than it would be in, say, Texas — is taking an uncharacteristic approach to addressing the city and state’s woes.

Driving the news: At an appearance on Wall Street this week, NYC Mayor Eric Adams denounced attacks on the wealthy, adding that he needs “my high-income earners right here in this city.”

• In a separate interview with Bloomberg, State Comptroller Thomas DiNapoli warned New York was reaching a “tipping point where we do make it economically unsustainable for enough of those folks to stay here.”
• And the coup-de-grace came from newly elected Governor Kathy Hochul, who on Thursday vowed no new tax hikes, or budget cuts.

Zoom out: Thatcher, the former U.K. prime minister, once famously quipped that tax-and-spend policies ensured that “eventually, you run out of other people’s money.”

• Based on their remarks this week, Adams, DiNapoli and Hochul are discovering the painful limits of capital mobility.

The bottom line: Politicians can’t rely forever on the deep pockets of those who chose to stick around, especially when faced with deteriorating quality of life, because they’ll simply go somewhere else.