Governor Andrew Cuomo is making a big deal out of the failure of a congressional “super committee” to produce a deal on reducing the federal budget deficit. This is supposed to trigger $1.2 trillion in across-the-board federal budget cuts over a 10-year period beginning in 2013—which, Cuomo said yesterday, could translate into $5 billion in lost federal funding for New York.

Bemoaning “Washington’s inability to get its fiscal house in order,” the governor warned:  “These events, combined with a stagnant national economy and the expanding fiscal crisis in Europe that has led to a sudden and severe decline in revenues for the state, have dramatically changed the fiscal course of the state.”

In reality:

  • $5 billion is a small fraction of what the New York State could expect to receive in Medicaid reimbursements alone over the next 10 years under current federal policy. As this articlenotes, Medicaid is exempt from the across-the-board cuts that are supposed to follow the super committee’s failure.
  • In the unlikely event that the automatic federal cuts are actually allowed to unfold in the coming decade, the main result will be deeper reductions in defense spending — and New York is one of the least defense-intensive states in the union. There also will be greater reductions in federal aid that directly benefits localities, not states.
  • Any conceivable deficit-cutting compromise between the current roster of congressional Democrats and Republicans would feature deeper cuts in Medicare and other health care spending, along with an increase in income taxes on high-income households, both of which would have hit New York harder than most states. This remains the most likely ultimate outcome of Washington’s current deficit dithering, with the precise mix of tax hikes and spending cuts depending on the outcome of the 2012 presidential and congressional elections.

In fact, few congressional observers expected the super committee to meet its goal. This is not a“game changer” for New York, much less some sort of emergency.

Cuomo nonetheless played the day’s big national news story for all it was worth, announcing: “I have asked my Council of Economic and Fiscal Advisors to work with senior members of my administration to draw up an expedited job creation and fiscal stabilization plan. This proposal would be based on the reality that the best way to generate revenue for the state and revitalize our economy is to create jobs.”

It seems the governor is laying the groundwork for some set of major fiscal initiatives, if not an outright change of direction in fiscal policy, to be unveiled officially in his State of the State message in six weeks from now.

Give Cuomo credit for recognizing, as he said in his statement, New York needs a to create jobs. The risk is that, under more urgent political pressure to do somethinganything!,  Albany will only invent new ways of destroying jobs–or further screwing up its long-term finances.  Like, for example, the newly reported scheme to tap public pension funds as a source of funding for a new Tappan Zee Bridge.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Hochul’s Pandemic Study Is Off to an Underwhelming Start

Although Governor Hochul's long-promised review of New York's COVID response hasn't formally started yet, it has already exposed important information about the state's pandemic preparedness – much of which is unflattering. Read More

Answers needed on Governor Hochul’s health-care budget

The health-care agenda laid out by Governor Hochul in her budget proposal this week leaves a lot of questions unanswered. Here are a few of them. Read More

The Health Department takes a big step toward COVID transparency

The state Health Department released a flurry of 20 COVID-related data sets this week, taking its biggest step yet toward full transparency about the state's pandemic response. Read More

Remembering the scandal that brought down Health Commissioner Howard Zucker

The resignation of Dr. Howard Zucker as state health commissioner marks the end of a term marred by scandal over his role in managing the coronavirus pandemic. The much-debated compelling nursing homes to admit COVID-positive patients, though it origi Read More

After 10 weeks, all but five of the Empire Center’s 63 requests for pandemic data remain unfulfilled

Over the 10 days that Hochul has been in office, there has been no further progress on the Empire Center's record requests. Read More

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Can Cuomo still be impeached?

Andrew Cuomo and Donald Trump have more in common than boyhood homes in Queens. Like Trump, Cuomo could still face impeachment and an impeachment trial despite a promise to resign as Governor later this month. Read More

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!