People overestimate the effect of the stock market on the city. It just that the 1987 stock market crash coincided with information technology that wiped out hundreds of thousands of jobs in NYC. It won't happen this time around. In the prior Wall St downturn (1981-1983) the city lost about 20,000 jobs, not 300,000. Look for that to happen again. I'm more worried that rising real estate values (and subway crowding) will choke us off. That killed us in the 1980s too. People are starting to leave because they can't afford it.
Paul is right about Medicaid, but wrong about Giuliani cutting it back. He tried, but the Medicaid machine is too powerful. If you add government employment and government-dependent health care and social services employment, its been going up. More money for the Democratic "non-profit" patronage base, less for schools and trains.
The state and local taxes used to fund "matching payments" for Medicaid aborb 2.6 percent of all the income earned by city residents. The national average is 1.0 percent. Even though much of the cost is shifted to the city, Medicaid taxes still absorb 2.0 percent of the money earned by residents of the rest of the state, placing in third behind NYC and Delaware. It's 1.1 percent in NJ -- that's why its taxes are lower.
Equally unfortuantely, the rest of the state has a Republican patronage machine to match the "social and health services -- industrial complex" in the city. The best paid people in the rest of the state work for state and local government, and there's a lot of them. Local government is an average share of the economy in NYC, a
huge share in the rest of the state.
No one is willing to say that local government in the rest of the stae is overpaid and overstaffed. No Democrat is willing to say that the reason the city spends so little on everything else and collects so much in taxes is that it spends so much on Medicaid. And no one understands why we can't afford the Second Ave.
I have some charts I'd love to see Rudy and Hillary answer some questions about.