The following appears in the June 29 – July 4, 2012 issue of the Long Island Business News:

President Barack Obama’s recent statement, “The private sector is doing fine” will rank in the annals of presidential quotes next to President Nixon’s “I’m not a crook” and President Ford’s, “There is no Soviet domination of Eastern Europe and will never be under a Ford administration.”

The fact is that 35 months after the Great Recession ended, the United States is experiencing the most anemic private sector recovery in the past half-century.  Between 1960 and 1999, average annual economic growth was 3.5 percent; between 2000 and 2009, 1.7 percent; and since then, economic growth has averaged 0.6 percent.

Many Americans still believe the economy is a mess because unemployment has been over 8 percent for 40 straight months, 23.2 million people are in need of work and the net worth of the middle class has been hemorrhaging. The Federal Reserve Survey of Consumer Finances, released in June, revealed that the overall net worth of the average household in 2007 was $126,000 and in 2010 it was $77,000 – down 40 percent in three years.

With the media spotlight on Obama’s private recovery statement, what was largely overlooked, however, was his follow-up comment: “Where we’re seeing weakness in our economy has to do with state and local government.”

Actually, the public sector is doing well versus the private sector. State and local government employment has been up 4 percent since the recovery has commenced.  Between 2007 and 2010, thanks to gratuitous public employee union contracts, annual wages grew 40 percent faster than wages in the private sector.

Also, public sector workers have benefits far superior to their neighbors who work for private companies.  According to the U.S. Bureau of Labor Statistics, 90 percent of state and local government workers have access to pensions versus 65 percent in the private sector.  Access to health insurance: 87 percent public, 69 percent private. Workers’ average cost of benefits: $14.51 per hour for public workers, $8.55 for private employees.

Obama and his big-government friends do not understand that their prescription – more federal stimulus dollars to state governments to maintain or increase public employee jobs – does not produce economic growth.

In New York, for instance, the billions of Obama stimulus dollars that arrived in 2009-2010 were used not to spur the economy but to expand state expenditures at pre-recession levels – about three times the inflation rate. And when the stimulus money dried up, not only did Albany have to deal with a $10 billion structural deficit, the state’s economic recovery lagged behind most other states.

New York’s unemployment rate in May stood at 8.6 percent versus 8.1 percent a year ago.  The state added only 6,100 private sector jobs in May, significantly behind lower tax and regulation-friendly Ohio’s 19,600 new jobs.

For New York to prosper, it must be acknowledged that public employee salaries and benefits are destroying local economies, not improving them.  Long Island’s residential and commercial real estate values continue to decline because there is little hope that local government spending will be curtailed due to the size of unfunded pension and health care liabilities. Right now, Nassau and Suffolk municipalities and school districts, on average, dedicate 8 percent of their operating funds to pension contributions. Because of increasing pension payouts and lackluster investment returns on pension fund assets, local contributions are expected to grow to 20 percent of operating budget expenditures within the next five years.

Contrary to President Obama’s claims, expanded government has been hindering local economies and destroying municipal tax bases. And if political leaders refuse to say “enough already,” expect ballot-box revolts, similar to San Diego and San Jose, Calif., where voters approved measures June 6 to cut pension and health care benefits to municipal employees and retirees, to spread like wildfire across the nation.

The following appears in the June 15-21, 2012 issue of the Long Island Business News:

If the Bush tax cuts expire at the end of this year, middle-class New Yorkers will face the greatest tax increase in their lifetimes. Contrary to all the bombastic rhetoric insisting the cuts were a windfall for the rich, the reality has been that those changes to the tax code have favored households making less than $250,000 a year.

Here’s what New Yorkers can expect in 2013 if the tax hikes go into effect: Personal income taxes for low income earners will go from 10 percent to 15 percent. The marriage penalty will return, and the child tax credit will decline 50 percent to $500 per child. Higher earners will see their 35 percent maximum rate increase to 39.6 percent.

Add in New York’s maximum rate of 8.823 percent (which has gone up 29 percent under Albany’s so-called 2011 tax reform act) and Long Island’s top earners will be paying a combined top marginal rate of 48.42 percent.

Seniors will be hard-hit if the Bush cuts expire. The top rate on Social Security benefits, which now stands at 30 percent, will increase to 34 percent. Also, the tax on dividends will rise from a flat 15 percent to a maximum rate of 43.4 percent, a 286 percent increase. Many Long Island seniors, who are barely getting by, thanks to the highest property taxes in the nation, will have no alternative but to move to low-tax states.

Other 2013 tax hikes:

• The capital gains tax will go from 15 percent to 23.8 percent
• The death tax estate deduction will drop from $10 million to $1 million
• The death tax rate on estates will go from 35 percent to 55 percent
• The employee Social Security tax will go from 4.2 percent to 6.2 percent
• The alternative minimum tax, which presently affects 4 million households, will affect 30 million households.

And if ObamaCare survives the Supreme Court, tax increases embedded in the law will impact the bottom line of many New Yorkers in 2013. For families making more than $250,000 a year, there will be a 3.8 percent surtax on capital gains, savings account interest, dividends and rental income. These same families will also have to pay an additional 2.9 percent to 3.8 percent on their FICA rate for Medicare Part A.

Then there’s the 20 percent “medicine cabinet” tax individuals under 65 will have to pay if they use funds in their health savings accounts to purchase over-the-counter drugs.

Flexible spending accounts, which under current tax laws are unlimited as to dollar amounts, will be capped at $2,500 in 2013. This will hurt families with big medical bills and limit itemized medical deductions for seniors with high out-of-pocket medical expenses.

There will also be an excise tax imposed on the manufacturers of medical equipment. This will increase the purchase price of pacemakers and other life-saving devices.

A study released in May by the Tax Foundation reported that millions of people have fled the Empire State because it has the second highest state and local tax burden and ranks 49th in business tax climate. Over 3.4 million New Yorkers with a total income of $119 billion have emigrated between 2000 and 2009. The primary destination was Florida, which does not have a state income tax or an estate tax and has a sales tax rate of 6.62 percent – 21 percent lower than New York.

If the Bush tax cuts lapse, expect the Empire State’s tax base and skill power to continue to decline as scores of New Yorkers join caravans headed to tax-friendly states.

This Op-ed piece I wrote appears in the New York Post on June 14, 2012.

This Op-ed piece I wrote appeared in the New York Post on June 11, 2012.

The following appears in the May 18-24, 2012 issue of the Long Island Business News:

Some days I’m sorry I get out of bed. That’s how I felt on the first Saturday in May after reading a slew of government corruption stories in the morning papers.  Here’s the roundup:

• Former state Sen. Hiram Monserrate, who is on probation for assaulting his girlfriend, was sentenced to two years in jail after pleading guilty to using $100,000 of taxpayer dollars to fund one of his campaigns for public office.
• Former state Sen. Pedro Espada this week was convicted of stealing hundreds of thousands of dollars from the Soundview Health Care Network.
• In Brooklyn, three public administrators were charged with stealing $2.6 million. The commissioner of the Department of Public Administration said in a statement, “The investigation exposed an audacious and calculated scheme to steal money from the dead.”
• Federal prosecutors announced they expect to indict 10 more Long Island Rail Road retirees for disability fraud. The October 2011 indictment of 11 former LIRR employees appears to have been only the tip of the iceberg. When The New York Times broke the billion-dollar bogus benefits story three years ago, it reported that “virtually every career employee of the rail road was applying and receiving disability payments giving the Long Island Rail Road a disability rate three to four times that of the average rail road.”

Let’s not forget the recent indictments of three Nassau County commanders, the Nassau County Police Department’s illicit sex inquiry, former state Sen. Carl Kruger’s sentencing to seven years in prison for bribery and honest services fraud, former state Sen. Joe Bruno’s bribery indictment and the Suffolk County grand jury report claiming former County Executive Steve Levy manipulated the Ethics Commission and used it “as a political sword to attack enemies of county officials.”

All in all, not a good spring season for taxpayers.

Historically, New York has had its share of political scandals. In the post-Civil War era, there was Boss William Tweed, (1823-1878), who made government work almost entirely for himself and a few cronies. And then there was Tammany Hall’s George Washington Plunkett, (1842-1924), who is remembered for describing the political corruption of the Roaring Twenties as honest graft. “I seen my opportunities,” he said, “and I took em.” But for the most part, these rogues were small-time crooks who stole for the sake of stealing, hoping not to get caught.

In our times, however, corruption appears to be pervasive at all levels of government for different reasons. Some people in government live under the delusion that they “sacrifice” so much for the public that they are, therefore, entitled to special perks and privileges. (The Government Services Administration Las Vegas scandal comes to mind.)

Others are narcissists who believe they are superior to the rest of society and, therefore, are not bound by the rules that govern the masses.

Then there are those who are infected by what New York Times columnist Ross Douthat calls in his new book, “Bad Religion,” pseudo-faiths that encourage one’s worst impulses instead of serving as a rebuke to avarice. “As a result,” Douthat persuasively argues, “pride becomes ‘healthy self-esteem.’ Vanity becomes ‘self-improvement,’ adultery becomes ‘following your heart,’ greed and gluttony become ‘living the American Dream.’”

The current government corruption crisis is, in my judgment, a spiritual and cultural one. Hence, it will take more than new laws to change hearts and minds. To restore civic virtue, religious and educational leaders will have to take center stage and make a concerted effort to instill in citizens of every age the canon first articulated by New York Governor Grover Cleveland that “public office is a public trust,” not a public trough for self-enrichment and self-aggrandizement.