New York Gov. David Paterson is taking the Rahm Emanuel mantra, "Never let a good crisis go to waste," to the next level. The Paterson plan is simple: Create a budget crisis through rampant overspending, and then repeat the word "emergency" as a justification for tax increases.
Look no further than today's New York Post to see this strategy in action. Gov. Paterson's latest "emergency spending legislation" calls for hundreds of millions of dollars in higher taxes on cigarettes and auto-, homeowner-, and commercial-insurance policies. The thought is that by invoking the severity of the budget situation in New York, the governor can convince legislators and their constituents that tax increases are "necessary."
Gov. Paterson's crisis, however, is of his own creation. After assuming office, he quickly ditched the belief that New York should cut and reform its way out of its mess. His 2009 executive budget increased spending by $1.4 billion, continuing the trend that had seen a 12.5 percent spending increase since 2003, compared with just a 0.5 percent increase in population. This unsustainable spending growth, funded by billions of dollars in tax increases and federal bailout cash, is the driver of Gov. Paterson's purported "emergency." There is no justifying the need for yet more tax increases. The governor and his Democratic majorities in the legislature spent their way into this budget hole.
And remember, just one week ago the governor "backed off" his call for a tobacco tax increase. Apparently he has since forgotten the reason for doing so: It's an incredibly stupid policy move that will give New York the nation's highest cigarette tax rate and will force New York City smokers to pay $6.25 to the government for every purchase. Which, of course, they won't do – they'll turn to smuggled cigarettes or jump the border to buy in bulk. Tax-paid cigarette sales have declined 8.3 percent annually over the past decade in New York. Expect that to increase – and tax revenue to fall well short of projections – should Paterson get his way.
Creating "emergencies" as political cover for tax increases is shameful and stupid. A year ago, Gov. Paterson at least had Jon Corzine's New Jersey as a point of comparison. New Jersey voters quickly rectified that situation when they elected Chris Christie. New Yorkers are salivating at the opportunity to do the same.