Bloomberg's Republican economic policy prescriptions

Cutting business taxes; cutting personal taxes

Tax cuts were also at the center of the mayor’s agenda. He offered few specifics, but warned that companies who feel they are taxed too highly at the federal level may move overseas, and those who feel they are taxed too highly by a state or locality may move to another state or region. 

“The mayor’s point is that if you want to keep jobs here, be competitive in the world, and attract investment that creates jobs, you don’t want to be raising your business taxes,” said Cunningham.

A recent analysis by Reuters, however, shows that federal corporate taxes as a percentage of the country’s GDP are lower than they have been at any time in the last 60 years (see chart).

Mayor Bloomberg followed his Navy Yard speech with a Dec. 12 appearance on NBC’s Meet the Press where he praised the agreement between President Obama and Republican leaders to extend all the Bush-era tax cuts.

“It’s critical that Congress pass these cuts so that new spending and new investments can create new jobs,” he said.

When asked by Meet the Press moderator David Gregory if he thought that extending the tax cuts for the wealthiest Americans would really promote economic growth, Bloomberg said, “I don’t think there’s any question that they put…more money in people’s hands, and I think that the public will do a better job with more money in their hands to stimulate the economy than you will do with government programs.”

He added, “I don’t believe that you need big stimulus things to get the economy going.”

In contrast, many economists say that tax cuts for the wealthiest Americans actually generate little or no stimulus, and the non-partisan Congressional Budget office found in a November, 2010 report that spending on government programs did achieve a significant stimulative effect on the economy.

The role of innovation

Both at the Navy Yard and on Meet The Press, Bloomberg referenced the need for the government to foster “innovation.” In his speech, the mayor said, “By taking these steps, we can do a far more effective job of unleashing capitalism’s most powerful force - innovation. Unless we innovate, we cannot hope to succeed. And if we do innovate, there is no way we can fail.”

At the Navy Yard, the mayor said that neither the federal stimulus package nor the health care bill did enough to promote innovation. New York City did receive over 550 million dollars in grants from the stimulus package, most of which went to fund research at the city’s hospitals and universities, according to John Parrott of the Fiscal Policy Institute.

The mayor cited examples of past successes that involved government investment that came to be leveraged by private industry and added, “America made big investments in basic science and let the free market work its wonders.”

He has not, however, specified what spending increases he would propose in this or other areas in order to catalyze innovation.

And when Mayor Bloomberg — who describes barriers to innovation as being “much more political than economic — appeals for more innovation, some say that he is calling, at least in part, for government to give businesses more leeway in how they operate.

“First, he’s saying the government needs to have a role,” Petro said. “And then he’s saying that government needs to get out of the way when it comes to innovation and businesses that want to create new ideas and new products. So basically he thinks that the government should help businesses wherever possible, but then government just needs to get out of the way.”

Some of the proposals the mayor set forth echo suggestions that business groups have made in the last year. The Public Policy Institute of New York State, Inc., which is affiliated with the Business Council of New York State, Inc., released a report earlier this year on how to “unfetter” the state’s “static innovation economy.” That report also advocated for fewer regulations on business and lower corporate taxes.

Though the Business Council refused detailed comment on the mayor’s speech, a representative said in an emailed message, “Clearly we share some of the Mayor’s views, especially on reforming regulatory burdens, lowering business taxes and promoting trade.”