New York leaders have come upon some good budgetary news recently with the announcement of higher-than-expected tax receipts both by the state and NYC. Unfortunately, the additional billions coming in won’t make a dent in a looming danger that could come to a head next year: an aggressive Donald Trump administration with a Republican government trifecta in hand going after the tens of billions of dollars in federal grants, aid and programs that the city and state receive for everything from Medicaid to building inspections.
An emboldened White House and GOP Congress could try not to just cut but divert already-allocated funds to both fulfill their overarching anti-government goals but to punish what are seen as politically unfriendly jurisdictions. Even if there aren’t steep reductions or specific clawbacks, state and local leaders should still expect to have to receive less overall from the feds and prepare to tighten their belts.
Trump has little interest in the expansive industrial policy that President Biden championed with the Infrastructure Investment and Jobs Act or the Inflation Reduction Act — efforts to invest huge sums into long-term development of domestic industries and public works.
The incoming president and his developing administration seem skeptical of all government programs and spending, with the duo of Elon Musk and Vivek Ramaswamy tapped to head an outside advisory office that aims to slash federal operations and budgets.
Republicans in a paper-thin but still-there majority in the House and with control of the Senate will undoubtedly move to slay longtime bugbears like the Affordable Care Act, which they’ve spent the last decade and a half chipping away at. Budgets for education, research, housing and so on are all on the chopping block.
The irony here is that a huge swath of Trump voters pulled the lever for the ex-president because they believed that he would lower prices and improve their economic situation. When Trump and Musk talked about cutting the government, many of these voters envisioned some nebulous waste that they imagine permeates federal agencies.
There’s no doubt that there are billions of dollars that go essentially down the drain every year, but does the public really want less from Medicare, the VA and Social Security, three of the biggest cost centers?
Feared cuts might all go through in full, or in part, or maybe not at all. Trump is unpredictable and is being pulled in a lot of different directions by different interests. Some of the infighting within the incoming administration will center around the exact scope and type of the federal spending reductions he aims to impose. Unfortunately, city and state leaders cannot wait around for clarity that is unlikely to come before they have to figure out our own spending priorities.
That is going to mean teasing out where cuts can be made without leaving New Yorkers worse off, which means maintaining the basic services that keep people stable and with some financial wiggle room. It also means pursuing all available options to make up disappearing revenues; we’re glad congestion pricing is back online, though it won’t be enough.
