Day 2: TAXES
In upstate New York, it’s not Yasser Arafat, the FALN or the Subway Series.
When you’re upstate, it’s still the economy, stupid.
Outside the economic boomtown that is New York City and its surrounding suburbs, the fierce Senate battle between Hillary Rodham Clinton and Rick Lazio has centered on financial solutions for upstate’s shrinking population base.
Clinton says her opponent uses “happy talk” to describe the region, airing an ad with an ostrich burying its head in the sand to symbolize Lazio.
Lazio counters that the region “has turned the corner” and that Clinton is trying to portray upstate as a “vast economic wasteland.”
“If you talk to people in our upstate communities . . . they don’t believe that the New York upstate economy is devastated,” he said this summer.
“They know there’s a lot of work to be done.”
The candidates each have their own set of numbers to bolster their argument.
Clinton says upstate job growth is stagnant, increasing just 0.6 percent annually from 1992 to 1999.
If upstate was an independent state, Clinton often says, it would rank 45th in the nation in job growth.
“I have now spent countless hours talking to parents who tell me – with tears in their eyes – that their children had to leave upstate,” she said last month.
Citing state statistics, Lazio says job growth was 2.9 percent last year – an increase from 1.1 percent in 1997.
His campaign points out that for the first time in 42 years, New York last year surpassed the national average for job growth.
“There’s been great progress,” he said.
But the figures sparked a fight between the Pataki administration and the federal Bureau of Labor Statistics, which argued that the job-growth figure for 1999 was actually only 1.8 percent.
The bureau, overseen by Clinton’s husband, finally dropped its fight, saying the state’s figures were correct. The fight over the upstate economy has put Lazio in a tricky spot because his most powerful political ally is Pataki, the state’s economic steward since 1995.
If Lazio says the region is falling apart, he risks alienating his GOP patron.
But if Lazio says that things are going great upstate, he looks like he’s playing Pollyanna.
“We believe that there is no single defining issue downstate, but we think we’ve succeeded in putting the spotlight on the economy with much of the voters upstate and the upstate media,” said one Clinton adviser.
A telling moment came last week, during a campaign stop Clinton made in Rochester when news broke that Xerox, one of the city’s leading employers, was going to start another round of layoffs.
Before even asking Clinton a question, a local TV reporter told Clinton that Xerox’s bad news “puts egg on your opponent’s face.”
To fight that impression, Lazio says his economic plan, a wide array of tax cuts, would pump $16 billion into the region.
Lazio’s proposed cuts include eliminating estate taxes and the marriage penalty. Clinton favors smaller reductions in each tax.
Clinton’s “upstate economic plan” includes tax breaks for high-tech businesses, increased recruitment and employee training, and $100 million a year in federal bonds to help wire the region for high-speed Internet access.
Both Clinton and Lazio favor raising the minimum wage to $6.15 next year. But Clinton doesn’t support a proposal that Lazio backs, which would exempt some “computer professionals” from overtime pay.
The candidates also differ on how much of a tax break people should get over the next 10 years.
While both candidates say their plan will still eliminate the national debt by 2013, Lazio’s tax-rebate plan is significantly larger than Clinton’s.
The GOP congressman says the price tag of his package is $776 billion. Clinton argues that the actual cost of Lazio’s tax cuts is more than $1 trillion.
While Lazio doesn’t dispute the $496 billion figure Clinton puts on her tax cuts, he argues that the first lady’s proposed programs have a total annual cost of $2.4 trillion – blowing a hole in the budget.
Clinton argues the same thing about Lazio, saying “if you add up everything that my opponent has proposed, he’s spent the entire surplus.”
The first lady’s argument was bolstered last week by a petition signed by 90 economists across the state who blasted Lazio’s plan.
“Should projected surpluses fail to materialize, Lazio’s tax cuts would risk returning us to the era of running chronic deficits to meet routine operating expenses of the federal government,” said the petition distributed by the left-leaning Fiscal Policy Institute.
Not surprisingly, the conservative National Taxpayers Union has its problems with Clinton’s budget proposals which, the group says, would increase federal spending by $242 billion a year.
“I personally thought the differences were immense,” said NTU senior analyst Tom McClusky.