Mamdani’s ‘Balanced’ Budget Relies On Gimmicks, Bailouts, and Borrowed Time

New York City’s budget crisis has been solved. Socialism finally works. Hooray.

That’s the not-too-believable message from Mayor Zohran Mamdani on Tuesday, who assured voters that despite all they’ve heard about socialism running out of other people’s money, he’d finally gotten around that inconvenient problem.

Weeks after warning that New York City faced a “historic” budget crisis and delaying its mandatory submission, Mamdani suddenly announced that he was “proud” to say that the problem was solved.

“When we came into office, we uncovered a $12 billion budget deficit. Today, I’m proud to say we brought it down to zero,” Mamdani announced triumphantly on X.

Huh?

As you probably guessed, this miracle was accomplished through the wizardry of clever accounting.

Mamdani—or shall we call him “Houdani”—accomplished this “balanced” budget through a slew of new taxes and fees, financial gimmickry that pushes the problem down the road, and what amounted to an indirect bailout by the state of New York.

THE CITY, an independent local news outlet, reported that Mamdani’s $124.7 billion budget was hardly a picture of fiscal restraint.

“It relies on billions of dollars in one-shot or short-term money to fund permanent programs, it stretches out pension payments so the next generation will pay for the retirements of present-day workers, and it projects a $7 billion deficit for the 2028 fiscal year that will need to be closed just one year from now,” the City reported.

Oof.

It’s telling that Mamdani said nothing about the gargantuan deficits that will almost surely hit future budgets because of his decisions today.

It helps to have a compliant governor in the state capital who is willing to sacrifice her state’s interests to avoid angering Mamdani. The New York Post noted that his budget was “built on the back of $4 billion in funny money from Gov. Kathy Hochul.” That’s in addition to another $4 billion promised over the next few years.

A large part of this bailout was funded by allowing New York City to irresponsibly delay funding its pension system.

Ken Girardin and John Ketcham, two fellows at the Manhattan Institute, wrote that Mamdani got the state to essentially change the way pension debt is funded to foist the bulk of the cost onto the future.

“The city wants to reduce those debt payments and instead pay it off over a longer period, likely well into the 2040s—meaning tomorrow’s workers will be taxed extra to pay for city services delivered before some of their parents were born,” they wrote for the New York Post.

Given that both New York City and the state are facing an exodus of high earners thanks to bad policies and not-too-subtle threats, this could add up to an apocalyptic financial crisis in the not-too-distant future.

Mamdani’s budget certainly didn’t solve the very basic problem that the wildly spending city takes in far less in revenue than it spends. Unlike the federal government, the city can’t print money, so they need to find other ways of siphoning it from taxpayers.

“What Mamdani is hailing as a triumph for democratic socialism amounts to a state bailout standing on a pension gimmick wearing a trenchcoat,” Girardin and Ketcham warned.

So, what can we make of Mamdani’s budget?

My take is that his message is pure gaslighting, but good politics in the short term. He can now go to his more gullible supporters and say, “See, look what I can do if I just find a few billionaires to tax. The budget is fine. All your dreams will now come true!”

That’s probably the smart way to be a socialist. Give out the goodies right away, then come up with excuses (or an enemies list) later for why things aren’t’ working out.

Mamdani has Hochul in a bad spot, and he knows it. He’s much more popular with the Democrat base than she is and if New York City sinks the state likely sinks too. That means she’s much more likely to give him what he wants right now, even if it puts New Yorkers living outside the five boroughs in a position where they must shoulder the burden of Mamdani’s economic madness.

But next year will soon come. If the city doesn’t suddenly experience a surge in growth and it doesn’t retain all those rich people it needs to exploit to keep the budget’s figurative head above water, the Big Apple could face a much bigger problem next year.

Even if Hochul retains the governorship, will her cash strapped state be able to bail out New York City yet again? She might not be able to. And then what?

At some point the gaslight will run out of gas.