New York City’s Obama economic boom

Manhattan's High Line trail overlooking new West Side construction

Manhattan’s High Line trail overlooking new West Side construction

A visit to New York City reveals a metropolis transformed by a seemingly unprecedented economic boom. Numerous neighborhoods, such as the areas along the well-planned High Line park, are gentrifying and have become Euro-fashionable, with boutiques to match. Williamsburg, Brooklyn, once home to bearded Hasidic Jews, is now the Mecca of bearded hipsters and young families, and has almost become a pricey parody of itself. Condo skyscrapers are reaching new heights, both physically and in terms of dollars. Restaurants and cafes, many of them quite expensive, are filled night after night. And President Barack Obama deserves a fair share of the credit.

We can point to at least three things that President Obama did which have set up an economic boom in New York City and the United States as a whole:

1. The Stimulus

When President Obama took office, America was hemorrhaging  jobs at the rate of 600,000 per month. President Obama was able to get his Stimulus passed within less than a month, and the Stimulus has turned those job losses around. The U.S. has now had a record 54 consecutive months of private sector job growth, with more than 10 million jobs created. America’s economy has been growing almost every quarter instead of shrinking under Bush, and growth for the most recent quarter increased a healthy 4.6 percent.

2. The Affordable Care Act

As planned, the Affordable Care Act has lowered healthcare costs for hospitals, individuals and the government. Moreover, as the ACA has given health insurance companies a windfall of millions of new paying customers, many of them in middle or lower income brackets who previously could not afford health insurance, as a tradeoff for certain rules and protections, such as the all-important prohibition against denying coverage due to pre-existing conditions. Additionally, the ACA is tilted toward preventive care, which will save many people a lot of catastrophic healthcare costs later on.

3. The Tax Code Change

In January 2013, President Obama signed into law a small tax increase on the wealthiest Americans, i.e., those earning over $400,000 annually. That has helped increase federal tax revenues 7.7 percent this year. Many high-income individuals who may have been hit by the tax increase live in New York. They may have grumbled about President Obama going after them. But the tradeoff has been magnificent, as they have made much more money from their growing businesses and appreciating investments in real estate, stocks, etc. Moreover, many of those whose principal income comes from capital gains and hedge funds, which constitutes much of New York’s investment class, probably didn’t see any tax increase at all.

As a result of these steps, the U.S. deficit has gone down from $1.4 trillion in 2009 (per George W. Bush‘s last budget) to a projected $506 billion for 2014. The stock market has more than doubled, from under 8,000 the day Bush left office to over 17,000 today. The cost of capital (i.e., interest rates) for investors is at or near historic lows. The capital markets love when America is on a path to fiscal discipline, which last occurred, not coincidentally, under Democratic President Bill Clinton. And real estate developers and wealthy individuals, who make money from their investments, thus have much more money to spend on buildings, condos, clothing, meals, art auctions, travel, spas and other goods and services in the Big Apple, as well as being able to hire more workers for their businesses.

This is not to deny that in New York City, like other areas of the U.S., many of the benefits of economic recovery have gone to the very wealthy. The Occupy Wall Street movement and the more recent fast food worker protests in New York City attest to that fact. For instance, wealthy Americans, not those in the middle class or lower income brackets, are more likely to have a lot of stock market and other capital investments that have risen so sharply since President Obama took office.  The answer is to vote Republicans out of office and vote in more Democrats, who have a proven record of trying to grow America’s economy from the bottom up or the middle out rather than from the top down.

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