ZELINSKY: Soaking Yale

This summer, New Haven saw its own version of a troubling national trend: soak the rich, in order to balance a broken budget. Facing a municipal piggy bank emptied by years of reckless spending, the Board of Aldermen proposed revisiting a 1990 agreement between the city and Yale, one that closed parts of High and Wall streets to cars.

Twenty years ago, the University paid over $1 million in cash and another $50 million in local development fees in exchange for desperately needed pedestrian walkways in the heart of campus. Now, aldermen want to force Yale to fork over more money by exploiting a provision in the agreement that allows New Haven and Yale to reopen the streets if both parties agree to such reopening in a fair and “mutually acceptable manner.” It’s a bald threat: pay up, or we’ll open up Yale’s most important walkways to traffic.

The Board of Aldermen’s current plan is meant to extort “rich” Yale for more money by unilaterally revising the agreement, a power the city does not have. This takes serious chutzpah: The University already makes voluntary payments to the city in lieu of taxes, polices its campus, and recently underwrote New Haven Promise to massive expense.

To his credit, Mayor DeStefano has acknowledged that soaking Yale holds little legal and practical merit. No reasonable reading of the 1990 agreement gives the city the power to change the deal without Yale’s consent. And, if even DeStefano — the duke of poor economic policy, who wants a local option sales tax — thinks that this tactic is a recipe for disaster, the Board of Aldermen has sunk to a new low.

When the city’s lawyers refused to endorse the Board, New Haven aldermen started the search for more pliant lawyers who would. So much for accountability and transparency.

The real solutions to the city’s fiscal problems are simple, but politically unpalatable to the Board: we must lower property taxes, cut bloated public employee pensions and use tax incentives to bring employers into New Haven. Local unions started this soaking scheme to wring cash from the University. Their aim is to obscure and distract from the real problem: Their stubborn refusal to make the concessions necessary to put the city back in the black. The unions have now captured the aldermen, most of whom rely on union-support in elections.

“But it’s just a few million,” some might say. When we have an endowment of $16 billion, what’s a little more or less among friends? After all, it’s not as if Yale is making massive cuts in departments’ funding, freezing new course offerings, and increasing the self-help portion for those on financial aid. Oh.

Every extra, umpteenth dollar Yale donates to New Haven means less to accomplish Yale’s core mission: educating students. By undermining the University’s raison d’etre, the aldermen undercut Yale’s academic community that attracts world-renowned businesses, providing much needed economic vibrancy to the city. This counterproductive proposal and the faux-populist trend it represents will only hurt New Haven in the long run.

Yale students deserve to know what Mike Jones ’11, our alderman, and his possible successors, Vinay Nayak ’14 and Sarah Eidelson ’12, will do to fight on the University’s behalf. Will they call the Board’s tactic what it is: illegal hand-waving and economic idiocy? Or will they continue the pattern Mr. Jones established with his wage-hike bill — an economic naïveté that will further set this city back?

Comments

  • jnewsham

    So you spend half the column decrying the board of aldermen for seeking to renege on its contracts with Yale, and then urge them to unilaterally “cut bloated public employee pensions?”

  • Gracchus

    This article would be brilliant satire if it weren’t so patently ignorant.

    First let’s see some average marginal federal income tax rates for the highest U.S. earning brackets under past presidents. To emphasize my point, we’ll just look at Republicans.
    –1953-1961, Dwight Eisenhower: 91.0%
    –1969-1974 Richard Nixon, 71.0%
    –1981-1989 Ronald Reagan 51.6%
    **”Soak the rich,” socialist Obama: 35.0%**

    Secondly, GE made big news last year when it was found that they paid nothing in federal income taxes (and further received subsidies equivalent to about 17% of their yearly profits–*how’s that for an invisible hand, Mr. Zelinsky?*). One by one it came out that through subsidies and loopholes, several major American companies paid billions less than the average blue collar worker (whom this article dares to call “bloated” with pension funds). You can really find this story anywhere, but here’s a business source for your pleasure: http://www.businessinsider.com/16-more-profitable-companies-that-pay-almost-nothing-in-taxes-2011-3.

    Finally, a more recent study found 25 top American companies had CEO salaries that exceeded their total federal income taxes: http://www.ips-dc.org/reports/executive_excess_2011_the_massive_ceo_rewards_for_tax_dodging.

    Yes, there are more specific issues related to New Haven. Frankly, however, I’ve already wasted enough time here on free market fundamentalists like Zelinsky, who in continuing to bemoan the plight of America’s super rich (in the face of such hardline Marxists as Warren Buffet) are revealing themselves to be as good of blind ideologues as the most dogmatic defenders of Soviet Communism 30 years ago. *If only minimum wage were repealed, then we’d recover all the deadweight loss and have full employment at 25 cents an hour!* Take your head out of that intro microecon textbook for a second to notice how the world really works.

  • Gracchus

    For the record, before Zelinsky or others ignore the argument itself and cry foul, the above tax figures are from The Tax Foundation–a conservative, anti-tax think tank.

  • yalieForASaneNH

    Is this some kind of sick joke?

  • yalieForASaneNH

    Yale does NOT pay its fair share which is why New Haven tax-payers are getting screwed, why the city’s budget is screwed, and why New Haven is a tense place to live no matter who you are (student or not). Groveling over a million here and a million there -which is absolutely pocket change for this multi-national corporation- particularly when Yale just had a record endowment year is incredibly distasteful. Frankly I’m disgusted that, surrounded by a sea of poverty (in which Yale plays a clear role) and inequality-fueled crime, Yale’s response is to build more walls and defend its lack of investment in New Haven. Gross. If ONLY we were soaking the rich. They can afford plenty of umbrellas. I doubt they’d even feel a drop. Meanwhile the poor -which is rapidly expanding to include more and more formerly middle-class folk thanks to corporate greed, disinvestment, gov’t trade policies, and wealth hoarding- is drowning. Thanks for bringing the class war on the bottom 99% of americans to Yale and for standing up for the little guy, Zalinksy.

    • River_Tam

      The only class war being conducted in America is being conducted in the feverish imaginations of privileged Yalies who read too much Paul Krugman and listen to too much Rachel Maddow.

  • morse_14

    I highly doubt that you’re actually a Yalie, given that you referred to us as a “corporation” and that you misspelled the author’s name. As for the rest of your argument–well, it’s about as spurious as your credentials.

  • Gracchus

    @morse_14 Calling someone’s entire statement “spurious” is not a rebuttal, and frankly yalieForASaneNH’s argumentative credentials far exceed your own. In terms of Yale being a corporation, you reveal only your own ignorance (see http://www.yale.edu/about/corporation.htm, for starters). There only remains the misplaced “a” instead of “e”, which hardly seems like grounds for assuming a lack of Yale affiliation, especially given the intellectual merits of your contribution here. Instead of considering the content of what was said, you will probably now suggest something like I am in cahoots with the above poster (no offense yalie…NH but I’m not a fan of your handle’s capitalization, much less know who you are!). #adhominem

  • HighStreet2010

    @yalieforasaneNH – what is Yale’s fair share? It seems ill-defined. You didn’t address the article’s pertinent points, which were that Yale isn’t legally obligated to pay anything to the city, yet does anyway in very non-trivial amounts; that Yale is also freezing wages, slowing hiring, and cutting back financial aid (you dismiss this by saying “millions are absolutely trivial” – I think the article has you beat on the face of the evidence); and that this particular instance of “pay or we’ll open your walkways to traffic” is probably not really legal and is easily compared to extortion. You may not agree with Zelinsky’s economics, but these points still need addressing. Since you think the article was comedy, I await your serious response – how much should Yale be paying?

    Also, I would appreciate an explanation of Yale’s causal role in New Haven’s poverty. Was it our corporate greed, that we sacrificed our souls in the quest to have a nice place to study what it means to have a soul?

    And Gracchus, calm down there chief. You don’t need to launch into paragraphs of unrelated talking points just because someone suggested lowering a tax and cutting pensions. Save some froth for later, the mouth can only hold so much. And for the good of everyone, lay off the hashtagging.

  • morse_14

    1. Find me a Yalie who refers to Yale as a corporation, and I’ll concede that point. Your link also doesn’t work, FWIW.
    2. I don’t get into internet flame wars, so I’m rather happy with dismissing irrelevant arguments. Including your own.

  • Gracchus

    @morse_14 <–Yale College 2012, Yale is a corporation. Point conceded. Oops an “l” was cut off the “html,” though shouldn’t a genuine Yalie be able to creatively figure that out? Again categorical dismissal without the slightest tidbit of content…your comments aren’t so much insidious as boring because of this.

  • blah

    what is this national trend to “soak the rich” in order to balance our national budget that you speak of? as far as I can tell, our tax policy has been moving in the opposite direction for over 10 years.

  • phantomllama

    Excellent column. As for ‘yalieforasaneNH’, please consider what New Haven without Yale would look like. (You’ll find the answer a few miles away in Bridgeport.)

    Let’s not forget that New Haven’s response to Yale’s generosity is somewhere between ambivalence and hostility. (Remember Elevate, anyone?) I wonder what we’ll get if we send still more money; assault rifles on Old Campus?

    A city that can’t make something of itself despite having one of the world’s best universities right in its middle is a miserable failure. If the only response of the Aldermen is to seek to steal more money from Yale, they are patently unfit to serve.

    But perhaps whilst we’re discussing this issue, we can consider buying Elm Street from New Haven too, thus bringing us closer to achieving the beautiful unified plans for the campus set out by John Russell Pope. Park and Ride schemes work brilliantly in Europe (Oxford and Cambridge have particularly effective examples) – I see no reason why we need to have traffic pouring constantly through the centre of campus.

    • Stereomedia

      Yale is welcome to move to Bridgeport. If so, I claim Harkness Tower.

      Also, for elm street, please consider foot bridge idea.

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