Now It Can Be Told: Mamdani’s Plans Are Going to Be Wildly Expensive

Zohran Mamdani won his race to become the next mayor of New York City on Tuesday. On Thursday the NY Times published a story explaining just how expensive his plans for the city will be. Let’s start with free child care:

The biggest plan, by far, is free universal child care. The city already offers free preschool for all 4-year-olds and many 3-year-olds. Expanding child care to infants and to toddlers under 3 would be a major challenge. Mr. Mamdani’s administration would have to create new day care facilities and hire scores of child care workers.

Mr. Mamdani’s campaign estimated that this could cost $6 billion annually.

The Mamdani estimate is roughly equal to the annual cost of the NYPD, the largest police department in the United States. But it’s important to note that no one really knows what this will cost. One left-wing group has estimated the cost for NYC could be as little as $2.5 billion per year but other estimates of the cost of expanding a program like his to the entire state come in at $12.7 billion to $20 billion per year. Just shy of half the state’s population lives in New York City so the cost of Mamdani’s plan could range from $6 billion up to $9 billion per year. Again, no one knows because the cost is dependent on a lot of factors including the wages paid to the caretakers.

Estimates for child care programs vary widely depending on enrollment rates and the wage levels of the child care workers. The average annual salary of a child care worker in New York State is $38,000. Advocates say that it should be closer to $85,000, the average for a kindergarten teacher.

Experts agree that implementing the plan would be a monumental task. Lauren Melodia, the director of economic and fiscal policy at the Center for New York City Affairs at the New School, who is studying the costs, said that the city needs more child care workers, that it is a labor-intensive industry and that many workers are currently underpaid.

But experts also agree that it would have economic benefits for the city and for mothers in particular. A recent report from the city comptroller found that it would bring 14,000 mothers to the work force, generating $900 million in labor income.

I’m no economist but spending $6 billion per year (or more) to generate $900 million in labor income doesn’t strike me as a great deal for city taxpayers.

Also, completely ignored is the question of how socializing motherhood impacts these children. Under Mamdani’s plan, they can be dropped off for care starting as young as 6 weeks. Experts recommend not taking kittens away from their mothers for at least 8-12 weeks and kittens develop much faster than humans. What are the long term effects of giving children to caregivers this early?

I also wonder about disease. Anyone who has children is familiar with what happens at the start of every school year when kids start mixing again and suddenly whatever is circulating comes home. Children at age 5 and up can handle that, but is it safe for kids at 6 weeks-6 months? It seems to me some of these questions should at least be raised before we rush into this money-losing proposition.

Compared to his child care plan, Mamdani’s plan for free buses is cheap.

The campaign says this will cost less than $800 million annually. Last year, there were nearly 410 million bus trips. At a cost of $2.90 per fare, and factoring in 2024’s fare evasion rate of 48 percent among bus riders, it would cost more than $600 million to make buses free.

The cost could fluctuate depending on how many people take the bus. In 2019, a year when ridership was higher before the pandemic changed commuting habits, making buses free would have meant covering $900 million in bus fares.

Making buses free will almost certainly increase ridership, which means higher costs for more buses, maintenance, etc. It’s safe to assume Mamdani’s estimate is the floor for costs.

MTA CEO Janno Lieber has said the cost of free buses could start approaching $1 billion annually in the next several years.

According to the MTA’s website, the agency faces a $3 billion recurring budget shortfall when the federal aid it received during COVID runs out as “ridership isn’t projected to be back to pre-Covid levels in the foreseeable future.” Free buses could deepen that budget shortfall.

But the real problem may come from what free buses does to other city-wide transportation. Will people who get used to free buses still pay for the not-free trains? If not, the costs will go up substantially.

And Mamdani’s plan for city-owned grocery stores is a measly $60 million per year. What’s crazy about this plan is that Mamdani’s resume is so thin there is zero chance he could ever get a job running the operation to set up the planned five grocery stores. He’s simply not capable or experienced enough. And yet, he’s just been elected to run all of these programs and be responsible for amounts of money far in excess of his demonstrated competence.

So where is the money for all of this coming from? From the rich of course. Mamdani is a socialist after all.

Mr. Mamdani wants to raise $9 billion dollars in new revenue by increasing income taxes for wealthy residents and corporate taxes on businesses — a contentious proposal that would require support from state lawmakers.

He also wants to streamline city contracts, hire more auditors to enforce the tax code and collect more fines — three measures that he says could raise an additional $1 billion per year. These changes would most likely need support from the City Council as part of the budget process.

Any potential downsides to these plans? I’m glad you asked. His new tax will make taxes from the city and state about as high as federal taxes.

At an 11.5% rate—and assuming all corporate taxpayers were taxed at the highest rate—corporate tax revenue in the 2024 fiscal year would have reached $11.9 billion, a $4.4 billion increase in revenue. Mamdani’s platform doesn’t explain how corporate tax revenue raised at the state level would flow back to New York City.

For corporations that also are paying New York City’s corporate income tax of 8.85%, their city-and-state tax rate begins to approach the federal 21% corporate tax rate, Walczak said. Some companies also pay an MTA transportation surcharge.

On top of the corporate tax, Mamdani also plans a millionaire’s tax.

New York City’s personal income tax system is relatively flat, but New York state’s income tax regime is more progressive than average, according to the Institute on Taxation and Economic Policy, with the state’s top 1% income earners subject to a 13.5% tax. Mamdani’s proposal would make the combined city and state personal income tax rate the highest in the country for those earning a little over $1 million, according to E.J. McMahon of the Manhattan Institute.

Add these together and a) it’s not clear they’ll raise enough money to cover Mamdani’s plans and b) they look like a great incentive for businesses and wealthy individuals to think about leaving the state. Why pay the highest taxes in the country if you can do your white collar job from anywhere?

But fear not, I’m sure it’s all going to work out really well! New York City’s voters elected a socialist with no experience running anything and put him in charge of their entire future. Now running their economy (and their schools!) is a guy who smiles a lot when asked tough questions, which is ideal if you think about it. What could possibly go wrong? I can’t think of anything at all.