New York City Mayor Zohran Mamdani boasted this week that his $125.8 billion budget proves socialists “understand economics” and that his administration “budgeted honestly.” In reality, his supposed fiscal triumph is anything but honest. It relies heavily on fiscal gimmickry, a huge bailout from Albany, and accounting maneuvers that push fiscal pain into the future.
Standing in the City Hall Rotunda, Mamdani announced he had reached a “handshake agreement” with City Council Speaker Julie Menin on a $125.8 billion fiscal 2027 budget, a budget that the City Council would then vote to adopt later that day.
The narrative Mamdani wanted to communicate was that his supposedly “capitalist” predecessor, Democrat Eric Adams, a career politician who had never run a business, had left the city with a $12 billion budget deficit that he closed through socialist magic.
“For too long, New York City had relied on budgeting tricks instead of budgeting honestly. Costs were hidden, fiscal cliffs were ignored [and] difficult decisions were deferred for someone else to make,” Mamdani said. “We chose a different path.”
“We found efficiencies in streamlined City government,” Mamdani claimed. “We refused to repeat the mistakes that created the crisis in the first place.” And then Mamdani got to the meat of his story: “And we raised taxes on the wealthiest New Yorkers instead of taking more from those with the least.”
“Throughout this process,” Mamdani continued, “I’ve been reminded of the words of the Austrian economist Friedrich Hayek, ‘If socialists understood economics, they wouldn’t be socialists.’ If these past months have shown us anything, it is that socialists not only understand economics just as well as the capitalists who came before, but that we can solve their years of mismanagement through an embrace of our principles.”
First of all, New York hasn’t been ruled by capitalists in any way since Mayor Michael Bloomberg left office over 10 years ago in 2013. Since then, New York has been ruled by the aforementioned career Democrat Adams and Bill de Blasio, whose early politics included activism on behalf of Nicaragua’s Marxist Sandinista movement. Capitalists, these men are not.
Second, while Mamdani did manage to raise taxes on the wealthy, he raised far less than he wanted, and even his revenue projections are almost certainly too generous. Specifically, Mamdani won approval for a pied-a-terre tax, an annual surcharge on luxury second homes whose owners do not use them as their primary residence. Mamdani claims the tax will raise $500 million a year, but the New York City comptroller estimates that, after accounting for behavioral changes by owners, it will raise only $340 million.
Whatever the actual number, a $500 million tax hike can’t close a $12 billion budget by itself, not even using socialist math.
So how did Mamdani close his budget gap? By using the same “budgeting tricks” and “deferred” decision-making, he claims to have ended, with some good old-fashioned bailouts from Gov. Kathy Hochul (D-NY) thrown in. His single biggest gimmick was delaying scheduled pension payments for city workers, pushing $2.3 billion in obligations onto future taxpayers. Mamdani also wrote down the costs of previously budgeted items, including collective bargaining expenses, essentially assuming that bills City Hall once expected to pay would somehow come in lower.
And finally, Hochul kicked in a $1.5 billion bailout from state taxpayers, including line items for youth programs, public health, and education spending. It was a calculated move by the governor. Mamdani gets the “other people’s money” socialists inevitably need to pay their bills, while Hochul secures Mamdani’s political support for her upcoming reelection.
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Even after all these bailouts and financial chicanery, the comptroller still notes that the city faces structural deficits going forward. New York’s own financial plan shows gaps of $7.1 billion next year and $9.1 billion the year after that. The comptroller says the real gap next year is even higher, at $8.8 billion.
As Mamdani-backed socialist candidates win Democratic primaries nationwide, the party might want to pause before embracing their agenda. His budget is a warning: Blame predecessors, tax unpopular targets, raid state budgets, postpone bills, and call it honesty. Democrats should look closely at Mamdani’s fiscal chicanery before deciding that socialism is the future they want to sell voters.