Brian Lehrer: Brian Lehrer on WNYC. Now, Greg David, business and economics contributor to the news organization THE CITY and director of the business and economics reporting program at the Craig Newmark Graduate School of Journalism at CUNY. His latest article, How Donald Trump's Mass Deportation and Tariffs Would Impact New York's Economy. He's also written recently on the potential impact on housing, on transit, and other aspects of the New York economy and New York City life. We will definitely get to Governor Hochul trying now maybe in a panic to resurrect the congestion pricing plan that she paused before Donald Trump can act on his promise to kill it from Washington. Greg, always good to have you. Welcome back to WNYC.

Greg David: Thank you. Let's see if we can make this segment as depressing as the last one.

Brian Lehrer: Well, first, we were talking a bit in the last segment about AOC/Trump voters in the congresswoman's district in the Bronx and Queens. She's been posting responses from some on her Instagram. The first one I saw at the top of the page that I saw, I didn't see every page was pretty representative of the others that I saw. It said, it's simple. Both you and he are for the working class. I'm curious if, as an economy reporter, you're surprised by that.

Greg David: No, I think there are some people who think that it's very clear nationally that voters held the Democrats responsible for inflation and what they see as a bad economy. All the efforts to convince them the economy wasn't bad failed because they know prices are higher and that made all the difference. I would interpret the New York City election results somewhat differently. As everybody knows by now, Trump made enormous gains in New York City, especially compared with what the Republicans did under Romney or what he did in 2016.

I think the lesson that should be drawn from that is the New York City electorate is far more conservative than the people who represent them in the city council and the state legislature. That's a function of turnout. People turn out in presidential elections and nobody turns out in the primaries that decide who's going to be a city council person or an assembly person or even a state senator, so we have this real imbalance in what New Yorkers think, what many New Yorkers think and what their representatives do on the local level.

At some point that should blow up, but given the turnout issues, maybe it won't. We'll just have to see. I do think that Trump will represent an enormous challenge to the progressives in the city and in the state legislature because his actions will be so far-reaching as far as the city's economy, the city's budget, and all the things that are on the agenda here.

Brian Lehrer: We'll go through some of those because you've written about a whole bunch. Of all the specific New York City economic topics you've written about, I want to start with transit because Trump has said he would block congestion pricing for driving into the Manhattan business district. The congestion pricing, as most of our listeners know, is there or would be there largely to fund MTA improvements. There is developing news on this because Governor Hochul, who paused congestion pricing apparently to help suburban Democrats win back some congressional districts, I don't know if it worked.

They did win a few back, is now apparently trying to revive it before Trump takes office. What's your best take on what's going on in Albany now on that?

Greg David: Well, first of all, I don't think anybody would have voted in those elections on congestion pricing. I think it was a ridiculous thing to do. Having said that, the congestion pricing provides $16 billion in much-needed capital money to fix the transit system. Hochul's latest gambit is, well, could I institute a $9 congestion pricing instead of $15 fee? The question is whether that requires her to go back to the federal government to get approval. The feds have to approve congestion pricing. Would they approve nine? Could they approve it by January 20th?

If they did approve it, can Trump revoke the approval? These are all unanswered questions. If congestion pricing is not implemented, she and the state legislature are going to be searching for a $1 billion-a-year revenue stream to fix the capital hole. It's a very complicated and difficult issue, and I think they completely misread it. Congestion pricing was unpopular at first, where it was implemented, and then became very popular. I came into the city Friday to go to see Ragtime. The $15 fee would have been so insignificant in terms of my total cost for the evening. I just don't understand this constant drumbeat about it. [crosstalk]

Brian Lehrer: A lot of people would say maybe insignificant for you, not insignificant for a lot of other people.

Greg David: Well, the people who drive into the city can afford it. We know that. Most of the people who drive into the city can afford it. If you're coming in for a night out, it's not that big a deal. Anyway, it's a $16 billion hole. The quality of the transit system depends on it. It's a big issue. It's going to continue to reverberate for I think another year. It's only the tip of the iceberg. Brian. I figured out that there's $40 billion in money coming to New York that is threatened by a Republican and Trump victory. You've got the Gateway tunnel, which is I think another $13 billion in federal money.

The feds have granted New York City 3 billion in infrastructure money. This is money that's been promised but not delivered yet. Are the Republicans going to seek to take it back? Are they going to use it to finance tax cuts? That's what's on the agenda now. We won't right away, but it's on the agenda.

Brian Lehrer: A lot of that $40 billion that I saw you cite in your article as well, would be from the bipartisan infrastructure bill that got passed during the Biden administration, also the climate measures passed in the so called Inflation Reduction Act. You think Trump getting into office can just stop that money from going out the door if it's been passed.

Greg David: I think people have wondered whether they can. Remember, here's the bigger game. Trump has promised enormous tax cuts. Republicans are on board with tax cuts. They have to finance them somehow. I mean, they can blow the deficit up more, but they're going to try to find money to offset the tax cuts. These are possible. We'll see, but it's certainly on the agenda.

Brian Lehrer: Since you mentioned tax cuts, how about the state and local tax deduction issue? The $10,000 limit on deducting state and local taxes from your federal income tax that has affected so many middle to upper middle to wealthier New Yorkers. Trump seems to say that he would repeal that limit. What's your take?

Greg David: Well, he has committed to repealing the limit. It's interesting. It tends to be a gift to Democrats who control the most progressive areas in New York and California that would benefit the most. We'll see. It's a very expensive thing to reinstate. When they put the limit in, they also lowered tax rates. We'll see, but he's committed to it, so I guess it's on the agenda. Of course, New York, California, and other states with high-income taxes will have to be in favor of it because their constituents want the ability to deduct those taxes back.

Brian Lehrer: As I read through your article on infrastructure, it goes down to such local projects that people may not be associating with the federal government. You wrote in the last two months, the Adams administration has announced it has won additional money for modernizing the Brooklyn Army Terminal and a Greenway on 10th Avenue and Inwood and EV stations in lower-income areas of the city. That depends on Washington, those things.

Greg David: That depends on the money from the infrastructure bill. We certainly don't have the money to replace it, especially if congestion pricing doesn't go forward. It's money that's promised and there are-- Citi thinks it's going to win even more money in the next couple months. Yes, that's why there's so much at stake. You were talking a little bit about this in the preceding section. In the first administration, people said, or in 2016, Trump should be taken figuratively, but not literally. I think we learned he should be taken literally.

The other part of this is the CHIPS Act, which is putting massive amounts of money into bringing chip-making back to the US. There's a $10 billion deal for a chip factory near Syracuse. When the speaker of the House was up in Syracuse, he said, well, we want to get that money back. Then he quickly backtracked. Still, that would be a crucial issue in New York and a couple of other places and especially Arizona where we're building like three or four of them.

Brian Lehrer: Well, I would imagine that Trump would support the CHIPS Act and implement the CHIPS Act because supposedly he's all about increasing manufacturing jobs in the United States, or am I missing something?

Greg David: I think you're right on that point, but I think you can't underestimate that their number one priority is-- Their number two-- Their top two priorities are immigration and taxes. Taxes are going to require some sacrifices somewhere, and we should all be watching what those are.

Brian Lehrer: Listeners, we can take some phone calls on the business and economic implications of Trump's election for Greg David, who reports on those things for the news organization THE CITY and directs the business and economics reporting program at the CUNY, Craig Newmark Graduate School of Journalism, 212-433-WNYC. Call or text 212-433-9692 and let's go next to your article on mass deportations and tariffs. If we think of mass deportations as largely a humanitarian issue or an anti-crime issue, depending on your point of view, your report on it in the city was in economic terms, where do you start that analysis?

Greg David: 330,000 undocumented workers in New York City, another 100,000 with some sort of status, maybe DACA, maybe temporary asylum status. Remove those people from the workforce and what happens to The New York City economy, well, it's going to suffer. Lots of jobs are going to be unfilled. I got some new information over the weekend. Something like 60% of all dishwashers in New York City are undocumented or they're not citizens and many of them are undocumented. If we deport all these people, is the economy going to be better off? Economists say no. Not only will, of course, we have a worker shortage, which by the way, at the very least would result in enormous cost pressures on businesses and probably a return of inflation, but those people spend money, they contribute to the economy. Undocumented people in New York State pay about $3 billion in taxes a year. The economic implications are enormous. In the view of all reputable economists I have talked to and read, the consequences will be bad, not good.

Brian Lehrer: Those numbers you wrote about the undocumented immigrants in New York, that here I'm reading your article, "Mass deportations would reduce the city's workforce by hundreds of thousands of people, crippling businesses, experts say." Do you really think he'll be deporting hundreds of thousands of people from New York City alone? That's what you project there?

Greg David: Well, that's what he said. I don't know what he's going to do, do you? I mean, none of us know, but he has promised mass deportations. Right. I think we should not assume that he won't follow through on what he said.

Brian Lehrer: Also in Greg's article, listeners, just so you know, he wrote about 310,000 New York City workers were undocumented in 2022, according to the Center for Migration Studies, and that number has almost certainly increased with the recent surge of asylum seekers. These workers represent at least 7% of the city's entire labor force. You also wrote that consumer spending, which accounts for about 60% of New York State's gross domestic product, that is 60% of the total New York State economy, consumer spending would also be impacted. Citing Lauren Melodia, an economist at the center for City affairs at the New School. Can you elaborate on that?

Greg David: Well, these people, these 310,000 plus whatever other number there are, spend money. They work. We know immigrants work at higher numbers than native-born US Citizens and they spend money in the economy. It's what I teach about population. Is a shrinking population good for the economy? No, it's terrible for the economy. Economies need populations to be growing in order to keep expanding. The immigration/deportation plans of Donald Trump are designed to shrink the workforce and shrink and wind up shrinking the economy. That's not what they say will happen, but that's what all economists say will happen.

Brian Lehrer: Yes. How about housing? You wrote about the potential impacts of housing of a Trump election. Trump campaigned on mass deportation of people here illegally, reducing demand, therefore, prices for housing. We had a call to that effect last hour as well. Do you buy it?

Greg David: No, I don't buy it and nobody I talk to buys it either. First of all, in the short run, construction workers are heavily undocumented, so that's going to raise the cost of construction. I don't think that immigrants are sweeping up a huge amount of housing. Now there's this little thing that's going to play out in New York City if that's true. We have 20,000 hotel rooms off the market because they're used for shelters. If they come back on the market, well, that could send hotel prices down a bit and might provide some opportunities to convert them to housing.

The loss of the Democrats was a big blow to housing in New York because Kamala Harris promised an $18 billion program to spur housing. Democrats came out on the side of the YIMBY movement. Yes, in my backyard movement. She wanted to provide help for people to buy homes. She had a robust agenda that aligns with what we're trying to do in New York with the City of Yes. We're not going to get that, also, I talked to one of my housing experts via email, and she pointed out to me that if the Republicans do gain control of the House, you are now going to have the Congress in the hands of people who don't want to spend federal money on housing.

She thinks the billions of dollars a year we get from the feds to help our housing could be endangered. I would be inclined to agree with her. I think housing is like transit, housing is something to really watch to see what kind of pressures are brought to bear on New York if the Republicans engage in their historic opposition to federal spending on this.

Brian Lehrer: Let's try Mike in Lake Hopatcong. You're on WNYC. Hi, Mike.

Mike: Hello, Brian. Just calling in reference to, like you say, the salt tax here from New Jersey, especially we finance our public education systems with that. Do you think that the powers that be are so much against public education, and that there's no chance of that getting back, that they're also anti-union, which public education is a big, strong union workforce? Would that be the other factors to hold back the salt tax?

Brian Lehrer: Mike, thank you, Greg.

Greg David: I think the salt deduction is purely about the numbers. Will the Republicans find ways to incorporate restoring the salt deduction in their tax cuts, which are designed to especially cut the corporate tax rate, cut the rates for high-income individuals, and maybe even those further down the line? It's just a numbers game. I do think the new administration will be anti-union, certainly with Elon Musk having Trump's ear, we can expect that, but I don't think that will play into the salt tax deduction.

Brian Lehrer: I think we have Mitch and Yonkers back. Mitch, are you there?

Mitch: Hi, Brian. Yes. Can you hear me?

Brian Lehrer: Yes. Take two. Go ahead, give it a shot.

Mitch: Okay, thanks. Hi, Greg. My question involves tax receipts and then the money coming back to very high tax federal tax collection states like New York, California. From what I understand, our federal taxes go directly to the IRS, federal government, and then they get remitted back to us. Certainly a large percentage of federal tax receipts come from states like New York and California. Is there anything we can do about that, about taking control of our own money?

Greg David: That's not quite right. Yes, New York and California send more money to the federal government than they get back because that's what a progressive tax system is supposed to do because we're both very rich and the money goes to places like Mississippi and other poor states. I would argue that we shouldn't be doing anything about that. Now, there is a big imbalance and New York politicians use that in their fight to get more money from the federal government. Places with a lot of rich people should be paying more in federal taxes and places without rich people should be getting more help from the federal government. That's good policy.

Brian Lehrer: Listener and thank you, Mitch. Call us again. Listener pushes back on some of the things you were saying in this text message. It says, how can your guest say that mass deportation will lead to a gap in jobs, but the same mass deportation won't lead to vacancies in housing, in rentals, where these people lived. Where do these immigrants currently live then? At work. What would you say to that listener.

Greg David: That's a very good point. We know the mass deportations will create enormous shortages in the workforce. Whether that will result in lots of housing vacancies and suddenly see prices and rents come down. The economists I talk to are skeptical about that. We'll see. Maybe they'll be right. I don't think they will be.

Brian Lehrer: How about the effects of the tariffs that Trump campaigned on? You wrote about that.

Greg David: Trump says the tariffs are played by foreign companies. Economists say the tariffs are paid by consumers. If they're right, we are looking at an enormous increase in prices, which will push up inflation. The Trump theory is that if we put tariffs on things, manufacturing will come back to the US. It will not come back to New York. We don't have the land, we don't have the low cost required. We are down to something like 50,000 manufacturing jobs, less than 1% of the workforce. Even if Trump is right, New York will pay the price of tariffs and not get the benefit of them even if he's right.

Brian Lehrer: Biden kept many of the tariffs from Trump 1, didn't he?

Greg David: He did. What Trump is talking about is very different this time. The Democrats have targeted tariffs on China and Trump is talking about a 10, maybe 20% tax on all goods coming into the US. If he does that, economists say the cost of those goods are going to go up by exactly the same amount. Actually, I saw a really good study of the washing machine issue. Trump imposed tariffs on washing machines and domestic producers raised their prices even more than the washing machines than the tariff was.

Because if you protect domestic manufacturers from foreign competition, they raise their prices to increase their profits, because that's what they are in business to do, make money.

Brian Lehrer: One more call. Melanie, and are you in Loch Arbor, New Jersey? Is that where you are, Melanie?

Melanie: Yes, I am. Hi. My question is, what do people who voted for Trump think they're going to eat? Because most of our food nowadays, the vegetables are picked by immigrants, the fruits, same with the meat production companies, and slaughterhouses are employing migrants. Chicken factories, that's what you have to call them, factories. Eggs and chicken production, all of the fish and seafood that's produced, this is all-- These factories are all staffed by immigrants. Do they think all of a sudden Americans are just dying to jump into these jobs, and will work for the same amount of money? What do they plan on eating? If they think the cost of food is high now, just wait and see.

Brian Lehrer: Melanie, thank you very much. Greg. Are there good numbers on that? This is something that I think people generally think, when they stop to think about it, that a lot of the farmworkers are undocumented immigrants. How true is that? I know you report on New York City's economy, so maybe this is not on your beat, but any idea?

Greg David: I don't know those numbers specifically. I do know numbers in New York City. I just got some new numbers over the weekend that shows that an overwhelming number of our dishwashers are not citizens. I have to get that right. Not citizens. Same with people who carry luggage, et cetera, and in construction, helpers are heavily non-citizens. I don't have specific numbers on this, but what I would-- I read a very interesting headline. I saw a very interesting headline last week. Another loser in the election. Economists. It's fairly clear that people who voted for Trump on economic grounds do not believe what economists think about the economy.

They do not believe bad things will happen. They are really upset at what they see as very high prices and they want them to come down. Now, economists would say if we have prices actually come down, it will be a sign of a terrible economy. If prices come down, are we going to bring wages down, too? That's what happens in really bad economic downturns. What is clear is that the economic arguments that I'm making here today and economists have made did not resonate with a lot of voters.

Brian Lehrer: Well, last question then. They apparently didn't resonate with Wall Street either, because Wall Street is booming since the election, or should we attribute it to something other than how they see the future economy under Donald Trump?

Greg David: No, Wall Street is booming because they think Trump is going to cut corporate taxes and that's going to lead to higher profits. Crypto is booming because Trump is all in on crypto, but, Brian, the bond market is not doing well and my retirement plan is going down because, I mean, fully invested in bonds. Why is the bond market not doing well? Because they think Trump's policies are inflationary. Yes, if you're in the stock market and he cuts corporate taxes, everybody thinks, oh, and he's also going to not block mergers and acquisitions, which is going to result in another wave of consolidation and takeovers.

The stocks are going to do well for a while, but some people are worried about inflation coming back, interest rates going up. When interest rates go up, bond prices go down, and my retirement plan lost about 10% in the last month.

Brian Lehrer: Oh, yes. Explain this if I can tack on a little addendum here. I know somebody who's in the process of buying a house and they thought as they're getting ready to apply for a mortgage, that the interest rates were going to come down Yay. After the Fed cut the interest rates from there, but after Trump was elected, the mortgage rates went up even though the Fed's rates were coming down. What?

Greg David: Yes. This is like the first lesson I teach in my class and pound through over and over again. The Fed controls short-term rates. The Fed controls the rate that banks charge each other and maybe you get for the next 30 days. The market sets the long-term rates. There's this auction of treasury securities every Thursday. People come and decide what they're going to pay to buy government bonds at the 10-year bond is the benchmark bond and they are buying based on their expectation for future inflation.

After Trump's victory, the interest rates investors demanded went up. The Fed is cutting rates but long term rates are rising again. That's meaning mortgage rates are higher and people like me whose investments are in bonds are seeing the value of our bonds decline. The Fed controls short term rates. The market controls long term rates.

Brian Lehrer: Greg David, business and economics contributor to the news organization THE CITY and director of the business and economics reporting program at the Craig Newmark Graduate School of Journalism at CUNY. Schooling us a little bit here too when he comes on. Greg, thank you very much for today.

Greg David: Thank you, Brian.

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