1) Sorry New Yorkers: You’ve Just Been Mamdani-ed

New York City faces a $12 billion budget gap in its massive $119 billion budget.

Hmm. We wonder why. Well maybe it’s because New York spends nearly twice as much per resident as the average city with one million or more residents.

So much for economies of scale.

Now, if you want a REALLY good laugh, here is Zohran’s assessment of the problem:

"A $12 billion fiscal deficit cannot be resolved through efficiencies and savings alone.”  

Right. So you can’t cut 10% of the spending in the world's most bloated municipal budget?

The chart below presents both the raw figures from the Census Bureau (in orange) and "fiscally standardized" totals from the liberal Lincoln Institute for Land Policy that adjust for services being provided by different levels of government in different places (in blue).

Even by the adjusted measure - the most favorable possible to New York - NYC would still be the top city spender per capita by a wide margin with a 10% cut.

A giant tax increase is coming to New York City. But on who exactly? New York already has about the highest tax rates on the rich of any place in the western world.  

Now how do you like democratic socialism?

2) Jobs in Red and Blue

We periodically report on job growth since the pandemic with color-coding for political control, via UP senior fellow, EJ Antoni. Here's his latest look, through year-end 2025.  Seven of the top 10 have unified Republican control, while the other three have divided government. Six of the bottom 10 have unified Democratic control, and deep blue Massachusetts, Hawaii, and DC have STILL not recovered pre-pandemic employment levels.

Massachusetts recently passed a soak the rich millionaire tax raising the income tax and capital gains tax from 5% to 9% on millionaires. And the state now ranks 47th in job growth.

What’s the definition of insanity again?

3) Meanwhile, Latin America Continues to Reject Socialism in Favor of Free Markets

Another domino has fallen in Central America.  

Sunday's landslide victory of Laura Fernández, the 39-year-old conservative candidate for president of Costa Rica, is welcome news and part of a continuing trend sweeping Latin America: freer markets and closer ties with the U.S.

The trend began in late 2023 with the election of Javier Milei in Argentina. Since then, Milei's free-market approach has paid huge dividends. Inflation has declined from 300% a year to just 30%, the budget deficit is now zero and the poverty rate has plunged from 52% to 31%. His party won October's mid-term election in a landslide.

Inspired by both Milei and the U.S., country after country in Latin America is moving to the right:

• Ecuador: President Daniel Noboa won re-election in April of last year, defeating leftist Luisa Gonzalez with 56% of the vote.

  
  

• Bolivia: In August, the socialist MAS party that had been In power for 20 years was repudiated with the victory of conservative Rodrigo Paz.  

  
  

• Honduras: Conservative Nasry Asfura won November's election in part due to an explicit endorsement from President Trump.

  
  

• Chile: December saw free-market candidate José Antonio Kast win a landslide 58% victory, turning a left-wing government out of office.

The stepped-up activity of drug gangs has heightened fears about crime and become a potent campaign issue. But so too has been the economy.

In Costa Rica, Fernandez ran on her three-year record as Minister of Economic Policy, which saw growth of 4% to 5% a year, unemployment of just 7%, low inflation and debt reduction.

She promised to "fight tirelessly" to promote economic growth, saying it was a necessity to lift people out of poverty.

If New Yorkers want to escape socialism and high taxes, maybe they need to emigrate to Costa Rica.  

4) There’s Even Rampant Fraud In the Federal Cell Phone Subsidy Program

Remember Obama phones?  

For the last 10 years, the Federal Communications Commission has spent some $1 billion a year on the Obama era program that subsidizes cell phone and Internet service for people earning below 135% of the poverty line. Everyone receiving Medicaid, food stamps or public housing money is eligible.

It won't shock HOTLINE readers that the program is prone to fraud and abuse. When Trump  took office last year the FCC's Inspector General began investigating three states with high usage and discovered millions of dollars in subsidies are being spent on deceased people.

Guess which state had the most fraudsters.  

Over 80% of the fraud came out of California, which was providing service for 94,000 "dead" accounts.

The California Public Utilities Commission, all of whose members were appointed by Newsom, has issued a statement that whines: "We take program integrity seriously (sic). But it's misleading -- and political -- to single out California. This is a nationwide issue, not a California scandal."

On that we sort of agree. Time to investigate the other 49 states and see how much abuse can be uncovered.

5) Merz: Europe Has Become "The World Champion of Overregulation"

Conservative German Chancellor, Friedrich Merz, has been in office for almost a year, but has been a disappointment. He has allowed spending to continue to grow out of control and his timid pro-growth proposals have been vetoed by the socialist party that is part of his coalition.

But at least a frustrated Merz recognizes the problem, and when he spoke last month at the Davos conference, he laid out the stark choice facing a declining Europe:

"Both Germany and Europe have wasted incredible potential for growth in recent years by dragging their feet on reforms and by unnecessarily and excessively curtailing entrepreneurial freedom and personal responsibility.

"We must substantially reduce bureaucracy in Europe. The single market was once created to form the most competitive economic area in the world.

"Instead, we have become the world champion of overregulation. That has to end."

To that end, Merz proposed the EU adopt an emergency brake for new regulations and an end to the automatic renewal of outdated rules.

Good luck with that.

6) She’s Got a Point!

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