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      Truss Takes a Bold Economic Gamble. Will It Sink Her Government?

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      Three weeks into her term, Prime Minister Liz Truss’s financial plans have thrown the markets and Britain’s currency into chaos and put her future in peril.LONDON — Prime Minister Liz Truss of Britain campaigned as a tax cutter and champion of supply-side economics, and she won the race to replace her scandal-scarred predecessor, Boris Johnson. Now she has delivered that free-market agenda, and it may sink her government.Four days after Ms. Truss’s tax cuts and deregulatory plans stunned financial markets and threw the British pound into a tailspin, the prime minister’s political future looks increasingly precarious as well.Her Conservative Party is gripped by anxiety, with a new poll showing that the opposition Labour Party has taken a 17 percentage point lead over the Tories. It’s a treacherous place for a prime minister in only her third week on the job.Labour is seizing the moment to present itself as the party of fiscal responsibility. With some experts predicting the pound could tumble to parity with the dollar, economists and political analysts said the uncertainty over Britain’s economic path would continue to hang over the markets and Ms. Truss’s government.“It’s entirely possible she could be replaced before the next election,” said Tim Bale, a professor of politics at Queen Mary University of London, who is an expert on the Conservative Party. “It would be very, very difficult to conduct a full-blown leadership contest again, but I wouldn’t rule anything out.”That Ms. Truss should find herself in this predicament so soon after taking office attests to both the radical nature and awkward timing of her proposals. Cutting taxes at a time of near-double-digit inflation, when central banks in London and elsewhere are raising interest rates, was always going to mark Britain as an economic outlier.But the government compounded the shock last Friday when the chancellor of the Exchequer, Kwasi Kwarteng, unexpectedly announced that the government would also abolish the top income tax rate of 45 percent applied to those earning more than 150,000 pounds, or about $164,000, a year.And Mr. Kwarteng did not submit the package to the scrutiny a government budget normally receives, deepening fears that the tax cuts, without corresponding spending cuts, will blow a hole in Britain’s public finances.Cutting taxes at a time of near-double-digit inflation, when central banks in London and worldwide are raising interest rates, has made Britain an economic outlier.Carl Court/Getty ImagesOn Tuesday, the pound stabilized briefly against the dollar, as did 10-year rates on British government bonds, though both began to gyrate later in the day after a senior official at the Bank of England signaled an aggressive rise in interest rates.The International Monetary Fund, which bailed out Britain in 1976, added to the deepening sense of anxiety when it urged the British government to reconsider the tax cuts. In a statement, it said the cuts would exacerbate inequality and lead to fiscal policy and monetary policy working at “cross purposes.”Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Energy Bills to Soar: Gas and electric charges for most British households are set to rise 80 percent this fall, further squeezing consumers and stoking inflation.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.Already, the specter of higher interest rates was causing the housing market to seize up. Two major British mortgage lenders announced that they would stop offering new loans because of the market volatility. Higher rates will hurt hundreds of thousands of homeowners who need to refinance fixed-term mortgages — property owners, analysts noted, who are the bedrock of the Conservative Party.“It’s not like the U.S., where people are on 30-year mortgages,” said Jonathan Portes, a professor of economics and public policy at King’s College London.An estimated 63 percent of mortgage holders have either floating rate mortgages or loans that will expire in the next two years. And the steep decline of the pound means that interest rates will have to rise even further than they would have merely to curb inflation.Ms. Truss, he said, could have taken a more cautious approach: rolling out the supply-side measures first, like plans to untangle Britain’s cumbersome residential planning rules and build more housing, which are hurdles to economic growth. Then, when inflationary pressures had eased, the government could have cut taxes.But that was never in the cards, Professor Portes said, because Ms. Truss and Mr. Kwarteng are free-market evangelists who ardently believe that cutting taxes will reignite growth, and because they have little more than two years to turn around the economy before they face voters in a general election.“This is ‘shock and awe,’” he said. “Truss, Kwarteng, and the people around them think they had to act quickly. The longer they wait, the more the resistance will build up.”Kwasi Kwarteng, Britain’s chancellor of the Exchequer, announced tax cuts that some fear will blow a hole in Britain’s public finances.Clodagh Kilcoyne/ReutersDuring the campaign, Ms. Truss modeled herself on Margaret Thatcher, who also announced a series of free-market measures after taking office as prime minister and endured a turbulent couple of years. Unlike Ms. Truss, though, Thatcher worried about curbing inflation and shoring up public finances; she even raised some taxes during a recession in 1981 before reducing them in later years.But Thatcher came in after an election victory over an exhausted Labour government, which gave her more time to weather the downturn and for her deregulatory measures to take effect. She also got a lift after Britain vanquished Argentina in the Falklands War in 1982, which uncorked a surge of patriotism.“Thatcher was thinking in 1979 that I only need to give voters something they like by 1982,” said Charles Moore, a former editor of The Daily Telegraph who wrote a three-volume biography of the former prime minister. “Liz Truss hasn’t got this amount of time.”The better analogy to Ms. Truss, he said, is Ronald Reagan, with his emphasis on tax cuts and other supply-side policies, as well as his relative lack of concern for their effect on public deficits. Like Thatcher, Reagan weathered a recession before the United States began growing again in 1983. And like her, he had a cushion before he had to face voters.Ms. Truss, by contrast, has taken office after 12 years of Conservative-led governments, and three years into Mr. Johnson’s tenure. She will have to call an election by the beginning of 2025, at the latest. The Labour Party, which had been divided by Brexit and internal disputes, has been galvanized by the new government’s chaotic start, in particular Mr. Kwarteng’s plan to cut the top tax rate, which has allowed Labour to stake out a clear contrast on issues of economic equity.Speaking at the party’s annual conference in Liverpool on Tuesday, the Labour leader, Keir Starmer, declared that the Conservatives “say they do not believe in redistribution. But they do — from the poor to the rich.”Keir Starmer’s Labour Party is seizing the moment to present itself as the party of fiscal responsibility.Henry Nicholls/ReutersLabour’s lead of 17 percentage points in a new poll by the market research firm, YouGov, is the largest advantage it has had over the Conservatives in two decades. The Tories won the support of just 28 percent of those surveyed, raising questions about its ability to hold on to its existing seats, according to Professor Bale.That forbidding political landscape only adds to the challenge facing Ms. Truss. For the tax cuts to have one of their desired effects — which is to encourage businesses to invest more — economists said companies would need some reassurance that the policy is not going to be reversed by a new government in two years.“This is a very inexperienced government swinging for the fences in a situation where Labour is the strong favorite in the next election, if they don’t swing too far left,” said Kenneth S. Rogoff, a professor of economics at Harvard. “If one believes that the tax cuts are going to be reversed under Labour, and that there is a high chance of a Labour government, why would they influence long-term investment?”Britain, Professor Rogoff said, was also rowing against much greater forces in the global economy. After years of low inflation and extremely low interest rates, the flood of public spending because of the coronavirus pandemic has brought back the scourge of inflation and a shift toward higher rates.“The verdict will almost certainly be that governments borrowed too much and should have raised taxes on the wealthy more,” he said.In the short term, Ms. Truss is likely to find herself increasingly at odds with the Bank of England. The bank was already expected to raise rates at its next meeting in November. On Tuesday, its chief economist, Huw Pill, said the government’s new fiscal policies would require a “significant monetary policy response.”Adam S. Posen, an American economist who once served on the Bank of England’s monetary policy committee, said, “The government’s policies are not only outrageously irresponsible, but they don’t seem to understand that the bank has to respond to these policies by raising interest rates a lot.”The Bank of England, like many other banks worldwide, is expected to raise rates at its meeting next month.Andy Rain/EPA, via ShutterstockMr. Posen, who is the president of the Peterson Institute of International Economics, likened Britain’s loss of credibility in the markets to that of Britain and other European countries in the 1970s and Latin American countries in the 1980s. The best course, he said, would be for the government to reverse its fiscal policy, though he said Ms. Truss and Mr. Kwarteng seemed “willfully committed to it.”Certainly, they have given no indication that they plan to back down. On Tuesday, Mr. Kwarteng told bankers and asset managers that he was confident the government’s plan would work.After the turmoil that led to Mr. Johnson’s ouster in July, and the protracted contest to replace him, few in the Conservative Party have the stomach to move against Ms. Truss now. But analysts note that the new prime minister has a shallow reservoir of support among lawmakers. Barely a third of them voted for her in the final ballot against her primary opponent, Rishi Sunak, and she won the subsequent vote among party members by a closer margin than expected.Taking note of the new YouGov poll, Huw Merriman, a Conservative lawmaker, may have spoken for many of his colleagues when he said on Twitter, “Those of us who backed Rishi Sunak lost the contest, but this poll suggests that the victor is losing our voters with policies we warned against.”“For the good of our country, and the livelihoods of everyone in our country,” he added, “I still hope to be proven wrong.” More

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      How Paul LePage, Running to Lead Maine, Benefited From Florida Tax Breaks

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      Mr. LePage, a former governor who is seeking to reclaim the office, has along with his wife benefited from property tax breaks reserved for permanent Florida residents, public records show.As governor of Maine for two terms until 2019, Paul LePage, a Republican, gained a reputation as one of the pre-Trump era’s most unfiltered politicians.He said he wanted to tell President Barack Obama to “go to hell,” and told the N.A.A.C.P. to “kiss my butt.” He made racist comments about drug dealers who supposedly travel to Maine and “impregnate a young white girl before they leave.”Making a comeback attempt now against his successor, Gov. Janet Mills, a Democrat, Mr. LePage is focusing heavily in his campaign on a push to phase out Maine’s income tax. He argues that the change is needed to keep wealthy residents from moving to Florida for just long enough each year to take advantage of the Sunshine State’s tax breaks.But Mr. LePage and his wife, Ann LePage, who have owned property in Florida for over a decade, have themselves benefited from that state’s tax laws while living in the Maine governor’s mansion, and again as he campaigns to return to the job. From 2009 to 2015, and also from 2018 through the end of this year, the couple received property tax breaks reserved for permanent Florida residents, public records show.The properties in question, both in Ormond Beach, Fla., are a home that the LePages bought in 2008 and sold in 2017, and another that they purchased in 2018 and still own. For both homes, the couple have sought and received what is called a homestead exemption, which is meant to apply only to primary residences in Florida.The sum the couple saved over the years is relatively small: A little over $8,500, according to a New York Times analysis of public records.But this is not the first time the LePages have faced scrutiny over such a tax matter — in 2010, Florida officials fined Mrs. LePage $1,400 before rescinding the penalty — and Mr. LePage’s focus on taxes in the current campaign for governor could open him up to attacks from Democrats.Mr. LePage’s campaign defended the tax moves, saying that Mrs. LePage’s mother had used the Florida home as her primary residence from 2009 until her death in 2015, when the couple removed the first homestead exemption. Mrs. LePage’s mother had scleroderma, a chronic disease that causes hardening of the skin.“Mrs. LePage’s mother would visit Augusta, but due to her condition, she spent a large amount of time, especially in cooler fall, winter and spring periods, at that permanent residence” in Florida, said Brent Littlefield, a spokesman for Mr. LePage’s campaign. “Mrs. LePage also traveled there in winter months to care for her. Her mother kept that as her primary residence while she was alive.”The campaign did not comment on the second exemption held from 2018 through this year. Attempts to reach Mrs. LePage directly were unsuccessful.The State of the 2022 Midterm ElectionsWith the primaries over, both parties are shifting their focus to the general election on Nov. 8.Inflation Concerns Persist: In the six-month primary season that has just ended, several issues have risen and fallen, but nothing has dislodged inflation and the economy from the top of voters’ minds.Herschel Walker: The Republican Senate candidate in Georgia claimed his business donated 15 percent of its profits to charities. Three of the four groups named as recipients say they didn’t receive money.North Carolina Senate Race: Are Democrats about to get their hearts broken again? The contest between Cheri Beasley, a Democrat, and her G.O.P. opponent, Representative Ted Budd, seems close enough to raise their hopes.Echoing Trump: Six G.O.P. nominees for governor and the Senate in critical midterm states, all backed by former President Donald J. Trump, would not commit to accepting this year’s election results.At campaign events, Mr. LePage has spoken about the couple’s home in Florida, and has criticized a Maine law requiring residents who split their time between the two states — so-called snowbirds — to spend at least 183 days, or just over half a year, in Florida in order to pay the state’s lighter tax burden.“We go down to Naples, Fla., to raise money from Mainers because that’s where all the money is — and it’s unfortunate that they have to leave for six months and a day,” Mr. LePage said in Bangor last month. “I have no problem going to Florida. We go to Florida, we have a home in Florida, but it’s for January and February, not for six months and a day. It’s unfortunate that we have this crazy tax and this is what happens.”But while Mr. LePage said that he and his wife were in Florida for only a couple of months a year, they have painted a different picture for Florida’s tax collectors over the years.In his final months as governor, Mr. LePage told reporters in November 2018 that he had a home in Florida and planned to move there because the state had no income tax. But by that time, records show, he and his wife had already claimed a homestead exemption on their Ormond Beach property — indicating that Florida had been the primary residence of Maine’s governor and first lady since March 2018, when they bought the home.That assertion meant that the four-bedroom home, about 15 minutes from the Atlantic Ocean, was eligible for a Florida homestead exemption, which shaves $50,000 from the taxable value of qualified primary residences in the state.After leaving office in 2019 because of Maine’s prohibition on serving a third consecutive term, Mr. LePage obtained a Florida driver’s license and registered to vote in the state. Then, in February 2020, he said he was considering a bid for a third term, and when he announced his run last year he cited criticisms of Ms. Mills’s response to the pandemic. He switched his voter registration back to Maine in 2020 and publicized pictures of himself putting Maine license plates back on his car.The couple have rented a home in Edgecomb, Maine, since 2020, and Mr. LePage has been campaigning in the state for much of the past year. But it was not until this June that Ann LePage informed a property appraiser in Florida that she and her husband were no longer residents of that state, according to the county appraiser’s office. The tax break will stay in effect through the end of this year, according to an official in the appraiser’s office in Flagler County, Fla., which handled the matter.Jon Alper, a Florida lawyer who specializes in asset protection, said the circumstances of the LePages’ homestead exemption claims were “certainly atypical.”“It’s possible under the law, but usually if one spouse is in the house, they’re both in the house,” he said.Mr. LePage and his wife, Ann, in 2014. They have owned two homes in Florida, one bought in 2008 and sold in 2017, and another that they purchased in 2018 and still own.Robert F. Bukaty/Associated PressThe LePages have struggled with tax issues while toggling between the two states for more than a decade.In 2008, while Mr. LePage was mayor of Waterville, Maine, his wife bought a home in Ormond Beach, not far from the home they would buy a decade later in the same city. She claimed the Florida homestead exemption even though she was also claiming a homestead exemption on a house she owned in Waterville. Both states require homeowners to certify that a property is their main residence in order to qualify for the exemption.That misstep was reported in 2010, during Mr. LePage’s first campaign for governor. Florida tax officials originally fined Mrs. LePage $1,400 for misleading them about her residency status in the state, but they withdrew the penalty shortly after, citing an explanation from Mrs. LePage that her mother, Rita DeRosby, was living in the house. A seldom-used provision in the Florida tax code allows homeowners to claim a homestead exemption if a dependent is residing on the property.Months after Mrs. LePage was cleared of wrongdoing, Ms. DeRosby joined the family’s move into the Maine governor’s mansion, according to local reports. When Ms. DeRosby died in 2015, her obituary said that she had “spent the last eight years of her life residing” with her daughter and Mr. LePage.Mr. LePage’s campaign proposal to eliminate Maine’s state income tax has prompted criticism from some Democratic officials that local governments would be forced to raise property taxes to offset costs.While he was governor, Mr. LePage tried to eliminate Maine’s homestead exemption, a proposal that would have denied an estimated 213,000 Mainers benefits similar to those he enjoyed in Florida, according to an analysis by the left-leaning Maine Center for Economic Policy. More

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      Rent Board Votes for 3.25% Increase on One-Year Leases

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      Two million New Yorkers who live in rent-stabilized apartments will be affected by increases approved at a raucous meeting of the Rent Guidelines Board.Good morning. It’s Wednesday. We’ll look at rent increases that are on the way for two million New Yorkers. We’ll also catch up on the final debate between the Republicans running for governor.Seth Wenig/Associated PressTo the list of items that cost more in 2022 than in 2021, add rent in New York City.As expected in a year when other consumer staples like food and gasoline have surged, the panel that regulates rents in the city approved increases for tenants — 3.25 percent on one-year leases and 5 percent on two-year leases.Housing advocates had pressed for a rent freeze or even a rollback, while landlords had argued that buildings would inevitably deteriorate unless rental income kept pace with expenses. The increases cover about one million rent-stabilized homes, which account for about 28 percent of the city’s housing stock and 44 percent of the rentals.The rent board session was raucous, with audience members blowing whistles and shouting slogans like “housing is a human right.” When the board chairman, David Reiss, outlined the reasons for the increases, dozens of people stood up, turned their backs to him and chanted, drowning him out.The 5-to-4 vote was a setback for tenants, as Mayor Eric Adams acknowledged in a statement after the vote. He said the increases would “unfortunately be a burden to tenants at this difficult time — and that is disappointing.” But he also expressed sympathy for small landlords who he said “are at risk of bankruptcy because of years of no increases at all.”The vote by the board was the first since Adams took office, and as my colleague Mihir Zaveri writes, the board took a different approach than it had under Adams’s predecessor, Bill de Blasio. The highest annual increases during his time in City Hall were 1.5 percent on one-year leases and 2.75 percent on two-year leases.But with the average rent on a newly leased Manhattan apartment reaching $4,975 in May — up 22 percent from 2021, according to the real estate firm Douglas Elliman — the rent-stabilization system has become a crucial source of affordable housing. The median monthly rent for rent-stabilized apartments is $1,400, according to a recent city survey, compared with $1,845 for unregulated homes. And the median income for people living in rent-stabilized homes is about $47,000, compared with $62,960 in unregulated homes.The last time there was a significant increase — 4 percent on one-year leases and 7.75 percent on two-year leases — was in 2013, the last year de Blasio’s predecessor, Michael Bloomberg, was in office.But the board has allowed far higher increases in the past. In July 1980, at a time of high inflation and a gas crisis, the board sanctioned 17 percent increases on three-year leases on apartments where the landlord provided heat. For apartments where tenants provided heat, the figure was 9 percent.On Tuesday Adán Soltren, whom Adams appointed as one of two tenant representatives, voted against the increases. He called the decision to support them “unjust” and told his colleagues, “Your decision will result in millions of people suffering while corporations and investors continue to profit.”Christina Smyth, one of two board members representing landlords, called the increases inadequate. “We are risking the decay of rent-stabilized housing,” she said.WeatherExpect a chance of showers with temperatures near 70. At night, showers and thunderstorms are likely with temps in the mid-60s.ALTERNATE-SIDE PARKINGIn effect until July 4 (Independence Day).The latest Metro newsCharles Fox/The Philadelphia Inquirer, via Associated PressWildfires: The Mullica River fire in Wharton State Forest in South Jersey has burned about 13,500 acres, threatening to become the state’s largest fire in 15 years.New Jersey hoopers: Although New Jersey was home to some of basketball’s greats, historically it has struggled to escape New York’s shadow. But a wave of rising stars in boys’ basketball could shift the trend.Arts & CultureCurtains up, masks off: Broadway theaters will be allowed to drop their mask mandates starting July 1. The Broadway League described the new policy as “mask optional” and said it would be re-evaluated monthly.Best in show: The Westminster Kennel Club Dog Show is underway — not at Madison Square Garden but, for a second year, on the sunny grounds of a Gothic Revival mansion in Tarrytown, N.Y.The Stonewall uprising: The Stonewall National Monument Visitor Center, which will open in 2024 as the first in the national park system devoted to the gay rights movement, will commemorate the 1969 Stonewall uprising and its legacy.DiscoOasis: Roller skating is enjoying another flash of popularity. DiscOasis in Central Park sets itself apart from New York’s other rinks with production values and theatricality.Republican candidates for governor spar againPool photo by Brittainy NewmanIn an hour that turned increasingly contentious, the four Republicans running for governor of New York appeared together one last time, making their case before the primary next week.They spent much of the hour, broadcast on the conservative news channel Newsmax, playing to the Republican base, describing their devotion to former President Donald J. Trump and their disdain for Gov. Kathy Hochul, the incumbent Democrat they hope to replace.“Kathy Hochul is going to get fired,” declared Representative Lee Zeldin, a four-term congressman from Long Island who was chosen as the party’s designee at a convention in March. “I’m looking forward to removing her from this office.”Zeldin was flanked on the stage of the Kodak Center in Rochester, N.Y., by the three other Republicans who also want to run against Hochul — Rob Astorino, a former Westchester County executive; Andrew Giuliani, the son of former Mayor Rudolph Giuliani of New York City; and Harry Wilson, a corporate turnaround specialist who, as an official on President Barack Obama’s automotive task force, helped take General Motors in and out of bankruptcy.After about 40 relatively restrained minutes, the sniping intensified, with Giuliani calling Zeldin “a flip-flopper” and Zeldin saying Giuliani’s “claim to fame” was that the actor Chris Farley had mocked him on “Saturday Night Live” 30 years ago “for being,” Zeldin said, “an obnoxious kid.”As the candidates talked over each other, the moderator, Eric Bolling of Newsmax, tried to reassert control. “Gentlemen, I love the heat, I love the heat,” he said.Giuliani — who has said that he sees his father and Trump as models for the kind of governor he aspires to be — was making his first in-person debate appearance. In the first two Republican debates, hosted by stations in New York City, Giuliani, 36, took part from a separate location because he was unvaccinated. But on Tuesday, he was on the same stage.Talking about his time in the Trump administration, he said, “When I think about the work I did with President Trump in the White House, that’s the kind of change that we need in Albany.”Zeldin, who was once considered a moderate, has also been a Trump stalwart, though in a debate on Monday night he stopped short of saying the 2020 election had been stolen. On Tuesday in Rochester, he seemed more attentive to Trump’s signature policies, saying he believed that the former president’s border wall should be completed.Asked what they would do to reduce crime, Giuliani and Zeldin said they would fire Alvin Bragg, the Manhattan district attorney. Wilson said it was “unacceptable for New Yorkers to live on unsafe streets” and said that “an extended family member” had been killed recently “by someone out on cashless bail” — his term for a change in state bail law that Democrats in Albany pushed through in 2019 and Republicans want rolled back.Giuliani said that on his first day as governor, he would tell the leaders of the Assembly and the State Senate, both Democrats, that without a “full repeal” of the bail law, “I’m not funding anything in our upcoming budget negotiations.”Bolling asked the candidates about inflation, abortion and Medicaid fraud. Wilson promised deep reductions in property taxes and income taxes, as did the other candidates. And despite the recent racist massacre in Buffalo, none of the four supported any new gun control measures, with Zeldin saying the state’s gun laws “go too far as is.”METROPOLITAN diaryOverheardDear Diary:I was on the M104, and a woman was talking loudly on her phone. She was explaining to whomever she was talking to about how she had flirted with a guy to make her ex jealous.At one point, her voice became a mumble, and the man sitting across from her interrupted.“Excuse me, can you please raise your voice?” he said. “It sort of dropped and we couldn’t hear what happened.”The other passengers applauded.— Ivy ManskyIllustrated by Agnes Lee. Send submissions here and read more Metropolitan Diary here.Glad we could get together here. See you tomorrow. — J.B.P.S. Here’s today’s Mini Crossword and Spelling Bee. You can find all our puzzles here.Melissa Guerrero More

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      Meet South Korea’s Swing Voters: Young, Broke and Angry

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      Frustrated over housing prices, a lack of job opportunities and a widening income gap, the once-reliable voting bloc is undecided and will most likely elect the next president.SEOUL — When he was a college freshman in 2019, Jeong Hyun-min sometimes had less than $10 to cover meals for three days. That same year, a scandal erupted in South Korea that still roils him today.While Mr. Jeong was cleaning tables and serving drinks at beer halls just to make ends meet, the country’s justice minister and his wife were accused of pulling strings to help their daughter glide into medical school, even fabricating an award certificate.“I realized what people had been saying all along: Your chances in this country are determined by what kind of parents you have,” said Mr. Jeong, a political science major at Daejeon University. “Fairness is the key if politicians want our trust back.”On Wednesday, South Koreans will elect a new president and all eyes are on young people, whose disillusionment with the government has made this one of the most tightly fought races in recent memory. ​Frustrated over sky-high housing prices, a lack of job opportunities and a widening income gap, young people who were once considered reliably progressive voters are now seen as undecided and will most likely tip the balance in the election.Jeong Hyun-min, a political science major, works part time distributing textbooks in a high school in South Korea.  “Fairness is the key if politicians want our trust back,” he said.Woohae Cho for The New York TimesUnlike previous generations, these voters are not easily swayed by old political dynamics, such as regional allegiance, loyalty to political bosses, fear of North Korea or a desire to ease tension on the Korean Peninsula. Instead, they talk of economic despair​ and general frustration as their primary concerns, themes captured in popular movies and TV dramas like “Parasite” and “Squid Game.”Many have adopted a saying: “isaenggeul,” or “We can’t make it in this life.”“In the past, young South Koreans tended to vote progressive, but now they have become swing voters,” said Prof. Kim Hyung-joon, an election expert at Myongji University in Seoul. “To them, nothing matters as much as fairness and equal opportunity and which candidate ​will ​provide it.”Young people near Konkuk University in Seoul. Unlike previous generations, these voters are not easily swayed by old political dynamics.Woohae Cho for The New York TimesYoon Suk-yeol, the leading candidate from the opposition People Power Party, has won over voters in their 60s and older by pitching their preferred conservative agenda. He has championed a stronger alliance with the United States and even threatened “pre-emptive strikes” against North Korea.Mr. Yoon’s rival, Lee Jae-myung, the candidate representing President Moon Jae-in’s Democratic Party, remains popular among voters in their 40s and 50s. He has called for a diplomatic balance between the United States, South Korea’s security ally, and China, its biggest trading partner.Few of these issues have roused South Koreans in their 20s and 30s, who make up one-third of the eligible voters, as much as they did older voters. Rather, on top of their minds is an uncertain economic future.“We will be the first generation whose standard of living will be lower than our parents’,” said Kim Dong-min, 24, a student at Konkuk University Law School.Kim Dong-min, 24, studying in the library at Konkuk University Law School. “We will be the first generation whose standard of living will be lower than our parents’,” he said.Woohae Cho for The New York TimesIn the decades following the 1950-53 Korean War, most South Koreans were ​equally ​poor. Those who found success were often referred to as “a dragon rising from a humble ditch.”Middle-class dreams were plausible as the postwar economy roared, churning out jobs. Education functioned as a vehicle of upward mobility. Millions of people migrated to the Seoul metropolitan area, where the best schools and most of the country’s wealth was eventually concentrated.Getting a degree from an elite university and owning an apartment in Seoul became symbols of social mobility. But in recent decades, the economy slowed, and that old formula has broken down. In a survey last year, nearly 65 percent of the respondents in South Korea said they were skeptical that their children’s economic future would be better than their own.In Seoul, the average household must save its entire income for 18.5 years to ​afford to buy a home.Woohae Cho for The New York TimesA majority of ​respondents in their 20s and 30s said they no longer saw education as the great equalizer, as admission into top universities depended largely on whether parents could bankroll expensive private tutors.“How would you feel when you are struggling in a marathon and you see others cruising along in sports cars?” said Oh Byeong-ju, 23, a senior at Dongguk University in Seoul.In South Korea, where nearly three-quarters of household wealth is concentrated in real estate, no index illustrates widening inequality quite ​like housing prices. Young couples whose wealthy parents helped them buy apartments — a tradition in South Korea — saw their property value in Seoul nearly double under Mr. Moon.The average household, on the other hand, must save its entire income for 18.5 years in order to ​afford an apartment in the city, according to estimates by KB Kookmin Bank.“It has become impossible to buy an apartment in Seoul, even if you work and save for your entire life,” said Park Eun-hye, 27, who works at Youth Mungan, a civic group that provides affordable meals for poor youths. “Whatever the candidates say sounds unconvincing. Young people instead invest what little money ​we save in stocks and cryptocurrencies.”Oh Byeong-ju, 23, a senior at Dongguk University in Seoul, says, “How would you feel when you are struggling in a marathon and you see others cruising along in sports cars?” Woohae Cho for The New York TimesSouth Korea’s poverty rate and its income inequality are among the worst in wealthy countries, with youths facing some of the steepest challenges. Nearly one in every five South Koreans between the ages of 15 and 29 was effectively jobless as of January, according to government data. That is far higher than the national average, 13.1 percent.Upon his inauguration, Mr. Moon promised “equal opportunities” for everyone. “The process will be fair,” he said. “And the result will be righteous.”Many young people claim fairness and equal opportunity — or their versions of those values — have been eroded instead. They bristled when Mr. Moon’s government formed a joint ice hockey team with North Korea for the 2018 Winter Olympics, arguing that it was unfair to replace elite South Korean athletes with inferior North Korean players.Posters featuring portraits of presidential candidates in Seoul.Woohae Cho for The New York TimesAnd last year, after a scandal revealed officials had used their position to seek personal gain in the housing market, young voters helped deliver Mr. Moon’s government a crushing defeat in the Seoul mayoral election.Rival political parties have since rushed to appease South Korean youth. Lawmakers lowered the minimum voting age to 18 from 19 and the age limit for running for Parliament to 18 from 25. Mr. Lee and Mr. Yoon, the two leading presidential candidates, have both apologized and have applied different tactics to win votes.Mr. Yoon’s popularity soared among men in the 20s after he promised to abolish the Ministry of Gender Equality and Women and sidelined a campaign adviser who identified as a feminist. Anti-feminist sentiments are widespread among the young men.Park Eun-hye, 27, at Youth Mungan, a civic group that provides affordable meals for young people in Seoul.Woohae Cho for The New York TimesMr. Lee is more popular among women in their 20s, and he has promised to introduce harsher punishment for date rape and other sex crimes. He also campaigned to make companies reveal gender-wage gaps to their employees and to the public.But 20 percent to 30 percent of South Koreans in their 20s and 30s have said they may change their mind about their preferred candidate before they vote this week, according to surveys. “Our support shifts from one political party to another, issue by issue,” Mr. Jeong said. More

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      Gerald Migdol Is Charged in Campaign Finance Scheme

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      Gerald Migdol is accused of concealing contributions to a New York City comptroller candidate to get more public-matching funds.A Manhattan real estate developer was charged on Friday with scheming to conceal contributions to a candidate in this year’s New York City comptroller’s race in a bid to get as much public financing for the candidate as possible.The developer, Gerald Migdol, arranged for dozens of donations to be made to the campaign in the names of people who had not authorized the payments, according to an indictment unsealed on Friday by federal prosecutors in Manhattan.One contribution that prosecutors said Mr. Migdol arranged, a $250 money order, was made in the name of a relative who is a minor, prosecutors said.The indictment does not name the candidate Mr. Migdol sought to help. But the details of the case and publicly available information suggest it is Brian A. Benjamin, a Democrat who ran unsuccessfully for comptroller and is now New York’s lieutenant governor.The indictment does not indicate that the candidate knew of the scheme.Mr. Migdol, 71, was arrested early Friday on charges of wire fraud, conspiracy to commit wire fraud and aggravated identity theft, officials said. He pleaded not guilty in an arraignment on Friday in Federal District Court in Manhattan and was released on bond. The wire fraud charges carry a maximum sentence of 20 years in prison.“Free and fair elections are the foundation of our democracy, and campaign finance regulations are one way communities seek to ensure everyone plays by the same rules,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement.Reached by phone after Mr. Migdol’s arraignment, Joel Cohen, his lawyer, said his client had pleaded not guilty “and that’s appropriate.”“That says what we need to say,” Mr. Cohen added.A man who answered the phone at Mr. Migdol’s family-run real estate company, the Migdol Organization, declined to comment. The company, which is based in Harlem, owns and operates residential properties across New York City.In a statement, a spokesman for Mr. Benjamin’s comptroller campaign said that “neither Lieutenant Governor Benjamin nor his campaign are being accused of any wrongdoing and they are prepared to fully cooperate with authorities.”The spokesman added that “as soon as the campaign discovered that these contributions were improperly sourced, they donated them to the campaign finance board.”The office of Gov. Kathy Hochul referred all questions to Mr. Benjamin’s campaign. Ms. Hochul chose Mr. Benjamin as her lieutenant governor in August after she succeeded Andrew M. Cuomo.Mr. Migdol’s family has long supported Democratic candidates, according to the Migdol Organization website, which includes photos of family members with Mr. Benjamin and other politicians.Several Migdol family members, including Gerald Migdol, contributed to Mr. Benjamin’s campaign under their own names, campaign finance records show.The contributions at issue in the case against Mr. Migdol, the indictment says, were meant to allow the candidate’s campaign to qualify for public-matching funds through the city’s campaign finance system, potentially unlocking tens of thousands of dollars in additional money. The scheme ran from November 2019 to January 2021, the indictment says.A few of the contributions mentioned in the indictment were given to the campaign by a person at Mr. Migdol’s direction, prosecutors said. The indictment does not name the person, who is identified only as CC-1. The indictment also cites other unnamed “co-conspirators.”Mr. Migdol, prosecutors said, explained the scheme in a message to the unnamed people in July 2020, describing how the city’s public-financing system could multiply their contributions eightfold.“We get 8xl for money orders of $100,” the message said, according to the indictment. “For Money orders of $250=8×1 for first $100 and the other $150 is not matched. So a MO for $250 is worth $950 for [Candidate-1]. Hopefully our next City Comptroller.”A biography of Mr. Migdol on his company’s website says he has been involved in the real estate business in New York City for more than 40 years, primarily in Harlem and the Bronx.Mr. Migdol told The New York Post in 2006 that he started buying brownstones in Harlem in the early 2000s when they were selling for several hundred thousand dollars, far less than the prices such buildings can fetch today.In October 2019, Mr. Migdol received a community leadership award in Harlem that described him as “a true Harlem legend.” He said in his acceptance speech that Mr. Benjamin had nominated him for the award.“I am grateful to my new friend — our great State Senator Brian Benjamin,” Mr. Migdol said in the speech, which his company posted on its website. “At first glance my nomination would not normally be a popular choice. He then said but for the fact that what you guys do here is worthy of being honored.”Mr. Benjamin, a former state senator from Harlem, placed fourth in the Democratic primary for comptroller, well behind the winner, Brad Lander, a City Council member from Brooklyn.Many of the details in the indictment were first reported in January by the news website The City, including that several people whose names were listed on donations to Mr. Benjamin’s campaign said they had not made the payments.One donation reported by The City was a $250 contribution made in the name of Mr. Migdol’s 2-year-old grandson.Jefferson Siegel contributed reporting. More

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      Where Does Eric Adams Really Live?

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      Throughout the race, there has been a significant degree of confusion surrounding the question of where Eric Adams resides.Given the confusion surrounding his residency, and how he accounts for his real estate on his tax returns, a moderator asked Mr. Adams how the electorate could trust him.Mr. Adams said, as he has in the past, that he takes responsibility for omissions on his tax returns, and then blamed his accountant, who he said was homeless.“He went through real trauma,” Mr. Adams said of his accountant. “And I’m not a hypocrite, I wanted to still give him the support that he needed.”Mr. Adams also insisted, again, that his primary residence is in Brooklyn.Mr. Adams owns a multi-unit townhouse in the Bedford-Stuyvesant area of Brooklyn in which he says he keeps an apartment. In one of the more bizarre moments of the mayoral primary, he gave a media tour of that apartment, with reporters observing non-vegan food items apparently belonging to Mr. Adams’s son. (Mr. Adams has been a vegan for years.)But Mr. Adams also co-owns a co-op in Fort Lee, N.J., with his partner, and he has said that he moved into Brooklyn Borough Hall for a time after the pandemic arrived. During the primary, Politico New York reported that Mr. Adams used conflicting addresses in public records and that he was still spending nights at Borough Hall.He has had to refile his tax returns in part because of irregularities concerning his residency, the news outlet The City reported. The outlet also reported that the city is seeking to inspect his Brooklyn residence following an allegation of an illegal apartment conversion on the property. His campaign has said he intended to rectify those issues, though the complaint remains active.Mr. Sliwa recently led a journey from Manhattan to Fort Lee “to find out where Eric Adams really lives.” More

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      No, California Isn’t Doomed

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      California has been struggling. It has stumbled through the Covid-19 pandemic and recession, afflicted by wildfires, an epidemic of homelessness and stratospheric housing prices. Last year it experienced its first population decline in records going back to 1900. Its latest mess was a costly and unsuccessful campaign to recall Gov. Gavin Newsom.The state’s problems are real. Nevertheless, there are positive signs. The first step toward fixing problems is recognizing them, and on that score, Californians have grown increasingly aware of what’s wrong. California is also blessed with abundant resources that enable it to fix problems that would be daunting for less endowed states.Housing is a good example. Prices are crazy: On Sept. 16, the California Association of Realtors announced that the median sale price in the state in August was $827,940, up 17 percent from a year earlier. Only 23 percent of California households could afford to buy a median-priced home in the second quarter, down from one-third a year earlier, the association announced in August.To make ends meet, many Californians scrimp and save and commute long distances from exurbs; others give up and move to cheaper states. Employers struggle to lure out-of-state recruits. Homeowners can swap one high-priced house for another, but renters can’t buy starter homes because they have no housing equity to use for a down payment. And California’s epidemic of homelessness can be traced in part to a lack of affordable housing.The upside is that almost everyone in California understands that building more housing is essential. More homes are being built in Houston, Dallas, Fort Worth and Austin combined than in the entire state of California, says Dan Dunmoyer, president and chief executive of the California Building Industry Association.One of Newsom’s first acts after surviving the recall attempt was to sign three bills to increase housing supply. Senate Bill No. 8 extends a 2019 law that accelerates approval of housing projects. Senate Bill No. 9 allows homeowners to build up to three additional housing units on their land. And Senate Bill No. 10 allows environmental review to be sped up for multiunit projects near transit hubs or in urban developments. Those are the latest of dozens of housing bills signed by Newsom and his predecessor, Jerry Brown.The California Environmental Quality Act, signed into law in 1970 by Ronald Reagan, who was then the governor, is valuable on the whole but enables people to use environmental pretexts to resist housing developments in their neighborhoods that they could not as easily oppose otherwise. There’s widespread agreement that this needs to change.Progress, though, is halting. The pace of issuance of permits for housing construction in California is slower now than in 1975, according to data compiled by the state’s Department of Finance and the U.S. Census Bureau. Environmentalists fight efforts to circumscribe the environmental quality act, worrying that legitimate environmental concerns about new projects will be neglected. And local elected officials continue to push back against efforts to increase density, which they perceive as reducing the value of existing homes. In Palo Alto, the headquarters of Hewlett-Packard and Tesla, Mayor Tom DuBois expressed opposition to Senate Bill No. 10, writing that “such legislation echoes more of Russia than of California.”Up against such forces, Dunmoyer, the president of the building industry association, told me that he’s impressed by the “courage” shown by Newsom and the California State Legislature in enacting senate bills 8, 9 and 10. But, he added, “This is a marathon, and we’re still in the first quarter of the marathon race.”Other problems in California should be fixable with effort and good will. As I wrote in my Sept. 8 newsletter, the state’s water shortages could be alleviated by diverting a little water from agriculture to other purposes. Farms account for only 0.8 percent of the state’s gross domestic product but more than 80 percent of the water used by people (that is, not counting water that stays in streams, deltas and so on).Homelessness is caused partly by a lack of housing, but also by inadequate treatment of people experiencing mental illness and drug addiction. Many conservatives argue that the state has focused too much on low-income housing as the solution to homelessness. “Focus on treatment first rather than housing first,” says Wayne Winegarden, senior fellow in business and economics at the right-of-center Pacific Research Institute for Public Policy. “Otherwise all we’re doing is taking the problem from the street to the hotel room.”Chris Hoene, executive director of the left-of-center California Budget and Policy Center, disagrees with Winegarden, and calls for more spending on Homekey, the state’s program for housing the homeless. Social services should be “wrapped around,” or integrated with, a home, Hoene says. It’s unfortunate, he says, that “people on different sides of strategies pit the potential solutions against each other.”One advantage that California has in dealing with these and other challenges — fixing K-12 education, lowering the tax burden on families and businesses and so on — is that the state’s finances have improved. The state raised taxes and trimmed spending to brace for the Covid-19 recession, but tax revenues came in unexpectedly high because higher-income workers kept working and the financial markets did well, generating taxable capital gains. The $100 billion California Comeback Plan, which Newsom signed in July, is a Christmas tree of Democratic priorities, including stimulus checks for two out of every three Californians, renter assistance, housing for the homeless, tax relief and grants to small businesses, universal pre-K, college savings accounts for low-income students and investments in infrastructure and wildfire resilience.I bounced this optimistic line of thought off Joel Kotkin, a professor at Chapman University in Orange, Calif., who is an expert on cities. He was more pessimistic. “The way our economy is structured, there’s an incredible amount of wealth being minted for a small number of people,” he said. “We have the worst overcrowding. The schools are terrible and they’re going to get worse.” He added, “Used to be a young, ambitious person went to California. I don’t think that’s happening anymore.”It’s hard to argue with a veteran observer of California like Kotkin, who began writing about Silicon Valley in 1975. On the other hand, the bearishness can be overdone. Matthew A. Winkler, editor in chief emeritus of Bloomberg News, observed earlier this year that people love to declare California “doomed.” It ain’t.The readers writeHow you describe a bill depends upon what you are talking about. If you are concerned about too much fiscal stimulus, then taking note of the tax increases and spending cuts makes sense. If you are concerned with the size of government, taking note of spending cuts makes sense, but it does not make sense to reduce the size of the bill by the amount of the tax increases. Same way with a Republican tax cut. If they cut taxes by $1.5 trillion and fully offset it with $1.5 trillion in spending cuts, that is a $1.5 trillion tax cut and that is how it should be described. Only offsetting tax increases should be taken into account.Paul PecorinoTuscaloosa, Ala.The writer is a professor of economics at the University of Alabama.Quote of the day“According to Wittgenstein’s ruler: Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler. The less you trust the ruler’s reliability, the more information you are getting about the ruler and the less about the table.”— Nassim Nicholas Taleb, “Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets” (2004)Have feedback? Send a note to coy-newsletter@nytimes.com. More

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      California’s Housing Crisis Looms Large for Gavin Newsom

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      Having survived a recall vote, the governor is free to focus on the state’s homeless population and housing shortage. He has more room to maneuver than he did when he first took office.The median home price in California has eclipsed $800,000. Tenants in the state are among the most cost-burdened in the country. Each night more than 100,000 residents sleep outside or in their cars. A crisis, a disaster, the religion of sorrow, a disgrace — whatever journalists and politicians call it, people across the state, including all the major candidates for governor in the recall vote this week, agree that the situation is untenable.The question is what, if anything, the governor can do about it. It’s something that Gov. Gavin Newsom has spent the past three years talking about. And now that he has won a decisive victory in the recall election, which cost close to $300 million and consumed the state’s and governor’s attention for several months, Mr. Newsom is turning his attention back to problems like housing.In many ways the answer there is different from what it was when he took office in 2019.Right now the focus is Senate Bill 9, which would allow duplexes in neighborhoods throughout the state and is one of the hundreds of unsigned bills that piled up on Mr. Newsom’s desk during the recall campaign. But even if Mr. Newsom signs it, which he is widely expected to do in the coming days, his legacy on housing is likely to be less about laws passed on his watch than his administration’s ability to enforce them. That’s because the executive branch has gained much more power over state housing policy than it had even a few years ago, after years of state frustration with how difficult the local governments make it to build housing in California.Mr. Newsom’s administration has come to embrace the role, taking action like suing cities for not building enough to keep up with population growth and creating a team to ensure that cities approve new housing. The moves are part of a nationwide shift in power — away from city councils and toward statehouses — over the $1 trillion annual residential construction market.“It used to be that housing was run by the local planning departments and California governors didn’t really pay attention,” said Ben Metcalf, managing director of the Terner Center for Housing Innovation at the University of California, Berkeley. “That has changed.”Mr. Newsom, a Democrat, has tried to get through the pandemic emergency by extending the state’s eviction moratorium even as the federal one lapsed, and pouring money from the state’s budget surplus and various coronavirus relief packages into homeless funding and programs like an effort to turn hotels into supportive housing.But California remains one of the most difficult places in America to build housing, causing a supply-and-demand imbalance. It is the leading edge of a nationwide problem that is pricing middle-income families out of ownership and has one in four rental households paying more than half its pretax income on rent.A polling site in El Centro, Calif., on Tuesday, when a statewide vote kept Gov. Gavin Newsom in office.John Francis Peters for The New York TimesPlanners, economists and both political parties have long called for states to use their power to ease the housing shortage by breaking local logjams. They point out that suburban governments have little incentive to fix the problem since they are accountable to homeowners who prefer that prices only go up. That conundrum has vexed would-be housing reformers since at least the 1970s, and emerged during California’s recall campaign in the Republican debates, where candidates talked a lot about adding more housing but shied away from discussions of where that housing would go.These often contradictory comments were a perfect encapsulation of Californians’ mood: They are universally unhappy with the state’s cost of living and the tent cities that have appeared along freeways, in parks and on beaches. But homeowners remain fiercely protective of their power to say what gets built near them. Kevin Faulconer, a former San Diego mayor and a Republican candidate in the recall election, all but ran away from his own pro-density policies in California’s second-largest city by saying, “When we see some of these pieces of legislation that want to eliminate single-family zoning in California, that’s wrong.”Mr. Newsom has tried to walk this same line. In 2018, he campaigned on a “Marshall Plan for housing” that had a goal of delivering 3.5 million new housing units by 2025. He came to regret the figure once he was in the governor’s chair, and it became fodder for his leading recall opponent, the talk show host Larry Elder, who seized on it as an example of broken promises. Mr. Elder did not need sophisticated research to find fault with the number: In a state that permits around 100,000 housing units a year, delivering 3.5 million — 35 years of housing at the current pace — is close to a physical impossibility.Mr. Newsom has been mostly quiet about big zoning legislation ever since. He did not take a position on Senate Bill 50, a contentious measure that would have allowed apartment buildings in neighborhoods across the state. And he was largely quiet about Senate Bill 9 as it passed through both houses of the State Legislature and lingered on his desk.Mr. Newsom, at a rally on Monday in Long Beach, Calif., has emphasized enforcement of existing housing laws.Doug Mills/The New York TimesWhat he has done instead is enforce existing laws more aggressively than his predecessors did. Two weeks after Mr. Newsom assumed office, California’s attorney general sued Huntington Beach for failing to plan for sufficient new housing. Since then, the state’s Department of Housing and Community Development has sent hundreds of letters telling cities to change or simplify their planning codes to comply with state law.The governor’s most recent budget allocated $4.3 million to staff a “housing accountability unit” made up of planners and lawyers who will monitor local governments’ housing decisions and intervene when they’re not following state law.Zoning defines a neighborhood’s physical character and who might be living next door, so it has captured most of the attention in California’s housing debate. But over the past few years, the Legislature quietly passed a slew of smaller measures that when strung together have radically changed the relationship between state and local government. The new rules change how much housing cities have to plan for, make it harder for them to stop developers from building and ultimately deprive them of funding and local control if they drift too far from state mandates.Because they transfer more oversight of housing from localities to Sacramento, the question of how aggressively those laws are enforced has fallen to the executive branch. It’s one thing for the state to pass laws to desegregate neighborhoods, set aside more land for subsidized housing and require cities to permit backyard cottages. If enforcing them isn’t a priority — which has long been the case with housing laws — they are bound to be ignored.In an interview after the recall vote, Jason Elliott, a senior counselor to Mr. Newsom who works on housing policy, rattled off a series of bill numbers and the esoteric text of planning codes to point out dozens of housing regulations that remain mostly unused. Environmental measures that support increasing density to reduce car trips. Various laws allowing backyard units. A way for developers to sue cities that don’t follow their own zoning rules. These are the types of statutes the new housing accountability unit will try to enforce.“I’m never going to say we’re done passing laws and we can’t do more,” Mr. Elliott said. “But what we really need to do if we want to see units spring up is get several dozen people thinking about this and only this, and empower them to reach out to cities.”Will Mr. Newsom ever get anywhere near 3.5 million new units? No. Even if it were politically possible, it would strain lumber and labor supplies.It took California several decades to get into a housing crisis this bad. Lofty rhetoric and promises for millions of units make do for a campaign slogan, but the reality looks more like a process of slowly digging out. More