Saturday, January 23, 2010
Kirsten Gillibrand and her patron, Chuck Schumer
Nobody likes big banks -- especially after the Great 2008 Wall Street Panic that sparked a year of agita for everyone with a 401k, required hundreds of billions federal bailouts to restore stability, and helped drive a deep, long recession.
So, as ticked-off Massachusetts voters prepared to bang Washington on the head last week, President Obama rolled out a new "populist" theme to channel voter anger against the banks in the form of a proposed tax on about 50 of the nation's largest financial institutions.
New York Mayor Michael Bloomberg immediately denounced the proposal, pointing out that the financial services industry is the lifeblood of New York's economy and the source of a huge chunk of the tax revenues of both New York City and New York State. "The way we pay our cops, firefighters and everybody else in the city is from tax revenues," Bloomberg said. "And if you want to see what happens to a city when their major industry fails, just take a look at Detroit." The Mayor added, adding, "I certainly hope our legislators in Washington will fight to protect our industry here."
No such luck. New York's senior Senator, Chuck Schumer, gave the tax his full support. But while Chuck is a news hound known to put out as many as 10 press releases in a single day, there was no release about this one. I guess Chuck isn't eager to trumpet it to his constituents.
Junior Senator Kirsten Gillibrand, who was appointed a year ago by accidental Gov. David Patterson and has since largely disappeared from public view, vaguely expressed "concern" about the proposal, adding that it "is far better than some proposals." Courageous leader, eh?
Interestingly, on her website, Gillibrand makes a big deal of how she's much committed to the successful rebuilding" of New York's financial industry because it is "responsible for 20 percent of the state's revenues and hundreds of thousands of jobs" and "the future well-being of New York City is dependent on the recovery of the financial sector."
She's right, of course, even if her actions don't reflect her words. In fact, prior to the recent downturn, the financial industry’s contribution to total New York City wages and salaries peaked at more than 35% in 2006. In FY 2001-08, Wall Street was responsible for nearly a quarter of wages and salaries statewide. Those controversial bonuses notwithstanding, as the industry is still clawing its way out of recession, a state report projects that proportion will be only about 19% in FY 2010-11.
These numbers means that Bloomberg is not exaggerating when he says that the city's ability to pay its cops and firefighters depends on Wall Street's health and growth. The financial services industry pays a huge portion of city and state revenue from personal and corporate income taxes, existing bank taxes, and commercial real estate taxes (and even residential real estate taxes, since Wall Street employment drives much of New York's housing market). The city's and the state's current crippling budget deficits are largely attributable to cutbacks on Wall Street.
What's more, Wall Street drives the whole New York economy, not just its governmental budgets. Take Wall Street out of the picture and New York wouldn't have all those trendy neighborhoods that have sprung back from decay and crime over the past three decades and morphed into trendy refuges for a burgeoning urban gentry -- Manhattanville, Tribeca, Alphabet City, DUMBO (don't ask), Williamsburg, etc. And that's not to mention the surging prosperity of the rest on Manhattan's older upscale neighborhoods in the same period.
People who think that New York can continue as the world capital of finance regardless of how it treats financial companies all of which now operate globally should learn more about London, Singapore and Hong Kong.
The bank tax is not the only recent issue on which Schumer and Gillibrand have put the supposed interests of their national party ahead of the concrete interests of the state they represent. Both have doggedly backed the Senate's health care proposal, even though it would severely disadvantage New York and has been panned for that reason by both Gov. David Patterson and Mayor Bloomberg, who called it a "disgrace." While Mary Landrieu got her state the "Louisiana Purchase" and Ben Nelson got his the "Cornhusker Kickback," between them, Schumer and Gillibrand got bubkis for their constituents.
Pols can get away with this kind of disregard for the people they represent only so long. Gillibrand may face a primary this year from Harold Ford, Jr. -- and I sincerely hope she does. She's also not been polling well against Republicans, and after Massachusetts, she may find herself on the endangered list. As for Schumer, he's also up for reelection in 2010 but far more deeply entrenched than Gillibrand. Still, there are rumblings of a challenge from TV business guru Larry Kudlow and even an online draft Kudlow movement. Better watch out, Chuck!
Any thoughts about these two Senators? Post a comment.