New York: payments to cities, schools cut as Wall Street profits soar

[Hannah Bell]

Coming on the heels of his praise of the Wall Street financial elite last week, New York Governor David Paterson has ordered the withholding of between 10 and 19 percent, a total of $750 million, in scheduled state payments to local governments, school districts, and health insurers...

Aside from the nominal “millionaires’ tax” enacted as part of the current state budget, Paterson and the legislature have refused to draw any additional revenue from the very financial elite which: a) caused the economic crisis; and b) is now set to lavish unprecedented year-end bonuses on itself. The availability of money for these bonuses, coming from firms which a year ago were on the verge of total collapse, is entirely due to the huge federal TARP bailout, funded by the public treasury, and the subsequent return by Wall Street to the same wildly speculative practices...

Indeed, the order to cut payments comes as the state comptroller has announced that Wall Street has rebounded dramatically from its recent crisis... “The comptroller, Thomas P. DiNapoli, said investment firms produced a record $49.7 billion in profits in the first nine months of this year. That amount is nearly two and a half times the previous annual peak in 2000 and well exceeds November’s forecast for profits of $38.4 billion ...”.

The Times continues, “As a result, the bonus pool for Wall Street employees based in New York City is expected to be higher than the estimated $18.4 billion paid in 2008...

In his speech last week in New York City, Paterson praised Wall Street’s financial parasitism as “the engine of our economy in New York” and defended the lavish bonuses on he grounds that without them, the salaries of the bankers and traders were “rather low”.

For months, Paterson has been proclaiming oncoming financial Armageddon, demanding massive cuts in the current state budget. In response, the state legislature recently slashed $2.77 billion in expenditures, primarily targeting health care and other services, over and above the cuts made when the current budget was enacted last spring. However, these cuts were not sufficient to close the projected $3.2 billion deficit... So, Paterson, loudly denouncing the legislature’s cowardice for not having cut even more, has unilaterally ordered the withholding of a significant portion of payments due to local government entities.

Paterson himself recognizes that his action is undemocratic and predicted that he would be sued as a consequence. The New York State United Teachers and school officials have now initiated such legal action on the grounds that the governor’s action is unconstitutional since the payments have already been authorized by the legislature.

Nevertheless, Paterson proclaims, in melodramatic and Bonapartist tones, that, due to the legislature’s failure to make sufficient cuts, he must act in the interest of “the people”. The Governor insists that he is doing what is necessary to keep the state from insolvency. “I am being sued for trying to keep New York State’s finances solvent,” he complained.

“This is a desperate attempt by special interests to put their needs ahead of the people of the State of New York,” he continued... "What these school districts and unions and otherwise have done is said: ‘We aren’t the special interests—we’re extra special ...We’re supposed to get all the money and everybody else can just divide up the crumbs.’”

It should be noted that the withholding of funds for schools and local services comes only after monthly obligations to the wealthy holders of state bonds (presumably not a special interest) have been paid in full.

The actions of the New York governor represent a warning. To the extent that they conflict with the interests of the financial elite, what little remains of democratic forms of government will be scrapped, with rule by executive dictate imposed under the guise of dealing with the financial crisis in the “public interest”.

http://www.wsws.org/articles/2009/dec2009/nycu-d19.shtml

[democracy1st]

1. he's a freakin failure from the word go!

[bridgit]

2. Wait till the MIC drops it's *own* leash - something wicked this way comes

[CaliforniaPeggy]

3. He could not be more wrong in his actions.

I am completely appalled.

K&R

[Hannah Bell]

4. kick