New York Governor Cracks Austerity Whip

Governor David Paterson has vowed harsh austerity in an effort to shore up the state's $15 billion budget deficit. Paterson's budget proposes higher sales taxes and fees, cuts in funding for education and health, and placing a greater burden on local and regional governments. He even seeks to strip Native Americans of their longstanding sales tax exempt status. While New York's middle and lower classes will bear the brunt of these measures, no plan exists to increase taxes on wealthy New Yorkers.

Paterson was the former lieutenant governor who became New York's chief executive last March in the wake of a scandal involving Governor Eliot Spitzer and a high-priced Washington, DC call girl. Many applauded the new governor: Spitzer's popularity was already in the tank, and some looked dewy-eyed on the fact that New York's new governor, David Paterson, was not only the first black governor, but the first legally blind one as well.

But after Paterson announced his new budget, that novelty has worn off.

Bankers and Bimbos
Paterson was lieutenant governor under Governor Eliot Spitzer. Stretching back to his days as New York's attorney general, Eliot Spitzer had gained the reputation as the "Sheriff of Wall Street", fighting corruption and conflict of interest among the banks and investment firms of lower Manhattan. He was responsible for NYSE Chairman Richard Grasso's downfall. Spitzer's reputation remained undiluted when he became governor, and the people at the helm of those same venerable institutions weren't happy about it.

So, when Spitzer conducted a bank money transfer to the escort service in preparation for his Valentine's Day weekend dalliance, someone on the Street found out about it--perhaps because they were proactively tracking his movements to begin with--and that information found its way into the hands of the Bush-Cheney Justice Department.

The ensuing newspaper headlines were damning--"Governor Caught in Prostitution Ring"--conjuring up sinister images. Spitzer was made to look not merely like a typical john patronizing a hooker, but an active participant of some grand criminal conspiracy. Allegations of "money laundering" followed, based on the conjecture that the way the money was transferred violated money laundering statutes. These allegations later turned out to be false, but no matter, they had done the necessary damage: Governor Spitzer resigned.

Spitzer was an easy mark at the time. His plan to grant drivers licenses to illegal aliens was largely responsible for his ebbing popularity. This no doubt presented a green light to the scandal.

What's interesting is that days later the Bear Stearns collapse was announced, and Fed chairman Ben Bernanke bankrolled its takeover by JP Morgan Chase for mere pennies on the dollar. Something Eliot Spitzer, the Sheriff of Wall Street, would have fought to prevent.

A few months later the monetary system collapsed. And a monumental bailout of some of Wall Street's most revered institutions occurred--hundreds of billions handed to bankers who were responsible for destroying their own banks! A lot there for Eliot Spitzer to frown upon.

Go Quietly--or Else
Spitzer was given the choice offered to most targets of a cold coup: "Go quietly--or else." In his stead is David Paterson, the sightless man whose blindness serves as a palpable metaphor for his see-no-evil approach to the Wall Street corruption that would soon come to light. What Spitzer might very well have viewed as abominable--the Bear Stearns takeover and the bailout of other Wall Street actors--remained entirely outside David Paterson's myopic vision. Now New Yorkers and the entire nation are suffering the consequences of not only the bankers' speculative antics, but the looting of the Treasury that was bottled and sold as its snake-oil cure.

And Wall Street can rest assured that the money New York borrowed from its banks will be paid back to help make up for speculators' losses.

New Yorkers, perhaps we were better off with the arrogant, prostitute-patronizing philanderer than with the affable, tax-mad budget-slashing Paterson.