December 16, 2009 > Analysis: Paterson defends Wall Street, but why?
Analysis: Paterson defends Wall Street, but why?
By Michael Gormley, Associated Press Writer
ALBANY, N.Y (AP), Dec 12 _ Wall Street's best and brightest, whose jobs were saved by a taxpayer-funded $700 billion bailout just months ago, will soon be getting their annual six-figure bonuses, usually worth more than a typical New Yorker will pull down in a year, if he or she still has a job.
``If we had to bail them out, then why should we supplement them?'' asked Jim Sweeney, a retired insurance agent from Kingston. ``I'd like to make a million dollars myself every year.''
The outrage is clear from the upstate book store where Sweeney browsed to Great Britain, where there's a proposal to tax brokerages and bonuses based more on politics than fiscal benefit. Earlier this year, New York Attorney General Andrew Cuomo investigated the bonus system and vowed to rein them in, to the loud harrumphs of voters as he considers a run for governor. Rep. Edolphus Towns of New York, chairman of the House Oversight and Government Reform Committee, said in July that Wall Street ``doesn't get'' that that days of rewarding ``egregious behavior'' are gone.
Taking the other side is Gov. David Paterson, who told a gathering this week at the Museum of American Finance that the bonuses are a good thing and that New Yorkers who would angrily deny them would be inviting an even more exasperating fate: State and city governments would be stripped of a major source of personal income tax revenue _ traditionally 20 percent of state revenues. Any action could also encourage these top earners to leave for hedge fund and other jobs, perhaps sending even more of a still fragile Wall Street to New Jersey or abroad.
``We need to stand behind the engine of our economy in New York _ and that engine is Wall Street,'' Paterson said this week, in what would appear to be an impolitic moment when the general public is bullish on outrage. ``If you say anything about corn in Iowa, they'll run you out of town. If you say anything about oil in Texas, they skin you up at the nearest tree.''
It's a view unpopular outside Manhattan. But Paterson insists it's essential for New York to rebuild its economy and revenue streams, maintain adequate funding of schools and other services, and to avoid another big increase in taxes.
``We don't have a God-given right to be the center of finance in the world,'' Douglas Elliott, a former investment banker now with the Brookings Institution in Washington.
Although rallying to the aid of Wall Street may run afoul of voters, the financial sector is also an engine for the campaign contributions Paterson needs if he is to stave off a challenge from Cuomo. Under that theory, Paterson's speech Wednesday was perhaps also a shot at a political rival who has railed against the bonuses.
Paterson is also fighting an artificial deadline of December imposed by Democrats and labor officials who say he's got to shore up his sagging political fortunes and poll numbers or step out of the way in 2010.
``Why would Paterson be trying to curry favor with Wall Street? Who knows? Take him at his word,'' said Maurice ``Mickey'' Carroll of the Quinnipiac University poll. ``It's probably a good move. Wall Street is New York City's business and not just for political contributions, but for tax revenue and everything else.''
But Carroll notes that polls show Paterson has little chance beating Cuomo, if the attorney general runs.
Paterson ``could be the friend of Wall Street against Cuomo,'' Carroll said. ``But whether it has any political implications for him, I don't know.''
``It's an interesting play for him,'' added Lee Miringoff of the Marist College poll.
``Main street, rather than Wall Street is the best political focus,'' Miringoff said. ``But right now, he's dealing with big budget woes and trying to redirect some funds in Albany's direction may be the larger battle.''
Winning that larger battle could be the key to Paterson's political future.
``Without that, his numbers don't get better,'' Miringoff said.
Beyond the sound bites, a more hands-off approach might work for voters, if the message gets through.
``Politically, while there is tremendous anger, there also is a strong theme among conservatives that the government is trying to run business,'' Elliott said. He said powerful groups from CEOs to entertainers might rightly wonder if they are next.
``There are a lot of people in this country who are not anxious for the government to decide who deserves the money they are being paid and who doesn't deserve it,'' Elliott said.
People like Mike Aldrete.
``It doesn't bother me if they get bonuses,'' said Aldrete, a retired teacher and a Democrat who moved to upstate New York from Maine two years ago to be closer to his grandchildren. ``I'm more concerned about the people in government than the people on Wall Street. I think there's too much politics and too much taxes in New York; that's where the real problem is.''
AP Writer Mary Esch contributed to this report from Colonie, N.Y.