Formerly Pro-Bailout Paterson Blames Lost Wall Street Bonuses for NY's Budget Deficit
Governor David Paterson made another smart political move. Late last week, when everyone was getting ready for the holiday weekend, he told a group in upstate New York that was sorry for all those Wall Street execs who were banned from raking in multimillion-dollar bonuses this year. Well, sort of. What he said was that he was sorry for the state of New York having lost the tax revenue brought in by the bonuses.
In a public appearance in Niagara Falls on Thursday, the governor said, "I understand why the President is mad, but there are actually New York State officials screaming about the bonuses [and] they're killing our tax money... I'll bet if they knew that, they'd stop saying it," reported the Daily News.
Wait a minute. Back in September 2008, the governor was all for using taxpayer dollars to bail out insurance giant AIG. (The company received $170 billion in federal bailout funds.) Now, the governor is lamenting lost tax dollars, when not so long ago he himself advocated giving tax dollars away?
(Maybe Paterson's vision was a little clouded back then by the $100,000 donation that AIG gave to the New York Democratic Party just two weeks before he proudly approved the bailout)...
If the government had given away less money the first go-round, it's possible that more of those those sorely-needed tax dollars would be available today -- and could be used to pay for vital public services -- like schools, public transportation, and security -- that are being cut because the state has a $2.1 billion dollar budget deficit.
No one would deny that Wall Street contributes significantly to the tax revenue of both the city and the state. But how much of this overall contribution came specifically from the income taxes paid on bonuses? As great as the flow of cash from Wall Street might have been for both the state and the city during the boom years, we've got to consider that much of it was based on a giant bubble of hyper-inflated cash.
It was that bubble, of which the bonuses are a symptom, that got us into this mess in the first place. Are those really the kind of illusory economic circumstances that political leaders like Paterson are hoping that we should return to?
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