Archive for June 2014

With some groveling, flip-flopping gov wins – By George J. Marlin

June 23, 2014

The following appears in the June 20-26, 2014 issue of the Long Island Business News:

Four years ago, gubernatorial candidate Andrew Cuomo told the radical leftist Working Families Party that if he were to accept its nomination, the party would have to support his “New New York” agenda, which stated that, as governor, Cuomo would “veto any increase in personal or corporate income taxes or sales tax.”

Cuomo made it perfectly clear to the WFP that he was opposed to extending the state’s so-called Millionaire’s Surcharge Tax, which was set to expire at the end of 2011. “I was against it at the time, and I still am,” the candidate told the party. “It’s a new tax. It was supposed to sunset. If it doesn’t sunset, it’s a tax.”

Comparing his refusal to extend the surcharge to his father’s principled opposition to the death penalty in the 1980s, Cuomo stood up to WFP and its “soak the rich” ideology. He let them know it had to be his way or the highway.

Fearful it might fail to get the 50,000 votes required to maintain its legal party status if it ran its own candidate in 2010, WFP capitulated. It chucked its principles and agreed to Cuomo’s conditions.

Fast forward four years and the proverbial political shoe is on the other foot. This year, the WFP would be the one to put conditions on its nomination.

Knowing that Cuomo is desperate to rack up a huge victory – one that not only surpasses Mario Cuomo’s second term total of 64.6 percent but one that could jumpstart a 2016 presidential run, if Hillary Clinton doesn’t enter the race – WFP figured it had the upper hand. Party leaders felt even more empowered when opinion polls indicated that a WFP candidate running against Cuomo and Republican-Conservative Rob Astorino could garner as much as 15 percent of the vote. That high a total could cost Cuomo the election or reduce him to a plurality victory.

Despite the fact that Cuomo had broken his word and raised taxes, this was not good enough for WFP’s members. At their May 31 convention, delegates were out for blood – and many were prepared to support announced challenger Zephyr Teachout, a Fordham University law professor.

What did the governor do to fend off a November challenge? He groveled.

The man who ran in 2010 as a centrist did a 180-degree flip-flop and signed onto the WFP’s hard-left platform, which the National Federation of Independent Business has denounced as “completely incompatible with the pro-growth policies New York needs.”

Cuomo pledged to support a $10.10 minimum wage plan that would also permit individual municipalities to increase it an additional 30 percent – a formula guaranteed to kill jobs. He agreed to push through the legislature public campaign financing which the Wall Street Journal pointed out “will further limit political competition and enhance the power of public unions backed by coerced dues.” And he agreed to abandon the coalition of Republicans and independent Democrats that has controlled the Senate – a coalition he boasted time and again was essential in implementing his first-term agenda.

Even though he ate plenty of crow, Cuomo still managed to receive only 58 percent of the delegates’ vote versus 41 percent for the novice Teachout. Dissenting party leaders called him Cuomocchio, a play on Pinocchio. Others said bluntly that they just don’t trust him.

When asked by a reporter if he was now “a true-believing progressive,” the ever-cagey governor dismissed the inquiry and said, “At these political conventions you win or lose. I won.”

Cuomo won, but the price was high. He revealed to the public that he’s a man lacking character and core principles – a political empty suit willing to embrace any heterodoxy to get by.

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Good read: Ravitch’s road to fiscal health – By George J. Marlin

June 11, 2014

The following appears in the June 6-12, 2014 issue of the Long Island Business News:

Eighty-year-old Richard Ravitch has had a remarkable life. The skilled entrepreneur made a fortune early on in Manhattan real estate, and free of financial woes he went on to serve the people of New York in various capacities – most recently as Gov. David Paterson’s appointed lieutenant governor.

In his memoir, “So Much To Do: A Full Life of Business, Politics and Confronting Fiscal Crisis,” Ravitch describes his contributions during New York’s fiscal crisis of the mid-1970s, his stewardship at the Metropolitan Transportation Authority and his role in later years as a “wise man” whose advice on municipal matters has been widely sought.

While his memoir is at times self-serving – all such works are – it is nevertheless filled with lessons taxpayers and elected officials can apply to present-day fiscal challenges.

It all began in 1975, when newly sworn-in Gov. Hugh Carey asked Ravitch to take over the ailing Urban Development Corp. Created by Gov. Nelson Rockefeller in 1968 after the assassination of the Rev. Martin Luther King Jr., UDC issued debt, backed with the state’s moral obligations to build housing in “substandard blighted areas.”

But the corporation was poorly run, and the investment community refused to underwrite additional debt. In February 1975, UDC defaulted on $104.5 million worth of notes.

The politically green Ravitch, with Carey’s blessing, brought the bankers together and threatened to file bankruptcy. “The banks blinked,” he writes in his memoir. “They agreed to withdraw their set-offs against UDC accounts.”

Ravitch helped create a plan that remedied the default, affirmed the state’s “moral obligation” to meet UDC’s principal and interest payments to bondholders and prevented chaos in the financial markets.

The UDC defaulted at the same time that New York City was running into fiscal difficulties. In 1975, city expenditures totaled $12.8 billion and revenues $10.9 billion. Fifty-six percent of locally raised taxes were appropriated for debt services, pension and Social Security payments. Years of budgetary gimmicks, phantom revenues, capitalization of expenditures and excessive use of short-term debt to fund daily operations forced the financial markets to close their doors to the city in 1976.

Ravitch was present at the creation of the Municipal Assistance Corp. and the Emergency Financial Control Board, which saved the city from bankruptcy. He also played a key roll in convincing the teachers union to use pension-fund assets to purchase long-term MAC bonds, whose proceeds were used to pay off the city’s heavy load of short-term debt.

One observation Ravitch makes that all New York elected officials, particularly those on Long Island, should heed: “The city’s most egregiously misleading gimmick … was to treat the proceeds of borrowing as revenues and to use these revenues to claim that the budget was in balance.” This gimmick brought NYC to its fiscal knees and may soon do the same to Nassau and Suffolk counties.

As lieutenant governor, he blew the whistle on the state’s cash accounting abuses, “which enables the state to avoid giving the public the bad news that expenditures may be growing faster than recurring revenues.” He has rightly called for state and local municipalities to abandon deceptive cash accounting and to adopt GAAP accrual standards.

Since that time, Ravitch has served on a long list of boards and commissions. After he left public office in 2011, he became co-chairman of the State Budget Crisis Task Force and has continued to make the case that “deceptive budgeting and borrowing practices are crippling our state’s ability to do what they can do – invest in the physical and human infrastructure the country needs to thrive.”

Just this past month, a judge in Michigan overseeing the Detroit bankruptcy case appointed him a special advisor.

If you want to learn what it takes to fix our current fiscal ills, read Ravitch’s memoir.

1984 Revisited: Archbishop O’Connor vs. Governor Cuomo – By George J. Marlin

June 7, 2014

This article I wrote appeared on The Catholic Thing web site on June 7, 2014.