Douglas Turner: New York is wishing upon a bailout star
WASHINGTON — AIG, CitiGroup, Fannie Mae, Freddie Mac and a hundred banks got theirs. There is no earthly reason why President-elect Barack Obama shouldn’t take care of the states from the same bottomless pit of printed money and Chinese generosity.
Obama has agreed to hear about the states’ deficits Tuesday at a National Governors Association meeting in Philadelphia. Originally, Joe Biden, the vice president-elect, was billed as the star attraction. That the boss himself is coming should encourage the governors to hope he has something in mind.
Although Gov. David A. Paterson was among the very first to sound the call for a state bailout, New York enters this process with relative disadvantages.
One of the biggest is that Rep. Charles B. Rangel, D-Manhattan, is in serious ethics trouble. Rangel is the single most powerful New Yorker in Congress as chairman of the House Ways and Means Committee, which writes tax law and oversees Social Security and Medicare.
Rangel is deeply interested in the states’ financial crises. He chaired the hearing in which their impending crashes were aired. Now he is charged with using his office to tinker with the tax code for a friend, and there are calls for him to stand down as chairman.
Rangel won’t be calling in any chips to help New York in a floor fight over the aid package.
New York’s standing here could be impaired by the refusal of the Legislature to act on budget cuts at a special session. But it is not alone. California’s Legislature is snubbing Gov. Arnold Schwarzenegger’s calls for tax increases.
And our foolish public pension and union benefits packages won’t sour a Chicago-based administration’s attitude on our Peoples Republic of New York.
What will hurt, though, is the state’s sluggish performance on building roads and fixing bridges, and the massive share our state gets of the federal outlay for Medicaid.
This is because some calls for upgraded federal aid to the states include aid for infrastructure and help for Medicaid. New York’s Medicaid program is already the most elaborate in the nation. It gets twice the amount of federal aid that its population should warrant.
Other hard-pressed congressional delegations may balk at dropping more money into that trough.
The nation’s governors are also focusing on a program of infrastructure jobs that could go to bid in 30 to 90 days. One program that is not mentioned, but ought to be, is construction of a national passenger railroad system that would put us on a par with Japan and France.
New York is ill-prepared to exploit a public works program. One study ranks New York no better than 26th of the 50 states with shovel-ready projects on the shelf.
It has only $200 million in ready-to-go plans, compared to $1.9 billion for Texas, $1.4 billion for Pennsylvania, $800 million for California and so forth.
Small states better prepared than New York for an infrastructure program include West Virginia, Alabama, South Carolina and Kentucky. This is a mark against every governor going back to Mario Cuomo.
When the fight over state aid warms next year, New York will have a freshman succeeding Hillary Rodham Clinton. The senior senator, Democrat Charles E. Schumer, is rightly preoccupied with saving what is left of Wall Street.
Almost all of the states are in deep trouble. They will get some federal help next year, but nowhere enough. The congressional brawl over who gets what will ape a John Wayne movie. Under the best possible circumstances, New York still will be in the deep hole it dug itself into.
The chief underwriter of all this federal spending is now the People’s Republic of China. It just announced that the United States owes China $585 billion. We borrowed $44 billion from China in the third quarter, twice the amount as in the second quarter.
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