A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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New York Gets Steamrolled
The state must recover from Spitzers transgressions quickly.
11 March 2008
After Hurricane Katrina, Louisiana desperately needed Americas compassion and financial support. But many national officials, policymakers, and talking heads said that the state was so corrupt that its public officials and politically connected contractors would likely find a way to pilfer any money that was given to it. Reputation is no laughing matter, especially in a crisis. New York States reputation has been steadily eroding for years, but the news about Governor Eliot Spitzers patronage of a prostitution ringcoupled with other recent, less titillating newspushes New York dangerously toward Louisiana territory. The next generation of New York leaders should understand what a serious blow the state has taken and what must be done to fix it.
For guidance in how to recover from an abysmal low, they could look to Louisiana. Katrinas aftermath was apparently a wake-up call for the states residents, as they learned the hard way that the states reputation had real-world consequences. Most of the money that the state eventually got came wrapped in layer after layer of corruption-resistant red tape, likely contributing to the slow pace of the recovery effort and increasing total costs through inefficiency. Last fall, jarred by these realities, voters elected a candidate for governor, Bobby Jindal, who explicitly ran against his states corrupt history, arguing that it first had to embark on serious reforms before the nations entrepreneurs and investors would do business there.
Since he took the oath of office in January, Jindal has had at least some cooperation from a legislature thats just as entrenched and self-protective as New Yorks, but whose members seemed shocked by how negatively the rest of the nation viewed their little world. In an early special session, the legislature passed, and Jindal signed, a spate of solid ethics laws. Jindal is currently negotiating to dedicate much of a one-time surplus to vital infrastructure investments, including capital spending on Louisianas all-important hurricane protection system of levees and coastal restoration. Hes also looking to ease the states tax burden. While one can quibble with some of his specific proposals, the governors tone is just as important as the details of his policies. The personable, optimistic Jindal makes it difficult for legislators to obstruct him without looking unreasonable, while his professionalism sets a good example for other elected officials, state and local. People in Louisiana genuinely seem excited about their new governor and their states future.
In New York, by contrast, people who care about state government have been depressed and listless for years, as lawmakers and statewide officials have long seemed more interested in helping themselves than in helping others. Some brief highlights of the states travails even before the Spitzer bombshell landed on Monday:
For these and other reasons, even conservatives were happy that the energetic Spitzer won office by such a landslide 16 months ago. Conservatives never expected Spitzer to be much of a fiscal steward, but many were happy to ignore some big issues if only he could start to change the culture in Albany and show that New York, too, understood that it had real problems and was starting to change.
Enter Client Number Nine. If news reports are true, Spitzer was as corrupt as the rest of them, willing to engage in activity that he knew could be prosecuted as a federal conspiracy of money laundering and human trafficking. Its not just that Spitzer, who had prosecuted prostitution rings as attorney general, seemed to think himself above the law. Other potential implications are even more disturbing. What if, for example, Spitzer didnt prosecute some organizations because he had relationships with them? The governor and former attorney general also made himself vulnerable to underworld blackmail. The knowledge that he was a client could have been a priceless piece of information for some shady character to use not only against Spitzer and his staff, who depend on his public office for their own career advancement, but also against his wealthy family.
The states prominent elected officials, including Senators Charles Schumer and Hillary Rodham Clinton, should be frank and acknowledge to the public just how serious the governors transgressions are. And the states all-but-assured next governor, David Paterson, must work with the legislature quickly to acknowledge that while Spitzers behavior was a shocking low point, the Empire State didnt have far to fall. New York could start cleaning up its act by passing a law requiring legislators to disclose how much money they make from outside business interests, as Louisiana just did, so that voters can learn just how valuable, for example, Silvers trial-lawyer employers consider his position. It should also take this years huge deficit as an opportunity to wrest the budget away from the special interests, lightening the taxpayers burden in future years.
The state better get down to business, or the next time it has to go to the nation for help, as it did after September 11, the first thing national leaders might think is that it cant be trusted. After all, the latest New York scandal made front-page headlines on newspapers far and wideincluding, to name just one example, New Orleanss Times-Picayune.
Nicole Gelinas is a contributing editor to City Journal and a Chartered Financial Analyst.