In the Winter City Journal, I praised New York State Attorney General Eliot Spitzer for his aggressive efforts to protect ordinary investors by cracking down on Wall Street corruption. But I wondered why Spitzer had shown no similar enthusiasm to protect New York taxpayers from the sleazy and sometimes lawless conduct of state and local government officials.
Now, though, Spitzer has made a move in this direction. Recently, he announced his office would begin prosecuting individuals who worked for Bronx pol Pedro Espada Jr.’s social-services empire. The workers had, among other crooked activities, fed attendees at political campaign events with provisions paid for with government money and originally intended for AIDS patients.
Former state senator and current city council member Espada stands at odds with the Bronx Democratic Party organization, and for that matter, with practically everybody else in New York politics, so it was no act of supreme political courage for Spitzer to take him on. Nonetheless, it is an important first step. New York taxpayers have long been victimized by fraud, theft, and unethical conduct in the social-services industry, which is heavily government funded; large sums of taxpayer money have gone down the drain or been stolen. The industry serves to a significant degree as a means for political insiders to line their pockets and for state and local officials to draft campaign workers for their election efforts.
The nexus between the publicly funded social-services providers and the pols who benefit from them—many of whom belong to the industry themselves—has been a decades-long scandal in New York. But beyond the occasional sensational revelation and indictment, few have tried to change the situation. In the past, the providers have successfully deflected criticism by cynically accusing their accusers of indifference or hostility toward the poor.
Spitzer should go beyond prosecuting lawbreakers in the social-services industry to demand the industry’s complete reform. After all, he didn’t simply prosecute wrongdoing in particular mutual funds; he insisted that the mutual fund industry reform itself from top to bottom—even suggesting, for example, that it lower the outrageously high fees it charges investors. Ordinary taxpayers, just like ordinary investors, deserve ethical and lawful behavior from those entrusted with their hard-earned money.
And there would be plenty of political corruption for Spitzer to sink his teeth into after that.