Last week, New York's Governor Peterson became the first elected official to aggressively challenge the notion that punishing Wall Street is good for the economy. We hope that others will follow his lead.
War on Manhattan
As we have stated on many occasions, Manhattan's economy is heavily influenced by the health of the Wall Street economy.
One third of New York City's employee earnings come from the financial sector, and when that sector suffers, New York City suffers. As many in Washington, DC continue to design plans to undermine the ability of Wall Street firms to offer competitive compensation packages and retain their best employees, we are encouraged by our Governor's courageous defense of the unpopular US financial sector.
If New York City and New York State have any hope of closing their budget deficits, it is through resurgent Wall Street profits and tax revenues from the compensation received by New Yorkers who work in the firms that drive the world's financial system from headquarters located in Manhattan.
Moreover, if the US federal government makes it more difficult for firms to lead the financial sector from the US, those firms will leave Manhattan and move to other parts of the world. Manhattan's place as the world's financial capital is an economic and national security advantage for the US, and sustaining that advantage requires the type of attitude that Governor Paterson expressed last week.
Paterson's Thorough Defense
In Saturday's Presidential address, President Obama took aim at Wall Street and stated that Wall Street caused the recession through which we are all now suffering. He said that the cause of America's current economic struggles was "the irresponsibility of large financial institutions on Wall Street . . ." The US House passed sweeping financial regulatory reforms recently, and as we await Senate actions on that House bill, the President seems to be gearing up to support attacks Wall Street with these new regulations and perhaps other legislative proposals that may win him political points but will undoubtedly add greater burdens to our troubled economy here in New York City.
Governor Paterson addressed the war on Manhattan last week in a speech.
"Some people think that if you deny the bonuses, that the money’s coming back to the American taxpayers. It’s actually the other way around. If you deny the bonuses, the money stays in the firms. It’s when you pay out the bonuses that you start to get the huge tax collections that New Yorkers see."
He followed up later.
"You don't hear anybody in New England complaining about clam chowder. If you say anything about oil in Texas, they'll string you up from the nearest tree. We need to stand by the engine of our economy in New York State, and that engine is Wall Street."
He also used his Twitter account to reinforce his views.
"Iowa, corn. Michigan, autos. Texas, oil. NY, Wall Street . . . We must stand behind the engine of our state's economy & strengthen it."
"If we support Wall St, and make the tough choices necessary to stabilize our state, Wall St will help NY as we build a New Economy."
Governor Paterson, you said it well.