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New York Feels the Pinch From Wall Street Downturn
New York Gov. David Paterson warned in a televised address that "the damage on Wall Street is affecting all of our communities."
(Mike Groll - AP)
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But the lessons from New Jersey should also be cautionary. After Corzine decided to seize the budget issue and impose tough fiscal discipline, his job approval rating in opinion polls plummeted to 38 percent, seriously clouding his reelection prospects next year.
"There is no political gain from being in any elected position of authority during a recession," said Nicholas Johnson of the Center on Budget and Policy Priorities, a liberal-leaning Washington-based think tank that monitors state budget issues.
In Paterson's case, the problem is compounded; he is, in a sense, the Accidental Governor, a man ascended to the position in unusual circumstances and had no articulated agenda. Some analysts said he appears to be making fiscal solvency his trademark issue, an issue he might use as his platform should he decide to run to keep the job in 2010.
"If you're going to try to develop a signature issue, now's the time to do it," said political scientist Douglas Muzzio of the City University of New York's Baruch College. "I don't think there's another issue that's as important and as dramatic as this."
Muzzio added: "Now the question is, can he deliver? Does he have the will and does he have the ability to move the recalcitrant and dysfunctional state government to fiscal responsibility? I don't know."
If he stumbles, there are believed to be several contenders eyeing his job, including New York Mayor Michael R. Bloomberg, an independent, and former mayor Rudolph W. Giuliani, a Republican.
Paterson has not laid out specific spending cuts, but he has indicated that everything -- including education spending -- must be on the table. That already has apparently set up a confrontation with Democratic leaders in the legislature, who are pushing for a plan to increase taxes on millionaires.
Grappling with the budget is difficult, because no one can be sure how much revenue will be available. But initial estimates are that Wall Street bonuses could be down more than $10 billion this year, and some struggling firms have announced plans to lay off tens of thousands of financial service workers.
Around the Street, the pain is already being felt.
At Ulysses', a popular restaurant and bar in the financial district, Dan Newman, the manager, said that people who might have racked up $100 tabs before are now spending more like $80.
And at the Tumi luggage store on Wall Street, "we've been feeling a pinch," said Toni Westley, a manager.
Domenick R. Fumai, 47, a financial analyst, is lucky to have a job but said, "There's a psychological impact of what you see and what you read in the papers." Fumai said he has been curtailing spending.
"I was thinking about replacing my car, a Mercedes from 2003," he said. "I'm pretty sure it's not going to be this year -- with the bonus I'll be getting."
He fingered $170 ties at the Hermes store and added, "I'm not spending whimsically."
