Back and Forth: Back to Hugh
Mon, 11 Aug 2008 14:08:00
In 1975, former Gov. Hugh Carey (D) came into office at a time when the state was on the verge of bankruptcy. In his first State of the State speech, he famously said that "the days of wine and roses are over," and then set out to bring business and labor leaders together to help steer the state through the financial storm. Today, in the face of expanding budget shortfalls, Gov. David Paterson (D) is drawing comparisons to the 1970s crisis while echoing Carey's call for fiscal prudence. The 89-year-old former governor-a title he insists on, instead of Gov. Carey-spoke about Paterson's approach to the current problems, how New York can compete in a global economy, and why the days of roses may still be over, but not the days of wine.
What follows is an edited tran scri pt.
The Capitol: When you were governor, there was a lot of talk of economic crisis.
Hugh Carey: Not just talk, we had one.
TC: Governor Paterson evoked your memory to describe today's financial troubles. How similar is that crisis to today's problems?
HC: Part of my successful administration was to appoint Basil Paterson, my lifelong friend-he was a member of the team right on through. He should have first-hand knowledge.
TC: What worked financially that you were not expecting to work?
HC: This may surprise you. We attracted tourism during that time. We are a service economy now-hospitality and means of entertainment. Attraction of tourism is a mainstay in New York. In those days, people rushed to New York because they heard it was really convenient, a hapless corpse. They wanted to attend the wake of the death of a city. But it didn't happen. Now we're attracting them because there so much to do in New York. That's a huge difference. We were a young population. During my administration we had 2 million illegal aliens. And I said, 'That's a resource for the future'-Caribbean origin and many others-from the south, the blacks. And that population is not only integrated but highly trained now.
TC: Should Governor Paterson look into cutting taxes as you did?
HC: When he gets there, he should. I can't dictate when it's right to cut taxes. But we're in a competitive economy. Not just 50 states, but competitive economies around the world are seeking to attract our business. And we got to capitalize on our proficient labor, productivity, all the things we needed to do back in the 70s.
I was talking about competition and globalization. I think what happened in the 70s, we were vaccinated. Because of the competition of the Rust Belt and other parts of our own country...When I mention globalization, we're vaccinated but we're not immune. And now we have to think about competition with Abu Dhabi and Calcutta.
Our financial markets [30 years ago] didn't have to think about the global financial markets. Certainly, Abu Dhabi and other parts of the world are able to complete transactions as quickly as we can. We have to globalize our education system. And another thing, the legislature is moving for a property cap, which would save the local property owners' homes, but we have to find a substitute for property tax. That's more of a national challenge than state. As I learned on the Ways and Means Committee, the only way to get away from excess reliance on property tax is to do something radical, and that is to pass our version of VAT [value-added tax]. That's a resource in Europe and all over the world that we don't have.
TC: Will the current budget deficit impede the state's competitiveness?
HC: If we don't go back to new forms of taxation, that's exactly what's going to happen. I notice that the legislature is pointing at the property cap as a means of alleviating those whose homes are suffering-growing educational taxes, property taxes are a major resource. If you gave me six months and a good team, I could design a VAT for the country that would make us competitive with Europe and Abu Dhabi for that matter.
TC: Do you think Paterson would give you the job?
HC: No, he's got Ravitch and Steve Berger, my old team, working on that.
TC: How do you think Paterson's team of economic advisors compares to yours?
HC: He's putting it together. He's had all those years in the Legislature, plus the tutelage of his father. I think he's as prepared as he can be. He's a very warm and collaborative individual. Easy access. I suggest we all give him a decent chance to show us what he can do well.
TC: Why does New York continue to have the same budget problems over and over?
HC: We had a yardstick. We tried to hold spending within half the rate of inflation. And that guarantees surpluses which were used by other governors to make tax cuts, far ahead of where we were in the 70s and the Rockefeller administration. Everything was overtaxed at that time. And that was a weight on New York City's economy. That does not exist today. But we are aware that we're not immune to any of the afflictions nationwide, including the energy crisis, which is a real dimension right now-a major source of instability. We have to be mindful of conservation and other kinds of energy production which can work in our favor.
TC: How much confidence do you have in Governor Paterson's ability to steer the state out of this crisis?
HC: He's giving words without alarm. He's indicating that the Legislature has to partner with him. He came out of the Legislature. He wants them to work with him. The budget which was passed could need some corrections. And I note also with some satisfaction that Comptroller [Thomas] DiNapoli is part of the process. In my days, we had a good comptroller, but he gave orders after the fact. Now, I notice that Comptroller DiNapoli is suggesting certain recommendations, timely recommendations, to the governor. They may not be in agreement all the time. But there are two watchdogs now: the governor's budget office and the comptroller. New York in my day, New York City, was a terrible drag-an almost cataclysmic event. That's not the condition today.
The Urban Development Corporation had to be rescued from the very brink of insolvency. I brought in people like Dick Ravitch, David Burke ... we came together and evolved during the crisis period. Not only effective mechanisms-control boards, [Freddie] Mac, so forth-but also brought in people like [former AT&T President] Bill Ellinghouse, head of telephone, to work side-by-side with unions to put together at that time a rescue plan. That rescue plan, with the guidance of people like Felix Rohatyn and many others and participation of labor like Al Shanker, the late Al Shanker. It was a cohesive effort that brought together different parts of the state and maximized cooperation. And we had to force our way into Washington. I hope that won't be the case with what I expect to be an Obama government.
TC: Are the days of wine and roses still over? Or were they back and now they're over again?
HC: No, no. I did that-I'd been a member of the [House] Ways and Means Committee. As such, I was able to do-people I brought into my administration-an introspective and very careful analysis of the state's condition. I'll quote Nelson Rockefeller, who was there before me, who said, 'I drank the champagne and Carey got the hangover.' Very accurate. When I saw that, I used that expression. I'd suggest to you it's out-of-date now because one of the things I did with John Dyson, the commissioner of commerce, we stimulated, organized the Long Island wines, as well as encouraging wineries in the upstate region. And that's been a huge resource because Suffolk County, which used to produce potatoes, suffered the gold nematode. Almost lost the whole potato crop. We had a very resourceful, and I should say burgeoning source of income now. The days of good wine on Long Island, whites and reds and blends, are so good we have to defend ourselves from California wineries shipping into our market.
TC: So the days of Long Island wines are still here?
HC: With moderation.
What follows is an edited tran scri pt.The Capitol: When you were governor, there was a lot of talk of economic crisis.
Hugh Carey: Not just talk, we had one.
TC: Governor Paterson evoked your memory to describe today's financial troubles. How similar is that crisis to today's problems?
HC: Part of my successful administration was to appoint Basil Paterson, my lifelong friend-he was a member of the team right on through. He should have first-hand knowledge.
TC: What worked financially that you were not expecting to work?
HC: This may surprise you. We attracted tourism during that time. We are a service economy now-hospitality and means of entertainment. Attraction of tourism is a mainstay in New York. In those days, people rushed to New York because they heard it was really convenient, a hapless corpse. They wanted to attend the wake of the death of a city. But it didn't happen. Now we're attracting them because there so much to do in New York. That's a huge difference. We were a young population. During my administration we had 2 million illegal aliens. And I said, 'That's a resource for the future'-Caribbean origin and many others-from the south, the blacks. And that population is not only integrated but highly trained now.
TC: Should Governor Paterson look into cutting taxes as you did?
HC: When he gets there, he should. I can't dictate when it's right to cut taxes. But we're in a competitive economy. Not just 50 states, but competitive economies around the world are seeking to attract our business. And we got to capitalize on our proficient labor, productivity, all the things we needed to do back in the 70s.
I was talking about competition and globalization. I think what happened in the 70s, we were vaccinated. Because of the competition of the Rust Belt and other parts of our own country...When I mention globalization, we're vaccinated but we're not immune. And now we have to think about competition with Abu Dhabi and Calcutta.
Our financial markets [30 years ago] didn't have to think about the global financial markets. Certainly, Abu Dhabi and other parts of the world are able to complete transactions as quickly as we can. We have to globalize our education system. And another thing, the legislature is moving for a property cap, which would save the local property owners' homes, but we have to find a substitute for property tax. That's more of a national challenge than state. As I learned on the Ways and Means Committee, the only way to get away from excess reliance on property tax is to do something radical, and that is to pass our version of VAT [value-added tax]. That's a resource in Europe and all over the world that we don't have.
TC: Will the current budget deficit impede the state's competitiveness?
HC: If we don't go back to new forms of taxation, that's exactly what's going to happen. I notice that the legislature is pointing at the property cap as a means of alleviating those whose homes are suffering-growing educational taxes, property taxes are a major resource. If you gave me six months and a good team, I could design a VAT for the country that would make us competitive with Europe and Abu Dhabi for that matter.
TC: Do you think Paterson would give you the job?
HC: No, he's got Ravitch and Steve Berger, my old team, working on that.
TC: How do you think Paterson's team of economic advisors compares to yours?
HC: He's putting it together. He's had all those years in the Legislature, plus the tutelage of his father. I think he's as prepared as he can be. He's a very warm and collaborative individual. Easy access. I suggest we all give him a decent chance to show us what he can do well.
TC: Why does New York continue to have the same budget problems over and over?
HC: We had a yardstick. We tried to hold spending within half the rate of inflation. And that guarantees surpluses which were used by other governors to make tax cuts, far ahead of where we were in the 70s and the Rockefeller administration. Everything was overtaxed at that time. And that was a weight on New York City's economy. That does not exist today. But we are aware that we're not immune to any of the afflictions nationwide, including the energy crisis, which is a real dimension right now-a major source of instability. We have to be mindful of conservation and other kinds of energy production which can work in our favor.
TC: How much confidence do you have in Governor Paterson's ability to steer the state out of this crisis?
HC: He's giving words without alarm. He's indicating that the Legislature has to partner with him. He came out of the Legislature. He wants them to work with him. The budget which was passed could need some corrections. And I note also with some satisfaction that Comptroller [Thomas] DiNapoli is part of the process. In my days, we had a good comptroller, but he gave orders after the fact. Now, I notice that Comptroller DiNapoli is suggesting certain recommendations, timely recommendations, to the governor. They may not be in agreement all the time. But there are two watchdogs now: the governor's budget office and the comptroller. New York in my day, New York City, was a terrible drag-an almost cataclysmic event. That's not the condition today.
The Urban Development Corporation had to be rescued from the very brink of insolvency. I brought in people like Dick Ravitch, David Burke ... we came together and evolved during the crisis period. Not only effective mechanisms-control boards, [Freddie] Mac, so forth-but also brought in people like [former AT&T President] Bill Ellinghouse, head of telephone, to work side-by-side with unions to put together at that time a rescue plan. That rescue plan, with the guidance of people like Felix Rohatyn and many others and participation of labor like Al Shanker, the late Al Shanker. It was a cohesive effort that brought together different parts of the state and maximized cooperation. And we had to force our way into Washington. I hope that won't be the case with what I expect to be an Obama government.
TC: Are the days of wine and roses still over? Or were they back and now they're over again?
HC: No, no. I did that-I'd been a member of the [House] Ways and Means Committee. As such, I was able to do-people I brought into my administration-an introspective and very careful analysis of the state's condition. I'll quote Nelson Rockefeller, who was there before me, who said, 'I drank the champagne and Carey got the hangover.' Very accurate. When I saw that, I used that expression. I'd suggest to you it's out-of-date now because one of the things I did with John Dyson, the commissioner of commerce, we stimulated, organized the Long Island wines, as well as encouraging wineries in the upstate region. And that's been a huge resource because Suffolk County, which used to produce potatoes, suffered the gold nematode. Almost lost the whole potato crop. We had a very resourceful, and I should say burgeoning source of income now. The days of good wine on Long Island, whites and reds and blends, are so good we have to defend ourselves from California wineries shipping into our market.
TC: So the days of Long Island wines are still here?
HC: With moderation.
