Carey's debt-defying feat
Former Gov. Hugh L. Carey is the Harry Truman of New York state a political figure who left office in disrepute, only to have his stature rise in later decades. Just as Trumans reputation was burnished by delayed appreciation for his Cold War leadership, Careys rehabilitation reflects a growing recognition of his role in tackling the near collapse of New York Citys finances 35 years ago.
At a time when New Yorks state government seems more dysfunctional than ever, this new book recalls an era when Albany actually worked. Seymour Lachman, a former state senator who runs the Carey Institute for Government Reform at Wagner College, and co-author Robert Polner devote most of their narrative to the dramatic crisis year of 1975. But they also sketch a colorful biographical back-story.
Carey was born 91 years ago in Brooklyn, the third-oldest of five sons and a grandchild of Irish-Catholic immigrants. He saw combat with the Army in Europe in World War II, rising to major and earning both a Bronze Star and the Croix de Guerre. After the war, Carey earned his law degree, married and started a family that would ultimately grow to 14 children.
In 1960, Carey was elected to the first of seven terms in Congress, defeating a Republican incumbent. From the start, his political career was grounded in two assets: his large and close-knit family, which played an active role in all his campaigns, and the deep pockets of an older brother in the oil industry.
Before his election to New York states top office, Carey endured a series of personal tragedies. In 1969, two of his sons were killed in a car accident. Three years later, his friend and political mentor Hale Boggs, the House majority leader, died in a plane crash while on a political trip that Carey had suggested he make. And in the spring of 1974, just weeks before announcing his candidacy for the Democratic nomination, Careys wife succumbed to breast cancer at the age of 49. The campaign became a sort of therapy for Carey and his children.
Slimmed down and spiffed up by his political consultant, the masterful David Garth, Carey cleverly played up his underdogs role in challenging the prohibitive Democratic favorite, Howard Samuels. Local party chairs, Carey joked, could be divided into two groups: “Enlightened leaders who see fit to endorse me, and bosses who have not.”
Early on, Carey was summoned to a lunch meeting in Little Italy with two of those bosses, Meade Esposito of Brooklyn and Matthew Troy of Queens. They had a friendly proposition: If Carey withdrew from the governors race, hed be handed the partys US Senate nomination as a consolation prize. If not, Esposito said, “Your “f - - - ing head will roll in the gutter.”
By his own account, Carey rose from the table, defiantly told Esposito and Troy he would run for governor anyway and promptly bumped into another arriving diner, the Roman Catholic bishop of Brooklyn, who announced, “Hey Meade, its wonderful to see you here trying to help Hughie.”
Carey easily defeated Samuels in the primary and Republican Gov. Malcolm Wilson in the general election after a campaign in which the looming fiscal crisis went almost unmentioned.
In his first State of the State Address, Carey memorably declared “the days of wine and roses are over.” Within two months, the state Urban Development Corp. became the first large government agency in the country to default since the 1930s.
But bigger headaches were just ahead. In March, the city was effectively shut out of the bond markets. The heart of this book recounts the tense and nerve-wracking months that followed, during which the city was on the brink of collapsing under the weight of billions of dollars in short-term debt accumulated during years of profligate spending.
While the banks were keeping the pressure on, Mayor Abe Beame and municipal labor unions resisted necessary cuts, and the federal government resisted calls for help. The extraordinary challenge brought out the best in Carey. “The greater the pressure, the bigger he got,” said his budget director, Peter Goldmark.
Carey called municipal bankruptcy “unthinkable” a claim that still can be debated but he also made sure union leaders considered just that possibility, since a bankruptcy court judge might abrogate their contracts. The unions, in turn, made the most of their own political leverage over the city pension funds, which were being asked to invest in the citys bailout bonds and notes. In the end, they were forced to agree to a series of pay-raise deferrals and freezes, along with tens of thousands of layoffs.
The governor had served in Congress with most of the men who would decide the fate of the citys agenda, including President Gerald Ford, who would be demonized by the famous “Ford to City: Drop Dead” headline. But Fords Oct. 30, 1975, threat to veto a bailout also forced the state and city (and their creditors) to put more of their own skin in the game.
Ford and Congress agreed to approve seasonal loans for the city a month later, after Carey had won legislative approval for a controversial city debt restructuring and tax hikes. There was plenty of trouble ahead, but the control mechanisms Carey pushed through the Legislature during that crucial year also proved to be the foundation for recovery.
While managing the crisis, Carey could draw on memories of his fathers struggle to keep afloat a once-successful oil delivery business. “The nightly dining room table talk was peppered with stories of fuel deliveries, tank trucks, expenditures, and revenues, and when the Great Depression arrived and deepened in the 1930s, the living-room discourse was edgier, revealing the pressures and tactics exerted by Eagles creditors,” Lachman and Polner write. After leading troops into combat, Carey worked as a lawyer for another oil firm owned by his brother, before running for office for the first time at age 41. In sum, he was shaped by a combination of life experiences that made him well suited to tackle the problems New York faced in 1975. That, plus his innate intelligence and an ability not to take himself too seriously, made him the right man at the right time.
Carey was a proud Kennedy Democrat who embraced the liberalism his era. Yet from the start to finish of his two terms, he was also among the most fiscally responsible New York governors of any era. And although he temporarily raised state taxes early in his tenure, he also went on to initiate the largest personal income tax rate cut in New Yorks history.
Lachman and Polner note that Carey was especially adept at sharing the spotlight and stroking egos. For example, in recruiting Wall Street financier Felix Rohatyn to the states fiscal rescue effort in 1975, he alluded to Rohatyns then-prevalent nickname, “Felix the Fixer.” If they succeeded, Carey suggested, Rohatyn would get the credit.
“Its up to you,” the governor told him. “Fixer or Savior.”
In the end, Hugh Carey himself turned out to be a bit of both.
Original Source: http://www.nypost.com/p/news/opinion/books/the_man_who_saved_new_york_eDQ0aIu3TrMaofZAIgsylO/0