Commentary Magazine


Topic: creative accounting

See What I Mean?

The New York Times this morning has a front-page story on the difficulty of balancing New York State’s budget, which is gushing red ink. The governor, David Paterson, called the legislature into session this week and delivered an address to both houses, asking — begging, really — for serious budget cuts to cover a $3 billion deficit in this year’s budget and far larger deficits in future years.

Good luck with that, governor. As the Times explains:

Gov. David A. Paterson is imploring the Legislature to finally reckon with the state’s ugly financial reality.

But first the governor must reckon with the likes of Senator Carl Kruger.

Mr. Kruger, a Brooklyn Democrat who is the chairman of the Senate Finance Committee, has amassed a campaign war chest of $2.1 million, in part because of generous contributions from his labor union allies.

Despite a deficit of more than $3 billion, Mr. Kruger has threatened to block any significant cuts to health care and education, the biggest spending areas in the budget. He has presented his own budget plan, which has startled even Albany veterans for its reliance on one-time maneuvers and financial gimmickry.

Last week, the state’s most powerful union, 1199 SEIU United Healthcare Workers East, had a rally in Albany, with 2,000 people screaming for no cuts. The SEIU and other public-service unions don’t hesitate to launch aggressive TV-advertising campaigns against politicians who do not toe the union line, while donating generously to the campaign war chests of those who do, such as Senator Kruger. The taxpayers have no means to push back, since the legislature is thoroughly gerrymandered. As a result, politicians take the path of least resistance: like Kruger, they prefer to use creative accounting to get around the state constitution’s requirement that the expense budget be balanced, rather than face fiscal reality. This, of course, simply makes the problem worse in the future, as more and more of today’s budget is funded with tomorrow’s money.

The Times has finally woken up to the fact that gerrymandering is an affront to the very principle of democratic government. And unless it and the rest of the New York media world finally acknowledge that allowing politicians to keep the state’s books as they please guarantees gimmickry instead of hard choices, disaster is inevitable. Like every corporation in the country, governments need the discipline that comes from having to adhere to rigorous accounting principles, and relying on independent accountants to ensure that they do.

The New York Times this morning has a front-page story on the difficulty of balancing New York State’s budget, which is gushing red ink. The governor, David Paterson, called the legislature into session this week and delivered an address to both houses, asking — begging, really — for serious budget cuts to cover a $3 billion deficit in this year’s budget and far larger deficits in future years.

Good luck with that, governor. As the Times explains:

Gov. David A. Paterson is imploring the Legislature to finally reckon with the state’s ugly financial reality.

But first the governor must reckon with the likes of Senator Carl Kruger.

Mr. Kruger, a Brooklyn Democrat who is the chairman of the Senate Finance Committee, has amassed a campaign war chest of $2.1 million, in part because of generous contributions from his labor union allies.

Despite a deficit of more than $3 billion, Mr. Kruger has threatened to block any significant cuts to health care and education, the biggest spending areas in the budget. He has presented his own budget plan, which has startled even Albany veterans for its reliance on one-time maneuvers and financial gimmickry.

Last week, the state’s most powerful union, 1199 SEIU United Healthcare Workers East, had a rally in Albany, with 2,000 people screaming for no cuts. The SEIU and other public-service unions don’t hesitate to launch aggressive TV-advertising campaigns against politicians who do not toe the union line, while donating generously to the campaign war chests of those who do, such as Senator Kruger. The taxpayers have no means to push back, since the legislature is thoroughly gerrymandered. As a result, politicians take the path of least resistance: like Kruger, they prefer to use creative accounting to get around the state constitution’s requirement that the expense budget be balanced, rather than face fiscal reality. This, of course, simply makes the problem worse in the future, as more and more of today’s budget is funded with tomorrow’s money.

The Times has finally woken up to the fact that gerrymandering is an affront to the very principle of democratic government. And unless it and the rest of the New York media world finally acknowledge that allowing politicians to keep the state’s books as they please guarantees gimmickry instead of hard choices, disaster is inevitable. Like every corporation in the country, governments need the discipline that comes from having to adhere to rigorous accounting principles, and relying on independent accountants to ensure that they do.

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