Kyle Smith at the New York Post deserves some sort of award for the mental gymnastics necessary to put out this piece of incredibly selective populism. He uses the rival Daily News‘ famous “Ford to City: Drop Dead” headline as a jumping-off point for a rant against Obama’s new taxes to offset the costs of health care reform (but he makes sure to take a cheap shot at the DN, calling it a “now-irrelevant city paper” after citing it). Ultimately, he argues, Obama’s tax policies are going to be a lethal blow to New York’s prosperity in the coming years. His argument boils down to this: big Wall Street paychecks and bonuses trickle down to the pockets of people who make and sell sandwiches, too. Not just bankers.
The reference to those making sandwiches reminded me of the story about the $175 hamburger being sold at the Wall Street Burger Shoppe, before the financial crisis really hit. In May, 2008, the Wall Street Burger Shoppe introduced a Kobe beef burger, topped with foie gras, black truffles, truffled mayonnaise, and, of course, gold flakes. Before that, in fall 2007, the Westin Times Square offered a $1000 bagel, topped with white truffle cream cheese, some other nonsense, and those tasty gold flakes. But even these sandwiches haven’t gone anywhere. I called the Wall Street Burger Shoppe, and was told I only needed to give them 24 hours notice — and, of course, $175 — to have the burger.
On the eve of our financial crisis, New Yorkers started eating gold. On Wall Street, where capital is made and destroyed on paper only, creating no real wealth, pertaining to no actual production of goods, it seems appropriate that the “realest” form of abstract wealth — gold — would become a literally and metaphorically tasteless food garnish. But those salaries that afforded — even made trendy — the consumption of gold in New York City were made possible by similarly absurd amounts of leverage at places like Lehman Brothers, who had a 1:31 ratio of capital to assets on the eve of its downfall. The more illusory your wealth, the more food-like precious metals become. It almost makes sense.
Yet Smith’s declared loyalty to “Sandwich Makers” and “Mom and Pop Bodega Owners” is expressed through frustration at the minor tax code changes for those earning more than $200,000 a year in Obama’s health care reform bill, which seems dishonest to say the least. To people like Smith, the short-term socialization of banking — the bailouts — is not even worth talking about, while the regulatory capture of health care by the insurance agencies amounts to the sky falling, and only when it relates to the tax code. And only when the tax code relates to those earning more than $200,000.
Kyle Smith echoes similar statements made by Mayor Michael Bloomberg, regarding Obama’s tax policies negatively affecting New Yorkers. But if you take a look at how votes on health care reform went down in the House, you can see that representatives for all but one borough voted for the bill. If you don’t immediately know which borough I’m referring to, you’ve probably never crossed the Verrazano. Even all of the representatives from Connecticut, home of some of the richest ZIP codes in the country, voted for the bill. And politicians — unlike columnists for the Post — are held accountable for their opinions, at least in theory. If the tax code changes in the health care reform bill were a death sentence for New York City, they probably wouldn’t have voted for it, almost unanimously.
Which also brings to mind whether Kyle Smith wrote about the piece of legislation that he intended to. Congress will soon be voting on Senator Chris Dodd’s financial reform bill, which will give federal regulators more ability to create “strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity,” reports Paul Krugman, the only New York Times columnist who isn’t exceptionally easy to make fun of. Krugman claims that the main flaw in the bill is that instead of creating strict laws on banking that will last no matter who is in the executive office, the Dodd bill leaves the severity of the legislation up to appointed officials, and any given administration’s attitude towards regulation will be reflected in how our banks are run.
Were this bill tougher, it might really limit how banks could do business by putting limits on leverage, like the House bill does. It doesn’t. So, Kyle Smith and the sandwich makers can sleep tight, if Wall Street isn’t making money hand over fist soon, it will not be the fault of the Obama administration. Bankers will continue to make big bonuses, buy sandwiches, and get their shoes shined, and New York will continue to be the prosperous place it has been for the last two decades. Let’s just hope that New York City and Wall Street have both learned something from the excesses of the aughts, and that we leave our gold where it belongs: hidden under Glenn Beck’s mattress.