WHO IS GEORGE PATAKI?

There lies the dilemma for George Pataki, the unassuming former small-city mayor who has become New York’s first truly conservative governor in more than 75 years. Almost unnoticed, Pataki is hacking away at the suffocating undergrowth, the result of decades of liberal rule, that has left New York’s economy resembling some lost Mayan civilization. The whole enterprise is a conservative’s dream. Almost everywhere he turns, Pataki finds some tortuous vine strangling a forgotten piece of enterprise.

Yet how long can the governor continue this lonely crusade before he grows arm-weary? His tax cuts over the last two years have made absolutely no impression on the public (although this may change when people start filling out their W-4s). His approval ratings hover below 40 percent. He is picketed by public employees’ unions everywhere he goes. The newspapers, particularly in New York City, spend their time lamenting cuts in state services.

Nor has he avoided personal embarrassments. His lieutenant governor, Betsy McCaughey Ross, has become a media darling by insulting him every chance she gets. It has taken a court order to get him to disclose the names of corporations and lobbying groups that contributed to his inaugural ball two years ago.

Most worrisome, New York state appears headed for a crisis next year when federal welfare reform meets Article XVII of the New York state constitution. It reads: “The aid, care and support of the needy are public concerns and shall be provided by the state.” Liberals are girding to use the clause — the only one of its kind in North America — as a ratchet to turn New York into the nation’s welfare mecca just as every other state will be dismantling its welfare system.

Still, the governor soldiers on. “I love this job,” he says, sitting with his shoes off in his new midtown Manhattan office. “I’m proud of this state and what it has represented for the rest of the country and the world. We’re determined to turn New York back into a place where people want to live and do business.”

Two years ago, when Pataki came from 9 points behind in the last week to upset three-term incumbent Mario Cuomo, many people believed New York was at the end of its rope. After three decades of spendthrift rule — spearheaded originally by Republican governor Nelson Rockefeller — the state was on the verge of insolvency. Except for Louisiana, New York still has the worst credit rating of any state in the country. Total general obligation debt stands at $ 23 billion, dead even with California, even though the latter has twice New York’s population.

And that’s only half the story. The biggest government debtor in the nation (outside the federal government) is New York City, which owes $ 30 billion — $ 4,100 for every man, woman, and child, one of seven of whom is on welfare. Both city and state draw on the same tax base. A mere tremor in one will bring walls down on the other. “The state is actually in a weaker position to help rescue New York City than it was in 1974,” says James Dearborn, a vice president at Moody’s Investors Service.

Along with this debt, New Yorkers were shouldering the highest tax burden in the nation, 162 percent of the national average. (New York City residents paid 174 percent.) David Frum may have sealed Cuomo’s fate in 1994 with a cover story in Forbes noting that one out of every three people who lost a job in the 1990-91 recession was a New Yorker. “Actually, it was worse than that,” says Robert Ward, director of research at the New York Business Council. “We lost another 100,000 jobs after the national recession ended in 1991. We’ve just made those back during the first two years of the Pataki administration.”

Amidst this general collapse, Cuomo was essentially clueless. His soaring rhetoric, so beloved by the press, disguised the fact that he was probably the country’s last medieval thinker. During an off-the-cuff acceptance speech at the 1990 state convention, Cuomo talked enthusiastically about his discovery of the principles of economics in conversations with Vincent Tese, commissioner of New York’s department of economic development. “This is wonderful, Vincent, they make something, they sell to us. We make something, we sell to them. We both come out ahead.” In the same speech, Cuomo bragged that he had persuaded “a British company to locate a brickyard right here in New York State.” (The speech was later carefully suppressed by his campaign staff.)

Meanwhile, state spending more than doubled over the 12 years of Cuomo’s tenure. In 1987, Cuomo reluctantly passed tax cuts, then postponed half of them. By 1994 the full plan still hadn’t been implemented.

Those days are now over. In his first year, Pataki proposed cutting taxes 25 percent across the board. The Democratic state assembly resisted, but the governor did manage to get through a 25 percent reduction for two-thirds of the state’s taxpayers.

General state spending declined for the first time since 1943. “The crown jewel of the Pataki agenda has been his 20 percent income tax cut,” noted Stephen Moore and Dean Stansel, authors of the Cato report. “It will shave $ 2 billion a year off New Yorkers’ tax bills — a tax cut as large in dollar terms as those enacted by all the rest of the states combined. No other state has improved its fiscal condition over the past two years more than New York has.” Then again, they noted, “no other state had such a giant hole to climb out of.” Even now, the state’s tax burden is still the highest in the nation.

Equally important have been improvements in the business climate. Worker’s Compensation had been particularly disastrous. Set up to protect both employees and employers, worker’s comp guarantees employees compensation for work-related injuries and guarantees employers protection from paying punitive damages in lawsuits.

In 1972, the New York State Court of Appeals, the state’s highest court, ruled that equipment manufacturers that had been sued by injured workers could turn around and sue the employers — thus neatly undoing the protections of worker’s comp. As a result, New York employers paid the highest insurance premiums in the nation.

How bad was it? In 1992, the United States government filed a motion in federal court arguing that a portion of Ellis Island, built on landfill, should be considered part of New Jersey. A National Park Service employee had been seriously injured on that part of the island. The employee sued the manufacturer of the equipment, which in turn sued the Park Service. The U.S. government tried to have the case transferred to New Jersey’s jurisdiction, where such third-party suits are forbidden. The government lost.

This year, Pataki decided there wouldn’t be a state budget until the state legislature agreed to repeal the 1972 Court of Appeals decision. Trial lawyers went berserk, but Pataki persisted. The negotiations broke the record for budget stalemates in a state where the budget is regularly two months behind schedule. Yet Pataki got what he wanted.

“I must say, I was impressed,” says Tom Carroll, president of CHANGE-NY, the state’s largest taxpayers’ organization. “I never thought he would prevail against the trial lawyers. He said we’re going to tackle worker’s comp this year and welfare next year and that’s what he’s done.”

“It’s a matter of setting priorities,” Pataki says. “I remember visiting the Reagan White House [when he was mayor of Peekskill, N.Y.] and no matter who you talked to, they always gave you the same three or four priorities. At the Bush White House, there were 147 different things they were going to do.”

Cutting regulations, which does not always require the consent of the legislature, has given Pataki another opportunity to improve the state’s business climate. “It would be an understatement to say things have gotten better,” says Ward, of the Business Council. “The change has been dramatic and fundamental.”

Earlier this year, for example, an Alcoa plant on the St. Lawrence River detected a defect in a furnace partly coated with asbestos. The company had just trained new staff in working with asbestos but was awaiting their certification by the state labor department. “The last time we dealt with the state, it took them six weeks to approve the certification and then they wouldn’t accept our check, even though we’re the oldest operating aluminum plant in America,” says Mike Cooper, Alcoa’s public-relations director. “This time they came through in less than eight hours. We had production back on the line in two days, whereas in the old days our people would have been sitting home for a month. There’s a whole new attitude down in Albany.”

When Kodak recently announced a decision to locate $ 500 million in new manufacturing facilities in its home city of Rochester (rather than Colorado or Mexico, where much of its recent investments have been), Kodak CEO George Fisher said, “Our decision has been influenced by the exciting policy changes that are occurring in New York under the leadership of George Pataki. There is absolutely no reason, given all the recent improvements, that New York cannot become a preferred location for manufacturing.”

Yet once again, the regulatory morass is so thick it may take years to clear away the underbrush. CHANGE-NY’s Carroll, who served as Pataki’s deputy director of regulatory reform, recalls an encounter with the Bedding Board, a turn-of-the-century reform agency originally set up to keep manufacturers from stuffing pillows and mattresses with dead rats. (The label marked “Do not remove under penalty of law” is the board’s signature accomplishment.)

“We had a manufacturer in Buffalo trying to make pillows designed to prevent sudden infant crib death,” recalls Carroll. “He has 70 handicapped workers, and he missed a payroll because the state Bedding Board was holding up his pillow license. We called in the officials and asked if they could expedite things. One career bureaucrat pulled me aside and said, “We really don’t consider this a health problem anymore. We don’t even do inspections.” I asked her when the Bedding Board had last met. She said she’d get back. She called the next day and said, “It’s too bad you didn’t ask sooner. The last surviving member died last week.” Yet we had 70 employees missing a payroll because of this agency.”

Where Pataki is likely to run up against even more entrenched bureaucracy is in his effort to enforce New York’s new death penalty. Approved by both houses of the legislature every year for the past 18 years, capital punishment had been vetoed each time by Cuomo or his predecessor, Hugh Carey. Pataki made it a campaign issue and wasted little time in signing a bill his third month in office. Yet nobody expects any killers to be executed in , this century and maybe not even the next.

The first problem has been prosecutors themselves. Manhattan district attorney Robert Morgenthau and Brooklyn’s Charles Hynes have indicated they are philosophically opposed to the death penalty and have not yet brought capital charges. Both are under tremendous pressure from the liberal press to practice passive resistance. When Hispanic drug dealers killed a police officer trying to make an arrest in the Bronx, district attorney Robert Johnson not only refused to bring capital charges but started maneuvering so that no one else could, either. The Pataki administration quickly realized that permitting this “inequality” between the Bronx and the rest of the state would open up legal justification for overturning sentences everywhere. Pataki replaced Johnson on the case with state attorney general Dennis Vacco. So far there have been only four other capital cases brought around the state, in Ulster, Monroe, Suffolk, and Onondaga counties — even though New York City accounts for 90 percent of the state’s murders.

But the real problem will not begin until convictions start reaching the Court of Appeals. With all seven members appointed by Cuomo, the state’s highest court has an outstanding record for detecting even the smallest peccadilloes in criminal convictions. In January, the court overturned a Manhattan burglary conviction on the grounds that the defendant had not signed a written statement agreeing to accept an alternate juror after another juror fell ill — even though the trial record showed the defendant had insisted on seating the alternate because he didn’t want to go through another trial. Pataki loudly criticized the decision.

Two days later, the New York Post revealed that the same defendant had had another conviction overturned four years earlier on the same technicality. The burglar, a career criminal, had obviously learned to job the system. He would agree to seat an alternate juror but carefully avoided signing any documents. The Court of Appeals played willing straight man in this burlesque. “There will be an execution at some point in New York,” says Scan Byrne, executive director of the New York Prosecutors Training Institute, “but it will happen sooner if there is an aggressive volunteer” — i.e., a Gary Gilmore type who seeks his own death.

While executions may remain a dim prospect, the new toughness on crime is filtering down anyway. Under Mayor Rudolph Giuliani and former police commissioner William Bratton, New York City’s crime rates tumbled almost 30 percent in the last three years. Pataki notes the same pattern has occurred across the state. “Yonkers, which is a city of 200,000, has had the same decline,” he says. Pataki has passed “truth in sentencing” laws, requiring repeat violent felons to serve 85 percent of their terms, rather than the previous 40 percent. The result has been a 70 percent reduction in crime committed by people on felony release.

But it is on welfare reform that the fate of New York’s revival may pivot. Years of profligacy have left entitlement payments a gaping wound in New York’s budget. Almost half the babies born in New York City are illegitimate, and 32 percent of children under 18 are on welfare. Medicaid spending in New York now exceeds that of California and Florida combined, even though these two Sunbelt states have ample elderly and three times the general population.

Even here the governor is making progress. “We’ve reduced the welfare rolls by 200,000 people just by tightening up on eligibility,” says Pataki. Recipients are now fingerprinted as a way of avoiding double-dipping (many had managed to collect both in New York and neighboring New Jersey). “We just ask for Social Security numbers and other forms of ID,” Pataki says, “and all of a sudden some of these people just melt away.”

But the first 200,000 may be the easiest. Federal welfare reform will require that 25 percent of the state’s 1.4 million welfare recipients be employed in workfare programs by 1997 and 40 percent by the year 2000. Providing day care alone could cost $ 950 million a year. In addition, New York’s liberals will not go down without a fight. There have already been efforts to unionize the 34,000 Home Relief recipients now earning their checks by sweeping streets and cleaning up in the parks.

Beyond policy, the biggest thorn in Pataki’s side has been his lieutenant governor, Betsy McCaughey Ross. A policy wonk at the Manhattan Institute who won attention with a brilliant critique of President Clinton’s health plan in the New Republic, McCaughey Ross has proved to be restive in political office. She alienated a whole series of staff members and made a bizarre claim of being detained by state police in order to keep her from speaking at a Pataki function. During the governor’s 1996 state of the state address, she stood directly behind him flashing her toothsome smile at the TV cameras. (She later told New York magazine she couldn’t find her chair.)

Now ostracized by Republicans, McCaughey has become the New York media’s favorite damsel in distress waiting to be rescued by the Democrats. Just married for the second time — to Wilbur Ross, a wealthy investor and hefty Democratic supporter — she is probably too close to the Manhattan in-crowd to avoid falling in with the glitterati. She will undoubtedly be bumped from the ticket in 1998 and has made noises about challenging Pataki or running against Sen. Al D’Amato, whose seat comes up that year. No one is very concerned. As for Pataki, he will be halfway through his second term in 2000, the year Sen. Daniel Patrick Moynihan stands for reelection. By then, Moynihan could seem as outdated as Cuomo did in 1994.

Like many of the Republicans who now govern the industrial states from New York to Wisconsin, Pataki came from hardscrabble roots. The grandson of Hungarian immigrants, three of whom did not speak English, the governor grew up on a farm in northern Westchester County. “One of my earliest memories is sitting in front of the television watching pictures from the Hungarian Revolution,” he recalls. “We only had one TV and everyone came over to watch. The excitement of people achieving their freedom and then the catastrophe of the Soviets’ crushing it — all that has never left me. From that point, my family and I were devout anti-Communists.”

Attending Yale, he was a Goldwaterite in 1964. “Barry Goldwater had that working-class conservatism that absolutely inspired me. I remember watching the San Francisco convention in Madison Square Garden and being so excited the Republican party was finally being taken out of the hands of the country club set and put in the hands of people who really wanted a change.”

After attending Columbia Law School, Pataki returned to his home town of Peekskill, where he was eventually elected mayor. “I remember one of the first things I discovered was we had an ordinance that said you couldn’t park on the streets from November to April,” he says. “I had people coming in saying, “I’ve got a twenty-year-old car, I can’t afford a garage, I don’t have a driveway, I just want to leave my car in the street.” So I went to the highway department and asked, “Why do we have this ordinance?” They replied, ‘Well, it snows five or six times a year and the plows can’t get through.” There you had it. We were playing havoc with people’s lives so that five or six times a year, municipal employees, who are well-paid, would have an easier time doing their job. So we repealed the law. It was just a minuscule example of the mindset whereby government dictates to the people rather than the other way around.”

At times like these, Pataki displays some of the same overblown resentment against governments that liberals often have against multinational corporations. Conservatives also express a few concerns about some of Pataki’s odd passions. The governor seems to have a weakness for electric cars. Others have criticized his embrace of a referendum that would have allowed the state to move even more borrowing off-budget. “That proved Pataki is really a lightweight on spending,” says one bond watcher.

But generally, the governor’s populism is serving him well. He raised hackles in Albany by refusing to live in the governor’s mansion. Instead, he commutes three hours a day from Garrison, where his four children attend public schools. “I got killed up in Albany,” says Pataki. “People said it was a disgrace, an insult to the state. But we didn’t want to disrupt our children’s lives.”

That the governor remains so obscure is really a measure of how far New York’s fortunes have fallen. Only 47 Fortune 500 companies remain headquartered in New York City (down from 254 in 1965). It is the only state besides Iowa that has lost population since 1970 and will soon fall behind Florida as the fourth largest state in the nation.

Traditionally, New York governors are national figures, always but a step away from the White House. In contrast to the Roosevelts, Al Smith, Rockefeller, and Cuomo, Pataki seems a humble Cincinnatus, happy to set the state straight and then retire to his farm.

Yet Pataki’s fate remains intertwined with the state’s uncertain fortunes. On the national scene, his pro-choice stance could easily hem him in with neighboring governors William Weld and Christie Whitman — a good ally in the Northeast but difficult to elevate to national office. Still, if Pataki really succeeds in unleashing New York’s latent industrial might, what a story that will be! Next to dealing with New York’s high taxes, overregulation, welfare dependency, municipal labor unions, and entrenched liberal culture, Washington would be a piece of cake.

William Tucker writes frequently from New York for THE WEEKLY STANDARD.