As a New York City taxpayer, I want a refund from Goldman Sachs. And you deserve one, too, before the company cuts checks to shower $16 billion in bonuses throughout its executive suites. We are all paying for the enrichment of the investment bankers and rainmakers who are going to pocket tens of millions of dollars. It might be one of the more subtle corporate rip-offs of taxpayers, and, most troubling, it’s all legal.
In the summer of 2005, Goldman Sachs successfully extorted money from New York, threatening to leave the city unless it received tax breaks and low-interest bonds. It did so in a fairly ugly way. Using the specter of September 11th as a club, the company pocketed an unbelievable deal: $1.65 billion in low-interest, triple-tax-exempt Liberty Bonds, enabling the firm to save as much as $9 million a year in financing costs, which would save Goldman about $250 million over the life of the bonds. If that wasn’t enough, the city also threw $115 million in sales and utility tax breaks at the company, in return for a commitment to maintain its headquarters in Lower Manhattan and employ more than 9,000 people through 2028; those breaks could rise to as much as $150 million if Goldman adds 4,000 new jobs by 2019.
Like too many cities and states in the country, New York rolled over, succumbing to the kind of corporate blackmail that has been draining cities and states nationwide of badly needed revenues for things like schools, affordable housing and infrastructure (this corporate blackmail is expertly documented by Good Jobs First). The fact is that, in my opinion, this give-away was unnecessary. The company was more likely to be persuaded to stay in New York by the closeness to other financial institutions, New York’s infrastructure and the trained workforce that existed.
Goldman’s executives simply took advantage of a city and government still desperate to create new jobs and took the money that was laying on the table. By the way, it wasn’t the high-fliers at Goldman who took the hardest hit from the economic effects of the 9/11 attacks. It was the working-class and middle-income people: 60 percent of the 100,000 people who were displaced by the attacks were making less than $11 an hour, according to a study by the Fiscal Policy Institute.
So, here we are now: a company that is taking money out of my pocket and yours is setting aside $16.5 billion in cash to pay out as bonuses—an average pay day of $622,000 per worker. Of course, average really is misleading—the top dogs at the company will reap the big windfalls (CEO Lloyd Blankfein is reportedly in line to cash a check of up to $50 million), with the support staff probably getting a free Metro Card or maybe a nice holiday gift basket, at best.
Why shouldn’t Goldman give some of that money back to the city, or the federal government (the low-interest Liberty Bonds are backed by the faith and credit of the feds)? Sure, some of the money will come back in tax revenues. But, why should a company that chooses to devote $16 billion to bonuses continue to be underwritten by the average person? Here’s the cruel irony: New York’s residential real estate market is out of control, with the city increasingly becoming a place for the rich. Blankfein and his high-rollers will likely spend a huge chunk of their new riches to buy multi-million digs in the city, further pushing up prices and making housing even more unaffordable for millions of people—the very people who are paying taxes that are supporting the tax-breaks Goldman Sachs is enjoying so it can rake in even larger profits. Isn’t capitalism great?
I know this is unrealistic—after all, as dumb as the deal was, supported by our mayor, governor and two United States Senators, it was legal—but why shouldn’t our political leaders ask for a refund? And if Goldman Sachs says no, New Yorkers and taxpayers everywhere should demand that their city, state or the federal government boycott its services and refuse to use the company in any investment of pension funds or other financial instruments (By the way, if you want to call Blankfein and tell him what you think, he’s ready to take your calls at 212-902-1000).
Yeah. Not going to happen. But, maybe this is a lesson for the future. The corporate raids of the public till have got to stop.