Wisconsin congressman Paul Ryan's Medicare plan has exposed cracks in Republican unity. (photo by George Skidmore)

Hochul, HSBC, and the future of Western New York: how public funds buy us nothing new, but at great expense.

Thanks to a Republican congressman from bitterly divided Wisconsin, the 30-year political slumber of white Baby Boomers may be over. Representative Paul Ryan’s proposal to change Medicare from a system of universal government-funded healthcare to an individualized voucher program has become the centerpiece of the special congressional election that will be held here on May 24. At this writing, the candidate who endorsed Ryan’s privatization plan is losing to the candidate who not only attacks that plan but who also says “no more tax breaks for millionaires.”

We don’t have elections like they do in Canada or Britain, where the party label by itself tells voters exactly which policies a candidate stands for. But because the Republican-led House of Representatives recently voted specifically for Ryan’s Medicare plan, the parliamentary style of party ID may have arrived in America. Republicans are on the record for throwing out Medicare. Democrats are on the record for keeping it. Republicans want further tax relief for the top one percent of Americans. Democrats don’t. That’s clarity.

Should Democrat Kathy Hochul defeat Republican Jane Corwin and the Tea Party’s Jack Davis, there will certainly be some truth to the conservative excuse-narrative that is now being tested—that errors in Corwin’s campaign (as when her staff chief baited Davis into smacking him, or when her literature described the 40-something candidate as a veteran of three decades in business) were more important than this alleged referendum on Medicare.

But the stark difference is still there between those who voted to kill Medicare and those who didn’t. And because of that difference, the realignment that progressives have been hoping for could be around the corner, because the white middle class, after having empowered the anti-government rhetoric of Republicans since Reagan, is so economically insecure now that it is terrified of the consequences of that rhetoric.

The Buffalo area used to be a national test-market for consumer goods because our income profile and our ratios of race and gender and age were typical of America. We still are. Our region is prosperous enough to host two professional sports teams and an orchestra, but more than 70 percent of our households find themselves below the statewide median income. Only two percent of our households have incomes over $100,000 a year, according to the latest analysis of income tax returns filed here. But we’re typical also in that the top one percent of households used to take in about 45 percent of all income; now, the top one percent take in slightly over 50 percent of all income. It is precisely because of that polarization of income—which has been happening all over America—that politics may be shifting.

Thus the Buffalo area is once again, as it used to be, the proving ground for political ideas, too. Back in 1972, the late Jack Kemp was not the first suburban Western New York Republican to succeed with an anti-tax, anti-government appeal, but he was the first Republican to bust up the Democratic coalition of economically self-aware Catholic union members, working-class blacks, and university liberals. He pulled the Catholics over to the GOP line by addressing their economic anxiety, even as they crossed the municipal boundary line from diverse, polyglot, densely settled Buffalo in their flight to white, conformist, sprawling suburbia. It wasn’t only Kemp’s football celebrity and his professional football players’ union card that helped him connect with Democrats. It was principally Kemp’s narrative of what was happening to our economy. Industrial jobs leaving Buffalo? Bethlehem Steel closing down? Kemp went along with those who blamed greedy workers and lazy union bosses, but above all, Kemp’s message was to blame taxes. The promised land of a new prosperity, he preached, was across the Jordan of tax cuts, specifically tax cuts for investors, and especially tax cuts on capital gains. With his veneer of intellectuality—especially the quotes from Austrian economists, the alliance with the egregious George Gilder and with the Wall Street Journal editorial page—Kemp’s formula of upbeat free-market fundamentalism became the Republican route to political immortality.

But when they voted to dismantle Medicare, Republicans flew too far from political earth on the Icarus wings Paul Ryan has fashioned for them. Even the Canadian Conservatives knew better than to attack the social contract of the modern state: Middle-agers and the elderly like Medicare on both sides of the border. They’ll pay more in payroll taxes to keep it going. All the Republicans needed to do was probe whether voters could distinguish between their own social safety net and the one Lyndon Johnson erected for the poor. Evidently, Republicans didn’t—because even Tea Party supporters like not only Medicare for the elderly but Medicaid for the poor, too. The Kemp era of middle-income Catholic suburbanites identifying their own economic interest with that of the investor class is now, thanks to Republican overreach, about to be over. As a result, a solidly Republican congressional district is up for grabs—and so is Congress in 2012. As before, it happened here first.

Public money, part deux

Now that the third-largest financial corporation on planet Earth has decided to keep its Buffalo branch office in HSBC Tower, the state’s economic development apparatus will have to come up with a new rationale for spending tens of millions of dollars on real-estate development in Buffalo’s inner harbor. But then again, maybe it will continue to do what it currently does: waste millions of public dollars in a futile search for a mission, while ignoring a stinking mess right under its nose.

In our last episode, Erie Canal Harbor Development Corporation (ECHDC), having defeated the litigants who tried to stop $153 million of public funds from being squandered on consultants, replica canals, and new big-box retail stores, claimed that it absolutely needed a block of downtown land, plus a no-bid deal with a developer, in order to keep HSBC bank from moving 4,000 jobs out of Buffalo. There was lots of stage-whispering about secret conversations with HSBC central in London about how the bank wouldn’t stay in its current tower but would consider staying if only it had a shiny new rent-free building to move into just a block or two away. Existing building owners in the central business district, already aware of the vast oversupply of Class B and Class C office space downtown, knew that should ECHDC build a new structure for the bank, there would suddenly be 800,000 square feet of Class A office space supply thrown into a market that simply has no new demand. Should that occur, every existing building’s rents would be forced down, and also everybody’s creditworthiness, too, because if the value of one’s prime asset shrinks, one’s ability to borrow shrinks, too. This community faced the terrifying reality that a unit of Empire State Development Corporation was prepared to detonate a neutron bomb on downtown, all in the name of delivering a handout to a multinational corporation for which Buffalo is at best an afterthought.

As expected, the multinational will continue to make its decisions about Buffalo, Chicago, Vancouver, New Jersey, and its other North American venues far, far away where HSBC’s executives live. Not here. We will be among the last to know.

These events leave the citizens of this community with an entity called ECHDC that is still in charge of $153 million of public money, and some questions, the main one being this: Now what will ECHDC do?

Part of the answer came last week with the announcement that Thursday in the Square, the popular downtown concert series that for many years has been held in the front yard of the Public Library on Lafayette Square, will now move to Erie Canal Harbor.

The message couldn’t be more clear. The mighty economic development apparatus of the State of New York, which is to say, the full faith and credit of our Empire State, will thankfully not be put to the task of destroying real estate values in downtown. Rather, it has been put to the task of shifting an existing enterprise a few blocks south. This, ladies and gentlemen, is economic development in the Empire State.

ECHDC’s out-of-town consultants, who to date have been paid more than $6 million in public funds, recently suggested that the Broadway Market be shifted from its current site in the struggling but self-helping, urban-farming, Central Terminal-reconstructing Broadway-Fillmore neighborhood, away from there and down to the inner harbor, too.

Meanwhile, ECHDC hosted a session at which the US Army Corps of Engineers described its own, independent, separate, federally funded plans to conduct dredging of the toxic wastes currently lurking in the Buffalo River’s sediments. (These wastes, and sewer overflow and suburban runoff, are why 34 percent of the black bass and over 80 percent of the brown bullheads in the Buffalo River have lesions and tumors on them.) There is no particular reason why ECHDC’s staff and budget should have been used to host another government agency’s presentation, particularly while that other agency is already part of an ongoing process of public information sessions underway already—especially when ECHDC funds would be much better used in actual infrastructure improvements to deal with all the sewer-overflow issues that the Army Corps of Engineers dredging process will not in any way address.

So ECHDC seems to be in search of a purpose. It is not going to build a bank building, but it still has the City of Buffalo’s Webster Block in hand. It has indeed accomplished the poaching of a long-established, pre-existing, weekly free concert from 10 blocks north through a deal with Buffalo Place, the business-improvement district that has been running Thursday in the Square. And now ECHDC hosts meetings of another government agency’s work, while using none of its own millions to make the stinking, poisoned water of Erie Canal Harbor any cleaner—just as the summer concert series is about to begin.

“There’s nothing new under the sun,” wrote the prophet Ecclesiastes a couple of millennia ago. Historians tell us that Buffalo hadn’t yet been founded, but I am absolutely sure that the guy was writing about us.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.