Every now and again, though, we’re reminded of the kinds of policies that earned the city and state a deserved reputation as a difficult place to do business.

The City Council this week is expected to pass a bill that will require developers to pay higher labor costs on projects that receive more than $1 million in subsidies. It’s called a “prevailing wage” bill, and it is nothing less than a sop to private-sector unions that have made this bill a top priority. Workers may receive as much double or even triple the current minimum wage of $7.25 an hour on most subsidized projects.

The bill grew out of the so-called “living wage” movement, which sought to mandate enormous increases in labor costs on projects receiving government subsidies. “Living wage” bills have been passed in several municipalities throughout the nation. Fortunately, the movement sputtered when it came to New York.

The “prevailing wage” bill is a compromise, but while it is better than the “living wage” mandate, it still reeks of improper government interference in the free market. What’s more, it represents a political straddle on the part of Council Speaker Christine Quinn, who wants to be mayor and figures that she needs the support of the city’s politically potent unions. She could have killed this bill. Instead, she sought to please both sides, and likely will please nobody.

Albany and City Hall are both trying to climb out of fiscal holes created by politicians who simply couldn’t say no to special interests. Mayor Bloomberg and his predecessor, Rudolph Giuliani, have created a new template for governance in the city, while Governor Cuomo seems intent on doing the same at the state level.

The trouble is that the old politics of special-interest payoffs has not disappeared, even if it has been discredited. Old paradigms never die. They don’t even fade away. They go into hiding, lurking in the shadows until they attach themselves to somebody willing to cut a deal in exchange for high office.

Speaker Quinn has shown herself all too ready to make a deal rather than make a decision. We don’t need and can no longer afford that kind of “leadership.”

This may seem like common sense. But for the teachers union and, regrettably, for the New York chapter of the NAACP, these ideas are heresy. That’s why they joined forces to sue the city when the Bloomberg administration sought to close 22 failing schools while opening 15 new charters in existing school buildings. Fortunately, common sense has prevailed. State Supreme Court Justice Paul G. Feinman recently ruled that the city had followed all proper procedures, and so he denied attempts by the union and the NAACP to stop the city from moving ahead with the closings. The union vows that it will not give up on the suit, which is hardly a surprise.

The saddest part of this spectacle was the NAACP’s presence in the court as an opponent of charter school reform. Charter schools serve—and serve well— predominately minority neighborhoods. Their importance will become only greater as the number of Catholic schools continues to decline, leaving many neighborhoods without an alternative to a failing public school. But the head of the New York chapter of the NAACP, Hazel Dukes, recently lashed out at an African-American parent of a charter school student. Ms. Dukes, who was a political laughingstock during her time as president of Off-Track Betting two decades ago, actually accused the parent of “doing the business of slave masters.”

That sort of language, that sort of mentality, speaks to the character of some (though not all) critics who will say anything and disparage anybody in defense of the failed status quo. Ms. Dukes argued that those who are working to bring quality education into poorly served neighborhoods are the moral equivalent of slave owners, and those parents who send their children to charter schools are complicit in this new form of enslavement.

Ms. Dukes has not been a credible figure in New York’s civic life for many years, with good reason. (In 1997, she admitted to embezzling $13,000 from an O.T.B. employee who was suffering from cancer.) But the teachers union remains a powerful force on behalf of the status quo. Its leaders should give up on this case, but they surely will not. They can’t help themselves. What a shame.

According to the LA Times, Goldman Sachs executives are privately advising analysts who cover them that it does not "expect the reform measure to cost it any revenue." One of those analysts, Guy Moszkowski, told clients that he was surprised by the level of conviction, "but we've learned to take such judgments from GS very seriously."

Another, Dick Bove, had been worried that Goldman was going to be changed by the bill. "Now I've figured out that it's not going to happen," he said. "They should win big here."

For that July Observer story, another Wall Street figure, a former senior Lehman executive, compared high finance to football, and the crisis to a bad injury: "You'd get tighter rules. You'd get better helmets. You'd get better this, you'd get better that," he said. But it's the same football game. "How else would it be?"

The law apparently exempts the agency from disclosing any "surveillance, risk assessments, or other regulatory and oversight activities," which is pretty much all they do. So Congress and other government organizations may look into the commission's business, but the public may not. In its report on the subject, FoxBusiness used a lawyer it employs to explain why this is bad, but S.E.C. spokesman John Nester spun the exemption as a boon for whistleblowers:

We are expanding our examination program's surveillance and risk assessment efforts in order to provide more sophisticated and effective Wall Street oversight. The success of these efforts depends on our ability to obtain documents and other information from brokers, investment advisers and other registrants... Because registrants insist on confidential treatment of their documents, this new provision also removes an opportunity for brokers, investment advisersand other registrants to refuse to cooperate with our examination document requests.

This means the commission will either become a super-efficient intelligence gathering organization, or will continue business as usual with no one looking over its shoulder. At any rate, at least they got the biggest firm in the world to smilingly admit they made "a mistake."

Oberman said that he thought that the decennial reapportionment could mean new opportunities for Russian-American pols.

"There is redistricting coming up, hopefully in a couple of years there may be possibilities down the line," he said. "There is a census coming out. There may be a lot of possibilities coming up."

Kruger chairs the Senate's Finance Committee, and even though his alliance with Pedro Espada, Hiram Monserrate, and Ruben Diaz angered a lot of voters, he still has $2.6 million on hand, more than any other legislator save for Assembly Speaker Sheldon Silver.

Oberman however received support from many corners. Gay groups, angered by Kruger's opposition to gay marriage, supported him.  Public transporation advocates did too, as did good government groups.

It wasn't enough.

"It wasn't the right time to do a challenge. There is too thin of a Democratic majority right now, and with the budget the way it is it wasn't time to go forward," Oberman said.

Oberman insisted that no one pressured him to drop out of the race--"People always think there was some kind of backroom deal," he said. "That wasn't the case--" and he said he now supported Kruger's re-election.

"I believe he is someone important to Brooklyn and the Democratic majority," he said. "There was room at the table for another person, but at this point I would say that we need someone like him representing Brooklyn."

Oberman, who works as an administrative law judge, raised close to $20,000 in his aborted bid.

"This has been a learning experience," he said. "The track record of most candidates is that they try and fail the first time or two and then they are sucessful. I am on the same learning curve."

dfreedlander@observer.com

"The ability to understand the legislative process is difficult at best," said John Pikus, special agent in charge of the Albany division of the Federal Bureau of Investigation. "There are factors involved in which bills are passed, member items are approved, which never see the light of day. Many of you in the public have tried to get into that arena to see exactly where your money is going. And that, really, from our standpoint, from the F.B.I.'s standpoint, was the problem. We can subpoena. We can provide opportunities for individuals to come in and talk to us, but the legislative process was almost Byzantine."

Pikus and Andrew Baxter, acting U.S. Attorney for the Northern District of New York, outlined an eight-count indictment against Bruno, in which Baxter alleged Bruno "improperly exploited his official position and concealed conflicts of interest, contrary to state ethics and reporting laws."

Most of the alleged impropriety, Baxter said, centered not on Bruno's specific outside business dealings but on his failure to disclose them. "This indictment does not charge anyone with bribery or extortion," Baxter noted.

Bruno said his prosecution would send a "frightening message to all elected officials who are not wealthy and have to work to make a living."

A reporter read the statement to Baxter, who replied: "It should not create a chilling effect on the state legislators that follow the laws."

UPDATE: Susan Lerner, the executive director of Common Cause New York, issued this statement on the news of Bruno's indictment:

This is an indictment of not only Joe Bruno, but also of New York State's ethics laws.  The man who held the highest position of power in the state legislature for years is formally accused of betraying the public interest on behalf of his self interest.  Joe Bruno's indictment emphatically highlights the shameful state of New York's ethics laws, graphically demonstrating why the Legislature should not be expected to police the ethics of its own members.  Even more disquieting is that the indictment  is further proof that, for years, the only meaningful ethics and corruption oversight in New York State is being carried out by federal agents and United States Attorneys.  This is a sad day for Joe Bruno, and sadder still for the New York Legislature.

A coalition of good-government advocates are making the case for "yes," and today released an update to a 2004 report by N.Y.U.'s Brennan Center which details New York's legislative dysfunction. The new report lists concrete recommendations like evening out funding given to legislators--regardless of party--and empowering the chairs of legislative committees to hire their own staff and move bills to the floor. There is also a new recommendation for more substantive notes on the fiscal impacts of bills.

"While there isn't much to cheer about looking back in either chamber, there is the promise of substantial reform from the likely new incoming Senate majority," said Andrew Stengel, the director of national election advocacy at the Brennan Center. "We hope at least one chamber will reform the rules needed to remake the legislature."

State Senator Malcolm Smith, who currently leads the Democratic conference and is working to become the chamber's majority leader, has spoken of the need to reform the Senate rules, and cited differing visions of reform (after the fact) as the reason a previous leadership deal fell apart.

"Do I like that it's a political pawn? No. But it behooves everybody to have reform," Stengel said.

The shock of the recent employment data comes at a time when government continues to debate how to rescue the economy. The Democrats are unhappy about how the $700 billion stimulus package has been deployed. They want homeowners and the auto industry to receive some benefit from the $350 billion that remains unspent. On the other hand, the lame duck Bush administration is focused on using the bailout funds to ensure the survival of the finance industry and increase the liquidity of the capital market. The resulting federal stalemate seems to be ending with a short-term loan program for American automakers. But as the economy continues to slide, it is becoming clearer that we need to rescue all of them - the finance industry, automakers and homeowners - and this will probably require more money and more taxpayer debt.

Part of the problem, as the Congressional Government Accountability Office (GAO) reported last week, is that the funding for the finance industry has not been properly supervised. Less seems to be getting lent than Congress intended, and there is a growing fear that the Bush administration is managing the bailout with the same lack of skill that they used in Iraq and after Hurricane Katrina. On December 3, citing the GAO report, New York Times' reporter Diana B Henrique wrote:

"...the Treasury Department still does not have the tools needed to monitor whether the banks that received Treasury investments are keeping their side of the bargain by using the money to expand available credit and address mortgage foreclosures. Nor can it ensure that potential conflicts of interest among its contractors are being adequately disclosed and addressed."

A particular deficiency among the anti-government Bush conservatives who will continue to run the federal government until January 20 is that they never seemed to learn how to operate the complex machinery of the US federal government. They have chased away many of the government's most competent managers, and in this moment of economic crisis can't seem to figure out how to use the $700 billion they have demanded to revive the economy. At first they wanted to buy bad debts and clean the balance sheets of the financial industry. Then they decided to buy shares of the firms instead. At the end of November we heard Treasury Secretary Henry Paulson was going to leave half of the fund to the Obama administration, now he is trying to get all of it released and the Democrats are bargaining to include help for homeowners and the auto industry in the $350 billion.

While the Bush administration drew a line in the sand and opposed using the $700 bailout for the auto industry, it signaled flexibility in using the $25 billion in loan guarantees for the development of fuel-efficient cars for the bailout. Initially the Democrats did not want to use the $25 billion authorized as part of last year's energy bill for the auto bailout, but in the past several days, Speaker Pelosi has relented and now agrees to use those funds as long as the Obama administration replaces them when it come into office.

It is easy to see why the public might be confused with all of this. So one way to read the story is to recognize that the wheels are off as long as the economic news keeps worsening. During the presidential campaign, President-elect Obama tried to keep his new spending proposals under control to prevent the deficit from growing. Now, and for the next couple of years, however, the size of the deficit does not matter. The good news is that the Obama team understands the need to ensure that all of this money we are about to spend be tied to performance indicators and financial controls.

On December 6, Obama's website posted this message:

"...we need action - and action now. That is why I have asked my economic team to develop an economic recovery plan for both Wall Street and Main Street that will help save or create at least two and a half million jobs, while rebuilding our infrastructure, improving our schools, reducing our dependence on oil, and saving billions of dollars.

We won't do it the old Washington way. We won't just throw money at the problem. We'll measure progress by the reforms we make and the results we achieve -- by the jobs we create, by the energy we save, by whether America is more competitive in the world."
 
Since my actual area of expertise is public management (and certainly not journalism!), I see this last point as particularly critical. We need to use cutting-edge performance-measurement techniques and ensure true accountability as we spend the trillion-plus dollars it will take to revive the economy. This is a tremendous opportunity to invest in the infrastructure that a generation of anti-tax and anti-government politics has allowed to deteriorate. But we need to ensure that every dollar invested pays off. The infrastructure we build must have a multiplier effect on the economy, and we must pick these projects with care. The new infrastructure must also be competently built and maintained. We need to spend money on sophisticated management information and performance management systems, and we must ensure that government contractors are held to strict performance standards.

When we say the government is going to build subways, improve energy efficiency in their buildings and rebuild schools, we don't actually mean that government employees will be doing that work. The work will be done by private firms under contract to the government. This is not like the New Deal's Works Progress Administration or Civilian Conservation Corps - during the Great Depression the government hired people and put them directly to work. The spending now being discussed will provide billions of dollars in contracts to private firms. This will resemble the new business that came to private companies when our nation built its interstate highway system and sewage treatment plants.

We need to make sure these huge capital construction projects are undertaken with a minimum of corruption but with a minimum of bureaucratic delay as well. We need a carefully constructed system of incentives and audits to ensure honest and effective contractor performance. State and local governments throughout the United States know how to do this. The past generation of scarcity has taught them how to squeeze water from a stone. Let's make sure now that the funding spigot has finally opened up that we don't drown in waste, corruption or bureaucracy. There is a tendency during emergencies to allow performance management and accountability systems to be circumvented (the War in Iraq's contracting processes, for example). In this day of low-cost communication and information, this is not necessary. We can have both speed and accountability.

Strategically, as the president-elect and the nation's governor's seemed to indicate last week, we should start with projects now underway that have been stalled for lack of resources. In New York City, the 2nd Avenue Subway, the new Penn Station and a number of other MTA capital projects should be accelerated. I very much like Obama's "use it or lose it" declaration. If New York can't move more quickly than we did at rebuilding Ground Zero, we shouldn't receive any of these federal monies. As we learned during the Clinton administration with the earned income tax credit - a tax break directed to the working poor - the key to economic stimulus is to provide resources to those capable of spending money quickly.  The economic crisis presents both great danger and great opportunity.  Our newly elected president fully understands this, and that fact gives us reason to be hopeful.