New York to Trump: Don’t say ‘drop dead’

It took just a few days after the September 11 terror attacks for a Texan President, George W Bush, to promise a $20bn cheque from the federal government to help rebuild New York City.

Ravaged by coronavirus, New York is again in desperate need of federal help. One of its Queens-born sons occupies the Oval Office. Yet the city is finding it much more difficult to wring money from Washington this time around.

Its campaign to lobby the Trump administration for financial support is now entering a vital stretch, as the Senate seeks to craft what is expected to be the last pandemic-related stimulus bill before the election in November.

New York City may have been the worst hit by coronavirus, with more than 20,000 fatalities, but it is just one cash-strapped US municipality vying for a share of a package that could reach $1tn or more.

So far, Republican senators, such as Florida’s Rick Scott, have shown little sympathy for either the city or state of New York, accusing their Democratic leaders of fiscal mismanagement. “Floridians shouldn’t have to backfill New York’s state budget and pension fund, and I won’t let it happen,” Mr Scott said this week.

In an effort to improve New York City’s fortunes, civic leaders have mounted a behind-the-scenes effort to encourage executives with ties to Mr Trump or members of his administration to make calls on the city’s behalf, according to several people apprised of the endeavour.

“They’re trying to leverage every relationship they have to try to get the president to do the right thing,” said one adviser to a prominent private equity boss in Manhattan. “They’re thinking: what are the touch points people have?”

In addition to the president, executives have been mobilised to lobby Steven Mnuchin, the Treasury secretary, whose family is from New York, and Jared Kushner, Mr Trump’s son-in-law and a product of neighbouring New Jersey. 

Another person briefed on the effort said Mr Trump was “willing to help New York on a Covid basis, but he doesn’t want to do anything to bail out [mayor] Bill de Blasio or [governor] Andrew Cuomo.”

James Whelan, president of the Real Estate Board of New York, the trade group for the property industry, declined to discuss specifics but acknowledged: “This is really sort of an all-hands-on-deck situation.”

© NY Daily News/Getty

The city’s need is immense. In a matter of months, coronavirus and the resulting shutdown of the local economy opened a $9bn budget gap. Unemployment is now running at 20 per cent. 

Together, the city and state are seeking $37bn in federal funds to cover losses and expenses resulting from the pandemic. In addition, the Metropolitan Transportation Authority, which runs the city’s subway system and buses, is asking for $3.9bn because usage has plummeted. The Port Authority of New York and New Jersey, which oversees airports, bridges and cargo ports, is seeking a $3bn infusion.

“Without federal funding, we’ll be in triage mode,” said Rick Cotton, the Port Authority’s executive director, who was himself stricken with Covid. Mr Cotton is now trying to preserve planned upgrades to JFK airport, among other projects. “This isn’t about politics — it’s about the recovery,” he said.

But New York City, which voted overwhelmingly against Mr Trump, has had a vexed relationship with him since he took office. His 2017 tax cut was funded, in part, by capping the amount of state and local taxes that residents could deduct from their federal taxes. The Salt cap, as it is known, has fallen particularly hard on residents of New York, New Jersey and Connecticut — three high-tax states that voted against Mr Trump.

Mr Cuomo, the New York governor who has gained a national following for his response to the pandemic, has likened Salt to a “civil war” against blue states and urged Mr Trump to repeal it as part of a relief package.

In what New Yorkers see as a further sign of political payback, the Trump administration has also downgraded a proposed train tunnel, known as Gateway, that the state is desperate to build beneath the Hudson River to New Jersey to replace an artery that is more than a century old and prone to flooding.

Some political advisers have expressed reluctance to have the executives they advise call Mr Trump. The president, they believe, feels emotionally wounded by New York’s rejection — and no amount of lobbying will cure that. “I’ve never known a situation where you can treat someone like dirt and then expect them to do the right thing,” said one real estate executive.

Others view Mr Trump as motivated purely by his electoral self-interest. They believe he sees no reason to help an overwhelmingly Democratic city — even if it is his hometown.

Meanwhile, chief executives have discovered that there may be consequences for trying to woo Mr Trump. Stephen Ross, head of The Related Companies, one of the city’s biggest developers, was pilloried after he hosted a lavish fundraiser for Mr Trump in the Hamptons in August. 

Mr Ross is a champion of Gateway, which would benefit Related’s sprawling Hudson Yards development on the far west side of Manhattan. But the fundraiser prompted outraged members of Equinox, a high-end gym chain part-owned by Related, to threaten to cancel their memberships.

Mr Ross declined to comment on his discussions with the president, but a spokesman said he had “made it clear to federal policymakers” that aid for New York “is not just regionally important, but also a national imperative”.

Kathryn Wylde, president of the Partnership for New York City, which represents the city’s business leaders, said the current situation differed from 9/11, when the city enjoyed the world’s sympathy. Now it was one of many places whose economy was being strangled by coronavirus.

But Ms Wylde expressed a tentative confidence that Mr Trump understood New York City’s importance to a national economic recovery, saying: “I do think the president is sympathetic to New York. He’s got an investment here.”

The bigger challenge, according to Ms Wylde, may be to persuade Mitch McConnell, the powerful Republican Senate majority leader, to back New York. The Real Estate Board’s Mr Whelan said Mr Trump’s help in this regard would be essential. “When Trump really weighs in, it has a pretty profound effect on Republican legislators,” he said.

New York City’s historical problems in Washington were symbolised in 1975 when President Gerald Ford’s response to its fiscal crisis prompted the legendary New York Daily News headline: “Ford to City: Drop Dead”.

But New York’s corporate bosses have proved effective in the past at exercising their clout in the nation’s capital on the city’s behalf. When President Ronald Reagan was poised to cap Salt deductions as part of his 1986 tax reform, for example, developer Lew Rudin and David Rockefeller swung into action and persuaded him otherwise.

The Salt changes of 2017 revealed that the local business community was no longer so unified. Some members were picked off by other enticements in the tax package that conferred big benefits on the wealthy and property developers, in particular.

Lobbyists and political consultants say the current hyper-partisan atmosphere also makes it more challenging for the city to make its case in Washington. Earlier this month, while business leaders were appealing to the administration, Mr De Blasio, a progressive Democrat, was joining activists painting a Black Lives Matter mural on Fifth Avenue, outside Trump Tower, that appeared calculated to anger the president.

“The mayor should be on the phone with the president, asking for money!” one consultant fumed.