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By Root 1135 0

to it, I countered, by making two contradictory assumptions. First, he assumed that none of the $14.3 billion of interest on the national debt and foreign aid payments should be credited to New York. Second, he assumed that all of the $6.8 billion paid by New York in corporate taxes should be credited to the state. Both assumptions rest on weak legs. An analysis for the Lehrman Institute by Columbia University’s Dr. Charles Brecher and Kurt Katzmar suggests that 15 percent of the interest on the national debt is probably spent here—meaning a roughly $2 billion benefit to New York. And a good part of the corporate taxes paid by New York are collected from national corporations that merely funnel their tax payments through New York.

Professor Moynihan looked up from his plate of sliced British beef and admitted, “Maybe, if we evened it out, the number would be $4 or $4.5 billion, but that’s still a lot.” It is, but it’s incomplete. The “deficit” shrinks further when you consider commuters who pay New York taxes but live in other states; count not just the primary federal contracts won by other states but also the subcontracts won by New York; make allowances for New York’s disproportionate number of not-for-profit institutions (which attract federal aid). And Moynihan’s “deficit” calculation fails to measure what he calls the “hidden policies of government”—regulations, tariffs, imported oil policies, paperwork—which entail costs but defy easy quantification. Printed in the Federal Register, for instance, are 60,000 pages of government regulations which Business Week has estimated tax national consumers $60 to $130 billion annually.

Trying to pin down a “balance of payments gap” is like trying to catch eels with your hands. It is also illusory. It attacks the progressive income tax, which presupposes that the rich are to pay more than the poor—and New York is considered a rich state, or at least its median income is high. “The logical fallacy of Moynihan’s argument,” Senator Proxmire says, “is that if you want the states to get the same back from the federal government that they send to Washington, why have an expensive federal government?”

But doesn’t the federal government murder New York by shortchanging the city on federal aid? Professor Moynihan has been careful not to make that accusation. “This is indeed an old established New York charge,” he says. “The trouble is that in the main it is false.” How false is documented in the Brecher/Katzmar analysis. The best measure of federal assistance, they explain, is to use two criteria: tax collections and need. New York City, for instance, in 1977 had 3.6 percent of the nation’s population, collected 4.4 percent of all federal revenues, and accounted for 4.3 percent of the nation’s poor; yet the city received 5.4 percent of all federal outlays. The state, the Treasury reported, ranked 1st in federal dollar aid, 1st in the growth of aid, and 6th in per capita aid.

One could make the argument that Washington should do more, but that’s different from arguing that New York does not receive its fair share of federal grants. Lester Thurow, a very good and very liberal M.I.T. economist, has written that in 1975 New York City’s per capita federal aid totaled $314, compared to a national average of $228. “While the average city,” he wrote, “gets 36 percent of its revenue from state and federal grants, New York gets 43 percent of its revenue from the same source.” The Temporary Commission’s conclusion: the federal government treats New York “comparatively well” and “reasonably equitably.”

President Carter may not be the friend candidate Carter promised to be, but he—and Gerald Ford—helped New York nonetheless. Assistant Secretary of the Treasury Roger Altman reminded the Association for a Better New York on December 1, 1977: “During this city fiscal year, total grants to New York will total $3.67 billion, a 33 percent increase over the $2.75 billion provided during fiscal 1976, the last full year of the Ford Administration.” Making allowance for some puffing on Altman’s part, Beame