It's Lack of Conscience, People

This election season has not produced a major campaign theme, so far as I can tell. There is, of course, the matter of Iraq and what to do about its tyrant, Saddam Hussein. On the domestic side, once again we have some difficulty with the economy.

Still, with candidates looking for some tangible focus, the major issue is, I think, about the mood of the people. If you believe a couple of television commercials produced by the drug companies, a lot of us are filled with anxiety and depression. If we are, might this be caused by things like the stock market, which has dropped 25% or more this year? Those wild swings of hundreds of points—up one day, down the next—don't soothe the nerves, especially since the overall progression has been downward.

In 1994, Republicans gained majority control of both houses of Congress, with voters perhaps fed up with the arrogant way Democrats were serving in public office. But I am not sure the GOP ever demonstrated that it could represent the people by standing close to them, as James Madison advised.

The past year, of course, a lot of attention has been given corporate executives who, seeking the "ambitious sacrifice of the many to the aggrandizement of the few," unwittingly reaffirmed the insight of Madison in Federalist 57. In taking millions of dollars from their companies, these corporate leaders left employees and shareholders little more than despair.

Those television commercials promoting pills to deal with anxiety and depression suggest that the cause of these ills might be a "chemical imbalance." I would offer the thought that the cause might be a "conscience imbalance" on the part of corporate executives who have no difficulty taking millions of dollars as their companies decline—or go under.

What kind of person will act to take such advantage of others? Former New York Mayor Rudolph W. Giuliani, in his book Leadership, writes: "I have a visceral reaction to bullies. I can't tolerate it when a predator takes unfair advantage." This comment appears in chapter 12, "Stand Up to Bullies." If I were to write such a chapter, I would direct it at the City of New York. I think the anxiety and depression I have lived with for the past year are the result of my Dayton Seaside ordeal, not a chemical imbalance—unless that ordeal created such an imbalance.

Mr. Giuliani suggests in his chapter on bullies that abuse of accounting rules caused companies to fail—and he singles out Enron. At Dayton Seaside the rules provided by laws and agreements—even the Constitution, I believe—were abused by the City of New York and the U.S. Department of Housing and Urban Development (which held mortgages at two of the three Dayton Seaside buildings). And it is even more distressing that no public official or daily media outlet has taken notice of how this abuse of the rules by government resulted in a change of ownership at Dayton Seaside.

The City of New York claimed that more than $60 million in back taxes was owed for the Dayton Seaside buildings. In a decision by a bankruptcy judge in federal court in Manhattan, notice was taken that the City's claim was based on miscalculation—but the judge, by applying technical rules, barred discovery into the City's actions at Dayton Seaside. (By the way, the City later settled with the new owners of the buildings for a tax payment of $10 million.)

The buildings were constructed under New York’s private housing finance law, which provides for partial tax abatement and limited profit of 6%. This law also calls on localities to cooperate in carrying out its purposes. What happened in the case of Dayton Seaside, however, was that the City successfully thwarted the proper execution of this law.

The Daily News, in April 1996, accused Dayton Seaside of being a leading tax deadbeat. The paper apparently did not investigate, or it would have learned that at two of the buildings HUD was responsible for payment of the property taxes to the City from the tax escrow remitted monthly with the mortgage payments. Those escrow payments, for the period 1985-95, were paid to HUD as due. HUD did not use this money to pay the taxes for those years because the City had not settled the last phase of the tax abatement, and thus the tax due was still unknown. The City did finally get HUD to hand over the tax escrow, but the City directed that this money be applied to current tax years, creating the illusion of vast tax arrearages for the period the escrow was intended to cover.

The Dayton Seaside ordeal included an ex parte letter sent to the bankruptcy judge from a Queens congressman and two state legislators, which the court in a memo said it could not consider in reaching its decision. This clearly improper letter included a request for guidance from the judge on applying the transition period from tax abatement to full property taxes. City officials had stated in sworn declarations that the transition period—nine years—had been completed at two of the buildings and would soon be ended at the third. This letter, however—even in its hostility to the owners of the buildings and in its urging for quick action to be taken against them—contains the admission that the details of the transition to full taxes still had not been settled.

Most of the officials who were responsible for the Dayton Seaside property tax manipulation are no longer in office. One middle-level HUD official who sent me a few letters providing no information is now a member of the New York City Council—Bill de Blasio. (Before becoming a councilman, Mr. de Blasio was campaign manager for Hillary Clinton’s successful Senate campaign.) I don't expect that persons with inside knowledge of the details of the also successful campaign to get new owners at Dayton Seaside will come forward, motivated by the prodding of their consciences. There is, however, that observation of Madison in Federalist 41: "A bad cause seldom fails to betray itself." Consider how the "bad cause" of the improper letter to the judge by the legislators pointed to inaccurate information in sworn declarations filed by City officials in the Dayton Seaside litigation.

Dayton Seaside does show how wise our Founders were. Madison, in Federalist 10, noted that officials might use apportionment of property taxes "to trample on the rules of justice." And Chief Justice John Marshall, in McCulloch v. Maryland, in 1819, cautioned that taking the tax power "to the excess of destruction would be an abuse [that] would banish that confidence which is essential to all government."

Dayton Seaside would not have happened had officials been mindful of and respected the views of our Founders. Also, the Dayton Seaside tax foreclosure could not have been brought had City attorneys honored their obligation to investigate allegations fully, an obligation that is necessary because of government’s power to destroy private businesses.

So these are the facts that I believe explain why I have been anxious and depressed for the past year, as I have struggled through the tangle of closed-door government. Perhaps election this November of candidates of conscience—who are committed to the common good and staying close to the people—will do more to alleviate anxiety and depression than barrels of pills. Conscience, integrity, honor among our public officials and corporate executives: what a boon that would be to our national confidence.

More than ten years ago, President Clinton said that it was time to return government to the people. He did not say how this would be accomplished—and Mr. Clinton’s fondness for political fundraising did little to give ordinary people access to government. Now even the New York Times, as evidenced by an article in its magazine by Paul Krugman on October 20, is starting to take notice of this problem. Mr. Krugman stated in his article that government in our country serves "people with the right connections." He also expressed concern that the "forms of democracy" are losing meaning.

Can we revive our democratic forms of government? Of course we can. All we need to do is elect officials who will honor their oath of office, and be guided by the counsel for our leaders that is found in the Federalist Papers. And to this end, we might have to look to candidates beyond the Democratic and Republican parties. Effective immediately.

In any event, for the good of our country, may the elections bring us people of conscience who will prevent any more Dayton Seaside ordeals and who will serve as role models to their counterparts in the private sector. Enough of anxiety and depression; let us have conscience and confidence.