Giuliani’s 1993 NAFTA Opposition Raises Questions

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The New York Sun

Mayor Giuliani has been gaining momentum among economic conservatives. He was a hit at the Club for Growth’s recent winter conference in Florida, where he touted his record as the only fiscal conservative in the presidential race who has “actually practiced it, there in the battlefields.”

But some of Mr. Giuliani’s positions taken while in the battlefields are now raising questions about his fiscal-conservative bona fides. Among them are his decision to endorse Mario Cuomo for governor in 1994, his opposition to cutting New York’s commuter tax in 1999, and, possibly most surprising, his opposition to the North American Free Trade Agreement in 1993.

Perhaps the most uncomfortable of these missteps for Mr. Giuliani to explain to his fellow Republicans is the endorsement of Mr. Cuomo, a Democrat, in the hotly contested 1994 governor’s race in New York. His campaign declined to comment on the issue for this story.

At the time, Mr. Giuliani criticized the plan of the Republican candidate, George Pataki, to cut the state’s income tax by 25%, calling it “ambitious” and “inconsistent with the performance of the economy of this state,” and worrying publicly that it could lead to a reduction in state aid to the city, in turn forcing the city to raise property taxes.

However, despite Mr. Giuliani’s public opposition to Mr. Pataki’s tax cut plan, this fiscal disagreement probably was not at the heart of the new mayor’s endorsement decision.

“I am fairly convinced from listening to him then, and listening to him now, that he did not believe that,” a fiscal policy analyst at the Manhattan Institute, E.J. McMahon, told me.

More important to his thinking seems to have been a long-standing feud with a former Republican senator from New York, Alfonse D’Amato. In 1989, Mr. D’Amato encouraged a well-funded challenge to Mr. Giuliani in the Republican mayoral primary; Mr. Giuliani, in turn, blamed Mr. D’Amato for his loss to David Dinkins that year. Mr. Pataki was Mr. D’Amato’s handpicked candidate in the 1994 gubernatorial election.

“It was not a shining moment, to say the least,” Mr. McMahon said of Mr. Giuliani’s anti-tax-cut rhetoric. “He went beyond what he needed to do.”

Then there was Mr. Giuliani’s opposition to the 1999 repeal of New York’s commuter tax, a small charge on the incomes of people who lived outside New York City but drew their salaries from jobs inside the city.

In 1999, it was .45%. That year, there was a special election for state Senate in Rockland and Orange counties. In order to help the Republican candidate, Thomas Morahan, the Republican-held state Senate passed a bill eliminating the commuter tax (a little bit of pandering to suburban voters). However, the Democratic-controlled state Assembly called the Republicans’ bluff and passed the same bill — forcing the Republican governor, Mr. Pataki, to sign it. The Democrats, in short, weren’t going to let themselves be painted as tax-happy.

Mr. Giuliani blew his stack, filing suit to try to stop Albany from repealing the tax. “Maybe it will hurt me politically,” Mr. Giuliani said. “But the message I am trying to send is, ‘Don’t mess around with the city.'”

“The commuter tax is an economically bankrupt concept,” Mr. McMahon said. However, he argued that Mr. Giuliani’s opposition to its repeal constituted less than meets the eye.

Mr. Giuliani and the speaker of the City Council, Peter Vallone, had been discussing roughly $700 million in tax cuts at the city level. After the commuter tax blindside, they had to reduce that to roughly $350 million.

“It would have been more valuable to do other tax cuts,” Mr. McMahon said. “I don’t think it says anything striking about him that he opposed that tax cut.”

If some of Mr. Giuliani’s other straying from the free market fold has explanations, it’s a bit harder to make heads or tails of his opposition to Nafta in 1993.

“I continue to be concerned about the effect it would have on the job situation in New York City,” the mayor-elect said in November 1993, as quoted by Newsday. “I don’t think it would help New York City.”

In the current campaign, Mr. Giuliani hasn’t made free trade a major theme. But he did address the topic briefly at the Club for Growth meeting at the end of March in response to a question from the audience. “We no longer have separation between a domestic economy and a global economy,” Mr. Giuliani said. “It’s one and the same thing. And I generally agree with the principles of free trade.”

However, the club’s president, Pat Toomey, said he thinks Mr. Giuliani has some explaining left to do about his opposition to Nafta. “He’s got to be for free trade now, and he’s got to explain why he wasn’t then,” Mr. Toomey said.

While Mr. Giuliani has an undeniably strong record of conservative reform and tax cutting in New York City, it is not an unblemished one. Parochialism, and even personal grudges, have led him at times to stray.


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