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Paterson: distressed New York needs help

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WASHINGTON — Gov. David A. Paterson brought his message of economic gloom — with a ray of hope — to Washington on Thursday, comparing the nation's economic woes to a depression and meeting with Federal Reserve Chairman Ben Bernanke in the hope of steering the federal government's fiscal policies toward helping the state recover.

"The United States is generally perceived to be in a depression," Mr. Paterson said, later clarifying that he meant the crisis is the worst since the Great Depression, fueled by widespread financial fear, the collapse of the housing market and budget deficits in half of the states.

"We have to understand that these problems will not fix themselves," he said in a speech at the National Press Club.

Above all, Mr. Paterson said, New York needs help from the federal government to fix its budget crisis, which he said will nonetheless require cuts to popular programs and layoffs of several thousand state employees. The federal government needs to invest in public construction projects, particularly upgrades of highways and ports that feed economic growth, he said.

Without help from Washington, he said, New York and other states could face bankruptcy.

And he reminded his audience that New York still receives less back in federal spending than it contributes to Washington through taxes, a difference of $62 billion at the last counting in 2006.

One possibility may be another economic stimulus package, which is being discussed in Congress. Mr. Paterson said he would support such a measure as a help to the states.

Overall, though, he may have a tough sell in Washington these days, as the federal highway trust fund is projected to reach a $3.1 billion shortfall next year and the Bush administration proposes to take money out of mass transit — another high priority for New York — in order to make up the difference.

Republicans in Congress, as well as the White House, also are steadfastly opposed to anything that could be called a tax increase.

He laid out the economic hardships in stark terms: foreclosures up 36 percent from a year ago in New York; a total of 194,000 manufacturing jobs lost, many of them upstate; a projected 35,000 to 40,000 New Yorkers likely to lose their jobs this year; the prospect of people freezing this winter because of high home heating oil prices and a shortage of low-income home heating assistance; ballooning budget deficits fed by government spending.

"The time has come for America to cut up its credit cards," Mr. Paterson said.

And while arguments of New York's importance sometimes ring hollow in Washington, Mr. Paterson made the case for the state's influence on the national economy. In fact, the city's transit system — which needs upgrading — alone has a budget bigger than many states', and it carries far more passengers on a daily basis than Amtrak or the nation's airlines, he said.

Mr. Paterson did sound a promising note, however, saying he believes political leaders can solve the crisis if they act quickly to slash some programs and invest in infrastructure. And he noted one possible benefit of rising energy prices worldwide: Companies that moved manufacturing out of upstate New York in recent years have discovered that the cost of energy in other countries outpaces the savings they made on foreign labor.

"We see this as a great opportunity to bring manufacturing jobs back to New York," Mr. Paterson said.

"Very few have come back," he acknowledged. But he cited the example of companies harvesting timber upstate, only to ship it overseas to be made into products that are then imported to the United States.

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