Will Sen. Moynihan rest in peace, or roll over?

In a Times piece on Washington’s Wall Street bailouts and New York’s economy, the Fiscal Policy Institute’s James Parrott says that “the magnitude of the bailout has been so great that it will have wiped out whatever cumulative surplus” New York had built up in sending more money to Washington than it got back for decades.

New York’s Sen. Daniel Patrick Moynihan, now deceased, used to track this “balance of payments” data in an annual report called “The Federal Budget and the States.” The last report, in 1999, reported that New York State sent nearly $16.2 billion more to Washington than it received in government services. This annual “deficit” had held roughly steady (after inflation adjustment) for the 16 years during which Moynihan complied the report.

In today’s dollars, $16.2 billion would be $21 billion. If the city and state had offered this annual figure to the federal government for each year of Moynihan’s report, the value of all that money today, assuming a 3 percent inflation-adjusted return, would be $880.5 billion.

Worth it? The bailouts that began in 2008 went far beyond the $700 billion headline value of TARP’s capital injections into financial firms. They included trillions of dollars’ worth of federal guarantees on everything to money markets to financial-industry bonds to securitisation issues. The bailouts also include the Fed’s purchase of $1.25 trillion worth of mortgage securities, its guarantees of Bear, Stearns’s most toxic assets, and its purchase of some AIG assets, all separate from TARP. Then, there are zero-percent interest rates.

All of these actions disproportionately benefit New York, at least in the short term.

One wonders what Moynihan would have thought about this turn of events. OK, we’ve quite possibly, and even probably, got our money back, more or less.

But we’ve done so at the price of our biggest industry having become a ward of Washington, with Wall Street — and the state and city — making decisions not based on economic and business fundamentals but on the expectation of future bailouts.