Let’s say you are a corrupt politician, and you’re looking to launder some public money. Don’t fret, it’s actually not all that hard.
Every year the New York City Council debates the budget. How much of your tax money goes to parks, how much to schools, infrastructure, they divide the budget pie. A portion of that pie every year gets sectioned away for “discretionary funding”. In 2012, that pie slice was 579 million dollars. Discretionary funds are money that the City Council Member can allocate as he or she sees fit. There are two types of discretionary funds. Expense funds ($151 million) are used to pay for salaries and services. Capital funds ($428 million) are used to pay for physical infrastructure – for “brick and mortar” projects.
If you’re looking to launder some money, discretionary funding is your best bet. The trick is to take your portion of discretionary funding and allocate it to programs and organizations that you run, behind the scenes. You give the money to “Totally Legit Company”, which you founded – that’s legal – and which is staffed and run by your family and friends – also, technically, legal. Once they collect their paychecks, the money is clean, and free to be given to you in a bag with a dollar bill sign on it. Luckily you won’t have to worry all that much because once the money is allocated from the Council budget to the Councilmember, there’s no oversight process to monitor its use or effectiveness. It’s a good faith kind of thing. New York City’s protection against discretionary funding abuse is only a few steps removed from a bank putting up a sign over its open vault that reads, “please do not steal.”
The most recent politician to be caught was Larry Seabrook who had been laundering money for decades before he finally went down. He sent taxpayer dollars to organizations run by his girlfriend. He funded an organization whose mission was to produce a parade, which hasn’t produced a march around the block. There is even a record of a lunch Seabrook put on the books for $170 dollars. The contents of the lunch? A bagel and cream cheese.
Last year, four progressive Councilmembers took a stand against this kind of fraud. They launched what they called an experiment dubbed “Participatory Budgeting.” Each Councilmember set aside one million dollars of their discretionary funding for projects to be proposed by, debated by, and instituted by their constituents. The project culminated in a vote by the constituents for the top ideas to receive funding. Direct democracy taking place, with the use of magic markers.
Increased participation will keep potential thieves on their toes. If Larry Seabrook had to pitch his shell company ideas in front of his constituents and asked them to fund the pockets of his family and friends’ bank accounts, I would imagine those not in his immediate family would have dealt with him long before the US Attorney General would have had to.
Why is it easier to spend 170 dollars on a bagel than it is for people to realize that you shouldn’t be able to spend 170 dollars on a bagel. The lesson here is fairly simple: when someone steals from you, don’t keep giving them money. Hopefully participatory budgeting expands, hopefully we start to realize that the money is being taken out of our pockets, hopefully we can make our City better for everyone, except of course for you: the corrupt politician.