Governor Andrew Cuomo: Why He will Run for President in 2016

OK, he may not have said it in so many words, but the New York governor all but declared his 2016 candidacy this week with one simple move. Charles Gasparino on the campaign's unofficial launch.

New York Gov. Andrew Cuomo presented his 2011-2012 proposed budget in Albany on Tuesday. (Mike Groll / AP Photo)

It's hard to overstate the significance of Andrew Cuomo's first budget as governor of New York. In it, he reversed years of orthodoxy and actually called for a reduction of state spending—the first person in a decade to deal with a budget gap of more than $10 billion by slashing the overall size of the state's budget. Unlike past governors (most notably his father) he didn't announce a massive tax increase or a budgeting gimmick to close a daunting budget hole and keep the New York welfare state rolling along.

And he did something else: He all but announced his candidacy for president of the United States.

People who know Andrew Cuomo will tell you he has been eyeing an eventual presidential run ever since he began spearheading his father's gubernatorial campaigns in the 1980s, through his years in the Clinton Administration as HUD secretary in the 1990s, right through his failed attempt to reclaim the Cuomo legacy in Albany, and when he finally was elected governor last year.

But yesterday's budget presentation, at least according friends and associates I spoke to in recent days, was Andrew Cuomo's way of telling the world that for all intents and purposes, he's running for president in the not so distant future—almost definitely not in 2012, but most definitely in 2016.

Of course 2016 is a long way off, but these people say you can hear it in the rhetoric he used: The son of Mario Cuomo—"the liberal's liberal," to borrow a phrase from The Wall Street Journal—declared the state "functionally bankrupt" thanks in part to its big-government policies. He then declared war on both the welfare state and his father's old liberal voting base (and the base of the New York State Democratic Party): The public employee unions, the special-interest groups, the lobbyists representing health care and education, all of whom have for years forced the state to live beyond its means because of automatic funding increases regardless of "outcome measures" and with "no performance measures," he said.

When he gets done with them, Cuomo vowed, they would all be running around the state capitol in Albany "like their hair is on fire."

According to people close to the governor, it wasn't just talk. They say that Andrew Cuomo has changed politically. He's left his old lefty friends in the dust and recognizes that the old formula of keeping government big by taxing rich people and businesses is a fool's game; they will just leave the state, as they've done in droves, taking their tax revenues with them. He also recognizes the Ponzi scheme that is big government ("Enron," he called it) where budgets are balanced with accounting gimmicks and borrowing that can't be sustained because the day of reckoning—where investors won't lend the state money because they're afraid they won't be paid back—is coming near.

If he can be even moderately successful in bringing order to New York State's insane finances, he might be the best candidate running on the 2016 Democratic ticket.

Whether this political transformation is true, or merely a "pivot" as talking heads like me call it, only time will tell. But people who know Cuomo say he believes that his new act as a liberal mugged by the reality of the welfare state serves at least a political purpose: It allows him to cast himself as a viable presidential candidate in a country that has become more conservative in fiscal matters according to virtually every poll. And if he can be even moderately successful in bringing order to New York State's insane finances, he might be the best candidate running on the 2016 Democratic ticket.

This, of course, would be no small feat. The state is suffering from a gaping hole in its budget, and a "structural" or recurring gap for many years to come. The economy in upstate New York is a disaster. The downstate economy has always been shielded by finance and banking, the biggest players headquartered in New York City. But since the financial collapse, with new rules limiting risk-taking and profits, the likes of Citigroup and Goldman Sachs can't be counted on to bail out the state's massive spending priorities any more.

During his budget talk, Cuomo didn't really discuss how to raise revenues and attract businesses to upstate New York where the economy is the worst—he just talked about how to stop the bleeding. That said, people close to him say he means what he says when he announced Tuesday that the era of big government in New York State is over, even if he left out some of the details, like just how he plans to make the Medicaid cuts called for in the budget. Or the fact that he has a record of supporting left-leaning causes, such as the expansive housing policy when he ran HUD that empowered the disasters known as Fannie Mae and Freddie Mac. Or his support of his father's big-government agenda during Dad's three terms that ended in the mid-1990s.

But these people tell me that Andrew has learned from his own mistakes, those of his father, and most recently those of President Obama, who failed to understand the changing mood of the country and pushed through the first steps toward nationalized health care and a stimulus package that involved the sale of $800 billion in debt during a time when many voters are worried about government intrusion and high spending.

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More than that, they say he has learned from the political success of his former boss, Bill Clinton, who flirted with a left-wing agenda during the early years of his first term (his failed health care proposal and higher taxes) only to lose Congress to the Republicans before he passed welfare reform and tax cuts to win re-election even amid scandal.

"I've known Andrew for a long time, and he's definitely looking toward 2016," says a friend and former adviser to Cuomo. "And we think he has a shot because he's learned from the past. He saw what Clinton did and the shellacking that Obama took during the midterms, and he recognizes that if HE'S going to be successful, he needs a different approach. You can't do it as a liberal anymore."

With that, this person says Cuomo is looking at the state's budget problems as a blessing rather than an albatross that makes it difficult for him to pay off the traditional liberal voting blocks. Instead, by taking aim at those constituencies he plans to make his mark politically and differentiate himself from not just his father, but the current left wing of the Democratic Party as the country moves to the right, particularly on economic issues.

"He'll take on the unions and the budget, and if he's successful no one in the Democratic Party will hold his conservatism against him," Cuomo's friend says.

But has he been mugged by reality enough to join the ranks of the neo-cons? Not exactly. At 53, it's hard to change your political beliefs even if the presidency is on the line. Indeed, people close to him say that while he's more conservative than his father, and is preaching fiscal austerity with no taxes (unlike other Democratic governors in California and Illinois who have proposed to deal with large budget deficits), Cuomo has yet to fully renege on his liberal credentials.

Rather, he is looking to recast himself as a realist, someone with the heart and desire of his father to provide the massive social safety net that big government has granted for so many years—but only within the limits of what he has to work with.

In New York, of course, Andrew Cuomo doesn't have much to work with. Businesses and rich people can't really be taxed anymore, and whether he can get a legislature to reverse years of spending and taxing, and start cutting instead, is more than an open question.

Yet the broader political trends are in his favor. Independent voters have turned negative on tax increases and debt, and with Wall Street analysts predicting massive municipal defaults on the horizon, he can't just borrow to close the budget gap as had been done in the past.

That's why he's sounding more like Ronald Reagan these days than Mario Cuomo, and hoping that's enough to someday get him into the White House.

Charlie Gasparino is a senior correspondent for Fox Business Network. He is a columnist for The Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His latest book, Bought and Paid For, is about the Obama administration and Wall Street.