Best thing going on in this picture is Elmo's look of shock and surprise.
This is from a New York Post article on a police altercation in Times Square with a man dressed up as spiderman. According to the article, Spiderman was pulling a more exorbitant than usual tourist shakedown; a cop asked Spiderman for ID. At some point in the interaction - who knows what happened leading up to it - Spiderman roundhoused the cop and things went about as you'd expect from that point on.
In fact, if you've spent much time in NYC you'll know that the Time Square Elmo is a pretty gritty figure, with a fairly gnarly costume, who you're as likely as not to see taking a break near the Starbucks dragging on a cigarette or getting in tourists' faces if they don't pay a higher fee for a picture with the kids. But still, Elmo!