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New York and the Nation

Racial disadvantage is a fact of current life. Urgent action is needed if it is not to become an endemic, ineradicable disease threatening the very survival of our society.” This is not a quotation from a speech by the head of the Urban League or the NAACP. It is part of the report by Lord Scarman to the British government dealing with the recent Brixton riots. The report concluded that the violence that spread to much of Britain after the Brixton disorders stemmed from decaying urban conditions and the problem of severe unemployment which falls “disproportionately heavily on black people.”

Decaying urban conditions are not, of course, limited to Britain; unfair distribution of burdens and benefits are not a monopoly of the Thatcher government. “The budget cuts are leaving serious and immediate human needs unmet. And, if the budget cuts continue as scheduled, the problem of the poor will worsen intolerably.” This is not a McGovern liberal speaking but a business executive, Richard Munro, president of Time, Inc.

It is impossible to speak of the New York economy without speaking of the national economy, of regional, racial, and industrial problems, of fairness and wealth, of greed and poverty. New York City, once again, faces serious problems; however, this time, they are not problems of its own doing. Quite to the contrary. Whereas the crisis of 1975 was, to a large extent, self-inflicted, the challenges facing the city now are the result of national policies and regional shifts not of our doing.

Since 1975, New York City has probably performed more credibly than any other unit of government in this country (beginning with the federal government) in the managing of its fiscal affairs. From an annual deficit of $1.7 billion in 1975, it went to a $250 million surplus this year. From a level of $6 billion in short-term debt in 1975, it will wind up this fiscal year with zero short-term debt. Wholly excluded from the credit markets in 1975, it returned to the short- and long-term markets this year.

None of this was accomplished by new economic theories. It was accomplished by courageous state and city political leadership and continued cooperation between business, labor, and government. Sacrifice was demanded from all the different elements among our citizens and if, as is inevitable, sacrifice is always greater among our underprivileged, at least an attempt was made to be fair and most people gave up something.

Balancing the city’s budget was not accomplished without paying a price. The price was a reduction of practically every major service. Whether it be police protection, sanitation, education, or mass transit, services have been eroded and, with them, the quality of our city life. The revival of midtown Manhattan, fueled by tourism and a weak dollar, cannot offset the decline in the other boroughs and cure the appalling condition of the South Bronx and of Bedford-Stuyvesant. However, reality dictated that first we had to get our fiscal situation in order; second, we would address ourselves to services and economic development. There was no painless way to pay for decades of fiscal abuses, deceptions, failures of will and leadership to which New Yorkers have been subjected by a succession of city and state political leaders. The only alternative to the course we chose was bankruptcy; that would have been far worse.

The city’s ability to keep costs under control, while revenues continued to rise rapidly, resulted in this year’s budget surplus and gave hope that the mayor, with the cooperation of the governor and legislative leadership in Albany, would finally have the means to devote to improving services and making a substantial investment in physical facilities. These hopes were dashed by a federal program of budget cuts and tax cuts which deeply slashed the city’s and the state’s revenue stream, a monetary policy which doubled our financing costs, and a steep recession which has the further effect of reducing our tax revenues and increasing our social costs. The result is a projected city budget gap of about $1 billion in fiscal 1983, further gaps down the road, and the state itself under considerable pressure.

Before discussing what actions are open to us to meet these problems and maintain the city as a place in which to live and work and bring up our children, let us look at the national environment in which we operate. New York City and New York State are tied to the same lifeline; it extends all the way through the Northeast and the Midwest, north of an are that reaches from Baltimore to St. Louis.

For the last twenty years, national budget, tax, and investment policies have encouraged migration of jobs and taxpayers to the Sunbelt from the northern half of the country. This migration was also encouraged by the high cost of local taxes and labor as well as by the unassailable proposition that life in the sunshine has its attractions. Compounding the effects of this migration, our energy-producing states vastly increased their revenues as a result of oil price decontrol, largely at the further expense of our region. The current program now pushes this destabilization further. Defense spending will help the Sunbelt while budget cutbacks will require both greater reductions of services and tax increases in the North, and this will further encourage investment and migration away from our region. The recession, coupled with fierce Japanese competition, has a greater impact on older industry, heavily located in the northern part of the country, increasing regional unemployment disproportionately.

The Reagan administration has talked of a program to help certain blighted areas in the inner cities—called “enterprise zones”—with special incentives. The events currently taking shape will turn this entire section of the country into one vast “enterprise zone.” Half of the population of this country will have to face up to industries in difficulty; urban decay, higher local taxes to pay for fewer local services, the flight of tax-payers, and social distress. The destablizing effect of current federal programs will ultimately hurt all parts of America, including those which, initially, reap the greatest benefits. However, by the time this is realized, it will be too late. A national administration which believes that tax policy should not be used to effect social change and that regional imbalances should be resolved by letting its citizens vote with their feet will not act early enough or forcefully enough to resolve these problems before they turn into crises.

A democratic society, to survive, must create new wealth and must see to its fair distribution; only thus can it maintain its greatest treasure, individual freedoms. The present program will create wealth for too few, and leave too many behind; ultimately our freedoms may be jeopardized.

Fairness is the ultimate test by which a democratic government is judged. But the legitimate need to encourage investment in order to improve productivity does not justify a tax bill catering to a variety of special interest groups, many of which will not create one new job or produce an additional ton of steel or barrel of oil. That does not meet the test of fairness. Nor is it met by budget cuts that fall most heavily on programs for the poor such as welfare, Medicaid, and food stamps while exempting indexed entitlement programs that benefit the middle class, such as Social Security, Medicare, and federal pensions.

The abuses and rip-offs of welfare which are rightly deplored are not limited to programs benefiting the poor; they are to be found at every level of government spending and for every purpose. They are not absent in a defense program scheduled to skyrocket to $1.5 trillion for sophisticated weapons systems destined for armed forces that are poorly educated, poorly skilled, and poorly motivated. Defending our vital interests is one of the country’s basic needs; fairness requires reinstatement of the draft. Common sense, as well as our budget and out economy, requires major cutbacks in new nuclear weapons systems and a buildup, at lower cost, in our conventional forces.

It is useless to talk about “turning this country around” and about new investment and job opportunities for all classes and all regions while we face federal budget deficits that are currently forecast to reach more than $400 billion over the next three years, and could well go higher. The level of these deficits almost guarantees that any economic recovery will immediately be choked off by rising interest rates, keeping our economy stagnating with high unemployment and inflation. At the national level, significant reductions in the growth of defense spending and entitlement programs, cancellation of the more exotic aspects of the recently passed tax bill, and new taxes based on energy consumption will be required to create an economic environment in which we can recover. We need, if not a balanced budget, a budget that is much closer to being balanced; we need lower interest rates; we need lower inflation and lower unemployment.

In our own region, New York City and New York State will once more have to collaborate to protect each other. The state cannot forget how close it came to being shut out of the credit markets in 1976 when the city had its brush with bankruptcy. The city cannot forget that the state furnished major budgetary and credit assistance for the last six years.

There can be no functioning State of New York without a workable City of New York and vice versa. To save the city means protecting the tax base, keeping the business and taxpayers we have, and, we can hope, adding to them. It means maintaining adequate levels of service despite budgetary pressures. It means better administration on the part of city managers, and cooperation on the part of the municipal unions. It means austere labor contracts supplemented by sharing gains if improvements in productivity are actually accomplished.

It should also mean major volunteer efforts on the part of New Yorkers, actively organized and led by the city administration. I have no doubt that many New Yorkers would be willing to volunteer to work if they were convincingly encouraged to do so and if in some cases minimal expenses were paid. Volunteers are particularly needed to work in our decimated libraries as well as in our schools, in relieving uniformed policemen and firemen from administrative chores, and in our hospitals. Such volunteer services should be organized by the city administration, with supporting funds from private sources, such as corporations and foundations based in New York. Volunteers will have to do often demanding work, as opposed to genteel fund-raising on Park Avenue.

To carry out such programs would obviously require the cooperation of the city’s unions. However, the unions must understand that jobs would not be taken away from them but that services would be improved in the city at little or no additional cost. That could be to everyone’s benefit. The use of civilians in clerical jobs of the Police Department, allowing for greater use of trained, uniformed policemen on the streets, is another departure from business-as-usual that both the city and its unions should be willing to try.

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