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The Fall and Rise of New York

1.

New York City is facing a social, political, and economic crisis far more serious than the fiscal crisis of the 1970s. This is reflected both in the life of the city itself and in the attitudes toward the city in Washington and in the rest of the country. Fifteen years ago President Ford gave a speech on New York which was accurately summarized by the Daily News as FORD TO CITY: DROP DEAD. In fact after the headline appeared President Ford did not do as well as the city did. Many of us believe that his remarks cost him the state’s electoral votes and the presidential election in 1976, whereas the city managed to make a recovery and went on to a decade of considerable prosperity.

A few weeks ago President Bush, in a speech to New York Republicans, said that “life in New York, especially in the city, is becoming more expensive, more difficult and more dangerous than ever before.” New York City, he went on, is a “city that lives in fear.” He spoke of “bad schools, dangerous streets, big deficits, open-air drug markets and muggings,” without mentioning that a decade of neglect of urban problems by the Reagan and Bush administrations helped to bring this situation about. But while his description generally was accurate, the way the city is perceived is even worse than the reality, not only in the United States, but also abroad.

The statements of the two presidents, and the reactions to them, suggest some of the main differences between the fiscal crisis of 1975 and the far deeper crisis that the city is now facing. In 1975, the New York press attacked Ford relentlessly for his antagonism to the city’s needs. The coalition of city businessmen and labor leaders who were then working effectively on the city’s financial problems lobbied furiously in Washington for the appropriations that Ford wanted to deny them; so did a political coalition of northeastern states led by New York. President Giscard d’Estaing of France and Chancellor Helmut Schmidt of West Germany personally urged President Ford to provide federal credits to the city.

Finally, although grudgingly, the president and the Congress decided that it was better to help New York City than to bury it; and this decision was, to a large extent, made easier by what New York was doing to help itself. New York State put its credit behind the city’s. New York’s labor leaders agreed to far-reaching concessions on such matters as salaries and hiring; New York’s banks, many of them with a significant part of their capital at stake, agreed to contribute to refinance the city’s debt; a new city administration, with the help of the Emergency Financial Control Board and the Municipal Assistance Corporation, brought the city back to financial equilibrium. The city both helped to bring about and benefited from the financial boom of the early Eighties. Despite the departure of a number of businesses during the Seventies, the mood of the city was decidedly upbeat. Many New Yorkers felt that they had waged, against very long odds, a political battle for the future of the city and that they had won.

The reaction to Bush’s recent statement, on the other hand, was muted. Apart from Senator Moynihan’s comment that only China and Albania deserved such scorn and some critical remarks by Congressman Charles Rangel, the statement was ignored by political leaders and the press. It was ignored not only because Bush’s words were much less threatening to the life of the city as Ford’s were, but also because the city today is vastly different from the city of 1975. There is no longer effective cooperation between business and labor. There is no strategic political alliance between the city and the state, which would deal with the city’s problems in Albany or in Washington. There is now a feeling of helplessness about the city’s long-term difficulties.

To make realistic comments about the city’s problems today can be risky. Anyone who does so is likely to be accused of “talking the city down.” Politicians regularly criticize the press for giving too much space to crime, homelessness, racism, and drugs, as if ignoring the truth about what is happening in the city would somehow make it go away. In fact, the attention given to violent crime in the press during the past several months has served to draw public attention to spreading patterns of danger and desperation which are leaving no section of the city untouched. Mayor Dinkins has now proposed an ambitious and wide-ranging “safe city, safe streets” program. Will this program be capable of recapturing the streets and the subways from criminals, and of getting legislative action to provide for stiffer and more intelligently administered criminal penalities? It deserves strong support, but it is too soon to hope that it will.

New York City, during the 1975 fiscal crisis, could still be described as a “gorgeous mosaic.” Mosaics are held together by some bonding material that keeps them from falling apart. During the 1970s there were, I believe, widely shared hopes that the city could provide opportunity for its citizens. Today, New York has become a city full of anger and violence in which ethnic groups are turned against other ethnic groups, races against other races, classes against other classes. The quality of life is the dominant economic, social, and political issue facing the city today. And whether for black or white, Hispanic or Asian, rich or poor, the daily experience of the city is becoming more and more unpleasant. That other cities in the US may be worse off, as many claim, is not really relevant. New York has to judge itself against its own past and its own standards. The many wonderful aspects of life in the city, its intellectual and cultural life, its energy and variety, are being buried by grinding pressures arising from civic failures—the streets and subways that are not safe; the public places that are not clean; the schools that are failing to educate; and the drugs that are more and more widely sold. I cannot imagine leaving the city myself, but many other people and a number of businesses are thinking of doing so.

These problems did not start under the Dinkins administration and they should not be laid at its feet. There is no shortage of plausible explanations for the city’s plight. These include the various failures of the federal government to support urban programs, to fight drugs, to fight crime, to provide assistance for housing, public transportation, and so on. Had federal urban programs remained at 1981 levels, New York City would receive an additional $2.4 billion of budget support for the fiscal year 1991. The reasons for the situation in the city also include the inability of the state to provide greater financial support for the city, especially for public education in the poorer school districts. But to change state and federal spending policies will require time and a drastic political realignment. In public life, there are no static conditions; things get better or they get worse. In New York City right now, they are getting worse. In order for things to get better, the city will have to make some fundamental, possibly radical, changes in the way it goes about its business.

Many misleading myths circulate in the city today, inhibiting efforts for reform and encouraging the acceptance of the unacceptable. One of the most pervasive is the myth that its only problem is the lack of means. The problems of the city are not only created by a lack of money. A city with a budget of $29 billion, a payroll of $15 billion, a municipal work force of over 300,000 people, and a capital program of $5 billion per year is not exactly without resources, even though the needs to be met are enormous. The last ten years have seen the work force of the city grow by more than 50,000 people; at the same time, labor contracts have become more generous in both compensation and benefits. And yet despite the significant increase in the size of the city’s work force and in the compensation of its members, the services delivered to New Yorkers have not improved and the quality of life in the city has steadily deteriorated. The time has come to question the city’s overall wage and personnel policy, which up now appeared to have three elements: continued increases in the number of employees; across-the-board increases in compensation, regardless of merit; little or no real increase in productivity. The labor negotiations of September and early October provided an opportunity for change; so far they have resulted only in confusion and a perplexed concern about the direction in which the city is going.

The city’s estimated budget deficit for 1991 of $1.3 billion was eliminated by raising almost $800 million in new taxes, by drawing on $300 million surplus funds and balances of the Municipal Assistance Corporation, and by various savings on expenditures. Measures of this kind cannot be repeated forever. It is already becoming clear, in view of the sharp deterioration in the city’s economy, that this year’s budget is sliding into deficit and that another large budget gap is to be expected next year, which could exceed $1.5 billion, without any increase in labor costs. Dealing with these future deficits will be the main challenge to the Dinkins administration.

The city must develop an overall economic and management philosophy in setting wage and employment policies. Failure to do so, in the present highly uncertain economic environment, will result in a large number of layoffs and cuts in services that will be damaging to both the city and its employees. To begin with, the increase of 1.5 percent in labor costs to the city that has been included in this year’s budget is more than the city can afford, and less than the unions are willing to settle for. The city could not find the $30 to $50 million required to hire one thousand additional policemen and had to finance these additions to the force by piecemeal cutbacks in everything from education to libraries. With the city’s economy in a recession, and the national economy entering one, there should be a freeze on wages until we have a clearer picture of the economic outlook and the city can negotiate with its unions a different approach to wages and hiring.

Nothing would be more destructive to the city’s economy, as well as to its workers, than labor settlements at salaries and benefits the city cannot afford—settlements that would have to be financed by further tax increases, which would drive more people and businesses away, and by widespread layoffs of city employees. The situation created by the tentative agreement reached between the city and the United Federation of Teachers (UFT) at the beginning of October proves this point. The settlement provides for a 5.8 percent increase, of which 1.5 percent is to come from the city’s budget, 2.5 percent from reduced city contributions to its pension funds, and the balance by the diversion of state aid funds to education. Two days after the settlement was announced, along with a proposal to add thousands of policemen to provide safety on the streets, the city administration, citing a sharp downturn in revenues caused by a weak economy, announced budgetary cutbacks which included layoffs for 15,000 city employees and a freeze on wages and hiring. We have not seen layoffs on this scale since the summer of 1975. The unions immediately expressed fierce opposition to the city’s announced plan.

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