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Is New York Going Back to the 1970s?
Nearly a half century later, there are disturbing echoes of a decade that almost doomed New York City. But there are real differences too.
No decade dominates the psyches of New Yorkers quite like the 1970s. Those old enough to remember the time perpetually warn of a backslide there, while others glorify a moment when the city seemed ruggedly free, more authentically itself. Literature and cinema are rife with portrayals of New York in that period, from Taxi Driver to The Warriors to Garth Risk Hallberg’s City on Fire to the latest Joker movie, which served as an obvious homage to Taxi Driver. It seems we can’t quite shake that decade off.
For much of the 2000s and 2010s, it was easy to be nostalgic about the 1970s as New York coasted through a new Gilded Age. The city grew wealthier as new arrivals and foreign money inflated the housing market to once unimaginable degrees. Crime, mirroring nationwide trends, plummeted, allowing neighborhoods once regarded as too dangerous for the affluent to transform, rapidly, into hipster playgrounds. There was the great divide in wealth that commentators and resentful natives always missed, conflating the sons and daughters of Iowan doctors with Chinese and Russian oligarchs gobbling up properties to shield their ludicrous assets from prying authoritarian regimes. Private equity got in the landlord game, buying out the old-fashioned local landowners and chasing out as many longtime tenants as they could, greedily ripping units from the rent-stabilization system and doubling their value on the open market. The carousel, it seemed, would never stop spinning. Homelessness exploded under Mayor Michael Bloomberg, who could’ve been dreamed up in a Tom Wolfe novel, and surged unabated under Mayor Bill de Blasio. But that was the price we paid for a safer, more attractive New York, with its endless array of bars, restaurants, museums, and opportunities for those with the ambition, luck, and privilege to seize them.
That’s all done now. The COVID-19 pandemic has brought New York City to its knees, despite the sociopathic triumphalism of Governor Andrew Cuomo. More than 20,000 died in the city alone, worth several 9/11’s, and the economic impact is likely to be felt for many years. Tax revenue is disappearing, small businesses are shuttering at a terrifying clip, and unemployment is reaching levels not seen since the Great Depression. All this will mean, inevitably, a reduction in social services. CUNY is already laying off adjuncts and K-12 public schools are bracing for deeper cuts. Some nonprofits will wither or disappear altogether. So far, de Blasio has sought to avert mass municipal layoffs, but those may be coming in the fall as federal aid from Donald Trump and Mitch McConnell inevitably fails to properly fill enormous budget gaps. New York has not faced a financial catastrophe like this since 1975, when it was one night away from going bankrupt.
The 1970s fiscal crisis was not like this one in a few crucial ways. There was no single cataclysm that triggered the city’s financial collapse. Rather, it was a confluence of factors, many of them outside the control of city and state lawmakers. The blue collar manufacturing base of the city eroded in the postwar period, depriving the city of jobs and tax revenue. White flight to the suburbs, fueled by cheap single-family housing and the rapid construction of highways at the expense of mass transit, deprived the city of its middle class. To compensate, mayors in the social democratic tradition like Robert Wagner and John Lindsay sought to borrow increasing amounts of money to protect the city’s generous safety net, subsidize cheap housing and free higher education, and shield the large, unionized municipal workforce from layoffs. By the time Abe Beame, a machine Democrat in the New Deal tradition, took office in 1974, none of that was possible anymore. The old budget gimmicks and borrowing wouldn’t work because the banks, increasingly internationalized and driven by a newly neoliberal approach to investing and lending, did not want to give an ailing city of poor Black and Puerto Rican people more money. New York was no longer a worthwhile investment. A new class of government officials, in New York and Washington, repudiated the New Deal tradition, regarding it wasteful and necessary for only the wrong kinds of people.
Beame, to his credit, strained to avert the worst of the crisis, but he was outgunned. Republican President Gerald Ford was surrounded by young conservatives who wanted to make an example of profligate New York City, a liberal Sodom in their eyes. They wanted to entirely deny federal bailout funds to New York. (Hence the famous Daily News headline, Ford to City: Drop Dead.) Ultimately, New York would receive federal aid, but in return Beame would be ordered to make deep cuts to the city workforce, laying off teachers, firefighters, sanitation workers, and many other municipal employees. CUNY’s budget was slashed and tuition was imposed for every student. Social services for the city’s poor were decimated. Daycares and hospitals were shuttered. Republicans in Albany, along with Democratic Governor Hugh Carey, seized control of the city’s finances, creating both the Municipal Assistance Corporation and the Emergency Financial Control Board, the entity that would effectively control how all money was spent. The EFCB, later renamed the New York State Financial Control Board, would impose devastating austerity, even rejecting contracts negotiated between the teachers’ union and the Board of Education. Crucially, for the new neoliberal order, three business executives sat on the EFCB, along with the mayor and the city and state comptrollers.
In 1986, New York City regained control over its budget. Though cutbacks staved off bankruptcy, the new austerity would create the sort of self-defeating downward spiral seen in governments across the world that have implemented similar measures in response to financial calamities. The economy suffered as unemployment spiked. Demand for goods fell. Even as the city recovered, many of the privileges of living in a thriving social democracy were never returned. Closed hospitals did not reopen. CUNY continued to raise its tuition as state funding shrunk. Welfare benefits shriveled. All mayors still need state permission to borrow money. And the Financial Control Board never disappeared. Instead, it lay dormant, perfunctorily signing off on the city’s finances every year, checking to ensure the budget, by law, was balanced.
Last week, NY1 reported that Cuomo had quietly nominated three close allies to the Financial Control Board. One of them, former City Comptroller Bill Thompson, was de Blasio’s top rival in the 2013 mayor’s race. It was the first time in Cuomo’s tenure he seemed to take any interest in the Board and his reasoning, to NY1, was blunt: “Is there more scrutiny? Yes. The financial situation for New York City and these other governments is more precarious than it has been,” Cuomo said. “And that’s going to require more scrutiny, more analysis, than it has in years. And putting the right people on the Financial Control Board is now vitally important.” Since taking office in 2011, Cuomo has sought to increase the role of the state in the city’s affairs as much as he legally can, whether it’s denying de Blasio’s requests for tax increases, minimum wage hikes, or forcing the city, in an unprecedented maneuver, to pay the rent of privately-run charter schools. Cuomo even once shut down the city’s subway system without consulting with de Blasio. The first New York City curfew since the 1940s was Cuomo’s doing. It was no accident he mused openly about using an obscure state power to remove de Blasio from office.
Cuomo cannot use the Financial Control Board to take over New York City’s budget without authorization from the State Legislature. The Democrat-controlled State Senate and Assembly, with its large number of left-leaning New York City lawmakers, is unlikely to do this right now. But Cuomo will impose his will in other ways. Consider his posture on the city and state’s cratering finances. Cuomo is currently laying the trap for severe cuts in the coming months, tying all the state’s hopes of salvation to federal aid. It’s a deeply cynical ploy; like the 1970s, there is a Republican administration in Washington hostile to New York. President Donald Trump and Senate Majority Leader Mitch McConnell do not want to authorize bailout money for a Democratic state. Perhaps, in the current negotiations, some local aid will be freed up, but we know it won’t be enough—not the $60 billion Cuomo is after.
Cuomo is right, ultimately, in that federal aid will be required to save New York and return it to its relative pre-pandemic glory. But he’s not being entirely honest. Trump is badly behind in the polls to Joe Biden and could very well lose this fall. Unlike the 1970s, when Democrat Jimmy Carter, a fiscal moderate, followed Ford, the consensus around stimulus spending has evolved drastically. Biden may be cut from Carter’s pedigree, but he’s spoken openly about authorizing a federal aid package far larger than any seen in modern times. Even Republicans have voted for larger stimulus bills than any Barack Obama supported during his presidency. It’s reasonable to believe, if Trump is defeated, the Biden administration would funnel many billions to New York City in 2021, recognizing that the decline of America’s largest city helps no one.
A reasonable executive, in the interim, would seek to keep New York afloat without resorting to self-destructive austerity measures. But that does not describe Andrew Cuomo. His budget director, former State Senate Republican staffer Robert Mujica, is effectively the most powerful man in the state outside of Cuomo, tasked with detailing whatever deep cuts to localities the governor deems fit. It’s only a matter of time, after Republicans snub New York, that Mujica begins telling the state legislature how much public school, hospital, transportation, and social service aid will disappear. Thanks to new powers won when the state budget was passed in April, Cuomo is permitted to make rolling cuts throughout 2020 as revenue dries up. Since first campaigning as a tax-cutting, anti-union centrist, Cuomo has had his most insidious austerity ambitions tempered by the reality of governing in a Democratic state, settling for hard property tax caps, Medicaid funding cuts, parsimonious CUNY and SUNY aid, and a failure to comply with a lawsuit over improperly funding public schools.
Now Cuomo is unleashed, permitted to realize whatever ambitions he harbored back in the days of 2011 and 2012. He has blocked de Blasio from borrowing any money, cutting off one recourse for staving off reductions, though when Bloomberg was mayor, the city borrowed to cover budget gaps after 9/11. Cuomo has insisted, repeatedly, taxes will not be raised on millionaires and billionaires to produce new revenue, though his predecessor, David Paterson, hiked taxes on the wealthy after the economic crash. Bloomberg, following 9/11, raised property taxes. And prior governors, including Nelson Rockefeller and Herbert Lehman, raised taxes during economic downturns. Revenue raisers won’t be enough, but they would help the city and state avert deeper, self-defeating cuts. Cuomo, however, has been adamant that he will not do it, insisting the millionaires and billionaires will pack up and leave the state once their taxes are increased slightly. His philosophical objections to raising taxes, unless successfully turned back by the legislature, will mean a weaker, frailer government, with the working class and poor punished with higher transit fares to offset yawning budget gaps. By the time federal aid comes through from a new White House—assuming a Trump defeat, which is not guaranteed—the damage may already be done.
Unlike others, I do not see the pandemic marking the death of the American city or a tremendous migration of young people toward suburban living. When there’s a vaccine and life resumes some level of normalcy, New York will be attractive again, perhaps with cheaper rents to lure back Millennials and Generation Z. This makes today’s moment unlike the 1970s, when the urban crisis was more existential. Even today’s shooting and murder spike, as tragic and disorienting as it is, does not represent the nadir of crime and violence in New York—nowhere close, really. Through July 19, there have been 212 murders in the city, an increase of 24 percent from 2019. If the number of deaths doubles by the end of 2020, that will make 424 murders, a large increase from last year. Yet that would still mark the lowest annual homicide toll of the entire 2000s. It would barely exceed the murder rate from 2012, Bloomberg’s second to last year in office, when 419 people were killed. The trend, currently, is incredibly distressing. It does not mark a return to a time when, routinely, 1,500 or more people a year were killed.
In the meantime, it will up to the emboldened left in New York to mobilize against Cuomo’s worst intentions and resist another replay of 1970s neoliberalism. Cuomo is more committed to the program than Carey ever was, and the competence of those around him—Cuomo aides are rewarded far more for sycophancy than any native ability—is much more questionable. Even if federal aid arrives, it will be up to the state’s congressional delegation and the legislature to hold Cuomo accountable, to ensure massive tranches of federal money are not misspent, redirected, or absorbed into places they shouldn’t be. That will be a formidable project on its own. It will be good, then, to have a new class of adversarial lawmakers unafraid to challenge the state’s most powerful man.