The Streets Were Paved with Gold - Ken Auletta [191]
These universal reasons partially explain why so little changed in New York over the first three years of the fiscal crisis. Still, wasn’t New York a special case? Didn’t everyone agree the fiscal crisis was for real? That bankruptcy was an immediate threat? Why weren’t local appetites curbed? Why didn’t the outside mechanisms imposed to police the city—MAC, the Control Board, the federal Treasury, the outside auditors—function as they were meant to? The answer to this riddle goes back to a commonly shared assumption. All of the actors—City Hall, Albany, Washington, the banks and financial community, the municipal unions, the business community, even the press—agreed: bankruptcy was unthinkable. Start with that common assumption and it follows that each would bend, do what was necessary, to avoid it. Differences revolve around tactics, not strategy. All are scaling the same peak. Since each climber has the power to cut the lifeline, they cling to each other, synchronizing their steps, their every movement. There are no sudden lurches. Alone, the mountain cannot be conquered. A team effort is required, the sharing of each other’s days and nights.
Inching up the mountain together, overcoming the same obstacles, surviving one seemingly hopeless crisis after another, the natural tendency is to celebrate the distance covered rather than the distance to go. One’s constituency becomes each other. The means becomes the end. Success requires continued team effort. Failure is the plunge into bankruptcy, not the failure to fundamentally reform city practices. That would mean risking a break. Instead of criticizing the banks for their shrinking investment in city securities or the unions for their raises and work rules, the other members of the team praise their cooperation. The pressure is off.
Rather than risk offending New York voters by scolding the city, as the Ford administration did in 1975, since the beginning of 1976 first Ford, then Carter, performed more as cheerleader than cop. With the approval of the teachers’ contract in early 1977, Governor Carey started to think of his reelection and began to rein in the Control Board. Hoping to restore investor confidence and seduce additional federal support, MAC Chairman Rohatyn, speaking for the “conservative” local establishment, declared in 1977: “We’ve cut away all the fat. From now on, we’ll only balance the city budget and pay off debts by cutting away New York’s muscles, bones and vital organs.” Teachers’ union president Al Shanker found those words so comforting he reproduced them in paid advertisements in the city’s newspapers. Yet, the next year, Mayor Koch announced he planned to cut $993 million of “fat” from the city budget over the next four years. Because he was committed to avoiding bankruptcy and Senator Proxmire demanded a labor settlement before considering loan legislation, Mayor Koch says “we had to” achieve labor peace at almost any price (though the same excuse did not apply to Koch’s police settlement, which came after the senate committee had acted). So, too, when the labor settlement was reached, the business/banking establishment, and the editorial pages of the Times and News, swallowed hard and chimed their support. That was preferable to tarnishing the Big Apple’s image in Washington.
Thus there grew, over the first three years of the crisis, the local equivalent of a military/industrial complex—what one might call a public/profit complex. The same absence of opposition, of rigorous checks and balances, which helped cause the fiscal crisis now rendered it nearly impossible to cure. Former adversaries were now on a first-name basis. Labor leader Victor Gotbaum hosted a dinner party at his Brooklyn Heights home for Ellmore C. Patterson, Chairman of the Morgan Guaranty Bank. Felix Rohatyn and Gotbaum celebrated a joint Southampton birthday