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What happened to City Comptroller Goldin is pregnant with meaning both about the role of the press and about the workings of the local version of the military/industrial complex. In the summer of 1977, an agreement was reached between MAC, the city, the unions and the banks to trade in their shorter-term securities for longer-term MAC bonds. This stretch eased the city’s immediate debt service payments, but it also ballooned the city’s long-term costs because a higher rate of interest over a longer period of time was called for. At first, the only major public official to protest was Goldin. “Our major ’complaint,” said one of his principal aides, “was the outrageous interest rate. The banks were making $150 million on the deal. That’s a lot of money. So Goldin publicly protested. We couldn’t interest the press in writing about it. I got a call from one newspaper reporter who said, ‘I lost a lot of respect for you for opposing the stretch.’ I blew up. That night, someone from MAC called to say, “We have the Times and the News editorially supporting the stretch tomorrow.’ The next day Goldin got quiet. He was worried.” The stretch passed without opposition. Felix had, cleverly, made sure to first brief his friends on the Times, the News and the Post.

Assessing the first three years of the partnership before the state assembly’s Committee on Banks, Ellmore C. Patterson of Morgan Guaranty proudly exclaimed, “It is pride which I am happy to share with many others, not only in the financial community but also in the labor unions, the Municipal Assistance Corporation, and the State and Federal governments.” Patterson had reason to be proud. The partnership had, together, kept the city from plunging into bankruptcy. For that they deserve praise.

But they had not fundamentally altered the city’s government. They had not balanced the city’s budget or returned the city to the private credit market. They had not ended the city’s reliance on federal credit or reduced the city’s debt; had not imposed a “wage freeze”; had not reversed the trend of rising budgets and reduced services; had not drastically overhauled the city’s management. New York could not have avoided bankruptcy without them, yet it couldn’t change ingrained habits with them. A veto power was conferred on each partner. City Hall entered the fiscal crisis as the victim of too many special interests and emerged as the victim of too few.

The banks and the municipal unions and the other partners have a hammerlock on City Hall. The city asks the banks to purchase city securities, and the banks successfully demand that the city grant unprecedented powers to nonelected business auditors. Committed to shaking up the government, Mayor Koch in January asked the state legislature to approve a bill to remove 3,000 city managers and supervisors from union membership. By May, he could not persuade a single Democratic member of the Assembly to sponsor his bill. He asked the City Council to pass legislation declaring that the city’s ability to pay be the paramount consideration in any labor arbitrator’s ruling. Yet he couldn’t muster the votes to get the bill out of committee. “I called in the City Council’s committee,” recalls Koch, a note of disbelief in his voice. “Miriam Friedlander said to me, ‘That’s anti-labor.’ I said, ‘Miriam, don’t you understand, you’re part of management.’ I was later told that of the nine committee members, seven were against me and two were noncommittal.” Normally, the only difference between the Council and a rubber stamp, Councilman Henry Stern once observed, “is that at least a rubber stamp leaves an impression.”

In 1975, the employee pension funds agreed to purchase $683 million worth of city securities in the spring of 1978. The unions, led by the wily Jack Bigel, made sure the purchase date coincided with the date of the expiration of their contracts. During the 1978 labor negotiations, the unions balked, refusing to make the purchase. Mayor Koch cried that the city was