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By Root 1094 0

Not just the reality of its museums and neighborhoods and theater and restaurants and architecture, but the idea of New York. The idea of diversity, of the bubbling melting pot, of the special compassion generated by America’s Statue of Liberty city, of competition among the best in every occupation. Plays try out on the road before meeting their big test in New York. New York, like Paris, determines next year’s fashion. For a journalist, this is the big leagues. Sure, Washington has great journalists, but it’s also a small town with one industry (government). In New York, you could spend whole days at newsstands surveying the myriad publications that make their home here. New York is the intellectual battery of America. Yes, greater tranquillity can be found in Plains, Georgia; more of a sense of community, in Peoria, Illinois; more comfort and golf, in suburban Summit, New Jersey, or Houston, Texas. But Sinclair Lewis told us all we need to know about those places.

It’s hard not to be arrogant about New York. But it’s also hard to ignore that my city’s crisis is, in many respects, a metaphor for what is happening socially and economically to America and the world. As we shall see, a generation of city officials sealed their eyes to economic currents; tried to ignore the limits imposed by a budget or bond market; tried to tax too much, seemingly unaware that business did not have to do business in New York. As elsewhere, New York did not—does not—know how to cope with decline. It could not harmonize what it wished to do socially or politically with what it could afford. Good politics and good economics were at war in New York. Even today, when New York knows what has to be done, there is scant evidence that our democratic political system can stretch to do the job.

New York has trouble coping with its fiscal crisis; America, with its economic and energy crises; the world’s nations, with the spread of armaments, inflation and hunger. But Cassandras are no fun. Most of us, like Prince Prospero, prefer retreating to the comfort of our own castles.

Chapter Two

The Causes of New York’s Fiscal Crisis

SEPTEMBER 21, 1938, was a special day for one resident of Long Island. A war was about to explode in Europe, but on this morning he was more concerned with a long-awaited package that arrived in the mail. Excitedly, he unwrapped his shiny new barometer, noticing that the needle pointed below 29, where the dial warned of “Hurricanes and Tornadoes.” Ridiculous. It was a sunny day. As recounted by William Manchester in The Glory and the Dream: “He shook it and banged it against a wall; the needle wouldn’t budge. Indignant, he repacked it, drove to the post office, and mailed it back. While he was gone, his house blew away.”

Something like that happened to New York thirty-seven years later. For years, few believed the menacing storm clouds. Since 1898, New York had become America’s largest and most important metropolis. Then, in the 1960’s, New York stopped growing. Each year, the budget would come up short; each year, officials would devise a temporary solution by taxing a little here, borrowing a little there, fudging everywhere they could. Then, during the year and outside the normal budget review process, they would add a program here or there, and fudge some more. By 1975, city expenditures totaled $12.8 billion, while revenues totaled only $10.9 billion. New York was borrowing to close an annual operating deficit of almost $2 billion. While city and state officials tinkered and wrestled with symptoms, New York was being blown away.

Prophets of fiscal and economic doom were scorned. “New York City is in dire financial condition as a result of mismanagement, extravagance, and political cowardice,” cautioned William F. Buckley, Jr., the Conservative party’s candidate for mayor in 1965. “New York City must discontinue its present borrowing policies, and learn to live within its income, before it goes bankrupt.” Judging the reaction, one would have thought Buckley favored a nuclear war. He was summarily condemned as a