The Streets Were Paved with Gold - Ken Auletta [73]
Another commonly accepted falsehood is that there were only two choices open to city officials in 1974–75: do what they did or go bankrupt. The city’s brief responding to the SEC charges explicitly states that the federal agency seems to have expected the city to say “there was no hope for its future.” The sub-headline of a Times story after the report was released probably reflected the common view: DECEPTION MAY HAVE KEPT THE CITY SOLVENT. A few days later, Beame elevated his lack of leadership to a patriotic virtue: “I’d have done the same thing over again. I could do it no better than I did.” (Goldin made the same preposterous claim.) This is the same mayor who confessed, in a September 10, 1975, address to the people of New York, “I accept the responsibility, along with officials past and present,” of using what he called “fiscal gymnastics.”
Straining to be fair, a mushy editorial in the Times outlined the terrible choice between the Mayor’s “financial and political responsibilities,” asserting there was “no easy answer.” The editorial then climbs to Olympian detachment: “Hence the final judgment on the wisdom of the Mayor’s asserted deceptions in 1974–75 must turn on whether the city was better off defaulting early or defaulting late. We don’t think there is a clear answer to that question. Nor, for that matter, do we think the answer is very important. The critical issue is whether Abe Beame or any prospective Mayor will have sufficient incentive to avoid taking similar short cuts in the future.”
That is not, I think, the “critical issue.” How do we draw lessons from the past unless we understand it? In effect, the Times was saying let bygones be bygones. To assume city officials had only two choices—what they did (fraud) or bankruptcy—is to ignore a third option: tell the truth, really cut the budget and drastically improve the city’s management. This is the option pressed in a series of 1974–75 memorandums to Comptroller Goldin from staff members Steve Clifford and Jonathan Weiner. The memos are quoted extensively in the SEC report. They were not acted upon; certainly not by the Mayor. Instead, Beame contented himself with the traditional warnings, phony layoff figures, and the pretense that he was cutting the budget while in fact it was growing. Comptroller Goldin, who is unfairly lumped with Beame in the SEC report, did make a decision late in 1974—after Beame blamed him for high interest rates—that caution was the better part of political valor. So this young, ambitious public official who intended to run for state comptroller in 1978 stopped criticizing Beame, swallowed the memos, denounced White & Case’s suggestion that the city did not have income to cover borrowing, and joined the Mayor in a united front.
What would have happened if the city had fully disclosed the bleak facts in 1974–75? “The answer, in the view of everyone interviewed yesterday,” concluded a front-page Times story, “was simple: The City would have gone bankrupt.” Why? Because, the story ended, it was “likely” that “the political climate in late 1974 and early 1975” was not right for disclosure. Perhaps that is true. But city officials failed to test that climate. Instead of rising to a difficult challenge, they collapsed. They never gave the public a chance.
Nor, frequently, did the press give the public a chance. As Kriegel said, “all the so-called ‘budgetary gimmicks’ were being called genius”—particularly by the