The Streets Were Paved with Gold - Ken Auletta [76]
A very different view is heard in Washington and around the country. New York, they say, has been committing suicide. They can point to a Treasury Department study revealing that in 1977 New York ranked first among the fifty states in federal dollar aid and enjoyed the largest increase—$1 billion—of any state; a National Tax Foundation study showing that in 1977 New York State paid 82¢ for each dollar it got back from Washington. “We think it makes sense for New York City to do more for itself rather than spinning new schemes for federal help,” warns Elinor Bachrach, a key aide to Senator William Proxmire, Chairman of the Banking Committee, which must pass on most city aid legislation.
“We don’t seem to be talking the same language,” worries MAC Chairman Felix Rohatyn. “It’s scary.” The gap between New York and Washington is wider than the city’s budget gap. New York officials claimed long-term federal loans would end its need to return to Congress for yearly fixes; many in Congress claimed it would worsen New York’s addiction. City unions complained they had made too many sacrifices; Washington complained they had not made enough. The state and the banks said they were overextended; Washington said they were underextended. New York screamed that bankruptcy could topple our federal system; Washington cried back that deepening involvement in local affairs could topple it sooner.
Murder or suicide?
To probe the question, Senator Moynihan and I agreed to lunch in early 1978. The former Harvard professor chose to meet in the Edwardian Room of the Plaza Hotel. His costume, appropriately, was Ivy League—slate-gray suit, pale yellow button-down shirt, simple polka dot bow tie. I asked a simple question and was dragged on a detour through Keynesian economics, past the fascinating rubble of different academic methodologies, ending with a lengthy discourse on how New York State had actually “recovered” from the 1969, but not the 1973, national recession.
After a time, I was reminded what an engaging man Moynihan can be. But also that there has always coexisted within the junior Senator from New York two parts academic and one part ham. In the contest between the two, sometimes the ham wins. The contest—and the question of murder or suicide—is crystallized vividly in Moynihan’s current search-and-destroy mission. “My hypothesis,” he argues, “is that the federal government is systematically deflating the economy of New York State.” The state, he charges, sends about $36 million to Washington and gets back only $29 million, leaving “a deficit” of over $7 billion. Others have arrived at a higher number. The Northeast governors forged a coalition to lobby for their fair share. “There are no sufficient reasons for the absolute decline of our state, not even our own considerable mismanagement of our affairs,” Moynihan told the Senate on June 27, 1977. “To the contrary, I have reached the conclusion that our decline has come about as the largely unintended, but nonetheless direct and palpable consequence of the policies of the Federal government.” The “deficit,” he said then, was $10.6 billion.
That was the ham speaking. Shortly thereafter, the Temporary Commission on City Finances issued its 398-page final report, documenting some of the city’s self-inflicted wounds. In what could have been viewed as a direct challenge to Moynihan’s thesis, the Commission said, “The ‘captive-of-events’ theory is also popular because it tends to absolve the local political process of responsibility for the fiscal crisis and buttresses the also popular view that the solution to the City’s financial problems lies in increased State and Federal aid rather than local political reform.” The Commission noted, for instance, that federal aid to New York City has increased twenty-three-fold since 1961.
On July 15, 1977, Moynihan cited the same sentence in a “revised edition” of his speech, with a new five-page introduction. “What the Commission says is true,” he declared, “and it is vastly important that it be said … many perceive a conflict between