Fear City: New York's Fiscal Crisis and the Rise of Austerity Politics, Phillips-Fein - B

                     "For President Ford and those around him, the New York fiscal crisis was a story of the bankruptcy - economic and moral alike - of liberal politics. It proved that using government to combat social ills would end in collapse. It provided a spectacular repudiation of the Great Society, the War on Poverty, even the New Deal. But for ordinary people, a fiscal crisis meant something different: it marked a change in what it meant to be a New Yorker and a citizen. We are still living with the consequences of this transformation, today." 

                      "Both the crisis and the government responses to it...seemed almost inevitable. To question that inevitability is the project of this book."

                       The closure of the dilapidated West Side Highway in the early 70's was symptomatic of the entire city, which too seemed to be coming apart at the seams. In the post-war years, NY boomed and represented all of the good that government could do. It was an industrial city where blue collar jobs outnumbered white ones. Somewhere between a fourth and a third of its workers were in unions. But between the late 60's and the crisis, half a million jobs disappeared as the manufacturers, shippers, and garment industries left town. All of a sudden, the number of people receiving public assistance multiplied by four. Whites were fleeing to the suburbs. Under Robert Wagner, the city began to borrow more and more, and for the first time to cover operating expenses. John Lindsay raised taxes, delayed infrastructure maintenance, and borrowed too. When Abe Beame became mayor in 1974, the city was reeling from a recession and the consequences of the Arab oil boycott. Borrowing continued, albeit at increasingly high rates, and the rating agencies began to downgrade NY's debt. Although it might have provided an orderly resolution of the issues, bankruptcy was abhorred by all and never really considered. The bankers looked at Beame "and saw a man who failed to understand they city's responsibility to its banks and shareholders. He looked at them and saw a group of men who had the money and power to help New York but who stubbornly refused to do so." In February, 1975 the city failed to sell $260M of tax anticipation notes. In May, Beame and Gov. Carey went to the White House to discuss the possibility of federal assistance. Beame asked for a ninety day loan, but no one in Washington believed he could provide a balanced budget anytime soon. Ford declined to help the city.

                     The city and state were on their own. The solution initiated by Albany was the creation of the Municipal Assistance Corporation, a state entity that would help consolidate the city's debt which it would pay with the city's sales tax revenue.    The city laid off thousands, including 5,034 police officers on June 30. The next day, the city was in chaos as garbage piled up, fire stations were closed, laid off workers protested and municipal services were curtailed. The state created the Emergency Financial Control Board to further reduce the mayor's control of the city's finances. Nonetheless, default remained in the air. In October, it was so close that the mayor signed a bankruptcy petition. Late in the year, the state approved a series of tax increases and the federal government passed a law authorizing short term federal loans to the city. As the year closed, it appeared as if the city was no longer on the cusp of default.

                    The consequences of the city's plight were severe. Almost 70,000 jobs were eliminated, child care centers closed, money for parks, libraries, health care, police and fire simply vanished. CUNY lost a quarter of its students. Capital improvements and repairs stopped. The city itself began to turn the corner. The Bicentennial festivities and the Democratic Convention both went off without a glitch. Apartments and hotels were built. Tourism hit record highs in 1979, the year the city reentered the credit markets. Nonetheless, services continued to be cut, and the quality of life in the city deteriorated as the city became dirtier, less safe and less healthy. It was less of a city, but one that could stand on its own two feet.

                       "Forty years after the fiscal crisis, New York appears in many ways radically different from its 1970's self." It is a much safer and more pleasant place. The interests of business and the wealthy are now paramount in NYC's politics. "Amid the prosperity that now dominates New York, there is also a desperate poverty and an acute sense that a different, older metropolis full of possibility has been lost." It's been fascinating to delve into details about a time of crisis that I remember vividly. Thanks Will for the recommendation.