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tv   New York Citys 1975 Fiscal Crisis  CSPAN  August 6, 2017 9:35am-10:44am EDT

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to do that. they're released to the public in february of this year. west the entire tour of american president life or trick at the herbert hoover residential library and museum at 6:00 p.m. and 10:00 p.m. eastern sunday on american artifacts. of 1975, newch york city was billions of dollars in debt and came close to defaulting on several massive loans. tv, on american history -fein talksphillips about her book and recounts how the new york city reduced .ervices she argues that the threat of bankruptcy and refusal of new york to bail out -- federal
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government to bail out new york. it is just over one hour. >> migrate pleasure to welcome stage thece to the professor at new york and .iversity it is my all moderate, so i am happy about that. hands:st book "invisible the businessman's crusade please the new deal," welcome her to the stage. >> thank you so much to the
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historical society for having me here. it is nice to be here, because i am a native of brooklyn your i was born a little bit down the block on pierpont street, that is the apartment my parents were living in when i was born. it is special to be here in particular, tonight. weeks ago, the new york daily news repriced its most famous hidden -- headline in history. trump to planet, dropdead." what most people know about the fiscal crisis in 1975 can be headline on that screen. president ford gave a speech to which the headline refers at a lunch of national press club in washington, d.c.. weeks before, he and his advisers had been debating whether or not the president should say anything and public
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about what most people believe would be the imminent bankruptcy -- as he laid it out at the citynal press club, the brought problems on itself and therefore the federal government had no obligation to help. there were several laws circulating through congress to provide federal aid. he criticized the city's network of hospitals and free public university as a necessary extravagances and luxury. why, he asked, should other americans support advantages in new york that they haven't been able to afford for their own community. he made it clear that he saw the committee -- intimately connected with the rest of society.
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he says if we continue to support, the day of reckoning will come to the rest of the country as it has new york and who will bill out the rest of america. was very angry about the negative talk his speech received. the ford administration was in fact to let the city go bankrupt in order to prove a point about the dangers of government spending. there was the time something as a headline suggested that was shocking about the sense of the devil may .are attitude there was a letter in the local newspaper expressing shock
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saying it was amazing that the federal government was willing to sit by and do nothing with the potential financial collapse of the nation's largest city, a place of opportunity persimmon people. new york did not in the end go bankrupt. month after his speech, ford reversed himself and agreed to support short-term loans for the city, but he did so at a high cost for new york. employment byic over 20% over the next five years. brooklyn,n impact on teachers were laid off from local schools. at least two schools were closed fire stations were threatened with being shut down.
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the zoo became so decrepit that there were moves to close it all together in order to protect the health of the animals. for many years, these cuts and once like it that took place throughout the city have been seen as the necessary move to solvency for new york. the only responsible solution to the problem of the fiscal crisis. my book looks at the crisis from a different perspective. through my work one of the things i came to believe is that it helped shape the lasting impacts of the crisis in a way that shapes to me the common wisdom of politics for a new yorker. in a the crisis sent a message way to people throughout the city and to those in the country watching, that institutions were weak and unreliable, not to be counted on. in this way, the crisis shifted public perception about the capacity of government for the city and country as a whole. in my book i argued that this austerity was in certain ways a
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political choice. that it reflected a particular interpretation of the crisis and they were other possibilities for new york in the and for us 1970's today. fiscal crisis, because they are hot moments of high drama and suspense and a lot of what i do in the book is try to give a sense of a narrative of the crisis and how it played out. but because they are these moments of intensity, have a way of creating a certain narrative in their wake. a script for events that suggest they must play out as they do and there are no other possibilities. for thing the book tries to do is to unsettle this. i'm going to talk today about what i like to think about as three lessons from the crisis. so the first of these is the new , york fiscal crisis happened for reasons that go beyond the obvious, the real problems of accounting and short-term debt that plagued the city. that it reflected in many ways a deep structure of america's
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politics in the postwar years. second, the suppose it solution to the crisis, austerity, reflected political ideas and symbolism as much as fiscal reality. although leaders of the time downplayed difficulties for the new yorkers, they actually had a deep, negative impact on city life. and finally, the crisis marked disaster for some, but for others in the city, it meant opportunity. and i will suggest the crisis helps to bring about a different way of approaching economic -- the economy of the city. one that helped to create a highly unequal new york that we live in today. finally in the end i will talk , about the prevalence of fiscal crises today and what this history might mean for the present issues facing the country. so, the first of these -- the fiscal crisis was the result of major structural problems, not just the bad choices of city officials. and to get to the question of
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why it happened, i will start talking about what new york was like in 1975, the year it almost went bankrupt. this is perhaps summed up by the collapse of a large swath of a west side highway in 1973. even before the crisis began, new york was a city in trouble. this is a picture of the collapse of the -- part of the west side highway near the , meatpacking district, which happened in december of 1973 while there were efforts to fix it. there were repair trucks driving across the road, loaded with asphalt. the road gave way beneath it, sending it plummeting down. it forced the closure of parts of the highway for a sustained amount of time. one of the things -- one of the interesting aspects from working on this book was exploring the scope and ambition of the city's public-sector. with a strong labor tradition
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and its economic base composed of small manufacturers, the city during the postwar years, going back from before the collapse of the highway, the city during the postwar years pushed many of the ideas and practices of new deal liberalism further than any were also in the country. it ran a network of more than 20 municipal hospitals, primary care clinics, research facilities for public health. it operated more than 720 miles of subways and buses and was equally committed to low fares. tuition at the city university was free. and federal spending during the new deal years and afterwards helped to usher in a wave of public projects, parks, swimming pools, roads, the creation of brooklyn college, the campus and more. in the 1960's, during the war on poverty years the city expanded
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, social spending opening day cares, funding welfare, sponsoring clinics to help drug addicts. in the book i described the mid century vision of city life in terms of social rights. suggesting that in a way the city at that point seemed to embrace an ideal of social citizenship. belonging to a committee or city gave you access to certain forms of social support. but the question is, who or what will finance the social sector? new york's public sector was undeniably growing strained by the early 1970's. why was this? first, the city was strained by the politics that demoted the industrialization. throughout the 1950's and the 1960's, construction of the suburbs, the subsidizing of these with federal housing loans, the building of roads to link cities to the peripheries led to the departure of millions of people from cities, including new york.
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not just people, but companies. the city lost manufacturing jobs in the postwar years to the suburbs where the land costs were lower and unions less strong. the city administration itself was ambivalent about preserving the industrial base. many real estate developers and landlords wanted to see small manufacturers depart manhattan. the mayor was interested in relocating industry to the outer boroughs, often companies would leave for the suburbs. the result was new york, by the early 1970's was in economic distress. they lost 10% of the population between 1970 and 1980. also about .5 million jobs, and the new jobs coming in in the service sector tended to generate less revenue and income for the city than the older ones. as the city grew poorer, and less white, there was a rising need for social services in general. but a shrinking tax base to pay for the services that might have
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been supported easier by a larger one without the suburban flight. i think one underlying question raised by the history is whether there is some way to consider entire metropolitan regions when it comes to making fiscal determinations for a city. should people who generate their wealth in urban areas be able to sequester their taxes from supporting the urban core? a second issue the city faced in the postwar years, they had to bear the high cost of social services, or a large part of the cost because of the way the programs had been structured by the state and federal government. it was not something decided locally it came from albany, as , do most considerations of the city tax structure and washington and had a higher level of government with more power to tax incomes and able to take on more responsibility, it would have meant something different for new york's budget.
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by the late 1960's and early 1970's, the nixon administration backed away from the commitment to the war on poverty and the federal money that had increased in the mid-1960's began to slow. another question the fiscal crisis raises, pressing today as president trump seeks, among other things, to redistribute the cost for programs such as food stamps from the federal government to the states is what level of government should best bear the costs of the social services? should they be borne by the largest possible with the greatest power to tax income? in a way the fiscal crisis reflects a change in national priorities as the federal government moves away from the commitments of the great society. a different arrangement would have meant a different situation for new york. now, these kinds of large questions were not raised in a
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serious way as the city's tax base ran into trouble. how did the city government deal with the revenue crunch? primarily through accounting tricks and short-term debt. there was great anxiety about the city's financial situation throughout the late 1960's and early 1970's. business leaders were growing increasingly concerned. at one point after the introduction of a tax on stock transfers, the stock exchange threatened to move to connecticut or even perhaps california. at the same time, in the late 1960's it was a time of incredible unrest and upheaval. citizens at wealth or offices, the occupation of colleges and manned the public universities become representative of racial diversity. takeovers of the hospital in the south bronx riots of the tombs , in lower manhattan for better conditions in the city jails. this was a couple of years
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before the attica rebellion in upstate new york. mayorr mayor lindsay or beam wanted to deal with these problems directly. both men, i can talk more about them in the q and a because they had an interesting biography shaping his approach the problems of new york. both chose primarily to burrow. to make up this growing gap between revenues and expenses so much so that debt service became the third largest budget item. beam won on the slogan if you do not know the buck, you don't know the job. he had grown up in poverty on the lower east side. he studied accounting at city college. he worked his way up through the
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democratic machine. he served as comptroller under lindsay. saw him new york times" as a real force of fiscal rectitude. but once he was in office, it became clear that his grasp on the city finances was limited. another interesting part is the role of a younger generation of city officials played in exposing the budget problems. coming out of elite universities, unlike mayor beam, sometimes with connections with the counterculture and antiwar movement of the 1960's and early 1970's, with no connection to the world of machine politics vision, shaped beam's these young men, they were mostly men, many of whom were centered around the office of the comptroller, harrison golden, began to write and talk about the city's accounting problems over the course of 1974. talking about how it was using
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long-term debts or capital funds to pay for annual operating expenses. the way it was overstating how much money it was getting from washington, but never really bothering to correct the books after less came in. in one memo a young man in golden's office -- a young man that often wore jeans, not done by most officials of the time, he wrote a memo that he shared with state senator roy goodman observing the budget gap of the city had grown so large that eliminating it would involve what seemed like insane measures, closing the school system altogether or eliminating the police force. nonetheless, the banks kept marketing and the ratings agency continue to uphold strong ratings for the city's bonds until a point came when they , would not any longer. in the winter of 1975, a young man at bankers trust, someone without a background in
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municipal bonds, canceled a sale that the city was going to make after he asked for a property tax collection data the city was not able to provide him. and the next month the bond offering had to be called off when no banks would buy it. in april, the banks of the city simply refused saying the markets were closed to new york. and that is what precipitated the kind of time from a spring of 1975 to the end of 1975 when it looked like bankruptcy was a real possibility for this city. that brings us to the second lesson the solution that elite , groups, both in washington and in the city is well proposed for the fiscal crisis focused on highly symbolic cuts to social services. and this is especially the case for the ford administration. so here are some of the key , players.
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the person with glasses is william simon the treasury of , the secretary who himself actually came out of the world of municipal bond trading. simon would go on later in life to head the foundation -- a conservative think tank and write a book called "a time for truth." they kind of jeremiah to american business people saying they had to take -- they knew to take a greater role in political life and wrest their country back. in the book he talks a great deal about the fiscal crisis and what it meant to him. he was fiercely opposed to helping new york. also on the ground, wearing glasses, is alan greenspan. he was fresh from the inner circles of ayn rand. and he was the chair of the
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ford council of economic advisers. henry kissinger is between them. he didn't do much when it comes to the fiscal crisis, but he was an important person. also was donald rumsfeld was at that ford's chief of staff. point, mayor beam, working with the governor of new york state , was to go and seek additional id from washington, d.c. in recent years, the federal government had provided financial assistance for certain corporations such as the defense contractor, lockheed, when they were facing problems. perhaps they reckoned it would work for new york as well. but beam and kerry did not find a friendly audience. donald rumsfeld was not induced, he said it would be a disaster. first, new york would delay cleaning up their mess, and second for the president --
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theedent it would set president wrote in my view the request is outrageous. alan greenspan said their wares no cuts for personal responsibility. must do right thing 24 hours, bite bullet. what the ford administration wanted to see from the city was a program of speed budget cuts. before the first meeting ford had with the mayor and kerry, his advisers prepared a list of suggestions -- tolls on the bridges, tuition. the city should be allowed to go broke, whatever this might mean for the citizens, the state, the municipal bond market, and the national economy. default wrote one official, could trigger a radical action, which is required. little hard analysis was done at the point when the ford administration was putting these things out on what impact these measures would have on a budget. what mattered as much was perception and the perception of toughness. r the conservatives around new
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york, new york embodied the zenith of a liberal order and the spectacle of its failure was a demonstration of its political project was no longer tenable within the city and for the country as a whole. in a certain way, this was also the agenda as it played out within the city as well. to deal with the crisis, the state created two agencies, the municipal assistance corporation and the emergency financial control board, they were intended to help refinance the city's debts, they would help get longer-term loans to replace the shorter-term and to oversee ones the budget. these were staffed by -- the mayor and comptroller set on these agencies, but they were staffed otherwise by people selected by the governor and included private executives, but no representatives of labor or community organizations, despite requests that they should be present. the people who sat on these organizations made it clear that they symbolism of the cuts was
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as important as their immediate fiscal impacts. as the chief executive of new or -- of new york telephone argued to balance the budget, to , restore the confidence of the financial community whose resources we need to survive, to guarantee the survival of new york city, there is an urgent need to alter the traditional view of what the government can and should do. what is required is a fundamental rethinking of the level and quality of services the city provides its citizens. and at one meeting with mayor beam in july of 1975, a banker, who we can also talk about more in the question and answer argued the more dramatic the , city cuts were, the better. overkill might be necessary to have the proper shock impact since the banking community had made it clear that the city's way of life is disliked nationwide. so, pressed to the bone, the
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city began to make cuts. and as it did, and the unions used pension funds to buy large quantities of debt, which some banks did, too, the ford administration agreed to back a program of short-term loans as long as the city was able to demonstrate they were able to progress towards a balanced budget. that brings us to this flyer. just a little bit of context for this document, between 1975 and 1980, the city's public workforce shrank by more than 20%. the staff of the police department declined by almost a quarter. the number of sanitation workers by a little less than 20%. the number of fire department employees by about 10%. the number of people working for the board of education, 14%. three of the city's 19 hospitals were closed, as well as primary health centers, child centers, drug treatment programs. of its network of several hundred day care centers for low
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income families, 77 lost their funding. the city imposed tuition at the city university of new york, breaking a tradition of more than a century of free higher education. while people have long debated the impact of the cuts on services, it seems worth noting they took place in the midst of a crime wave, a spread of fires in neighborhoods like bushwick and brooklyn, and the adjustment of the city to a postindustrial economy. poverty rates in new york climbed from about 14% in the late 1960's to a little over 20% in the early 1980's where they stay to the day. in other words, this takes place in an atmosphere of intense need. this flyer comes from a coalition, a police union produced it in the summer of
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1975, after the announcement of a round of cuts. and the idea with the flyer was the police unions were planning to distribute it at the airport, giving it out to potential tourists coming to visit new york. they also had a campaign, they took out several large ads in the city newspaper as saying, when was the last time you or a family member was mugged? they drove around the city, blaring these messages with sound trucks. and inside the flyer it talks -- it is warning people to stay off the streets after 6:00. to stay, whatever you do, stay far away from south bronx. the flyer is definitely trafficking in a set of racial stereotypes and anxieties about race and crime in the city. but in a way, i guess i was interested in the flyer and took the title of the book from it, not in reference -- in a way to
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kind of referred to the broader atmosphere of fear, fear of bankruptcy and the role of crises in generating a sense of fear that makes it possible to change things rapidly that otherwise would be challenging to change. this took place in an atmosphere of intense unmet social need. this is an away why the cuts met with great anger from any new yorkers. in some ways the crisis destabilized the world of liberal left politics in the city. many activist had been fierce critics of a racial economic inequities within the public sector prior to the crisis. when it arrives, these organizations and movements that had been critical of the city's public institutions suddenly found themselves scrambling to defend their existence. one bronx community activist who had been involved in protesting for better services at the
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hospital in the bronx, calling them at one point totally inadequate, responded with a shock when the decision is made to shutter the facility in 1976 saying, if we lose it, we will lose all chances of a new one. once you close a institution, it is over. the crisis -- that is felix on the left, right next to governor hugh carey. that slide should have come earlier. but you can still see the image. the crisis laid bare a variety of tensions within the system. the whole question of who could access education and culture, knowledge in a way seemed at stake. with vigorous protests in response to efforts to consolidate campuses and eliminate some of the newer schools such as a community college in the bronx, a bilingual two-year school offering classes in spanish and english, which served a kind of unique student base coming out
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of a neighborhood and it was immensely popular as a community institution as a sign of the , city investment in the south bronx. there was an extensive mobilization both involving students and faculty writing letters to both city officials and the emerging financial control board and also a more direct action oriented set of protests closing the grand concourse, ultimately occupying the school. in the end, the attempt to shut down that school and others was pushed back. the system as a whole began to formally charge tuition. there were also a set of protests in libraries around keeping them open. this is an image of someone sleeping in the morningside heights library. sit-in lasting about six weeks as activists try to keep it from closure. a different kind of mobilization developed around the plans to
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close fire stations. one that was driven in some ways by the panic of a working-class population that was afraid of being driven out, literally burned out of the city. if you cut sanitation, this -- the streets stink read one , article in the greenpoint gazette. if you cut education, children do not learn to read. if you cut fire protection, people burn. so there were a set of protest , about the plans to close almost every fire house closure met with a neighborhood response. there was an extensive campaign around keeping one in park slope on union street open. but the best-known, and most successful was the 16 month long occupation of what became known as the people's firehouse. in northe company 212 williamsburg. this grew out of the activism of the predominantly polish working-class neighborhood. when the announcement came that the city planned to close it,
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despite the prevalence of wood framed houses in the neighborhood, many perceived it as a act of neglect that would literally reduce the population. closing the firehouse appeared to the people in the neighborhood, part of a long-term plan to transform it. a way of showing the city no longer cared about preserving it as a working-class space. their occupation was a sign the fire station belonged to them, just as the neighborhood. we can see the people in front of the fire station, with the banner, planned shrinkage stops at northside. that refers to the idea put forward by roger stirrer, a mayor'sf the administration that the city selectively decides which neighborhoods would continue to receive services. and sort of intentionally and close off fire stations, libraries, public transit to parts of the city that were kind
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of deemed beyond the pale, or incapable of being restored. it should be noted there was no planned shrinkage. it was not the official policy thehe administration, and author of the article had to leave the administration. but in a way the idea resonated. it spoke to people who are losing services and whose experience of that -- it was hard to believe, hard for people to see it as a neutral set of necessary fiscal decisions. it was experienced as a kind of pointed attack on neighborhoods and the way of life within them. and in the end, the city reversed course and kept the fire house open. it was it was brought back, the cuts to the fire department affected the level of services.
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the people firehouse or engine company 212 was closed in 2003, despite another local protest is spearheaded by the son of the man who had been its leader in 1970. -- in 1976 and 1977. the second lesson to kind of pull back from, the second lesson of the fiscal crisis is that it was resolved to the extent it was through a program that focused on cuts to services. services that were actually badly needed and were far from frivolous. their loss was deeply troubling to those directly affected who did not have the power to make these decisions that affected their lives. within the context of the fiscal crisis, such cuts seemed like the only solution, but that in a way reflected how the debate had been established from the outset and reflected a set of social priorities. a question about whose needs were expendable.
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that brings us to the third lesson, the fiscal crisis was not only a time of pain for some, it was also one of opportunity for others. and the city chose a different plan for development in the wake of the crisis. one that was focused in part on using city resources to attract and retain corporations and developers. in a way, i think another kind of longer-term impact of the fiscal crisis was that it redefined what it meant to be a liberal in new york. as people who saw themselves committed to aiding the programs that might help the poor and would help increase economic equity began to believe the only way it could happen was through wooing the rich. that to pay for public services, they needed private revenue. as mayor beam put it when he unveiled a program for economic development in late 1976, it was a program composed of tax cuts and promises to not increase
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taxes further, he suggested this represents " the city's commitment to improve the business climate and the recognition that job creation must be at the top of the list of priorities." he sought to create an ambassador core of executives to travel around the country, trying to persuade business people that new york was a great place to be. and this is the context in which donald trump, who was at that point a developer in his late 19 -- in his late 20's, the son of a landlord owning thousands of outer borough apartments cut his major deal in manhattan. it was the development of the bankrupt commodore hotel. the commodore was the kind of grand old hotel, a midtown landmark since 1919. but it had fallen on hard times, like the city since its owner, the railroad declared bankruptcy in 1970. the railroad planned to close
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the commodore. it had not paid property taxes for years. there was a massage parlor operating in the lobby. it was obviously not something the city wanted to continue to have there. trump saw an opportunity. he wanted to redevelop the property. he looks for different partners, ultimately working with the hyatt regency. he lobbied city officials for a tax break to make it possible to do so. ultimately what he did was buy the property, sold it to a state agency and leased it back. and through the arrangement, he was able to obtain a property worth upward of $360 million as of last year. it continues on and will for a few more years. the economic development administrator did not view this as a one-off thing. it was described at the time as an effort to send a signal to the entire business community there was a change, or as
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governor carry put it when the ground was broken on the project, new york in the past had failed to give business the kind of incentive and support they needed to flourish, but that day has passed. did the city have any other options when it came to the commodore? there was actually at least one other potential buyer who was willing to take a deal that was far less, which trump received. there was a strong sense of, -- there was a level of discomfort from quite a few people, both public officials, and also in the broader development among other developers at the time commenting this bargain seemed unusually generous. no matter, the kind of abatements that trump got would become more common. today, according to a report by the comptroller, they are worth about $3 billion to the city. and it is still not clear that they generate the kinds of good
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jobs that would actually make them worthwhile. in certain ways, we live in a city that has been deeply reshaped in the orientation towards wealth. the budget today might seem to have recovered entirely from the crunches of the 1970's. crime is very low compared. certainly over the time i have been working on the book, the questions of the improved quality of life has come up again and again. in certain ways it has become better. in other ways, i think that history, the problems of that earlier era and the difficulties of the solutions that were arrived at then remain with us. new york is today one of the most unequal cities in the country, in a country that has become more unequal since then. almost 60,000 people live in shelters and lack homes even as
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swaths of manhattan have become parking places for the wealth. proposals for affordable housing often revolve around tax breaks and create housing that is both too scarce and too expensive for the very people who might benefit most. the public schools, as we know, are unequal and divided by race. in part it is driven by levels of parental contributions for basic elements of education that were unheard of an earlier moments in the 20 century. the city library lacking funds and selling off land to private developers. and the city took a long time to recover from the fiscal crisis at all. but in many ways for poor or working-class new yorkers, the transformation of the city has taken place without their full inclusion. while for middle-class people, the city is becoming ever harder to live in.
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of course we cannot simply bring back or re-create the mid-20th century city, but i think the model of urban life has something important to offer and to teach us. we might actually look to some aspects of it as a model for the problems we face today. finally, a few additional words to sum up. i have tried to outline in this talk what i mean by the politics of austerity. first, the way this reflected the postwar united states, not just the shortsightedness of local public officials. the decision to make the cuts was a choice and a painful one. finally, the cuts were accompanied by a decision to shift public resources towards the private sector, or private economic development. which was also a choice and one with lasting consequences for
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the kind of city that new york would become. i think this history matters, for many reasons. but partly because the politics of the fiscal crisis and the rhetoric of austerity are with us now. insee them at work discussions about puerto rico and attempts to arrive at some kind of solution for the debt crisis there. we see it in the history of detroit, like puerto rico, declared bankruptcy. states including illinois, new jersey, carry large debts in the form of underfunded pensions as new york city does. and the national debt is at record levels, which president trump is fighting as justification for austerity today. so what other choices were the 70'sor new york in and what choices do we have now? i should say, as a historian, i am a historian, rather than an urban economist or urban
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planner. i don't see my central job as telling the people of the past what they could or should have done. there are ways in which this history feels tragic to me, a dilemma that does not have easy answers. many of the measures that might in fact have provided fiscal relief for the city, such as more generous federal funding for health insurance or welfare, or the metropolitanization of a tax base so they could have a common fund, these were not part of the politics at the time. i think it is important to remember the reason for that is not technical, but political. it is not as though it is technically impossible or unimaginable, it is not possible because of a political, or because of political forces and ideas. i think similarly today it is important to remember what funding shortfalls in part reflect to generations of
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antigovernment and anti-tax politics -- the national debt is in some ways the long legacy of the bush era tax cuts extended by president obama and the wars in iraq and afghanistan. and that shortfalls on funding too areocal level, fraught with politics of taxation the difficulty in , generating resources needed for a strong public sector. a public sector that can in turn help to create a more democratic and military and political culture, one in which an ever greater number of people come to see themselves as participants in society. they experience their cities and countries as belonging to them. swimming pools, parks, libraries, schools, housing these are elements of common , life. it matters they be public, and remain public spaces. so in the end, these questions , are also with questions about the priority of society.
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can we pay billions for weapons, but not pensions for our public servants? fire protection for the city? art and music for the public school? do the tax breaks that private sectors receive actually helped create good jobs, affordable housing, a city opened all the -- or do they spur inequality and the growing inequality of the public area, in which he seemed to have one set of classes for the wealthy, another for the poor, and a vanishing space in between. these are underlying questions. i am not sure this history provides us with easy answers. history has a way of not doing that, but at least it brings them forward to us again to discuss and debate together. i think i will wrap up there and open up for questions. [applause]
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>> all right i have a microphone. if you can just wait for the microphone to get to you, we will open things up. >> thank you. the one part i didn't understand was the role of these counterculture influence guys around harrison gold, the comptroller -- the office of the comptroller, harrison golden. i didn't understand it how some of those men were coming from ideologically or whether their proposals they formed at the time were in opposition to those beam.liam simon or mayor
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greatillips-fein: question. i think i was very interested -- -- anybody out there who is i note most people are encountering the news of the fiscal crisis for the first time. i do think that is one of the things that this book sheds more light on. so, yes, there were the -- i think one of the things that happened during the crisis was generational tension between the younger professional and professionally trained people who were shaped more deeply by the antiauthoritarian politics at the time, and who have few
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-- who find themselves in a mode of exposing, i guess, the problems with the city finances. and they are in a rough community with different political critics of the beam's and also people in the banking community. and i don't think that they -- the problems that they were pointing to her actual funding shortfalls, actual problems. i think it is important to recognize about the history of the fiscal crisis, there was actually a fiscal problem. it is not as though this was dreamed up or invented either banks or the ford administration.
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the city was actually -- there was a gap between revenues and expenses and the way that city was maneuvering around this were not sustainable. they depended on this level of short-term borrowing that wasn't publicly announced in any way and not something that could be sustained over time. i don't think they work -- the group of people involved in helping this come to light were to theologically opposed city's public sector, but they -- and this may be important, they also didn't see themselves as committed to trying to save it as an important goal, either. way, it is a tricky thing, but it is a history without a
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clear set of heroes, especially in the city government. there was nobody who emerged to offer a truly -- a full, oferent, political defense the city's public sector and a clear set of entities that could have saved it. there were different ideas that floated around, but in a way they were kind of -- and some of them might actually have potentially -- they might have worked, ideas about creating something like a reconstruction finance corporation, a federal agency that could make bailout cities.ans to troubled beam loved to point out that new york aid more income tax and it got back from the federal government. oldink the people around
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and and the comptroller's office, they were not putting out a true alternative solution. -- they were becoming increasingly anxious about the condition of the city, and what the funding shortfalls city'snd what the accounting problems were paid -- papering over. >> just a second. there ever anas explanation of eating or lindsay over there budget chicanery, and what do you think of bill de blasio's budgeting? ms. phillips-fein: how do they explain what they were doing? it was interesting, in certain ways, they never did offer a
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full explanation or defense. and i think it is -- especially -- every year at that point, there would be a dramatic fight between the city and albany. people would go to albany and ask for more taxing power, additional state transfers, they sometimes got some of it, they didn't get most of it. i think that was what they had to say about it. beam himself, in a way, i think never -- it is not as though he offered a public defense of what he was a high levelre was of disorganization in the city's budget offices. there was no really good way of tracking revenues and expenses at that point.
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one of the things that happened after the crisis was they knew cash flow accounting system was put into practice quickly and soon thereafter. life,think even in later and after the whole fiscal crisis was over, i think there was something about -- it was almost as though beame had never fully believed that it could happen. even after it happened, he still do believe it could happen. so, i think it is interesting there was a strong sense that this was -- the city would be supported going forward and no one would let new york actually fail. this created a level of fuzziness that may seem hard to imagine in retrospect. i haven't actually, i have not
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followed de blasio's budget than the any more general citizenry. i don't have that clear a sense of what de blasio is doing. i know there is concern about the pension debt, the unfunded pensions. i think de blasio has increased different kinds of anti-poverty spending. i don't think he has talked about it as much as he possibly could. i don't actually have a close analysis. i'm interested to hear about what his budget practices are, but i can't speak to them. >> to what extent did mayor
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koch's policies move new york down the path you described? did he have a lot of agency or was he a victim of having to leave things to the bankers and things operating at the state or federal level. ms. phillips-fein: koch had a lot of agency. in some ways, what koch does, in contrast to beam, who always, there was always some sense in which beam, even after he more or less got on board with the program, there was this history of tension. beam had had to essentially ask for the resignation of some of his close associates. he had accepted these different executives, new deputy mayors in his administration. there was always this tension
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between beam and the broader business community and the emergency finances control board. koch really ran on a program of embracing austerity for the city, and more than that, coming out of the work was a sense of koch's hostility in particular to protesters, people who objected to the closure or cutbacks. a strong sense, and there was a coda to the fiscal crisis when the loans of the federal government that had been extended were going to expire. president carter was in washington and the city has to renegotiate what it's federal support is going to be and koch goes, many of the people who originally opposed aid to new york were saying, here we are three years later and they still
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have not cleaned up. what are we going to do? now koch really goes and says, he's tough, and the toughness is defined partly by a willingness to ignore protests and ignore objections. this comes to a head in a way with the closure of a hospital in harlem, which was a historically black hospital. at one point, it was one of the few hospitals in the city where african-american doctors could practice. it was a longtime community institution. it was not a perfect institution by that time, but was deeply supported by the community and there was a protest, a movement, to save the hospital, which koch in some ways relished throwing aside.
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yeah, so koch in a lot of ways is a post-fiscal crisis mayor. his popularity and his public persona is very wrapped up with pressing cutbacks of different sorts and with the program of austerity, so that is what i would say about koch's relationship to this history. >> hi. i'm not sure if i understood you correctly, but i think you said there was not a plan of plan shrinkage going on at the time. as a person involved in the people's firehouse, what we meant by that was that we felt the city, there were areas where the real estate was prime real estate fundamentally. it was along the waterfront, which williamsburg was, and the government's plan was to stop putting funding into neighborhoods so they would fall apart so that real estate developers could come in and change things around. as everyone knows, that's what
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exactly what did and up happening in williamsburg, which is unrecognizable today, but we were talking about developments at the time where repairs were not being made, and in fact, it may have taken a long time, but as people know, that housing is being privatized, many sections of it, and because we were in brooklyn, we were talking about the development around the waterfront, prime property. i would like if you comment on that a bit more. ms. phillips-fein: i think it is important, i do think there is something like a logic of planned shrinkage that was driving the cuts, but in certain ways it resembled that, but i think, there was also a kind of very high level of chaos.
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haphazardness defined the cuts in the late 1970's. such that i don't know if it is exactly -- i never found in working through the papers of the beam administration, it is not as though you find people talking about how, sort of strategizing in this way exactly. and i also, and with rogers, he left the administration, and a lot of people left the administration when he wrote his article about plan shrinkage -- they said that is what we are not doing at all. whatever, obviously they were going to say that. i guess i would characterize plan shrinkage is something more like a logic or a, a kind of
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logical way of understanding a trend of things, rather than seeing it as the active policy of the beam administration, if that kind of makes sense. but i do hear what you are saying. also a point about the use, the shifting of the use of the land is important as well. >> hi. you spoke to the reaction that koch had as mayor to the fiscal crisis, but can you use him what the difference would have been if that had been mayor cuomo instead, or he would have been under the same constraints?
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ms. phillips-fein: in that election of 1977, there is cuomo, koch, someone else running as well. one of the things that come in yet, i don't know what would have happened. i think with a different, i guess i do think a lot of the, although there was a widespread appearance to the cutbacks, it also to to be disparate, different neighborhoods and communities have their own movements and it was hard to build something that worked across the city as a whole, and thus could have had a stronger role in electoral politics. i think one of the things come in the election of 1977, a lot of the attitudes of the candidates despite their differences, you know, it is
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hard to find people who are breaking ranks and proposing a different way forward for the city, so i am not sure cuomo, how different would it have looked. it might have had something less, and again, i think trump -- not trump, koch, one of the things that has been on my mind about koch is this sort of kind of the relish and gleefulness and the sense of embracing, seeing someone bucking the conventional wisdom in throwing out the sacred cows and not listening to those people who don't know what they are doing and condescension around that. there is something i think, that troubles me profoundly about the political stance. i think koch put that forward in
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ways that were different than a cuomo would have. at the same time, i think there is a question about the broader balance of political forces in the city at that moment and what was a different kind of mobilization in the city. >> i think we have time for one more question. ms. phillips-fein: i will stick around for a few minutes afterwards if people want to come up and chat. >> hi, kim. if i heard you correctly, you said there are no heroes in this. there a lot of people say there were heroes, even the unions were a hero, so could you elaborate on that?
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ms. phillips-fein: i think the, i guess what i mean by that is that the unions, there are people who took actions that saved the city from declaring bankruptcy. at the same time, the actions that they took helped to transform the city and the cost, i don't mean to say that new york should have gone bankrupt. i don't think that would have been a better solution for the city or would have led to a different, better outcome, but the assumptions that were made about what had to be done to avoid bankruptcy helped to transform the city in these ways that were not in the interest of
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all new yorkers, and i guess that is what i mean. that is part of why despite kind of recognizing the role, and in some ways, that more than anything else is what makes this account different from the ones that have come before. stories of the fiscal crisis tend to lionize the actions that were taken to prevent bankruptcy, and this book, while telling the story of what brought things to that point, is also an attempt to account for what was lost at that moment as well. so i guess that is what i mean. that's what i mean to say about the question of there not being heroes. also, i guess it's not altogether fair either. i think there are heroes in this
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book. they are the people who, for me anyway, the people who try to articulate or put forward a different vision of the city at this moment of profound change, who tried to keep the firehouses open who tried to keep their , schools open, who tried to keep their colleges available, and there was an enormous amount of labor he and bravery that went into those defenses of social institutions and the vision of the city that was behind them, so if there are a set of heroes, it is those activists and people, at least for me. >> all right, let's have one more thank you for kim for being here. [applause] ms. phillips-fein: thank you. [applause] >> again, she will be available for signing and the book is in the gift shop if you have not picked up your copy yet, so feel free to do that. thank you all for coming here.
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