1 00:00:08,720 --> 00:00:11,800 Speaker 1: Hello, and welcome to another episode of the ad Thoughts 2 00:00:11,840 --> 00:00:16,280 Speaker 1: podcast on Tracy Alloway and I'm Joe Wisenthal. So, Joe, 3 00:00:16,480 --> 00:00:20,600 Speaker 1: it is firmly that time of year again. It's uh 4 00:00:20,720 --> 00:00:24,400 Speaker 1: the time when we start talking about deficits. Do we 5 00:00:24,480 --> 00:00:28,400 Speaker 1: have to no? Actually, sorry, this is actually one of 6 00:00:28,440 --> 00:00:32,680 Speaker 1: my favorite subjects. I love discussions about fiscal policy. I 7 00:00:32,760 --> 00:00:37,080 Speaker 1: hate the way fiscal policy is typically discussed in the media, 8 00:00:37,200 --> 00:00:41,000 Speaker 1: in which deficits are always per se bad and attempts 9 00:00:41,000 --> 00:00:44,680 Speaker 1: to cut the deficit are always considered good and neutral. 10 00:00:45,000 --> 00:00:47,440 Speaker 1: So I'm actually very excited about anything having to do 11 00:00:47,479 --> 00:00:50,239 Speaker 1: with deficits, and I'm confident that whatever we're going to 12 00:00:50,240 --> 00:00:54,560 Speaker 1: talk about we will frame in a non cliche manner. Okay, 13 00:00:54,600 --> 00:00:57,080 Speaker 1: so let me set the scene a little bit. Um. 14 00:00:57,120 --> 00:01:00,760 Speaker 1: We did just have the US government pass a spending 15 00:01:00,840 --> 00:01:04,840 Speaker 1: proposal which is widely expected to boost the deficit by 16 00:01:04,959 --> 00:01:08,200 Speaker 1: a significant degree. And at the same time, of course, 17 00:01:08,280 --> 00:01:11,959 Speaker 1: we have deficit and spending hawks who get all worked 18 00:01:12,040 --> 00:01:16,640 Speaker 1: up about the prospect of America basically, uh, spending too 19 00:01:16,720 --> 00:01:19,199 Speaker 1: much money and that could be bad over the long term, 20 00:01:19,240 --> 00:01:22,840 Speaker 1: and in theory it should force the US government to 21 00:01:23,040 --> 00:01:27,840 Speaker 1: ratchet down some of its expenditure. That's how the mainstream 22 00:01:27,920 --> 00:01:32,160 Speaker 1: theory goes. But as you pointed out repeatedly, that's not 23 00:01:32,319 --> 00:01:36,440 Speaker 1: necessarily correct. Right, So the mainstream view seems to be, oh, 24 00:01:36,520 --> 00:01:38,760 Speaker 1: we're spending all this money, what can we take a 25 00:01:38,920 --> 00:01:43,880 Speaker 1: hatchett too, Whereas I think the more realistic way to 26 00:01:43,920 --> 00:01:46,959 Speaker 1: think about it is, here's this thing on paper that 27 00:01:47,040 --> 00:01:49,680 Speaker 1: we call a deficit. How can we use this as 28 00:01:49,720 --> 00:01:52,560 Speaker 1: a pretext to take the X to government spending we 29 00:01:52,600 --> 00:01:55,760 Speaker 1: don't like? Okay, so you have said the magic word 30 00:01:55,920 --> 00:01:59,560 Speaker 1: for this particular episode, which is pretext. Today, we're going 31 00:01:59,600 --> 00:02:03,080 Speaker 1: to talk about an example in US history which one 32 00:02:03,200 --> 00:02:08,480 Speaker 1: historian reckons was really a good instance of a deficit 33 00:02:08,720 --> 00:02:15,200 Speaker 1: of overspending being used as a pretext to change social policies. 34 00:02:15,320 --> 00:02:17,600 Speaker 1: So this should be an interesting one. I think this 35 00:02:17,760 --> 00:02:20,640 Speaker 1: is a kind of conversation that will not make me cringe, 36 00:02:21,200 --> 00:02:24,000 Speaker 1: all right, And just before I bring her on, so 37 00:02:24,040 --> 00:02:27,680 Speaker 1: the example that this particular person uses is New York 38 00:02:27,760 --> 00:02:31,000 Speaker 1: in the nineties seventies when it's sort of teetered very 39 00:02:31,120 --> 00:02:34,880 Speaker 1: very close to the brink of bankruptcy, and she argues 40 00:02:34,919 --> 00:02:38,400 Speaker 1: that New York actually made a certain number of decisions 41 00:02:38,440 --> 00:02:41,600 Speaker 1: that ended up having a very very big impact on 42 00:02:41,760 --> 00:02:44,720 Speaker 1: where the city went from there. So we're going to 43 00:02:44,800 --> 00:02:53,959 Speaker 1: bring her on. I can't wait. So without further ado, 44 00:02:54,040 --> 00:02:57,240 Speaker 1: our guest for this episode is Kim Phillips Fine. She 45 00:02:57,360 --> 00:03:01,919 Speaker 1: is the author of Fear City, New York's Fiscal Crisis 46 00:03:01,960 --> 00:03:05,600 Speaker 1: and the Rise of Austerity Politics. She's also a historian 47 00:03:05,720 --> 00:03:09,040 Speaker 1: of twentieth century US politics and a professor at n 48 00:03:09,160 --> 00:03:11,639 Speaker 1: y U. So, Kim, thanks so much for coming on. 49 00:03:11,840 --> 00:03:15,000 Speaker 1: Thanks for having me. So before we begin, I wonder 50 00:03:15,000 --> 00:03:17,400 Speaker 1: if you could sort of set the stage for us 51 00:03:17,440 --> 00:03:22,919 Speaker 1: about what New York was like before this budget crisis hit, 52 00:03:23,080 --> 00:03:26,000 Speaker 1: because a lot of people don't remember now, you know, 53 00:03:26,080 --> 00:03:29,160 Speaker 1: three or four decades later, that at one point New 54 00:03:29,240 --> 00:03:35,240 Speaker 1: York was this almost I guess social democratic utopia, or 55 00:03:35,520 --> 00:03:37,800 Speaker 1: maybe that's pressing it a little bit, but it was 56 00:03:37,840 --> 00:03:40,040 Speaker 1: close to it. Yes. Well, I think one of the 57 00:03:40,080 --> 00:03:43,520 Speaker 1: things that I talked about in Fear City, and which 58 00:03:43,840 --> 00:03:46,920 Speaker 1: I think many people have been interested in, is New 59 00:03:46,960 --> 00:03:49,800 Speaker 1: York in the post World War Two period was a 60 00:03:49,880 --> 00:03:54,400 Speaker 1: city that built on, but also departed from, much of 61 00:03:54,440 --> 00:03:57,400 Speaker 1: what was dominant in terms of New Deal liberalism in 62 00:03:57,440 --> 00:04:00,800 Speaker 1: the country as a whole. New deliberalism kind of as 63 00:04:00,840 --> 00:04:03,720 Speaker 1: it played out across the United States, had a strongly 64 00:04:03,760 --> 00:04:07,440 Speaker 1: suburban quality to it. There were the Federal Housing Administration, 65 00:04:08,120 --> 00:04:11,680 Speaker 1: UM subsidies and loans for mortgages, and there was a 66 00:04:11,680 --> 00:04:14,440 Speaker 1: way in which on a national stage and some ways 67 00:04:14,480 --> 00:04:17,880 Speaker 1: was tilted towards the suburbs. New York, however, was always 68 00:04:18,000 --> 00:04:21,480 Speaker 1: very different than this, obviously, and the city had one 69 00:04:21,520 --> 00:04:24,960 Speaker 1: of the strongest social safety debts that we see in 70 00:04:25,000 --> 00:04:27,400 Speaker 1: the United States in the post war years. The local 71 00:04:27,440 --> 00:04:31,400 Speaker 1: government some ways kind of takes elements that are present 72 00:04:31,600 --> 00:04:34,880 Speaker 1: in the national scene and pushes them further. There are 73 00:04:35,680 --> 00:04:39,120 Speaker 1: more than twenty at the peak public hospitals, a network 74 00:04:39,200 --> 00:04:42,200 Speaker 1: of public health clinics that run through the whole city. 75 00:04:42,440 --> 00:04:46,720 Speaker 1: Public housing is very powerful in New York, federal public housing. 76 00:04:47,240 --> 00:04:51,159 Speaker 1: The public transit system, of course, is unparalleled in the 77 00:04:51,200 --> 00:04:54,520 Speaker 1: country and also has very low fares. Throughout this period, 78 00:04:55,200 --> 00:04:58,680 Speaker 1: the school system was in contrast to the New York 79 00:04:58,680 --> 00:05:01,839 Speaker 1: City public schools today, which are very heavily reliant on 80 00:05:01,920 --> 00:05:04,560 Speaker 1: a lot of private fundraising for many of the perks 81 00:05:04,600 --> 00:05:07,960 Speaker 1: like art and music, even reading. In Richmond, in some places, 82 00:05:08,279 --> 00:05:10,800 Speaker 1: those things were really all paid for via the Board 83 00:05:10,839 --> 00:05:14,400 Speaker 1: of Education. The city's labor unions were quite strong. This 84 00:05:14,480 --> 00:05:16,919 Speaker 1: is the point in time when the public sector is 85 00:05:17,040 --> 00:05:20,360 Speaker 1: unionized for the first time. So in all of these 86 00:05:20,360 --> 00:05:24,800 Speaker 1: different ways, the city's public kind of has a ambitiousness 87 00:05:24,960 --> 00:05:28,840 Speaker 1: in terms of it's public spending and the kinds of 88 00:05:28,960 --> 00:05:32,760 Speaker 1: services that city residents come to expect simply by dint 89 00:05:32,800 --> 00:05:36,159 Speaker 1: of being New Yorkers. They're also, of course, higher education 90 00:05:36,279 --> 00:05:40,080 Speaker 1: expands considerably in the city over this point, and QUNE 91 00:05:40,440 --> 00:05:44,960 Speaker 1: is free. It's a tuition free university. So who were 92 00:05:45,080 --> 00:05:48,600 Speaker 1: the biggest opponents of this? I'm sure even during the heyday, 93 00:05:48,600 --> 00:05:50,480 Speaker 1: they're always going to be people who think a city 94 00:05:50,520 --> 00:05:53,800 Speaker 1: should be run differently. Is it people upon whom the 95 00:05:53,880 --> 00:05:56,760 Speaker 1: tax burden falls to fund this or is it more 96 00:05:56,920 --> 00:06:00,680 Speaker 1: of an ideological nature of people who think actors decide 97 00:06:00,720 --> 00:06:04,080 Speaker 1: this is not what the government should be doing. Well, 98 00:06:04,120 --> 00:06:06,880 Speaker 1: it's a combination, and I think that the So just 99 00:06:07,160 --> 00:06:09,760 Speaker 1: one more word about where this comes from. The New 100 00:06:09,839 --> 00:06:13,200 Speaker 1: York City is kind of drawing on a long tradition 101 00:06:13,279 --> 00:06:16,039 Speaker 1: really going back to the nineteenth and early twentieth century, 102 00:06:16,720 --> 00:06:20,039 Speaker 1: all of a kind of liberal to left politics. You know, 103 00:06:20,040 --> 00:06:24,839 Speaker 1: they find triangle shirtwaist, fire, disaster, the workplace safety and 104 00:06:25,080 --> 00:06:28,320 Speaker 1: fire codes that follow it. Many of the public hospitals 105 00:06:28,400 --> 00:06:31,120 Speaker 1: predate the New Deal, but this public spending in the 106 00:06:31,160 --> 00:06:34,520 Speaker 1: city really grows in and after the New Deal, and 107 00:06:34,560 --> 00:06:36,440 Speaker 1: it does so at a time when the city is 108 00:06:36,480 --> 00:06:40,400 Speaker 1: getting large transfers from the federal government. Um so the 109 00:06:40,760 --> 00:06:44,359 Speaker 1: city had been. Property taxes are always the major, the 110 00:06:44,440 --> 00:06:47,560 Speaker 1: largest revenue source, but during and after the New Deal, 111 00:06:47,600 --> 00:06:50,839 Speaker 1: these are supplemented by transfers from the federal and to 112 00:06:50,880 --> 00:06:55,520 Speaker 1: a lesser extent, the state government. So this expansion generates 113 00:06:55,520 --> 00:06:58,960 Speaker 1: a lot of support in the city overall. However, there 114 00:06:59,000 --> 00:07:01,600 Speaker 1: are people in the city who are always highly concerned 115 00:07:01,640 --> 00:07:05,760 Speaker 1: about it, especially among and and this this concern grows 116 00:07:06,000 --> 00:07:09,240 Speaker 1: in the late fifties and early nineteen sixties, and it 117 00:07:09,360 --> 00:07:12,800 Speaker 1: comes I think initially it's less actually really an ideological 118 00:07:12,880 --> 00:07:16,119 Speaker 1: thing purely, although it's hard to prize apart, but it 119 00:07:16,160 --> 00:07:19,320 Speaker 1: is the first kind of sense of alarm comes from 120 00:07:19,320 --> 00:07:23,000 Speaker 1: people in the business community who are concerned about having 121 00:07:23,000 --> 00:07:26,600 Speaker 1: to bear a higher proportion of this tax burden going forward, 122 00:07:26,960 --> 00:07:29,320 Speaker 1: and they become especially anxious about this in the early 123 00:07:29,360 --> 00:07:33,360 Speaker 1: nineteen sixties, when the city first is first starting to 124 00:07:33,400 --> 00:07:36,520 Speaker 1: experience some of the problems that will manifest more dramatically 125 00:07:36,560 --> 00:07:40,360 Speaker 1: about ten years later, and the new mayor, John Lindsay 126 00:07:40,400 --> 00:07:43,520 Speaker 1: pushes for a stock transfer tax, or a small tax 127 00:07:43,600 --> 00:07:47,560 Speaker 1: every time a stock changes hands, as well as a 128 00:07:47,600 --> 00:07:51,680 Speaker 1: personal income tax and a small commuter tax. These taxes 129 00:07:51,920 --> 00:07:54,760 Speaker 1: set off a wave of alarm in the business community. 130 00:07:55,160 --> 00:07:58,040 Speaker 1: The New York Stock Exchange briefly threatens to move up 131 00:07:58,080 --> 00:08:01,200 Speaker 1: to Stamford or maybe the California. Uh So, there's a 132 00:08:01,280 --> 00:08:04,720 Speaker 1: kind of a deep sense of alarm. It's both coming 133 00:08:04,760 --> 00:08:08,360 Speaker 1: from a kind of real economic concerns about being asked 134 00:08:08,360 --> 00:08:11,400 Speaker 1: to bear the burden for these these services, but also 135 00:08:12,080 --> 00:08:13,920 Speaker 1: no kind of more deeply maybe a sense of who 136 00:08:13,960 --> 00:08:16,920 Speaker 1: is the city government responding to, whose voices seem to 137 00:08:16,960 --> 00:08:20,280 Speaker 1: matter the most, who counts for the city government. And 138 00:08:20,320 --> 00:08:23,840 Speaker 1: I think that's part of what the city's economic elites 139 00:08:23,920 --> 00:08:28,640 Speaker 1: become concerned about in the early nineteen sixties. So on 140 00:08:28,720 --> 00:08:31,520 Speaker 1: that note, before the nineteen sixties, we have New York 141 00:08:31,640 --> 00:08:35,199 Speaker 1: kind of ticking along. It's providing all these public services, 142 00:08:35,320 --> 00:08:38,560 Speaker 1: it's borrowing from the market in order to fund those, 143 00:08:38,679 --> 00:08:42,440 Speaker 1: it's also getting um some income from the federal government. 144 00:08:43,360 --> 00:08:47,280 Speaker 1: And then eventually by the nineteen seventies, it's stumbled into 145 00:08:47,280 --> 00:08:51,120 Speaker 1: a full blown fiscal crisis. Walk us through what the 146 00:08:51,160 --> 00:08:54,079 Speaker 1: tipping point was for that, because I'm always curious when 147 00:08:54,080 --> 00:08:57,160 Speaker 1: it comes to debt crises. You know, rarely does a 148 00:08:57,240 --> 00:09:01,240 Speaker 1: budget kind of explode from nothing to billions or trillions 149 00:09:01,240 --> 00:09:03,840 Speaker 1: of dollars overnight. It's sort of a long process, but 150 00:09:03,920 --> 00:09:06,920 Speaker 1: then inevitably something kind of tips it over the edge. 151 00:09:07,120 --> 00:09:10,640 Speaker 1: So what was it for New York? Well, for New York, 152 00:09:10,840 --> 00:09:13,000 Speaker 1: what happened? And this I think also goes back to 153 00:09:13,160 --> 00:09:15,679 Speaker 1: the discussion of the pretext at the beginning. I mean, 154 00:09:15,800 --> 00:09:18,079 Speaker 1: New York in the late nineteen sixties and early nineteen 155 00:09:18,120 --> 00:09:23,000 Speaker 1: seventies was experiencing a genuine revenue crunch. And what happens. 156 00:09:23,360 --> 00:09:26,360 Speaker 1: There are several different factors that kind of come together 157 00:09:26,880 --> 00:09:30,720 Speaker 1: for the city. The first is the national recession that 158 00:09:30,800 --> 00:09:33,560 Speaker 1: begins in the late nineteen sixties, but which is much 159 00:09:33,640 --> 00:09:36,960 Speaker 1: deeper in New York, partly because all throughout the nineteen 160 00:09:36,960 --> 00:09:40,520 Speaker 1: fifties and through the early nineteen sixties. It's easy to 161 00:09:40,520 --> 00:09:44,560 Speaker 1: forget this today, but manufacturing was the most important part 162 00:09:44,640 --> 00:09:47,160 Speaker 1: of the city's economy in the nineteen forties and early 163 00:09:47,200 --> 00:09:50,840 Speaker 1: nineteen fifties. Those companies are leaving the city and going 164 00:09:50,960 --> 00:09:53,920 Speaker 1: both the surrounding suburbs and also to the south and 165 00:09:54,480 --> 00:09:57,840 Speaker 1: in the case of the government industry, overseas. And these 166 00:09:57,920 --> 00:10:00,280 Speaker 1: jobs which had really been that the motor of the 167 00:10:00,280 --> 00:10:03,600 Speaker 1: city are no no longer exist. The service sector jobs 168 00:10:03,760 --> 00:10:06,520 Speaker 1: don't pay as much and don't generate as much revenue 169 00:10:06,559 --> 00:10:09,480 Speaker 1: for the city, and that is sort of the first 170 00:10:09,840 --> 00:10:12,360 Speaker 1: downturn of the late sixties, which kind of takes there's 171 00:10:12,360 --> 00:10:16,480 Speaker 1: a stock market decline and Wall Street is in trouble 172 00:10:16,520 --> 00:10:19,480 Speaker 1: as well. This kind of deepens the revenue problems of 173 00:10:19,480 --> 00:10:21,480 Speaker 1: the city. So, first of all, there is actually a 174 00:10:21,520 --> 00:10:24,400 Speaker 1: real revenue issue that the city is facing. The second 175 00:10:24,760 --> 00:10:28,120 Speaker 1: important issue is the the end of the War on 176 00:10:28,160 --> 00:10:30,880 Speaker 1: Poverty or like during the mid nineteen sixties, the city's 177 00:10:30,880 --> 00:10:35,840 Speaker 1: spending had expanded still further, funding daycares, drug treatment clinics, 178 00:10:36,200 --> 00:10:40,720 Speaker 1: different kinds of welfare programs. Medicaid and aid for families 179 00:10:40,720 --> 00:10:43,640 Speaker 1: with dependent children are both structured in such a way 180 00:10:43,640 --> 00:10:46,280 Speaker 1: that the city has to bear twenty five percent of 181 00:10:46,320 --> 00:10:49,079 Speaker 1: the cost of those programs, which is much much higher 182 00:10:49,120 --> 00:10:51,600 Speaker 1: than really anywhere else in the country. The way you're 183 00:10:51,720 --> 00:10:54,600 Speaker 1: estate splits that up, so the city actually has these 184 00:10:54,600 --> 00:10:57,319 Speaker 1: new costs that are associated with the War on Poverty. 185 00:10:57,360 --> 00:11:00,400 Speaker 1: After Nixon's election, although those you don't to see this 186 00:11:00,679 --> 00:11:03,640 Speaker 1: really sharp declines in spending. It stopped growing as it 187 00:11:03,679 --> 00:11:06,520 Speaker 1: had been earlier, and any expectations that there would be 188 00:11:06,520 --> 00:11:10,200 Speaker 1: a kind of continued expanding commitment from the federal government 189 00:11:10,480 --> 00:11:14,720 Speaker 1: to address issues of poverty and racial inequality, that expectation 190 00:11:14,840 --> 00:11:16,520 Speaker 1: is gone. So I think that's the second issue, is 191 00:11:16,559 --> 00:11:18,400 Speaker 1: that previously there might have been some sense in the 192 00:11:18,440 --> 00:11:21,480 Speaker 1: city you can expand spending, and we're at a moment 193 00:11:21,520 --> 00:11:23,960 Speaker 1: where the federal government is actually assuming more of the 194 00:11:24,000 --> 00:11:26,760 Speaker 1: cost of these things that might continue in the future. 195 00:11:27,200 --> 00:11:29,959 Speaker 1: That goes away, and the city turns to a kind 196 00:11:29,960 --> 00:11:33,679 Speaker 1: of extend every year. The late sixties in early seventies 197 00:11:34,000 --> 00:11:36,800 Speaker 1: is a kind of dramatic budget battle with Mayor Lindsay 198 00:11:36,880 --> 00:11:41,000 Speaker 1: going up um to Albany. New York is always dependent 199 00:11:41,080 --> 00:11:44,640 Speaker 1: on Albany's permission to pass new taxes. They're asking for 200 00:11:44,720 --> 00:11:47,960 Speaker 1: new sales taxes, they're asking for different income taxes. It 201 00:11:48,080 --> 00:11:51,560 Speaker 1: is obvious that the problem is developing. Albany is itself 202 00:11:51,600 --> 00:11:56,520 Speaker 1: becoming increasingly anxious about New York State's competitiveness as the 203 00:11:56,559 --> 00:12:00,080 Speaker 1: industrialization progresses, they don't want to extend the same of 204 00:12:00,120 --> 00:12:02,679 Speaker 1: give New York as much taxing power as it asks for. 205 00:12:03,280 --> 00:12:06,080 Speaker 1: As a result, all in all, the city starts to 206 00:12:06,160 --> 00:12:09,160 Speaker 1: turn to short term debt in the kind of really 207 00:12:09,240 --> 00:12:12,080 Speaker 1: dramatic way in the early nine seventies. And that is 208 00:12:12,120 --> 00:12:16,080 Speaker 1: really what opens up the possibility of a true fiscal crisis. 209 00:12:16,320 --> 00:12:18,400 Speaker 1: So I think there's two things together. One is the 210 00:12:18,400 --> 00:12:22,040 Speaker 1: the underlying problems the city was having generating enough revenue, 211 00:12:22,440 --> 00:12:25,640 Speaker 1: but that winds up turning into a debt crisis because 212 00:12:26,160 --> 00:12:30,560 Speaker 1: the city never really addresses the underlying factors leading to 213 00:12:30,600 --> 00:12:34,800 Speaker 1: the crisis. Instead, the mayor decides to borrow, and to 214 00:12:34,840 --> 00:12:38,240 Speaker 1: borrow this short term debt that's do very quickly, generating 215 00:12:38,320 --> 00:12:41,720 Speaker 1: high interest rates, and is you know, kind of a 216 00:12:41,760 --> 00:12:45,000 Speaker 1: constant pressure to pay it back. They're borrowing against the 217 00:12:45,200 --> 00:12:48,360 Speaker 1: kind of rerouting funds from the capital budget to use 218 00:12:48,480 --> 00:12:53,040 Speaker 1: for annual operating expenses um. And this is really I 219 00:12:53,080 --> 00:12:55,320 Speaker 1: think you know that that's that's that's that's what sets 220 00:12:55,400 --> 00:12:58,320 Speaker 1: up the possibility of a true crisis, is that they 221 00:12:58,320 --> 00:13:00,959 Speaker 1: are becoming more and more dependent on the banks at 222 00:13:00,960 --> 00:13:02,960 Speaker 1: the very moment when it should be noted the banks 223 00:13:03,000 --> 00:13:08,400 Speaker 1: are becoming less reliant on municipal bond advantages. That is, 224 00:13:08,440 --> 00:13:10,840 Speaker 1: at the moment of kind of the relaxation of a 225 00:13:10,840 --> 00:13:14,280 Speaker 1: lot of the regulations for the financial industry. Banks like 226 00:13:14,400 --> 00:13:17,880 Speaker 1: First National City Bank now City Bank are expanding their 227 00:13:17,920 --> 00:13:22,680 Speaker 1: international portfolios. Previously municipal bonds, so they have a strong 228 00:13:22,800 --> 00:13:26,240 Speaker 1: tax advantage, but that is becoming less important as more 229 00:13:26,280 --> 00:13:30,640 Speaker 1: income is generated overseas, and maybe maybe ideologically to the 230 00:13:30,679 --> 00:13:34,080 Speaker 1: idea of being committed to a certain city, a certain place, 231 00:13:34,559 --> 00:13:37,079 Speaker 1: it holds less cachet. I mean, I think earlier in 232 00:13:37,120 --> 00:13:39,599 Speaker 1: the post war period, a lot of these bankers know 233 00:13:39,800 --> 00:13:42,120 Speaker 1: it felt good to finance a city like New York. 234 00:13:42,160 --> 00:13:44,320 Speaker 1: There was a kind of prestige to it, a sense 235 00:13:44,360 --> 00:13:48,360 Speaker 1: that you were involved in helping support a major metropolis, 236 00:13:48,440 --> 00:13:51,600 Speaker 1: and that too, I think starts to lessen that sense 237 00:13:51,640 --> 00:13:56,160 Speaker 1: of commitment. So before we get to how this episode 238 00:13:56,559 --> 00:14:00,840 Speaker 1: was used to really overhaul the city's provision and how 239 00:14:00,880 --> 00:14:04,280 Speaker 1: do they solve the crisis? How do they solve the crisis? Well, 240 00:14:04,280 --> 00:14:06,480 Speaker 1: I mean what happened so so, just to give a 241 00:14:06,520 --> 00:14:08,319 Speaker 1: little bit of a sense of how how things played 242 00:14:08,360 --> 00:14:11,400 Speaker 1: out in the spring of nineteen seventy five, I mean 243 00:14:11,600 --> 00:14:14,959 Speaker 1: all over late nineteen seventy four early nineteen seventy five, 244 00:14:15,360 --> 00:14:19,400 Speaker 1: things became increasingly tense with the banks. The bankers asked 245 00:14:19,440 --> 00:14:23,360 Speaker 1: the city to give evidence about taxes that it just 246 00:14:23,400 --> 00:14:29,040 Speaker 1: can't provide um and in eventually there are the banks 247 00:14:29,240 --> 00:14:33,240 Speaker 1: refused to underwrite the city's bond offerings any longer. And 248 00:14:33,400 --> 00:14:35,520 Speaker 1: this is what kind of provokes the crisis. And for 249 00:14:35,560 --> 00:14:38,360 Speaker 1: the rest of nineteen seventy five, New York is teetering 250 00:14:38,360 --> 00:14:41,080 Speaker 1: on the edge of bankruptcy, and many people believe the 251 00:14:41,120 --> 00:14:44,040 Speaker 1: city is most likely to simply default at some point 252 00:14:44,120 --> 00:14:47,880 Speaker 1: over the year the crisis is solved. There are a 253 00:14:47,920 --> 00:14:50,760 Speaker 1: couple of things that happened. The first is that state 254 00:14:50,840 --> 00:14:54,640 Speaker 1: agencies that are staffed mostly by people picked by the governor, 255 00:14:55,000 --> 00:14:59,040 Speaker 1: including a healthy representative of private executives, are created to 256 00:14:59,120 --> 00:15:02,760 Speaker 1: oversee the city budget and both to refinance its debt 257 00:15:02,800 --> 00:15:05,240 Speaker 1: and then to give to kind of give money to 258 00:15:05,280 --> 00:15:08,280 Speaker 1: the city so that an attempt to restrain its spending 259 00:15:08,440 --> 00:15:13,880 Speaker 1: so that happens, and then ultimately, although President Ford is 260 00:15:13,960 --> 00:15:17,200 Speaker 1: known for saying, you know the famous daily news headline 261 00:15:17,280 --> 00:15:19,240 Speaker 1: drop dead, which is what most people know about the 262 00:15:19,240 --> 00:15:23,320 Speaker 1: fistical crisis, he actually after saying he was never going 263 00:15:23,360 --> 00:15:25,880 Speaker 1: to permit any bailout for the City of New York 264 00:15:26,360 --> 00:15:28,760 Speaker 1: um and he was going to veto any proposal to 265 00:15:28,920 --> 00:15:32,040 Speaker 1: provide federal aid. There is a program of short term 266 00:15:32,080 --> 00:15:34,200 Speaker 1: federal aid for the city, which is very important in 267 00:15:34,280 --> 00:15:37,200 Speaker 1: terms of getting it out of the fistical crisis. And finally, 268 00:15:37,240 --> 00:15:40,960 Speaker 1: the city's labor unions actually ultimately purchased large quantities of 269 00:15:41,000 --> 00:15:44,280 Speaker 1: its debt, which also helps it kind of ride out 270 00:15:44,360 --> 00:15:47,240 Speaker 1: the crisis. But it takes a while before even it's 271 00:15:47,280 --> 00:15:50,520 Speaker 1: clear the city isn't going to actually go bankrupt. Okay, 272 00:15:50,560 --> 00:15:53,680 Speaker 1: So what are the tough political decisions that go into 273 00:15:53,720 --> 00:15:56,360 Speaker 1: the solution, because I think it's fairly clear at this 274 00:15:56,400 --> 00:15:59,360 Speaker 1: point that, for instance, New York doesn't have as many 275 00:15:59,440 --> 00:16:04,400 Speaker 1: public health care clinics or free universities, so presumably something 276 00:16:04,440 --> 00:16:07,800 Speaker 1: happened there. Right. The federal government kind of insists upon 277 00:16:08,000 --> 00:16:10,560 Speaker 1: a set of cuts that the city has to make 278 00:16:10,960 --> 00:16:14,440 Speaker 1: in order to get any aid, and the federal everment 279 00:16:14,480 --> 00:16:17,640 Speaker 1: never actually mandates any particular cuts. It is always in 280 00:16:17,760 --> 00:16:21,800 Speaker 1: terms of moving towards a balanced budget. But the city 281 00:16:22,120 --> 00:16:27,800 Speaker 1: uh winds up closing hospitals, closing clinics, defunding daycares, closing 282 00:16:27,880 --> 00:16:32,080 Speaker 1: drug treatment programs, tuition at the City University, raising the 283 00:16:32,120 --> 00:16:34,520 Speaker 1: transit fair or beginning the long series of transit fair 284 00:16:34,600 --> 00:16:37,560 Speaker 1: hikes that we still see today. So and these are 285 00:16:37,600 --> 00:16:40,280 Speaker 1: some of the things. You know, it winds up changing 286 00:16:40,360 --> 00:16:44,440 Speaker 1: the social contract in the city to significantly contract many 287 00:16:44,480 --> 00:16:47,400 Speaker 1: of the services that had been present earlier. You know, 288 00:16:47,440 --> 00:16:50,840 Speaker 1: I think that's what it. It's solution to the crisis. 289 00:16:51,000 --> 00:16:56,080 Speaker 1: Is it away? So here's my question, what would that 290 00:16:56,160 --> 00:16:59,520 Speaker 1: social contract have looked like if New York had just 291 00:16:59,640 --> 00:17:03,800 Speaker 1: to clare bankruptcy and sort of gone its own way. Well, 292 00:17:03,920 --> 00:17:05,879 Speaker 1: it's impossible what would have happened if the city had 293 00:17:05,880 --> 00:17:08,280 Speaker 1: gone into bankruptcy court. I'm not sure that it would 294 00:17:08,280 --> 00:17:11,080 Speaker 1: have been any better for the city necessarily to go 295 00:17:11,119 --> 00:17:14,840 Speaker 1: into bankruptcy court. There was a lot of anxiety, deep 296 00:17:14,880 --> 00:17:18,440 Speaker 1: anxiety about what bankruptcy would mean for New York and 297 00:17:18,560 --> 00:17:22,880 Speaker 1: turning the city's affairs over to a bankruptcy judge. It's 298 00:17:22,920 --> 00:17:25,080 Speaker 1: quite unclear what that would have meant or would that 299 00:17:25,160 --> 00:17:28,159 Speaker 1: actually have saved the services? I don't think so. I mean, 300 00:17:28,200 --> 00:17:31,000 Speaker 1: I think that the alternative for the city, if there 301 00:17:31,040 --> 00:17:32,960 Speaker 1: was an alternative for the city it would have been 302 00:17:33,000 --> 00:17:36,119 Speaker 1: a political one or finding some different way to fund this. 303 00:17:36,200 --> 00:17:38,120 Speaker 1: I mean, if there was any way to maintain the services, 304 00:17:38,160 --> 00:17:41,600 Speaker 1: you would have to do it through politics or finding 305 00:17:41,640 --> 00:17:44,320 Speaker 1: some way to fund them that was more stable, and 306 00:17:44,760 --> 00:17:48,119 Speaker 1: you know, I had the potential to actually survive and 307 00:17:48,119 --> 00:17:50,639 Speaker 1: that you know, for example, changing the Medicare of funding 308 00:17:50,680 --> 00:17:54,119 Speaker 1: formula would have really changed the city's balance sheet. You know, 309 00:17:54,160 --> 00:17:57,240 Speaker 1: the federal opposition hostility to New York was very great. 310 00:17:57,680 --> 00:18:01,480 Speaker 1: Forward at that point is surrounded by but like um 311 00:18:01,560 --> 00:18:04,480 Speaker 1: Donald Rumsfeld, who was his chief of staff through these 312 00:18:04,600 --> 00:18:08,560 Speaker 1: this period, Alan Greenspan, who was the chair of the 313 00:18:08,560 --> 00:18:12,800 Speaker 1: Council Economic Advisors, and William Simon, his Treasury secretary, who 314 00:18:12,840 --> 00:18:15,240 Speaker 1: actually came out of the world of municipal bond trading, 315 00:18:15,720 --> 00:18:18,239 Speaker 1: but was fiercely hostile to New York and had no 316 00:18:18,359 --> 00:18:22,000 Speaker 1: interest in extending the city any aid. They really believe 317 00:18:22,080 --> 00:18:24,479 Speaker 1: that New York could go bankrupt and it really wouldn't 318 00:18:24,520 --> 00:18:27,040 Speaker 1: have much effect on the national bond market, which seems 319 00:18:27,080 --> 00:18:30,000 Speaker 1: crazy to me or the national economy in some ways. 320 00:18:30,040 --> 00:18:31,840 Speaker 1: I mean, these was like a there were other people 321 00:18:31,840 --> 00:18:34,880 Speaker 1: in the Ford administration who had a more tempered approach 322 00:18:34,960 --> 00:18:37,240 Speaker 1: or who were concerned about what it would mean for 323 00:18:37,280 --> 00:18:40,280 Speaker 1: the national economy, for the perception of the United States 324 00:18:40,640 --> 00:18:43,840 Speaker 1: during the Cold War, for other cities and states, need 325 00:18:43,880 --> 00:18:46,280 Speaker 1: to borrow that all of these would be negatively affected 326 00:18:46,320 --> 00:18:49,080 Speaker 1: if New York went bankrupt, let alone new Yorkers themselves, 327 00:18:49,440 --> 00:18:53,159 Speaker 1: the people clustered around for However, the conservative faction in 328 00:18:53,200 --> 00:18:56,240 Speaker 1: the Ford administration did not have these concerns. They had 329 00:18:56,240 --> 00:18:59,200 Speaker 1: a kind of sense of rinksmanship or wanting to push 330 00:18:59,240 --> 00:19:02,040 Speaker 1: things as far as they could and to to force 331 00:19:02,119 --> 00:19:04,520 Speaker 1: the city to kind of make a set of to 332 00:19:04,640 --> 00:19:09,480 Speaker 1: to to really dramatically repudiate it's earlier politics, and if 333 00:19:09,480 --> 00:19:10,840 Speaker 1: it didn't, if it wasn't willing to do so, they 334 00:19:10,840 --> 00:19:13,040 Speaker 1: were willing to let it go broke. In your view, 335 00:19:13,160 --> 00:19:17,399 Speaker 1: has the position of New York City within national politics 336 00:19:17,960 --> 00:19:20,480 Speaker 1: changed much or is it similar? I feel like there's 337 00:19:20,480 --> 00:19:22,800 Speaker 1: always this sort of hostility towards New York if it's 338 00:19:22,800 --> 00:19:26,919 Speaker 1: still but maybe dislike of Wall Street, elite bankers, the 339 00:19:27,000 --> 00:19:30,480 Speaker 1: perceived left word tilt of the city. You don't get 340 00:19:30,480 --> 00:19:33,359 Speaker 1: the impression that people outside of New York really like 341 00:19:33,480 --> 00:19:35,640 Speaker 1: New York that much. And I'm curious if, in your view, 342 00:19:35,760 --> 00:19:38,880 Speaker 1: is really even that different today. That's an interesting question. 343 00:19:38,960 --> 00:19:40,880 Speaker 1: I know, I have to say I think it probably 344 00:19:41,160 --> 00:19:44,920 Speaker 1: is actually somewhat different today that I think that New 345 00:19:45,000 --> 00:19:49,160 Speaker 1: York has kind of post nine eleven, even the kind 346 00:19:49,160 --> 00:19:55,520 Speaker 1: of media images of New York today, Seinfeld, friends, I 347 00:19:56,000 --> 00:19:58,000 Speaker 1: just I think there's a way in which New York, 348 00:19:58,480 --> 00:20:01,280 Speaker 1: for better or worse, the the rough edges are off 349 00:20:01,320 --> 00:20:04,920 Speaker 1: of it in the national consciousness. And I think at 350 00:20:04,960 --> 00:20:08,600 Speaker 1: this point, you know, new York is the during the 351 00:20:08,680 --> 00:20:12,159 Speaker 1: nineteen seventies, It's right after the height of the anti 352 00:20:12,320 --> 00:20:15,200 Speaker 1: movement against the war in Vietnam. It is a time 353 00:20:15,320 --> 00:20:20,359 Speaker 1: of profound cultural conflict in the country. New York is 354 00:20:20,400 --> 00:20:25,480 Speaker 1: seen as a center of black radicalism, of Puerto Rican radicalism, 355 00:20:25,480 --> 00:20:28,840 Speaker 1: with the Black Panthers and the Young Lords, respectively. It 356 00:20:29,000 --> 00:20:32,440 Speaker 1: is seen as kind of the epicenter of the gay 357 00:20:32,560 --> 00:20:35,960 Speaker 1: rights movement. It is seen as a kind of hotbed 358 00:20:36,000 --> 00:20:38,800 Speaker 1: of feminism. In all these different ways, I think New 359 00:20:38,880 --> 00:20:40,840 Speaker 1: York is seen as a kind of, I don't know, 360 00:20:40,880 --> 00:20:45,679 Speaker 1: a center of licentiousness and of permissiveness. And in some ways, 361 00:20:46,040 --> 00:20:48,560 Speaker 1: the fiscal crisis is just like another manifestation of this. 362 00:20:48,720 --> 00:20:52,600 Speaker 1: It's like a lack of restraint in city government as well, 363 00:20:52,920 --> 00:20:56,119 Speaker 1: there was a lot of constituent mail at A lot 364 00:20:56,160 --> 00:20:59,360 Speaker 1: of you wrote letters to their congress people about New York, 365 00:20:59,400 --> 00:21:01,239 Speaker 1: and a there a lot. I'm not sure that there 366 00:21:01,320 --> 00:21:04,200 Speaker 1: was a national sense that New York, you know, deserved 367 00:21:04,240 --> 00:21:09,000 Speaker 1: its problems and was I'm not sure that there was 368 00:21:09,000 --> 00:21:12,880 Speaker 1: actually that much hostility among kind of the grassroots constituents 369 00:21:12,920 --> 00:21:15,240 Speaker 1: on the national level around the country of people who 370 00:21:15,240 --> 00:21:17,560 Speaker 1: really wanted to see New York suffer or something. But 371 00:21:17,640 --> 00:21:20,200 Speaker 1: I think there was enough of it that politicians could 372 00:21:21,119 --> 00:21:23,360 Speaker 1: play on it, harp on it. Yeah, and a whole 373 00:21:23,440 --> 00:21:26,400 Speaker 1: New York up in this way. So aside from these 374 00:21:26,400 --> 00:21:30,360 Speaker 1: sort of cultural differences, Uh, there's a big difference between 375 00:21:30,840 --> 00:21:34,760 Speaker 1: New York and the US as a whole, and we 376 00:21:34,840 --> 00:21:38,000 Speaker 1: kind of touched upon it in the intro, which is 377 00:21:38,080 --> 00:21:41,560 Speaker 1: that New York ultimately has to come up with its 378 00:21:41,600 --> 00:21:45,000 Speaker 1: own budget and the US the federal government also has 379 00:21:45,040 --> 00:21:47,280 Speaker 1: to come up with its budget, but it has the 380 00:21:47,320 --> 00:21:52,320 Speaker 1: ability to issue sovereign debt and to essentially print its 381 00:21:52,320 --> 00:21:55,280 Speaker 1: own money, which gives it some leeway when it comes 382 00:21:55,359 --> 00:21:59,199 Speaker 1: to spending. So I guess my question is, you know, 383 00:21:59,560 --> 00:22:02,520 Speaker 1: we've talked talked about New York. Clearly some tough choices 384 00:22:02,920 --> 00:22:05,720 Speaker 1: were made when it comes to that particular deficit. But 385 00:22:05,760 --> 00:22:08,560 Speaker 1: when we see the federal deficit begin to go up, 386 00:22:08,800 --> 00:22:11,480 Speaker 1: do we need to worry that we have to start 387 00:22:11,520 --> 00:22:15,280 Speaker 1: making tough choices? Yet Again, I guess I think that 388 00:22:15,840 --> 00:22:20,680 Speaker 1: the you know, the the question, both in New York 389 00:22:20,920 --> 00:22:26,680 Speaker 1: in the seventies and also nationally today, it really is 390 00:22:26,920 --> 00:22:30,600 Speaker 1: the kind of society that we want to have and 391 00:22:30,960 --> 00:22:35,600 Speaker 1: what the resources are to create that. But I think 392 00:22:35,880 --> 00:22:39,199 Speaker 1: that the expansion of the deficit should not lead to 393 00:22:39,600 --> 00:22:43,520 Speaker 1: a call to cut social services. There's plenty of money 394 00:22:43,560 --> 00:22:47,159 Speaker 1: in this country to fund those social services, and the 395 00:22:47,240 --> 00:22:50,879 Speaker 1: question is how and where and whether people want to 396 00:22:50,960 --> 00:22:53,960 Speaker 1: have them? Do we want? And in some way that 397 00:22:54,119 --> 00:22:56,159 Speaker 1: the same is true was true in New York in 398 00:22:56,160 --> 00:22:59,480 Speaker 1: the seventies, although it you know, for cities it is different, 399 00:22:59,560 --> 00:23:01,720 Speaker 1: not just in terms of being able to print money, 400 00:23:01,760 --> 00:23:05,159 Speaker 1: but the taxing power of a city is the ability 401 00:23:05,160 --> 00:23:08,360 Speaker 1: to tax incomes in particular, is just much less than 402 00:23:08,400 --> 00:23:10,800 Speaker 1: that of a state or a federal government. And I 403 00:23:10,800 --> 00:23:13,359 Speaker 1: think one of the underlying questions that the fiscal crisis 404 00:23:13,440 --> 00:23:17,080 Speaker 1: raised is should you fund these kinds of redistributed social 405 00:23:17,080 --> 00:23:19,879 Speaker 1: services at the local level? Is that always going to 406 00:23:19,920 --> 00:23:22,240 Speaker 1: be kind of an unstable basis for them because of 407 00:23:22,920 --> 00:23:25,760 Speaker 1: the possibility of capital flight in one way or another. 408 00:23:26,080 --> 00:23:29,719 Speaker 1: Should such programs really the bulk of the fiscal burden 409 00:23:29,880 --> 00:23:32,919 Speaker 1: fall at kind of levels of government where people have 410 00:23:33,040 --> 00:23:35,919 Speaker 1: less ability to exit. So I think that's part of 411 00:23:35,920 --> 00:23:39,840 Speaker 1: the question that is raised, But more generally, I think it's, 412 00:23:40,040 --> 00:23:44,280 Speaker 1: you know, the issue is really what type of society 413 00:23:44,320 --> 00:23:47,240 Speaker 1: do we want to live in, what kind of inequalities 414 00:23:47,280 --> 00:23:49,280 Speaker 1: do we want to tolerate, what are we willing to 415 00:23:49,320 --> 00:23:52,520 Speaker 1: do about them? And how can we find and then 416 00:23:52,880 --> 00:23:55,240 Speaker 1: you know, and then the question how to pay for them? 417 00:23:55,280 --> 00:23:59,280 Speaker 1: Out of that, I love that angle of the degree 418 00:23:59,359 --> 00:24:03,480 Speaker 1: to ward. Cities actually have strong taxing power. I think 419 00:24:03,560 --> 00:24:07,640 Speaker 1: you mentioned earlier the threat even seems kind of hard 420 00:24:07,680 --> 00:24:09,280 Speaker 1: to believe that the n y s C. Who's going 421 00:24:09,320 --> 00:24:13,240 Speaker 1: to move to California at one point in the current era, 422 00:24:13,359 --> 00:24:16,000 Speaker 1: we just think of this incredible rise of cities. It's 423 00:24:16,040 --> 00:24:19,120 Speaker 1: one of the most dominant forces in the economy, these 424 00:24:19,160 --> 00:24:22,080 Speaker 1: mega cities that just attract more and more and more 425 00:24:22,160 --> 00:24:27,719 Speaker 1: attention and activity away from the countryside, these huge clusters 426 00:24:27,760 --> 00:24:31,000 Speaker 1: of activity. Do you think that force is stronger today 427 00:24:31,040 --> 00:24:34,400 Speaker 1: than it was say in the seventies, where perhaps back 428 00:24:34,400 --> 00:24:38,439 Speaker 1: then companies and rich individuals could more credibly threaten to 429 00:24:38,560 --> 00:24:41,960 Speaker 1: leave the city, whereas today they could say it, but 430 00:24:42,040 --> 00:24:44,680 Speaker 1: it might be so much harder. Yeah, that's a really 431 00:24:44,760 --> 00:24:48,560 Speaker 1: interesting question, actually, and I think I think that threat 432 00:24:48,760 --> 00:24:51,120 Speaker 1: was a credible threat. In the seven days, I mean, 433 00:24:51,160 --> 00:24:54,520 Speaker 1: many companies were leaving the city, and New York loses 434 00:24:54,640 --> 00:24:58,359 Speaker 1: ten percent of its population over the nineteen seven days, 435 00:24:58,359 --> 00:25:01,120 Speaker 1: so so people actually are moving out of New York. 436 00:25:01,200 --> 00:25:04,200 Speaker 1: And the same is true for many different urban centers 437 00:25:04,320 --> 00:25:07,560 Speaker 1: in the Northeast and Midwest, in particular the rust belt 438 00:25:07,560 --> 00:25:11,640 Speaker 1: cities are all all lose population, lose investments and over 439 00:25:11,680 --> 00:25:14,280 Speaker 1: this period. So, you know, the New York stocking change 440 00:25:14,280 --> 00:25:17,320 Speaker 1: is an interesting example. How it does seem totally absurd. 441 00:25:17,359 --> 00:25:19,240 Speaker 1: How could they go to Connecticut to the New York 442 00:25:19,240 --> 00:25:23,360 Speaker 1: Stock Exchange. The internal memos and discussions of it suggests 443 00:25:23,359 --> 00:25:26,320 Speaker 1: that it was actually a somewhat serious, you know, topic 444 00:25:26,359 --> 00:25:30,000 Speaker 1: of conversation within the stock exchange. Obviously that didn't happen, 445 00:25:30,080 --> 00:25:31,760 Speaker 1: But I do think it was a credible threat. That 446 00:25:32,359 --> 00:25:34,879 Speaker 1: is it a credible threat? Now? Well, it's interesting I 447 00:25:34,920 --> 00:25:39,879 Speaker 1: think it, although yeah, maybe not quite as much in 448 00:25:39,880 --> 00:25:42,840 Speaker 1: the same way. But it also I'm thinking of the 449 00:25:42,840 --> 00:25:49,520 Speaker 1: different cities kind of vying for Amazon's headquarters. And I 450 00:25:49,560 --> 00:25:52,359 Speaker 1: think that we even as cities have grown stronger and 451 00:25:52,400 --> 00:25:55,840 Speaker 1: have proved to be this kind of magnet for people 452 00:25:56,280 --> 00:25:59,879 Speaker 1: and money, it's also a moment when businesses have a 453 00:26:00,119 --> 00:26:03,359 Speaker 1: um perhaps more powerful, and people perceive them, you know, 454 00:26:03,400 --> 00:26:07,080 Speaker 1: they're not tied to a single place. They're capable of 455 00:26:07,600 --> 00:26:12,320 Speaker 1: looking around, shopping for what locale can give them the 456 00:26:12,359 --> 00:26:14,600 Speaker 1: best deal on any one of a number of fronts. 457 00:26:14,640 --> 00:26:18,840 Speaker 1: So it may be a double movement. So on the 458 00:26:18,880 --> 00:26:23,119 Speaker 1: topic of business is becoming more powerful, I just wonder 459 00:26:23,240 --> 00:26:27,119 Speaker 1: when when it comes to Donald Trump's um recent tax 460 00:26:27,160 --> 00:26:30,680 Speaker 1: reform and his budget UM we have seen some people 461 00:26:30,800 --> 00:26:35,359 Speaker 1: describe that as obviously business friendly, but also sort of 462 00:26:35,400 --> 00:26:39,400 Speaker 1: anti urban in that it seems to take direct aim 463 00:26:39,440 --> 00:26:43,280 Speaker 1: at a lot of big cities and metropolitan areas in 464 00:26:43,320 --> 00:26:47,480 Speaker 1: the US. Does that mean that the tide is turning 465 00:26:47,520 --> 00:26:51,280 Speaker 1: against some of these big cities. Well, I wouldn't overstate 466 00:26:51,280 --> 00:26:54,320 Speaker 1: the friendliness of the federal tax code to cities previously. 467 00:26:54,440 --> 00:26:57,520 Speaker 1: I mean, things like the mortgage interrotroduction has always has 468 00:26:57,560 --> 00:27:01,760 Speaker 1: never been very good for cities. Really I think Trump himself, 469 00:27:01,880 --> 00:27:05,960 Speaker 1: despite his background in New York, has always had a 470 00:27:06,040 --> 00:27:12,240 Speaker 1: certain kind of hostility to aspects of cities. So I 471 00:27:12,359 --> 00:27:15,600 Speaker 1: guess there are aspects of the tax bill that will 472 00:27:15,640 --> 00:27:17,840 Speaker 1: be bad for cities, but I don't know if it would. 473 00:27:17,960 --> 00:27:20,200 Speaker 1: I'm not sure it's this dramatic, a kind of pendulum 474 00:27:20,280 --> 00:27:23,600 Speaker 1: swinging away. Local politicians have learned quite a bit about 475 00:27:23,640 --> 00:27:27,520 Speaker 1: the ramifications of most notably the elimination of the state 476 00:27:27,560 --> 00:27:31,280 Speaker 1: and local tax deduction. Would you say we're still pretty 477 00:27:31,320 --> 00:27:35,040 Speaker 1: far away from anything like what we saw in the seventies. Yes, 478 00:27:35,119 --> 00:27:37,000 Speaker 1: we are definitely far away from anything like what we 479 00:27:37,040 --> 00:27:39,480 Speaker 1: saw in the seventies, at least in New York. We are. 480 00:27:39,640 --> 00:27:41,440 Speaker 1: And again I think in New York there are a 481 00:27:41,560 --> 00:27:46,560 Speaker 1: number of The disarray in the budget office leading up 482 00:27:46,600 --> 00:27:50,080 Speaker 1: to the crisis was quite profound, you know, the city 483 00:27:50,200 --> 00:27:54,680 Speaker 1: didn't have systematic bookkeeping and kind of abandoned a certain 484 00:27:54,680 --> 00:27:58,280 Speaker 1: systematic bookkeeping at all. That is just not the case today. Again, 485 00:27:58,400 --> 00:28:01,280 Speaker 1: and also the underlying strange to the city today is 486 00:28:01,400 --> 00:28:05,080 Speaker 1: much greater than it was then. So I think we're 487 00:28:05,160 --> 00:28:07,720 Speaker 1: quite far from an actual fiscal crisis similar to that 488 00:28:07,760 --> 00:28:10,320 Speaker 1: in the nineteen seventies. At least in New York. Now, 489 00:28:10,359 --> 00:28:13,800 Speaker 1: I think other states and cities around the country are 490 00:28:14,200 --> 00:28:18,560 Speaker 1: in much more difficult situations. Many state governments are in 491 00:28:18,680 --> 00:28:22,280 Speaker 1: pretty bad fiscal shape, really, and I think will be 492 00:28:22,359 --> 00:28:26,960 Speaker 1: her pretty profoundly by these tax changes. All Right. That 493 00:28:27,040 --> 00:28:29,760 Speaker 1: was Kim Phillips, Fine, the author of Peer City, New 494 00:28:29,800 --> 00:28:32,920 Speaker 1: York's Fiscal Crisis and the Rise of Austerity Politics. Thanks 495 00:28:32,960 --> 00:28:48,320 Speaker 1: so much for coming on, Okay, Joe, So, I thought 496 00:28:48,360 --> 00:28:51,320 Speaker 1: that was a fascinating conversation, and it's really important to 497 00:28:51,400 --> 00:28:54,480 Speaker 1: have it as we hear lots of talk about the 498 00:28:54,560 --> 00:28:58,960 Speaker 1: deficit flying around. It's important to remember that ultimately we're 499 00:28:58,960 --> 00:29:01,360 Speaker 1: talking about political choices when it comes to how we 500 00:29:01,440 --> 00:29:04,959 Speaker 1: spend our money. Absolutely. I mean, obviously there's a difference 501 00:29:04,960 --> 00:29:08,760 Speaker 1: between the federal government and the city government and the 502 00:29:08,800 --> 00:29:12,840 Speaker 1: strict monetary restraints. But this idea that budgets are a 503 00:29:12,880 --> 00:29:17,320 Speaker 1: reflection of our priorities, and that math is not the 504 00:29:17,400 --> 00:29:20,040 Speaker 1: only factor, and that we still have to make decisions 505 00:29:20,080 --> 00:29:23,000 Speaker 1: about what level of inequality or other injustice we want 506 00:29:23,040 --> 00:29:27,280 Speaker 1: to accept can't be just completely separated from, you know, 507 00:29:27,280 --> 00:29:30,240 Speaker 1: the sort of revenues and outlays. Yeah, I will make 508 00:29:30,280 --> 00:29:33,840 Speaker 1: an unpopular finance confession, though part of me feels a 509 00:29:33,840 --> 00:29:37,080 Speaker 1: little bit uncomfortable whenever we say that deficits don't matter, 510 00:29:37,600 --> 00:29:41,959 Speaker 1: like clearly they must matter eventually, right, the government can't 511 00:29:42,040 --> 00:29:46,160 Speaker 1: print money forever to finance ballooning spending. No. I think 512 00:29:46,200 --> 00:29:50,920 Speaker 1: actually it's very popular. I don't necessarily disagree. Let's let's 513 00:29:50,920 --> 00:29:53,560 Speaker 1: have a whole episode on this specific aspect of the question. 514 00:29:53,720 --> 00:29:57,680 Speaker 1: Let's do that sind okay, let's see that one other point, 515 00:29:57,760 --> 00:30:02,800 Speaker 1: just this idea of cities and the I love that 516 00:30:02,920 --> 00:30:07,200 Speaker 1: perspective about the perception of New York in the nineties seventies, 517 00:30:07,600 --> 00:30:10,240 Speaker 1: And because I do sort of think that, especially post 518 00:30:10,280 --> 00:30:14,440 Speaker 1: financial crisis, New York isn't that popular of a place 519 00:30:14,560 --> 00:30:17,040 Speaker 1: on the sort of national political landscape. I guess there's 520 00:30:17,040 --> 00:30:20,800 Speaker 1: some debate, But the way our guests described it in 521 00:30:20,840 --> 00:30:24,200 Speaker 1: the seventies, the sort of this center for radicalism on 522 00:30:24,360 --> 00:30:26,240 Speaker 1: all these different fronts, and then the way that that 523 00:30:26,400 --> 00:30:29,240 Speaker 1: interplayed with all these sort of fiscal and economic questions, 524 00:30:29,440 --> 00:30:32,200 Speaker 1: I found to be really fascinated. Yeah, and people don't 525 00:30:32,200 --> 00:30:35,400 Speaker 1: necessarily always connect the two to that, No, but they should. 526 00:30:35,880 --> 00:30:39,320 Speaker 1: All Right, this has been another edition of Odd Lots. 527 00:30:39,360 --> 00:30:42,120 Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at 528 00:30:42,120 --> 00:30:45,360 Speaker 1: Tracy Alloway and I'm Joe Wisenthal. You can follow me 529 00:30:45,560 --> 00:30:49,400 Speaker 1: on Twitter at The Stalwart, and you should follow our 530 00:30:49,440 --> 00:30:53,520 Speaker 1: producer Topor Foreheads on Twitter at Foreheads T, as well 531 00:30:53,560 --> 00:30:58,560 Speaker 1: as the Bloomberg head of podcast, Francesco Levy at Francesca Today. 532 00:30:58,600 --> 00:31:08,400 Speaker 1: Thanks for listening year to