New York After Bloomberg
Tuesday, September 3, 2013
The last time New York City had a Democratic mayor (1990-1993), his policies pushed the city to the verge of bankruptcy. David Dinkins increased taxes and spending even as the stock market, upon which the city depends for most of its finances, tanked in the early 1990s. It was only the policies of Rudy Giuliani, who became mayor in 1994, that pulled the city back from going over the fiscal cliff. Dinkins, a product of city government prior to its transformation by the adoption of a new charter in 1989, never grasped the vast powers at his disposal. Giuliani’s ascension, thanks to the luck of a Staten Island secession initiative appearing on the ballot in 1993, initiated an improbable twenty years of mayors who weren’t Democrats. The 9/11 terrorist attacks made it possible for Michael Bloomberg, who was his own brand, to succeed Giuliani. But Gotham’s luck has finally run out. Those looking to anticipate the city’s future have only to glance at the effective termination of the very successful stop-and-frisk policing policy at the hands of a liberal activist judge and the left-leaning city council to get a glimpse of the troubles to come. Starting next year, Gotham will, for the first time in a quarter century, have an activist liberal Democrat in City Hall, someone fully aware of the office's considerable powers of patronage and contracting.
Michael Bloomberg’s final term as mayor has been marked by split-level government. The powerful mayoralty created by the city charter reform of 1989, tightly aligned with the city’s real estate and financial sectors, has kept loose control over city spending while beautifying Manhattan. At the same time, the City Council, increasingly under the influence of the public sector unionists and the left-wing Working Families Party, has used its powers not just to expand the city’s spoils system but also to extract additional money from the city’s private sector through living wage and minimum wage legislation.
Gotham’s luck has finally run out.
New York’s government has become the province of two special interest factions, the big real estate barons and the public sector employees, each with a direct economic stake in government spending. Most of the city’s communities have largely been spectators in all this. Because of his vast private wealth and his willingness to use it, Bloomberg didn’t need to appeal to citizens in trying to govern. He had no followers but employed a vast battalion of hired help to govern. He treated his subjects in the highly centralized state of Paris-on-the-Hudson as consumers of public services who needed to be administered for their own good. The upshot has been a collapse in civic participation and voter turnout. Bloomberg narrowly won a second term in 2009 against Bill Thompson, a lackluster candidate, by spending a record $124 million even as he prevailed with the fewest votes of any victorious candidate since 1917, when there were three million fewer New Yorkers. At the same time, the Working Families Party (the true force among city Democrats), has grown more powerful as overall voter turnout has declined.
What promises to be most striking about the next mayoralty is that the two tiers, mayor and council, will be unified. It is all but certain that the city’s next chief executive will be a liberal Democrat – most likely Christine Quinn, the current speaker of the City Council, or former Comptroller Bill Thompson, who lost to Bloomberg in 2009, or perhaps Public Advocate Bill de Blasio, who has close ties to the Working Families Party. The primary is September 10, with the general election on November 5.
The new occupant of Gracie Mansion will inherit a city debt that doubled under Bloomberg, in part because city spending grew 55 percent on his watch while pension costs have grown by more than 300 percent. This means that the city now spends nearly six-and-a-half billion dollars a year just on debt service. In what has been one of the great – though little discussed – public policy failures in American urban history, Bloomberg spent an additional thirty billion dollars on education over the course of his three terms to scant academic effect.
New York’s government has become the province of two special interests factions, the big real estate barons and the public sector employees, each with a direct economic stake in government spending.
But the looming debt and the probability of a three billion dollar budget shortfall in the coming fiscal year have never become issues in the mayoral race. The leading candidates have been engaged in a bidding war to win votes. All, for instance, promise to sharply increase the construction of subsidized housing. Thompson supports free city lunches for all students regardless of their parents’ incomes; de Blasio promises to expand pre-K education and the number of city teachers by increasing taxes on those earning $500,000 or more; Quinn, who has promised an additional two billion dollars in contract set-asides for minorities, has also vowed that “we will be improving the [already freely available] NYC condom.”
The next mayor will have to negotiate new union contracts with the 300,000 city workers who contribute virtually nothing for their pensions and health care. While almost all the contracts expired three or four years ago, city workers have continued to get their seniority step raises as guaranteed by state labor laws. The issue at hand is whether they will receive retroactive wages as well. So far, the candidates have suggested that the municipal unions, the crucial voting bloc in the primary election, deserve retroactive raises without specifically promising to grant them.
Politically Correct Policing
By the time the next mayor is forced to face up to the fiscal issues, he or she will likely also have to face the consequences of their support for eliminating stop-and-frisk policing. A somewhat hysterical Bloomberg has warned that New York could become Detroit or Chicago should the policy end for good. That is unlikely. Unlike New York, Detroit and Chicago don’t have professionalized police departments. What will likely change, however, is that Gotham will shift from the active policing first introduced by Giuliani (but overdone by Bloomberg, who pushed arrest quotas on the police in recent years) back to the passive policing of the Dinkins years. Active policing eliminated the sense of menace that once defined the city’s streets. Pre-Giuliani and Bratton (his first police commissioner), just asking for a cup of coffee the wrong way could get you a fat lip.
Despite its unprecedented reductions in crime, New York City in 2014 will be overrun with police monitors bumping into each other. A recent court decision by a federal judge appointing a monitor to oversee the police department is accompanied by city council legislation, passed despite Bloomberg’s veto, to also appoint a monitor. Worse yet, the council voted to allow citizens to sue individual cops in state court for violating the rights of suspects identified by age, gender, housing status, and sexual orientation. The result will be a return to politically correct policing as cops, now majority-minority, look to protect their own interests during a boom time for the grievance industry. Passive policing will, over time, reproduce the old sense of menace that made the city so frightening to so many.
New York has benefited tremendously from the Federal Reserve’s low interest rates. But should interest rates rise, the Dow will stumble, and Gotham will tumble.
New York City is home to a stunning assortment of people. Under David Dinkins, when there were two separate offices for women’s grievances and an Office of European Affairs to make sure all the bases were covered, the city came apart at the social seams. Giuliani put things back together by insisting on a single standard for everyone. It was a policy that reduced crime more in the poorest neighborhoods than in the wealthiest, even as that outcome earned the former prosecutor undying hostility from Gotham’s liberals and race hustlers. Bloomberg kept things together with his bank accounts. “No one will ever know everything Mike Bloomberg did with his money,” said a political expert who has seen the mayor reach for his wallet more than once. In the “back to the future” social order to come, race, class, and gender will be ubiquitous when it comes to handing out new benefits but banned when it comes to pursuing criminals or questioning prospective employees.
Of the city’s last three mayors, only Giuliani was able to succeed in the absence of a stock market boom. The historic New York stock market, which achieved its glory in the analog age, is now owned by the twelve-year-old Atlanta-based and digitally-driven Intercontinental Exchange. In the new, post-recession, post-analog age, Wall Street’s revenues are down 50 percent since 2008. So far, New York has benefited tremendously from the Federal Reserve’s low interest rates. But should interest rates rise, the Dow will stumble, and Gotham will tumble.
Rising crime and falling financial sector revenues will make it very hard to keep the city stable under a new mayor who has promised the city’s Democratic Party interest groups the payday they’ve been awaiting for two decades. All the major candidates for mayor have promised higher taxes on the wealthy, some of whom will depart under the new regime. But in a city where half of all new jobs are in the low-wage sectors and crony capitalism is the order of the day when it comes to development, the new mayor will be boxed in by the extravagant promises made during the campaign. The new mayor will require Giuliani’s courage and Bloomberg’s bank account just to keep Gotham on an even keel in the period ahead.
Fred Siegel is a senior fellow at the Manhattan Institute’s Center for Civic Innovation and scholar in residence at St. Francis College in Brooklyn. His reinterpretation of American liberalism, The Revolt Against the Masses, will be published in January 2014 by Encounter Press.
FURTHER READING: Alex J. Pollock examines “Municipal Debt Crises: Some Historical Perspective.” John Steele Gordon says "Congratulations! You Have Arrived at the Greatest City on Earth." Timothy P. Carney claims "Nanny Bloomberg's Mandates Lack Supporting Data" while Nicholas Eberstadt observes "NYC Health Claims Don't Add Up." Jay Weiser discusses "New York City’s Ground Zero Transportation Boondoggle." Henrik Temp reveals that "Bloomberg’s Soda Ban Would be Counterproductive; Increase Obesity."
Image by Dianna Ingram/Bergman Group