In the midst of his successful campaign for governor, Andrew Cuomo reportedly sent public employee union leaders around the state copies of Seymour Lachman and Robert Polner’s The Man Who Saved New York; Hugh Carey and the Great Fiscal Crisis of 1975 (State University of New York Press, 2010). Several responded publicly by arguing that the crisis of 1975 was not the same as what we’re facing today. No, today’s situation is potentially much more serious because we’re not just talking about one city, but the entire state and a huge percent of its municipalities.
In 1975, other municipalities, including the city of Yonkers, were on the verge of defaulting on their debt. But none were in as bad a shape as New York City. The city had resorted to short term borrowing in order to meet operating expenses, but even that stopped working. They had come to the end of the road – being unable to meet both short-term and long-term obligations. The state had to step in to avoid being pulled down in the undertow and as a result, NYS taxpayers had to cough up millions to service the city’s debts and those of the Urban Development Corp., the State Dormitory Authority and other authorities.
Today’s crisis has not reached the stage that Hugh Carey faced on his first day in office in January 1975. That’s one major advantage that Andrew Cuomo will have on January 1, 2011. However, while the cost of preventing the city’s bankruptcy was felt by the thousands who lost jobs and services, the state and federal governments pitched in and helped avoid a bigger crisis, due in large part to Carey’s indomitable will and political astuteness. However reluctant he was to face facts, Carey benefited from having hired people of character and talent. They helped him see the danger, at which point he piloted the ship of state to safe harbor, although not without nearly crashing into several large political icebergs.
One key for Andrew Cuomo then is what kind of people will he bring to Albany? Will he follow Hugh Carey’s example and hire people who will not be afraid to talk truth to power, or will they be people who are cowered by Cuomo into painting the world as he’d like it to be?
Another key will be whether he understands the problem is not just solving next year’s budget crisis, but seeing what New York State will be facing in 2015 and 2020. I’m not saying finding $8 billion without raising taxes to balance next year’s budget will be easy, but will the budget be balanced with the long term in mind or will Cuomo follow the pattern of his predecessors – not worrying about future until it arrives?
In 1975, Hugh Carey’s biggest obstacle was getting the federal government to participate after the city and state had both sacrificed and made major changes in budgetary practices. That took a tremendous effort on Carey’s part and required incredible political savvy. Even if Cuomo matches Carey in those qualities, the likelihood of the federal government’s playing an equivalent role in the coming years is slim to none. The simple reason is that New York would be joining a long line of states with their hands out.
Start with California whose debt is already being subsidized by the federal government (see “State Bailouts? They’ve Already Begun” by Meredith Whitney, Wall Street Journal, 11/3/2010, A27). If New York wants Washington to bail it out, it would hardly be at the front of the line and would have a tough sell to a Congress that will be extremely resistant to increasing federal spending, given Republican control of the House and the number of Democratic Senate seats up in 2012.
Let’s hope Andrew learns from Hugh Carey in another respect. Hugh Carey didn’t spend any time blaming his predecessors – Nelson Rockefeller and Malcolm Wilson – when he arrived in Albany. That’s a lesson that Barack Obama should have taken to heart. Blaming Bush may have worked for a short time, but he played that card past when it had lost any political value. There would be nothing to be gained were Cuomo to blame past governors or Legislatures for the problems we’re facing. Given that Cuomo asked to be put in a position to solve the state’s problems, the best strategy is to skip the blame game.
Union leaders should read this book. Lachman and Polner point out how men like Albert Shanker and especially Victor Gotbaum put aside self-interest and joined Carey in achieving a major victory on behalf of the entire population of New York City and the state. Everyone needs to understand that the practice of the state’s spending better than 250 percent of its tax receipts over the past decade (see Whitney) needs to be put in reverse.
Thirty-five years ago New York City’s leaders waited much too long to admit their fiscal practices were unsustainable. It appears that Sheldon Silver recognizes New York State is heading in that direction. Would that the state’s union leaders accept that reality and help avert the kind of crisis that the city faced. If not, there’s no guarantee the outcome will be as successful as the one Hugh Carey achieved in ’75.