September 17, 1975

Liberal Spending Killing New York

To the rapidly growing list of liberals admitting early stupidities add the name of Abraham Beame, mayor of New York City.

He now says his own budget policies when comptroller of America's largest city was the largest single factor in its present near bankruptcy.

"The very practices I advocated 10 and 20 years ago are responsible for our present difficulty," said Beame last week in a radio interview ignored by the printed media.

"The borrowing of money to pay debt was a mistake," moaned Beame.  "It is a bitter lesson."

Indeed it is.

Unfortunately the consequences are affecting the whole nation as New York's financial problems frighten investors away from municipal bonds.  It is ironic that the financial center of the nation threatens to bring down the Temple of Wall Street.

There were a few non-professional citizens crying out in the wilderness years ago against the borrowing of money to pay short term expenses.  The politicians hooted down the warnings, and the economic "experts" assured us we "owed it to ourselves" so there would be no end to the free lunch.

So New York lavished borrowed money on welfare, the highest teacher salaries in the U.S., and sweetheart contracts to garbage collectors.

The per capita cost of welfare in New York is an incredible $324.00.  In all other big cities it is less than $25.  In Chicago it is only $3.17.

Monopoly city unions have put one employee on the payroll for every 24 tax-paying citizens.  Chicago has a ratio of one to 75.

Street cleaners in New York earn more than starting teachers, and the latter work less than 32 hours per week for nine months a year with a median salary of $17,350.

The municipal employees' pension programs alone cost $1.5 billion a year - a tax of $500 on every household.

To meet these exorbitant costs, the city levied the highest taxes in the country.  The house of cards might have held together if a law could have been devised to force the middle class into peasantry.

But the United States is still a free society, and the taxpayers registered their dissatisfaction in devastating fashion - by moving away.

Some two million working New Yorkers have left town in the past three years taking with them 10,000 businesses 42,000 jobs, and a big chunk of tax revenue.

Garment manufacturers - once the back-bone of New York industry - are relocating down South or overseas.  The great ocean shippers find it much cheaper to use Southern and Gulf Coast docks.  The corporate giants now prefer Atlanta, Houston and Chicago.

New York staved off bankruptcy last month by borrowing $100 million from city pension funds to meet increases in welfare and sanitation workers' contract.

It needs $2.3 billion to carry it until mid December when the next $6 billion-dollar interest payment on its debt is due.

A group of private bankers, operating under an emergency state law called the Municipal Assistance Corporation, is trying desperately to convince investors they should give up their short term bonds for long-term securities returning more money but in smaller bites.  In other words, refinancing.

So far the investors aren't having any.  The issue is in real doubt.

Mayor Beame has criticized the state and the federal governments for not bailing him out.  Even if they weren't as near broke as New York for the same spend-thrift policies, Big Brother can't hazard a rescue.

If the principle is established that the frugal self-denying small communities throughout the heartland of America are to be assessed to support stupidity elsewhere, then the ball game is over.

Though the wrench may be close to tragic, perhaps it is just as well that New York and other cities of one political party pay the price of favoritism.

The ancient Greeks thought a city of more than 50,000 was unmanageable.  Technology has made possible much larger municipal units, how much larger has been a matter of debate.

One thing is certain, eight million people packed into the tight confines of New York is a blight.

Perhaps the exodus of people from too-big cities will have to continue until the cities have shrunk to manageable size.

In the meantime, sweet reason will have to be the short range hope of big cities.  Municipal credit is gone.  Like it or not, city employees and welfare "clients" will have to start getting by on less - much less.

Remember, this advice comes from one of their kind.

Author: Lindsey Williams