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Manhattan Institute

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Stronger Than You Think


Stronger Than You Think

December 2, 2001
Urban PolicyNYC

The day after voters elected Michael Bloomberg their next mayor, political analyst George Stephanopoulos told a television audience that Bloomberg had just won the toughest job in America.

Since then, others have expressed similar sentiments, as headlines have variously described the mayor-elect's job as impossible or the hardest ever faced by a New York mayor.

Even allowing for standard journalistic overstatement, the notion that Bloomberg is taking on a herculean task—or, even worse, one that may be impossible—is not merely wrong, it is dangerous. It ignores the gains that New York has made in the last few years and resurrects the idea that the city is fundamentally unmanageable, subject to forces that government mostly can't control.

This idea, which never seems to completely die, is troubling, because it has led to civic paralysis and allowed some city leaders to shrink from tough choices on the grounds that their decisions ultimately matter only on the margins.

It's startling that New Yorkers might think that way now, even considering the horror of the terrorist attacks. After all, Mayor Giuliani's greatest accomplishment may be that he demonstrated again that New York is a governable city. Former Mayor Edward Koch achieved something similar when he took office in 1978 and quickly stabilized the city after nearly a decade of fiscal, economic and social disorder.

Although we shouldn't minimize the task Bloomberg has before him, it is no greater than the challenges Giuliani or Koch confronted and overcame. After all, the city's problems are largely the result of a sudden, unpredictable event—not a long series of self-inflicted policy mistakes that need to be reversed.

The city is better prepared to handle this crisis than it was when Koch or Giuliani took office. Consider, for instance, its fiscal condition. Shortly after his victory, Bloomberg acknowledged that the real budget deficit he would face—not the inflated one that made headlines in the panicky days after the attacks—would be about $2.5 billion. That's a huge challenge for a new mayor. But to put it in context, it's about the same size as the budget gap Giuliani faced when he took office in 1994.

Moreover, warnings by some fiscal watchdogs that the city's debt is at an all-time high also need to be put in context. While the city's aggregate debt is the highest it has ever been, in relation to the size of the city's economy and the amount of personal income generated by New Yorkers, the debt is still within manageable levels.

When Giuliani took office, he made plenty of tough decisions to balance the city's budget, including shrinking the size of the government and getting productivity gains from the municipal workforce. It was a difficult job, but by no means impossible.

Similarly, Bloomberg will have to move quickly to solve his budget problems, but the ideas are ample. The Citizens Budget Commission, for instance, has identified more than $1 billion in potential budget savings simply by implementing the same kinds of pay and productivity procedures typical in the private sector and in other municipalities.

The ideas include merit pay plans for city workers and small co-payments from workers on health insurance premiums. Because of the budget surpluses of the last several years, Giuliani did not press very hard for these kinds of savings, but the current fiscal difficulties will give the new mayor a greater incentive to pursue such solutions.

Even with a recession staring the city in the face, the city's economic outlook is better than it was at the start of the downturn in 1989.

Back then, most experts despaired because there seemed to be no new economic engine on the city's horizon and thus no quick end to the recession. Even during the economic expansion of the mid-1980s, many industries had been in full retreat, and Wall Street accounted for 70% of new jobs created in the city. Economic development in the city's outer boroughs stagnated largely because of rising crime. Half the Broadway theaters were dark. The TV networks were on the run, movie jobs were fleeing the city and the advertising industry shrank even amid the Financial District's boom.

So there was little else to count on besides Wall Street. Eventually, the city lost 325,000 jobs before that recession ended.

But the ‘90s were far different, and as a result, the city's economy is better positioned to rebound once the national economy starts growing again.

True, in the ‘90s, Wall Street soared once more. But the city also regained its reputation as an entertainment and media capital. Broadway's theaters—even those that had been dark for years—opened again, and tens of thousands of movie and TV production jobs came back. In the outer boroughs, the sharp drop in crime stimulated economic development as construction soared and retailers, including many national players that had avoided the city, opened up. Before the Sept. 11 attack, New York's employment was at its highest level in more than 30 years.

Perhaps it's easy to forget some of this now because New York is a city filled with transients. Many of those who live or work in the city now weren't around in the early 1990s and don't quite understand just how much has been accomplished since then under effective civic leadership.

It's true that the new mayor faces a literal hole in downtown Manhattan, a figurative hole in the city's budget and an uncertain economic future.

But he is taking over as mayor of a city with the nation's best police force, the world's richest and most diverse cultural and social fabric and perhaps history's most powerful and innovative business community.

Maybe we should worry he'll get overconfident.

Malanga is a senior fellow at the Manhattan Institute and a contributing editor to City Journal.