The pandemic economy could revive one of America’s ugliest fights over local control

New York City had a distinctive kind of social welfare state that was undone by a budget crisis in the 1970s.

Forty-five years ago, New York City stood on the precipice of financial ruin. Facing rapidly rising welfare and social services costs, municipal leaders found they could not rely on their rapidly shrinking tax base, a newly parsimonious federal government, or once-friendly local financiers. 

In 1975, New York’s leaders were forced to radically cut basic services and accept oversight by the state-appointed Emergency Financial Control Board. The city’s basic social contract was abandoned, sending transit fares skyrocketing and imposing tuition on the City University of New York. Not even police and fire protection were spared, despite rising crime rates and a plague of arson that devastated neighbourhoods across Brooklyn and the Bronx.

New York University professor Kim Phillips-Fein tells the story of New York’s fiscal crisis in her book Fear City, which was nominated for the 2018 Pulitzer Prize in History. Her story is framed as a reckoning between an island of social democracy in America and the ascendant conservative movement, backed by a revanchist financial industry. 

Since then, fiscal austerity has been imposed time and again on weakened governments from Greece to Puerto Rico, by bond vigilantes and conservative politicians. Now the Covid-19 pandemic has sent municipal revenues plunging, and Republican leaders in Washington, DC, have largely dismissed calls to lend a helping hand. CityMetric spoke with Phillips-Fein about Fear City and lessons of 1975 for cities facing a nightmarish budget season. 

Your book is about how the fiscal crisis in New York was used to discipline the city and curb it's more social democratic policies. Do you think the current debates in the US over state and local relief could play out the same way? 

Today’s reluctance to extend aid to states or cities reflects a crass sense of where support for Trump, and the Republican Party more broadly, is located. More deeply, there's a tacit argument that the places affected by this are cities, poor people, and people of colour. There seems to be no sense that those people or those localities are part of whatever vision of America the right has. There's a certain way in which they can be written off. 

It’s a theme you see in parts of Trump's rhetoric, where economic growth is being counterposed to public health. The ultimate logic of it is that it doesn't matter if these cities are affected, it won't matter to you if these other people are sick or die. Now, as much as in the 1970s or the AIDS crisis, the question of who deserves healthcare and how the public sector will address the crisis are affected by both short-term political calculations and a larger ideological framework.

In both cases, the fiscal issues facing municipalities are not necessarily their fault. New York in the ’70s was on the losing end of national policies that undercut its budget, as well as policies incentivizing white flight, deindustrialisation, and segregation.

In the 1970s, the right said New York brought its problems on itself. It's the result of the structure and institutions of local governance, it's their fault, and we don't have to do anything to help. In the 1970s, in New York, I think that was wrong. The problems that New York had were not limited to the city. They reflected larger historical and economic forces and also political choices made at the level of the federal government.

But at least then, there was a certain logic to it. New York did have a distinctive kind of social welfare state. Today, the coronavirus is a different type of problem. It obviously is not something that New York brought on itself or that any city brought on themselves. It's even stranger seeing that logic being trotted out here where it so obviously does not make sense. In the 1970s, there was at least a conflict between different ideas about governance that was playing out.

Your book shows how little power local politicians have in the end. They are beat up on by bond markets, the state, and federal authorities. It makes municipal leaders almost seem inconsequential.

By the 1970s, the city had developed a very distinctive set of institutions, ranging from its public transit, tuition-free City University, its parks, its libraries, and its public housing programs. The city government played a critical role in bringing all those into existence. 

Similarly, today, the choices made at the level of the New York government deeply affects the kind of city we live in. The public sector has grown in recent years, for example, with the expansion of pre-kindergarten programs. At the same time, there is much more leeway for public-private partnership models, like Business Improvement Districts, that wind up concentrating wealth in certain parts of the city. But both of these are choices made at the level of city government. With the response to the public health crisis, there are a lot of decisions made at the city level. It's not as though city politicians are completely impotent, or that city politics is totally irrelevant. 

City governments are easier for local actors, local social movements, to influence and put pressure on than higher levels of government. At the same time, the story of New York in the 1970s is that there are also limits to what cities can do. They can be powerful, but there are limits.

Now city governments need help again, and maybe you could see political self-interest at higher levels work against austerity. During the Great Recession, the failure to really bail out state and city governments is a big part of why the economic downturn lasted so long and why the recovery was so weak. But then, Republicans in Congress didn't have the political incentive to make the recovery stronger. Now you might think that they would have that incentive. Do you think that kind of base political motivation could change how this plays out? 

My sense is that ideological considerations will be stronger. There's a way in which the right may feel there's political strength in being punitive. This particular strand of the Republican Party, or at least Trump's version of it, may have the sense that the benefits of not helping the cities are actually politically greater than the political cost of deepening the recession. 

Being able to say “I wasn't supporting the cities, I wasn't supporting public sector workers, I wasn't supporting poor people, or the people of colour who use these services.” That's how some of the forces around Trump would perceive it. That's not totally different than when Gerald Ford took the hard line against New York. It was partly an effort to court the right of the Republican Party, which was gaining strength. 

Ford actually did wind up bailing out in New York, albeit on conditions that were pretty bad for the city. But after he gave the “New York drop dead” speech, he went around and talked to different Republicans audiences on a big fundraising trip about not being bullied or pressured by New York. Clearly that was supposed to be a selling point.

You write that for ordinary citizens on the losing end, "austerity meant not only not only budget cuts but a political mood of bleak hopelessness."  What did the fallout of the fiscal crisis mean for ordinary people, for political engagement, and hope for the future?

In 1970s New York, there was a very visceral sense of seeing these local institutions threatened with closure. It's not just the city budget, but it is your children's school, your park, your local library. Whether or not the street lights are on, what the bridges are like, what the roads feel like. The budget actually creates the social world of the city and, in a very direct and personal way, what it is like to live in a particular place. 

The more money you have, the more you can insulate yourself from that. You can buy a house with a backyard, you can go to private school, you can take a car instead of the train. With money you can separate yourself from the public sphere. But the less money you have, the more that is your world. 

I started working on Fear City right before my daughter was born and I was acutely aware of how much the experience of our family was shaped by the public resources around us. By being able to go to the park, by being able to go to story hour at the library, by being able to go to the public school in our neighbourhood. These are the sinews of our lives.

During the 1970s, what was shocking to people in New York was that this was happening when poverty in the city is rising, when the homicide rate is climbing, in the middle of an arson wave – this is the moment when firehouses are being closed. There was something shocking about the withdrawal of resources in that context  There's a feeling of bewilderment, confusion,and ultimately apathy, that nothing you do matters. We'll see how it plays out today. My fear is that the withdrawal of resources, especially at this moment of political and social crisis, could lead to resignation and rage that doesn't have anywhere to go. 

What lessons would you hope readers today might take from your book?

People really responded to the portrait of social democratic New York in the beginning of my book, the sense of what the city was like in the postwar years. The sense of hope around the vision of a more egalitarian city life, the role of the public sector, and of collective action in bringing that about. 

Once those kinds of institutions are created, they don't just disappear. They're actually very difficult to fully dismantle. Even though there’s tuition at CUNY now, it still does exist and it’s a powerful educational institution and resource for the city. There's a lesson, going back to the beginning of our conversation, that cities and governments can actually create places that are better for people to live in. 

Fear City told part of the story of the rise of the present order, and it may be in some ways that we're now living on the other side of that. Perhaps the crisis can reshape people's ideas and lead to a different kind of future. It’s far too early to say how things will go. You could also imagine really negative outcomes, and imagine the politics of the country taking very scary directions.

Jake Blumgart is a staff writer for CityMetric.


Coming soon: CityMetric will relaunch as City Monitor, a new publication dedicated to the future of cities

Coming soon!

Later this month, CityMetric will be relaunching with an entirely new look and identity, as well as an expanded editorial mission. We’ll become City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications coming soon from New Statesman Media Group. We can’t wait to share the new website with you, but in the meantime, here’s what CityMetric readers should know about what to expect from this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is going to be a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission will be to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we’ll cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing, and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications this fall, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

City Monitor will go live later this month. In the meantime, please visit to sign up for our forthcoming email newsletter.

As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our forthcoming digs. You can already follow City Monitor on LinkedIn, and on Twitter, sign up or keep following our existing account, which will switch over to our new name shortly. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

In the meantime, stay tuned, and thank you from all of us for being a loyal CityMetric reader. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.