Fear City: New York's Fiscal Crisis and the Rise of Austerity Politics

Fear City: New York's Fiscal Crisis and the Rise of Austerity Politics

by Kim Phillips-Fein


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An epic, riveting history of New York City on the edge of disaster—and an anatomy of the austerity politics that continue to shape the world today

When the news broke in 1975 that New York City was on the brink of fiscal collapse, few believed it was possible. How could the country’s largest metropolis fail? How could the capital of the financial world go bankrupt? Yet the city was indeed billions of dollars in the red, with no way to pay back its debts. Bankers and politicians alike seized upon the situation as evidence that social liberalism, which New York famously exemplified, was unworkable. The city had to slash services, freeze wages, and fire thousands of workers, they insisted, or financial apocalypse would ensue.

In this vivid account, historian Kim Phillips-Fein tells the remarkable story of the crisis that engulfed the city. With unions and ordinary citizens refusing to accept retrenchment, the budget crunch became a struggle over the soul of New York, pitting fundamentally opposing visions of the city against each other. Drawing on never-before-used archival sources and interviews with key players in the crisis, Fear City shows how the brush with bankruptcy permanently transformed New York—and reshaped ideas about government across America.

At once a sweeping history of some of the most tumultuous times in New York's past, a gripping narrative of last-minute machinations and backroom deals, and an origin story of the politics of austerity, Fear City is essential reading for anyone seeking to understand the resurgent fiscal conservatism of today.

Fear City is one of Publishers Weekly's Top 10 Best Books of 2017

Product Details

ISBN-13: 9780805095258
Publisher: Holt, Henry & Company, Inc.
Publication date: 04/18/2017
Pages: 416
Product dimensions: 6.50(w) x 9.30(h) x 1.50(d)

About the Author

Kim Phillips-Fein is the author of Invisible Hands: The Businessmen’s Crusade Against the New Deal. She teaches history at New York University's Gallatin School of Individualized Study, and has written for The Nation, Dissent, The Baffler, The Atlantic, and The New York Times, among other publications. She lives in New York City.

Read an Excerpt



When the West Side Highway first opened in 1930, it seemed to promise a glorious "new era of speed in motor transportation," in the words of the Manhattan borough president. In a city of subways, the wide, elevated road opened up new possibilities for car transportation. Rising on steel archways above the busy streets of the meatpacking district, it appeared sure to last forever.

By the early 1970s, though, the highway's asphalt had been worn down by the vast traffic of the postwar years. The surface had eroded under the tons of salt dumped on it each winter; cars and trucks bumped over the uneven metal plates the city had used to patch the gaping spaces. The skeletal supports that held up the elevated portions of the highway were rusting, damaged by decades of rain and melting snow. Mayor John Lindsay planned a major repair for the deteriorating structure, and construction began in the autumn of 1973. As the city's commissioner of highways put it, "You can't just fill cavities on this highway. You have to put in new teeth."

The work had barely started when the disaster the city feared came to pass. In December 1973, the highway simply buckled under the weight of a repair truck carrying asphalt at the intersection of Little West 12th and Gansevoort Streets in the West Village. A tremendous hole ripped open in the road, the broken pieces on either side sloping down in a sharp diagonal to the street below. The driver of the truck managed to leap out as his vehicle plunged to the ground, taking with it a four-door sedan that had been driving along behind. Miraculously, neither driver was badly hurt. But the downtown stretch of the highway had to be closed to traffic immediately. The city shut down the highway uptown as well, closing it from 72nd to 79th Streets for repairs slated to take at least a year.

The sudden closure of the West Side Highway irritated commuters and city residents who found their streets clogged by rerouted traffic. But for some, the quiet highway became a respite. Upper West Side children played on the empty tree-lined road, exulting in the freakish expanse of open space. The highway became a path for cyclists long before bike lanes were marked around the city. Novelist Frederic Morton described the eerie peace of the "splendid promenade" where he would go for moonlit strolls on winter evenings, enjoying the cracked road as though it were a Roman ruin and watching the cats frisk among the broken stones. A young downtown artist, Terence Sellers, wrote in her journal about glimpsing the "enormous towers of the World Trade Center" looming from the deserted highway, the second of the newly built pair emerging into view "as if one was not enough." But while the closed highway might have been splendid, it was hardly safe. In the summer of 1974, a fourteen-year-old boy fell to his death at the corner of Little West 12th and Gansevoort, tumbling through the forty-by-fifty-foot hole that had been left gaping when the truck ripped through the pavement nine months earlier.

In the early 1970s, the entire city was a bit like the West Side Highway. The promises and the visions of an earlier era had come up against their limits. Everyone knew that things might collapse. And though no one was willing to talk too openly about the possibility of failure, the problems of the city were common knowledge, unmistakable and impossible to hide. There was perhaps something appealing about this disrepair, a certain freedom in the unkempt metropolis. Yet there was also real danger. And there was no rescue in sight, nothing that would come in to close the holes, to fix what had been broken, to save the people who lived in the city that was slowly falling apart.

* * *

When a person goes bankrupt, there's always the last punishing expense: the extra medical bill or tuition payment, the final credit card charge, the mortgage interest rate that ticks up at just the wrong moment. But this is never the full story. The tragedy has its climax, but its origins lie deep in the past — the lost job, the student debt, the divorce, the illness, the long-hoped-for raise that never materialized. For a city, it's the same. There's the short version of events, and then there's the one that goes back.

The collapse of New York in the 1970s stunned the nation because for so long, the city had embodied a kind of government and society whose success seemed unassailable. During the decades that followed World War II, New York represented the fullest realization of the confident liberalism that dominated American politics. Throughout the 1950s and 1960s, people who visited New York from other parts of the country, whether from small rural towns or from cities such as Chicago, Los Angeles, and San Francisco, found much to wonder at. They marveled not only at the familiar postcard attractions — the Statue of Liberty, the Empire State Building, the magnificent skyline — but also at the way that New Yorkers lived.

New York City had been at the forefront of social reform ever since the early twentieth century. Progressive reformers had pressed for housing market regulations to ensure that apartments for poor people were not dangerous firetraps. Labor organizers had won laws protecting workers on the job after the Triangle Shirtwaist Factory fire of 1911. In the early 1930s, following the onset of the Great Depression, the city government had been plagued by fiscal problems; it was saved from default by bankers who extended a loan and demanded service cuts. But these cuts were rolled back within a few years, when Mayor Fiorello La Guardia was able to win funding from Franklin Delano Roosevelt — the former New York State governor occupying the White House — for a vast array of public works and social programs.

As a result, during the postwar period New York provided a remarkable range of services to its citizens, through an extensive public sector hard to imagine today. At its peak, the city ran a network of twenty-four municipal hospitals, along with dozens of neighborhood primary care and pediatric clinics. Its health department even conducted original research into matters of public health. Over the decades, the city built numerous parks and playgrounds, elementary and secondary schools, public housing, swimming pools, college campuses, piers, highways, bridges, and airports. In the 1960s, it opened day care centers for low-income mothers and treatment clinics to help drug addicts. Its sprawling library system included public research libraries that rivaled many private university collections.

Physically, too, the city was opened up to everyone by the far-reaching system of inexpensive public transportation. In 1950, the subway fare was just 10 cents a ride (equivalent to less than a dollar today); a bus ride was 7 cents. The Metropolitan Museum of Art and the Museum of Natural History had no charge for entry, not even a recommended amount. The city ran three radio stations and two public television stations, and the City Center of Music and Drama offered bargain tickets on theater, opera, symphony, and ballet — high culture at low prices. New York also controlled its Board of Education, which was a separate entity in many other cities, and it took on responsibilities (such as running the court system and a network of college campuses) that elsewhere were the province of county or even state governments.

Before New York became the decrepit city of the early 1970s, in other words, it had been the capital not only of high finance and Wall Street, but also of a certain robust strain of democratic politics: a demonstration of citizenship bound up with social as well as political rights. The most visible, obvious examples of public investment — the subways, the parks, the city university — were impossible to overlook. But there were also countless other ways that the city government made itself felt in the lives of New Yorkers, less monumental but no less vital.

* * *

Greenpoint-Williamsburg, a neighborhood at the northern edge of Brooklyn abutting the East River, is today the epicenter of the Brooklyn renaissance: an enclave of hipsters, artisanal food, craft beers, locally made chocolate, cool bars, and luxury apartment buildings built to take full advantage of the riverfront views. This transformation into a garden of consumer pleasures would have shocked the people who lived there in the middle years of the twentieth century. Back then, the area was packed with immigrants from southern and eastern Europe and their descendants, and filled with the factories where they labored. It was a working-class part of the city: 95 percent of the residents of North Brooklyn (a region that included Greenpoint-Williamsburg as well as Bushwick, Bedford-Stuyvesant, and Crown Heights) earned incomes under $5,000 per year in 1955, the equivalent of about $44,000 per year today.

Life for the people who lived in the wood-frame houses dotting the half-industrial area was never easy. But even in the poorest neighborhoods, the city government provided substantial assistance in ways both large and small. Greenpoint Hospital, a municipal health center, cared for neighborhood residents; the Greater New York Health Council offered workshops on nutrition; an old police station on Stagg Street had been transformed into a city youth center. In the summers, a child growing up in North Brooklyn in the 1950s could participate in a special chorus program run by the Board of Education, or swim at the public McCarren Pool, or attend marionette plays presented by the Parks Department in McCarren Park. In the winters, the park was home to a city Christmas tree.

A similar scene played out in Morrisania and Mott Haven, two South Bronx neighborhoods largely populated by poor black and Latino families. By the 1970s they had become prime examples of urban despair, and even during the postwar years they were already experiencing white flight and disinvestment. The construction of the Cross-Bronx Expressway in 1955 further hurt the communities, displacing residents and destroying housing stock. Yet despite their many problems, during the 1950s these neighborhoods too benefited from the expansive activism of the city government. A family worried about the polio virus that spread through the city in a "mild epidemic" in 1955, for example, could get immunizations through a city-run program at the neighborhood child health center, which brought the new Salk vaccine to more than 170,000 children. Crooked teeth might have been treated at the orthodontic clinic that the Morrisania City Hospital opened in 1950. Indeed, the local public hospitals were so heavily used in the 1940s and 1950s that the city expanded its programs to provide medical care to people at their homes.

In Morrisania, the Forest Houses public housing project, built during the 1950s, offered space for 1,350 families, and sought from the outset to create an integrated neighborhood bringing together blacks, whites, and Latinos. A few blocks away, Morris High School boasted a new gym and cafeteria constructed by the city. Annual talent shows there pulsed with rhythm and blues — a kind of training ground for performers who might go on to such neighborhood institutions as Club 846, where Thelonious Monk and Charlie Parker were regulars in the 1940s and 1950s, and the Tropicana Club, a Latin music club where stars like Tito Puente often came to play.

When the children of the South Bronx and Greenpoint-Williamsburg grew older, they might, if they were strong enough students, go to college at one of the city's public campuses and earn a bachelor's degree without paying tuition. In the 1950s and 1960s, the four-year schools were joined by two-year community colleges. No other city in the country ran a network of municipal colleges of this scope. And in addition to the university system, the city operated a continuing education program through which people who had never been to high school or even elementary school could earn equivalency degrees, attending daytime or evening classes held in community centers and other locations.

This heavy investment in libraries, hospitals, subways, buses, health clinics, museums, theater, education, and art had a great deal to do with the political economy of New York in the postwar years. The city then was industrial: at the end of World War II, 41 percent of its workforce was employed in blue-collar jobs, including 28 percent in manufacturing. But in contrast to the steel towns of Pennsylvania or the South Side of Chicago, New York was not dominated by a single massive employer. Its factories were small shops rather than gargantuan assembly lines employing thousands of people, of the kind found at River Rouge near Detroit. Its industries were diverse and specialized, many serving a local or regional rather than a national market. Blue-collar jobs outnumbered white-collar ones, the frenetic activity of the port was as important a part of downtown as Wall Street, and the trade in physical commodities was as critical as the exchange of financial instruments. New York was a city of making, lifting, and transporting, and to many it seemed clear that the people who did this work were those for whom the city should run.

The city's politics reflected its economic structure. The working class was socially visible and politically strong; its unions were a recognized force, an accepted part of the life of the city as a whole. A quarter to a third of the city's workers were in unions: they represented everyone from dental technicians to machinists, commercial artists to barbers, movie publicists to people who serviced vending machines. The industrial nature of the city also meant that there was a clear economic rationale to the investment in public goods. The subways got workers to their jobs, the clinics kept them healthy, and the libraries and universities offered skills training and an avenue for upward mobility and the purchasing power that went with it. The city's small manufacturers — many of whom had much in common socially with the people who worked in their plants — benefited from all these services themselves. Even when the business owners objected to taxes, the small scale and dispersion of their companies made it difficult for them to influence the city's politics as much as the working classes did.

To be sure, there was always some strain underneath the surface of the postwar city, with its institutions criticized from both left and right. Civil rights activists fiercely denounced the myriad ways that city government failed people of color; as they pointed out, the city was a far easier place to live in for the predominantly white middle classes than for the racially diverse poor. The elites, meanwhile, were often skeptical of the "social democratic" bent of the city and its deep investments in the public sector. Heads of national corporations, financial executives on Wall Street, real estate developers whose main priority was finding ways to boost property prices — many of the powerful longed to create a different kind of New York City. They imagined it remade as a gleaming white-collar consumers' paradise of corporate headquarters and rising real estate values. They viewed the garment and electrical manufacturers of downtown as a waste of valuable space, eyesores that tarnished the potential of the city. Ever since the 1920s, these leaders had described their ambition to zone away industry, expand parkland to raise land values, and build highways that could allow "decentralization" of the city's economy — that is, moving factories to the suburbs. Sometimes, they warned that the hospitals, libraries, schools, and social workers placed an unsustainable weight on city budgets.

Still, despite such tensions, in the mid-twentieth century New York appeared prosperous, powerful, and successful. Its politics were at the left edge of urban liberalism, demonstrating that it was possible to run a city government that did far more for its citizens than most American cities ever dreamed of accomplishing.

Significantly, the political vision that New York's public institutions expressed was not limited to the city alone. It was part of the liberal politics that had emerged in the 1930s and that seemed in certain respects to dominate the United States during the postwar years: a society that saw promoting working-class consumption as an important way to generate overall prosperity, and an activist government that was willing to intervene to improve the quality of life for ordinary people. The difference was that New York pushed this vision much further than other parts of the country, and did so in ways that were deeply linked to the big-city environment. For much of the country, the "New Deal order" had become intertwined with the rise of suburbia and the flight from cities. New York was a reminder that there was also an urban version of this political and social sensibility, one that emphasized common spaces and public investment more than the private greenswards of lawns and country clubs. The city almost seemed to proclaim a right to happiness and pleasure, even for people insignificant in terms of wealth and power. That was the promise implicit in the ordinary, everyday monuments of the local health clinics, the free museums, the affordable transportation: a right to belong to the city and to have the city belong to you.


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Table of Contents

Introduction 1

Part I Origins

1 Warnings 13

2 The Gap 28

3 Use Neighborhood Bookkeeper 46

4 Sounding the Alarm 60

5 Things Fall Apart 73

6 Washington Politics 89

Part II Crisis

7 Big Mac 111

8 Fear City 129

9 The Facts of Life 145

10 On the Brink 162

11 Drop Dead 177

12 Pastrami and Rambouillet 190

Part III Legacies

13 State of Emergency 205

14 The Peoples Firehouse 227

15 The College in the Tire Factory 241

16 A New New York 256

17 Blackout Politics 268

18 The Final Storm 283

Epilogue 303

Notes 317

Acknowledgments 383

Index 387

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