Mayor Bill de Blasio’s mid-year budget update is due in the next two weeks, but we don’t have to wait in suspense: The mayor demands that President-Elect Biden deliver the dough. But what do the election results really say about the prospects of a full-on bailout for Gotham and New York state?
On Election Eve, the mayor presented his budget plan to NY1. “If Joe Biden’s elected president, the most likely time for a major stimulus is February,” he said. “The second we have that, New York City’s in a position to address a whole host of issues, avert layoffs, but also to do a lot of positive things.”
Biden isn’t ignoring New York: His transition team includes city Department of Transportation Commissioner Polly Trottenberg and planner Marisa Lago. But it doesn’t include any state or city budget official.
How much will the new president go out of his way to help us, though? Leave aside the fact that a divided Congress — no matter which party wins the Senate — won’t give him room for a multi-trillion-dollar stimulus. Biden owes his victory to five states — and he needs to keep them onside to win re-election. Two of them, Arizona and Georgia, are growth states with little patience for the government pay and benefits that places like New York offer and the high taxes that go along with them. Many of their newer residents fled these taxes.
The other three — Michigan, Pennsylvania and Wisconsin — have their own experiences with fiscal and economic crises over the past decade. In no case did any state receive a full bailout, no strings attached. In each state, self-help and adjustment were the biggest factors in recovery.
In 2013, the city of Detroit declared bankruptcy. The state, under a Republican governor, didn’t ask for a federal rescue — but nor did then-President Barack Obama offer such support. Said Obama’s spokesman: “You have heard leaders in Michigan say, and we believe they’re correct, that this is an issue that has to be resolved between . . . Detroit and the creditors.”
All parties — public employees, public-sector retirees and bondholders — took deep losses. Retirees too young for Medicare, for example, became responsible for their own health-care costs.
Detroit’s voters elected a new mayor, and the business community, too, realized that no outside help was coming: The city began making its downtown more attractive to start-ups and doing basic things like improving bus service for lower-income workers.
No, New York isn’t Detroit, but the analogy doesn’t work in our favor. Detroit lost its major industry and its tax base over 50 years. After four decades of continuous economic boom in the Big Apple, what’s our excuse for being so broke, so quickly?
Speaking of which, a few years earlier, the Bush-Obama bailout of Michigan’s auto industry hardly held its workers harmless. Auto workers agreed to cuts in pay.
Then there’s Pennsylvania. The capital city, Harrisburg, filed for bankruptcy in 2011. A judge rejected it (yes, you have to be approved for bankruptcy), but the threat forced union workers to agree to pay and benefits cuts.
Scranton, Biden’s hometown? Eight years ago, the mayor slashed all government workers’ pay, including his own, to minimum wage, in a successful bid to wring cuts to employee benefits.
Finally, in Wisconsin, former Gov. Scott Walker reduced government workers’ ability to bargain for benefits 11 years ago. His Democratic successor hasn’t acted to reverse this measure.
Are swing voters in these states going to have sympathy for New York?
De Blasio won’t even gingerly mention what other states and cities started to do long ago: ask public-sector employees to contribute to health insurance, for example, or ask young retirees to pay for health benefits on ObamaCare exchanges. (In the private economy, for that matter, older retirees pay for their own Medicare premiums; the city picks up this tab for its own well-compensated retirees.)
Hizzoner won’t ask for even the most basic “sacrifice”: a wage freeze.
Yes, the new president and the new Congress should enact extraordinary aid for states and cities — and yes, New York should get its proportionate share. But absent leadership on proactive cuts that do the least harm to public services, that won’t be enough. Our leadership consists of asking Scranton and Detroit to rescue the most entitled city in the land.
Nicole Gelinas is a contributing editor of City Journal.
Twitter: @NicoleGelinas
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