Aid for New York

AS New York City lingers on the brink of default, President Ford last week reconfirmed the notion that he's more committed to his own political future and to this country's corporations and to the few men who run them than to the people as a whole.

The city's situation is grave and while it's hard to say who or what exactly caused all its financial problems, even President Ford and the Federal Reserve Bank are--through backdoor guarantees to the private banks that might be affected--anticipating "ripple effects" from default. Vice-president Rockefeller links the entire nation's economic well-being to New York's fate.

President Ford calls these and other predictions about what will happen in the event that New York defaults "the blatant attempt in some quarters to frighten the American people and their representatives in Congress." Ford didn't exactly allay the fears of New Yorkers when they came within hours of default two weeks ago. By delaying executive action and then rejecting the idea of any federal aid--either by the executive, through Congress or through the Federal Reserve Bank--Ford has looked not to the nation's concerns but, while facing a tough battle with Ronald Reagan, to the political mileage that could be garnered from New York's plight.

Ford would have this country believe that he's concerned about New York's spending policies, yet his own record in the House of Representatives Armed Services Committee and as president, show that these concerns are cast aside for enormous overruns on taxpayer-funded defense contracts. In his actions, as John Lindsay pointed out, there "were none of Mr. Ford's critical concern for waste, mismanagement or policy."

And while Ford's Secretary of State, Henry A. Kissinger '50, continues to support economic aid to Chile and asks Congress for $250 million in economic aid to a fascist government in Spain, the president maintains that he will not give a penny of extra federal money to New York City.

In support of this austere policy, Ford points to the fact that New York City's wages and salaries are the highest in the United States and says the city has been "courting disaster." He points to New York's hospital system, one of the best in the country, and to the city's university, with its free tuition and open admissions policy and he talks of "unbalanced budgets" as if the city were responsible solely to the accountant's sheets and not its 8 million people.

New York's services, its hospitals, its open university, and its policy toward city workers have all been models to other cities in the country--even if its spending has outrun its revenues. And it is not entirely clear that the city's problems arose from these and other programs as much as the inequities of federal and state reimbursement formulas for New York's welfare system--inequities that make New York State 39th on the list of states receiving federal welfare subsidies, and force the city to take half the burden of welfare for single adults, childless couples and the working poor, for whom the Federal Government accepts no responsibility.

It seems that even with the best of management--and clearly Abraham Beame has not provided this--New York would still have faced severe financial problems some time in the future. The exodus of city-dwellers into the suburbs, the Great Society programs started in cities by the federal government, which then dropped funding for these programs, we must recognize the impact of the national economy on it economic problems.

Moreover, New York's plight cannot be viewed in a vacuum; we mus recognize the impact of the national economy on it and other cities. New York is now one of the most expensive places in America to live. And the city's deficit is by far the highest, but not because municipal union workers have demanded too much money--although admittedly, some of the union's pension policies need reforms--but because of an economy besieged by inflation, due in part to massive defense spending and unrestrained monopoly corporations' continual price raising.

President Ford claims that federal subsidies to New York and other cities would make them unresponsive to investors in city bonds and thus irresponsible in their spending. But his analysis hardly touches on the city's responsibility to its people, a responsibility that the federal government should share. For years now urban residents have been paying federal taxes to support farmers with billions of dollars in federal subsidies--including money to landed gentry not to grow crops. As regional economic interdependence in the U.S. becomes even more complex it is vital that the federal government give aid to this country's cities. New York deserves this aid immediately.

Ford's concern for New York's investors betrays a certain duplicity. While he seems to regard New York as a corporate entity, he fails to recognize that because the federal government, through the Federal Reserve Bank, has time and again subsidized major corporations nearing default, he owes aid to the city. Lockheed is a classic example of federal subsidies keeping a corporation afloat, although Ford now likes to think of that bail-out as "I don't know, it might have been a mistake." When Con Ed skipped its regular stock dividend in 1974, banks' loans to electric utilities, as a result of Federal Reserve Bank officials' pressure, jumped from $5.9 billion to $8.4 billion. The Fed will most certainly use similar backdoor techniques to ensure that New York's banks don't go under after default, but it could also extend these forms of economic assistance to give New York enough money to avoid default.

New York is more than just a corporation, and its long-term problems, as well as other cities', will not be solved by short-term stop-gap measures, although these might be sufficient to avoid default in early December. The federal government has the clear responsibility to come forward with a carefully, worked-out plan of federal subsidies for all cities--a plan that will include some form of autonomy for city budgeting (unlike the legislation for loan-guarantees presently before Congress calling for a three-man board with absolute power over New York's spending policies) and with some form of accountability to Washington agreeable to cities and the federal government alike.