By JACK NEWFIELD
The two greatest mysteries perplexing the labor movement in recent
years are what happened to Jimmy Hoffa senior, and what happened
to the great New York City surplus of the late 1990s.
I’ve got the answer to one of them: Rudy spent it. He threw
away the jackpot trying to make himself senator — and failed
anyway. It’s now apparent that Giuliani purchased the city’s
good times partially with borrowed money and left Mike Bloomberg
holding a bag of debt.
New York City went from a $3 billion budget surplus in 1998 to a
$4.5 billion deficit when Giuliani left office. This mismanagement
of prosperity is a large part of the Giuliani legacy. He left city
finances in a mess that was aggravated by the recession and the
collateral economic damage of 9/11.
“On debt, there was no discipline at all,” said Conservative
Tom Carroll, the president of Change New York. Some fiscal watchdogs
saw this coming, including former State Comptroller H. Carl McCall.
In July 2001, McCall declared: “The most responsible use of
the record surpluses would have been to reduce the debt burden and
build a reserve fund for the rainy day that will inevitably come.”
The surpluses “afforded the city a golden opportunity to get
on the path toward long-term fiscal stability. The opportunity has
been squandered,” said McCall. “Instead, on the heels
of unprecedented prosperity, the city faces the prospect of service
cuts. That’s simply inexcusable.”
Giuliani spent his surplus in two ways. First, on projects he thought
would help him win his Senate campaign in 2000 against Hillary Clinton.
And then on polishing his legacy in his final year, after he pulled
out of the Senate race. Most of the current budget deficit is Giuliani’s
responsibility. Tax cuts he enacted since 1995 — benefiting
mainly the wealthy — cost the city $2.2 billion. He added 25,000
employees to the city’s payroll, including thousands of patronage
hires that came from political leaders he was allied with.
The Housing Authority and Dept. of General Services became notorious
as patronage dumping grounds, and he installed a patronage dispenser
right in City Hall.
Giuliani used fiscal tricks to dump the costs onto future generations.
City Comptroller William Thompson told me: “About $2.5 billion
of the city’s $5 billion budget deficit in fiscal 2002 was
attributable to Giuliani. He rolled over the debt each year and
funded the projects and programs he thought would benefit him politically.”
During Giuliani’s term as mayor, total city debt rose by more
than half to about $42 billion in loans outstanding, making us the
biggest debtor in the nation outside the federal government.
The cost of paying off the city’s bonds is up from 15 percent
of tax revenues when he took office to a projected 19 percent by
2005 — squeezing spending on healthcare, education and other
services. One place where Giuliani did not spend his surplus was
on workers or union contracts.
He was actually a profligate spender — but without targeting
the spending towards the poor and most needy. The city’s economic
future is now in history’s pawnshop, because of Rudy Giuliani’s
ambition-driven, and legacy-driven spending and borrowing between
1999-2001.
This article is based on Jack New-field’s
new book, “The Full Rudy: The Man, the Myth, the Mania.”
($11.95)
DC 37
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