New York, 1975: New York, 2025

Old New York

The New York City that Zohran Mamdani will likely take responsibility for as the next mayor is a different city than it was in the 1975 when Abe Beame was mayor. During the post-World War II era of 1945-1975, it was the capital of the 20^th century, the locus of American life and hub of the great global capitalist recovery. Today, it retains preeminence in financial services, media and glamour, but its relative standing has been eclipsed both domestically and internationally.

The growth of strong regional metropolises like Miami, Dallas, Chicago, Los Angeles, San Francisco, Seattle and Washington, DC, eroded the New York’s national hegemony. The restructuring of the global economic order has left the Big Apple a steppingstone to Shanghai, the likely capital of the 21^stcentury.

The postwar recovery plateaued out during the ‘70s and the social challenges this fostered came to a head in city’s fiscal crisis of 2008. New York was hit hard by postwar suburbanization, the mass “white flight” propelled by the GI Bill and Robert Moses’s mad reconfiguration of the city’s transport infrastructure, parks and public housing. Numerous major New York-based corporations relocated, taking their workforces with them; the city’s tax-base withered.

Paris, during its postwar reconstruction, pushed the poor to the city’s periphery; postwar America lured white, middle-class city dwellers to the Levittown suburbs sprawling across the country. Social life was re-centered, shifting from the city to the ‘burbs. Private homes, cars, TVs and malls became the America’s new reality. This shift profoundly altered life in the nation’s cities, especially Gotham.

1975 Fiscal Crisis

Kim Phillips-Fein opens her carefully researched and pointedly critical study, Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics (2017), with these memorable words: “On October 30, 1975, the New York Daily News printed the most famous headline in its history: ‘Ford to City: Drop Dead’.”

She focuses on the fiscal crisis that gripped the city for much of the 1970s and came to a head in ’75 when the then-mayor Beame considered declaring bankruptcy. As she reflects, “the financial collapse of New York would be the ultimate symbol of American economic decline, a demonstration to the whole world that the United States was no longer the preeminent nation it has been over the postwar years.” The city did not declare bankruptcy, but what did occur is more telling. It set the stage of a new phase in the New York’s historical development and the rise of global financial capital along with corporatists neo-liberalism.

Phillips-Fein, author of Invisible Hands: The Businessmen’s Crusade Against the New Deal (2014), brings a strong sense of drama to her reconstruction of one of the most pivotal moments in the city’s long history.  Like a good documentary filmmaker, she tells a compelling story that combines portraits of key people involved in the crisis with a wider view of the social context in which the crisis took place.

At her best, Phillips-Fein writes empathically on the toll the crisis bore on city residents, especially the poor and people of color. She also dissects its impact on representative neighborhoods (e.g., Greenpoint-Williamsburg) and public institutions (e.g., public hospitals). She documents how the mounting crisis led to innumerable popular demonstrations, marches, strikes, sit-ins and culminated in the wide-spread looting and fires in the Bronx that accompanied the blackout of July 13, 1977.

As memorable as the Daily News headline, in ’75 the Council for Public Safety, a front group representing police, firefighters and other unions, published Welcome to Fear City: A Survival Guide for Visitors to the City of New York with a skull on the cover. It warned tourists not to walk after 6 p.m., or leave Midtown, or take the subway. It was released as city workers faced the threats of layoffs, wage freezes and mounting insecurity.

The mid-70s was a period that saw a spike in rapes, assaults, robberies, burglaries a car theft and the murder rate double in a decade, from 681 in 1965 to 1,690 in 1975; New York’s 2024 murder rate was 377.  The city appeared in free-fall, a sentiment captured in movies like The French Connection (1971), Death Wish (1974), Taxi Driver (1976) and The Warriors (1979).

Making of a Fiscal Crisis

Phillips-Fein reveals how the fiscal crisis was long in coming … and inevitable. Its denial was a victim of a “kick-the-can-down-the-road” political philosophy shared by the two mayors of the postwar recovery, Robert Wagner (1954-1965) and John Lindsay (1966-1973). And the metaphorical “can”? — debt.

Both mayors understood that city revenues did not cover its costs, both daily operating and long-term infrastructural expenses. They both chose to hide this reality through increased city borrowing. In 1974, when Beame took office, the city’s debt was, as she says, “in the ballpark of $10 billion” whereas it was about $4 billion in 1965.

Why did it matter that the city’s debt more than doubled in a decade? Phillips-Fein makes clear that over the preceding two decades, mayors and other officials swallowed hard, juggled the books and went on as if then-current problems would be solved by themselves.

But in the early-70s, the U.S. faced a severe recession and Pres. Richard Nixon took major step to address it. He ended the dollar’s equivalence to the gold standard and imposed a nationwide freeze on all prices and wages. Compounding the deepening crisis, the major oil-producing countries orchestrated a global energy crisis which sent the global economy into a tailspin. In the ‘70s, U.S. and global capitalism began to restructure, and the old model of future-funding no longer worked. As the crisis mounted, an insider admitted, “the city is fucked.”

Sadly for New York, banks were no longer interested in municipal bonds; there were better ways to make money. The past finally caught up with the present and Beame was holding the proverbial debt bag. Once an old-fashioned New Deal Progressive, he succumbed to the new fiscal-policy reality of austerity, of increased inequality, imposed by their bankers and their enforcers.

Beame ordered cuts to the police, fire-fighters and sanitation workforce; he imposed wage freezes on city workers and laid-off teachers; approved ever-increasing subway fare increases; shut down municipal hospitals; and – for the first time since it was founded in 1847 – introduced tuition at the City University. Phillips-Fein follows the crisis through Ed – “How’m I doin’?” – Koch’s liberal retrenchment (1977-1989). “The city would adopt strategies of development that focused on tax breaks,” she notes, “and run campaigns designed to market the city who didn’t there: tourists, executives, companies that might come and do business in New York.”

The most telling aspect of Fear City involve Phillips-Fein’s consideration of Pres. Gerald Ford’s key henchmen during the city’s fiscal crisis – notably Alan Greenspan, Chairman of the Council of Economic Advisors and two Chief of Staff, Donald Rumsfeld (1974 to 1975) and Dick Cheney (1975 to 1977). She makes clear the crisis turned once social welfare minded New Deal Progressives into postmodern fiscally conservative neo-liberals.

New New York

In the decades since the crisis, the city and city life were fundamentally changed. For all the hipster hype about the “sharing” or “gig” economy, New York is more divided between the super-haves and the rest of us than any time since the Robber Barons of the late 19^th century.

In March 2024, New Yorker Controller Brad Lander reported: “As of June 30, 2023, the City’s debt limit was $127.4 billion, and total indebtedness counted against it was $96.9 billion, leaving remaining debt-incurring power of $30.5 billion, or 24.0 percent of the limit. Sadly, Mamdani’s campaign website does not address the issue of the city’s debt.  However, he is proposed borrowing $70 billion over the next 10 years to tackle New York City’s affordable-housing crisis.  This would push the city’s debt over the NY State imposed limit.

Financial crisis is an endemic feature of capitalism. The suffering that gripped New York in the 1970s is now gripping many U.S. cites (e.g. Chicago, Houston and San Francisco) as well as countries including Argentina, Pakistan, Egypt and Ghana. Phillips-Fein’s Fear City is an excellent primer as to the complexity – and human consequences – of such crises.

A fiscal crisis may greet Mamdani if/when he becomes mayor.  According to The New York Timesreport, “JPMorgan Chase, the nation’s largest bank, put the odds of a recession by year’s end at 40 percent.”  Making matters worse, Pres. Trump has set his sights on the likely next mayor with an $18 billion cut in federal funds for a Second Avenue subway extension and new train tunnels under the Hudson River.  This will intensify the pains for poor and working-class New Yorker due to cuts in Medicaid and food stamps.

Some conservatives see the handwriting on the wall. Eric Kober, a senior fellow at the conservative Manhattan Institute, writes: “But the city projects large gaps between revenues and expenditures in future years: a $5 billion shortfall in FY2027, rising to $6 billion in FY2028 and FY2029. To make matters worse, the Citizens Budget Commission (CBC), a nonpartisan watchdog group, projects that the FY2026 budget is $3 billion short of planned spending, and that out-year gaps are more like $8 billion–10 billion.”

Zohran Mamdani will face many challenges if/when he takes office – one can only hope it won’t be a replay of 1975.

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