In 1975 New York City was in danger of bankruptcy.  It needed help to pay its bills.  That the nation’s greatest city could be in such trouble was inconceivable to most people.  However, not everyone was surprised, because in several areas, such as public health, housing, education, and child day care the city had been providing expensive services.  To those observers it now appeared that such generosity had created the predicament.  To local political leaders, Washington had to assist. Then came the shocker.  On October 30 a Daily News front page headline, “FORD TO CITY:  DROP DEAD,” gave the impression that the President of the United States would permit the city to fail.  In the eyes of many, the city’s fathers, notably former mayors Robert F. Wagner, Jr. and John V. Lindsay, and now Abraham D. Beame, had through their policies created a financially unsound socialist utopia.  Interpreted as callous by advocates for the city, Ford’s attitude as reflected in the headline was politically explosive.

Students of this crisis, such as Joshua B. Freeman, Rick Perlstein, Seymour B. Lachman and Robert Polner, have studied its origins and consequences.  They noted that it was preceded by an economic recession and other factors beyond the city’s control, and that its resolution had a devastating impact on the city’s poor.  In Fear City:  New York’s Fiscal Crisis and the Rise of Austerity Politics, Kim Phillips-Fein adds her voice.  The author of Invisible Hands:  The Businessmen’s Crusade Against the New Deal, she contends that the crisis of the ‘seventies has been exploited by foes of social justice to the present day.  Citing debt crises in Greece, Puerto Rico and Detroit, she notes that they argue that austerity is “the only option” to avoid municipal default. To Phillips-Fein, theirs is “a political choice,” not an economic one.

Politics was on Gerald Ford’s mind when he made his speech on New York. He never said the city should “drop dead,” but did suggest that the city financially restructure through bankruptcy.  To the final draft of his speech before the National Press Club, he added, “I can tell you that I am prepared to veto any bill that has as its purpose a Federal bail-out of New York City to prevent a default.”  According to Phillips-Fein, Ford’s aim “was to open the way for an orderly collapse.”  However, not anticipating the hostile reaction, he was “stung by the general hostility” to his words.  As the author observes, his “real position was exactly as it harsh and strict as it appeared.”  Thus the headline and the sharp reaction.

Based on a numerous archival materials and collections, this account of the crisis adds depth and authority to the many accounts already available.  Also well-written, it contains deftly sketched portraits of many key figures, such as municipal union presidents  Victor Gotbaum and Albert Shanker and mayors Abraham D. Beame (“The Neighborhood Bookkeeper”) and Edward I. Koch.  Its title captures the mood of New York in 1975, when a leaflet shouted, “WELCOME TO FEAR CITY,” and called itself “A Survival Guide for Visitors to the City of New York.”

In December of 1975 Congress ended the crisis.  It passed the New York City Seasonal Financing Act, which provided loan guarantees needed by banks and New York State to obtain credit.  However, as Ms. Phillips-Fein demonstrates, the politics of austerity in the years that followed contributed to a city in shambles.  An evening power blackout on July 13, 1977 left the city dark and dangerous; “more than 1,600 stores in neighborhoods all over the city were robbed” as “some 10,000 of the city’s 25,000 active-duty officers failed to respond to the police commissioner’s orders to report immediately for service.”

By 1978 the city “was still shut out of the credit markets, unable to borrow money” as its public infrastructure crumbled and fear of default had returned.  The city’s new mayor, Edward  Koch, “determined to reject the welfare state politics of earlier years, assumed a “populist persona” and rejected programs to assist the city’s minority population. In Washington, the new president, Jimmy Carter, declined to offer federal assistance to deal with urban problems.  Poverty deepened as government spending tightened.  Three-term mayor Koch accused his predecessors of attempting to make New York “the No. 1 welfare city in America.”

As vividly described in Fear City, cutbacks mainly impacting the poor were a significant part of New York in the ‘seventies.  “Between 1974 and 1977, the workforce of the Department of Health shrank from 4,400 full-time and 1,600 part-time employees to 3,300 full-time and 1,000 part-time

Workers.  Its staff of nutritionists fell from twenty-three to five.” In 1977, as deaths from fire rose in the city “to 330 (up from 232 the year before), the city was closing firehouses.  That year the city lost “more than 500 employees.”  In the Greenpoint-Williamsburg section of Brooklyn, Engine Company 212, known as “the People’s Firehouse,” resisted shutdown only because of fierce community opposition.  Also surviving was “the College in the [Abandoned] Tire Factory,” Eugenio Maria de Hostos Community College of the City University of New York, located in the South Bronx.  Local support also saved this school, but the University survived on the condition that it abandon free tuition and end its policy of Open Admissions, which gave a college seat to every city high school with a diploma.  The university nevertheless terminated “five thousand part-time and a thousand full-time” employees. The mood was ugly.

In her conclusion, Ms. Phillips-Fein observes that New York now enjoys prosperity, but also “desperate poverty.”  It may be added that austerity has contributed to significant racial and ethnic change.  A remaining question is whether social democracy will again be a civic priority.