New York Fiscal Crisis
In 1975 the mayor and governor of New York met with President Gerald Ford in order to receive assistance. At the time New York was very low on cash and couldn’t quite cover all of its expenses, therefore they needed help from the government in order to stay afloat. However, despite the needs of New York they were turned down, leaving New York to deal with their own problems. In order to avoid bankruptcy the state would rely on large loans and reduce their spending; its government leaders drew up plan after plan to help their beloved state escape turmoil. The city’s economy was being hurt by the massive migration to the suburbs and a large decrease in the manufacturing businesses. As time went on the overhead of the city was on the rise. Prior to further economic problems the US as well as New York’s government assisted with the cost. However, when issues such as skyrocketing inflation hit New York had to borrow large amounts of money to avoid bankruptcy. The government leaders just believed that their loans would only be temporary, but when recession occurred the banks as well as investors that gave money to the New York government suddenly became cautious and demanded reassurances. When these weren’t met the bond market was shut down and New York was yet again unable to pay all of its expenses. In response to this the Municipal Assistance Corporation was created that assisted New York in taking care of the overhead by having bonds supported by sales tax. However, this failed and the Emergency Financial Control Board was made to guide New York during a time of economic strife. The saving grace for New York was the assistance they received from Washington, as they made a deal to keep the city out of bankruptcy. Even though New York was now safe the cuts in government paid jobs took a serious hit. In the article titled "The Legacy of the 1970s Fiscal Crisis" by Kim Phillips-Fein the serious economic problems that plagued New York, almost to the verge of bankruptcy, are discussed.