WTC Records Folder 0140 label, 2001

NYC 9/11 Public Portal Document

trying to prop up the stock market. But to a very weak economy we have now added the shock to public confidence created by the terrorist attacks, as well as a huge national loss of jobs -- the airline industry alone expects to eliminate 100,000. The result is bound to be negative for the city and the state. Alan Hevesi, the city comptroller, has estimated the total economic loss to the city as a result of the attack on Manhattan at more than $100 billion, a truly staggering figure.

In this context the city and the state have to be treated as a single unit. Few remember today that in the winter and spring of 1976, the State of New York was shut out of the public markets and was unable to sell its bonds because of the fiscal weakness of the city.

It took five years, from 1975 to 1980, with enormous sacrifices on the part of all New Yorkers, with the strong support of the city's labor unions and the The New York Times, October 9, 2001

banks, to close a gap of about $1.5 billion on a city budget of $15 billion. And this took place in a relatively benign economic environment, at a time when New Yorkers, by and large, were confident that we would prevail. Now we are facing a potential deficit of $4 billion to $6 billion on a $39 billion budget. Is it reasonable, under existing circumstances, to believe that the city and the state can close budget gaps of possibly $6 billion each in one fiscal year and maintain the city as a viable economic and social entity?

It would be impossible to do so as a practical matter, but it would also run counter to President Bush's stimulus program. New York will not be the only city with a large budget deficit next year, though it will have the biggest one, some of it due directly to the attacks on Sept. 11. Nor will ours be the only state in trouble. Layoffs throughout the declining economy, both reducing revenues and increasing costs for state and local governments, will undo many of the positive effects of any federal stimulus program proposed by President Bush.

It is urgent that our governor and mayor, with their counterparts in other parts of the country, develop with the Bush administration a plan of short-term assistance to states and cities, one that would prevent what is likely to be a hard national recession from turning into a real depression. Such a plan could include a temporary assumption by the federal government of certain state and local costs, coupled with incentives for local tax reductions, federal The New York Times, October 9, 2001

guarantees to pension funds for the financing of infrastructure projects, and private-public partnerships for functions like school construction.

In 1975, after years of overspending and excessive borrowing camouflaged by accounting fictions, New York was widely viewed as the main culprit in its problems, deserving of a bankruptcy. Federal help in the form of loans and loan guarantees came only after President Valery Giscard d'Estaing of France and Chancellor Helmut Schmidt of Germany warned Mr. Ford that a New York bankruptcy would set off a crisis for the dollar and impair America's credit. Now New York has a good fiscal record as well as the nation's sympathy, and its importance to the national economy is well recognized.

As long as the international situation remains as cloudy as it is now, as long as Americans have to respond to calls on the one hand to live a normal life and on the other to be ready for more terrorist attacks, it is unrealistic to expect a strong economic recovery. We should be realistic about what this

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