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Could New York Go Bankrupt Again?
Today's guest is Richard E. Farley, author of Drop Dead, a history of how the richest city in America got addicted to spending, saturated in debt, and crashed the municipal bond market—and then managed to get a federal bailout in the nick of time.
In 1975, New York City almost went bankrupt. Farley argues that the same conditions are reemerging today: runaway budgets, gimmicky accounting, overpromised entitlements, and politicians more interested in ideology than arithmetic. He wrote all this before the rise of mayoral candidate Zohran Mamdani, who promises to blow spending through the roof, enact new taxes, and create masses of new regulations.
If you want to understand what it takes to bankrupt a city, listen up. New York might be sleepwalking into another fiscal disaster, and this time, there might not be a bailout waiting.
0:00—Intro
1:24—Mamdani's agenda and economic collapse
6:03—How New York went broke in 1975
8:21—Budget fraud and political chicanery
12:20—Out of control spending
16:20—Municipal bond market saturation
20:11—Bailout politics of Mayor Abraham Beame, Governor Hugh Carey, and President Gerald Ford
31:47—Who is Felix "the Fixer" Rohatyn?
36:37—Why the budget grew during the austerity era
38:59—How NYC returned to budget normalcy
42:53—Is New York repeating the mistakes of its past?
47:00—Mayor Eric Adams and former Gov. Andrew Cuomo
50:12—Why NYC won't return to the Bloomberg model
56:32—Generation gaps and voter behavior
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Transcript
This is an AI-generated, AI-edited transcript. Check all quotes against the audio for accuracy.
Nick Gillespie: Richard E. Farley, thanks for talking to Reason.
Richard Farley: Thank you for having me.
You work in the world of finance and all of this—what is your best estimate of, if Mamdani wins in the fall and he gets his, you know, he runs the table, he gets to do everything he wants. What happens to the population of New York?
Well, let's talk about what happens to the fiscal situation and the taxes, because that will drive a lot of it. And also, there's one thing we need to talk about too, which is law and order.
I think that if you increase the budget by $20 to $25 billion—which I think he's clearly capable of doing—we're not even talking about the nonsense about grocery stores, although he's only saying 5 or 6 grocery stores. So that's probably a sidebar.
If you increase the budget by $20 billion—which I think he's capable of doing—that's an increase of 15 to 20 percent in a time when every projection says revenue is going to decrease. If you throw into that taxes that will drive people to New Jersey, Westchester, etc.
Or totally out of the area.
Or totally out of the area. That could create a structural deficit equal to that. That money's not coming from the federal government as long as Trump's here, and there's a Republican Congress—or even one house of Republicans.
And part of what you argue in the book is, the bigger difference too, is New York is still the fourth most populous state, but it is n
Published on 1 month, 1 week ago