Tag Archives: financial crisis

The Hon. Edward Koch: How am I doing?

There are certain world-renowned wonders that are automatically associated with New York City (NYC). Mention Central Park to anyone and they immediately talk about it being in the City of New York. Images of Times Square seem imprinted on the minds of anyone who talks about visiting the City. The Statue of Liberty stands at the mouth of NYC’s harbor as a welcoming beckon to those fleeing prosecution. It seems like everyone, foreigner or national, can tell me something about the Statue of Liberty and its location off the lower end of Manhattan. Depending on your point of view, Wall Street forever represents NYC’s place in the world of finance and power or greed and excess. The iconic symbol of the Yankees is well-known in almost every part of the world. The World Trade Center and 9/11 can only be spoken of in relationship to NYC. Madison Square Garden represents NYC’s preeminence in sports and world-class musical concerts. Irrespective of Geo-location and age most people associate certain symbols only with the City.

Depending on your date of birth or current residency you might not associate certain personalities with the City of New York. The captain of the Yankees, Derrick Jeter, is a City Icon. He is seen as representing the notions of fair play and excellence that have come to symbolize life in NYC. Willis Reed  represented the grit and determination of the City when on May 8, 1970 he hobbled onto the basketball court at Madison Square Garden to lead the Knicks to an NBA championship. Joe Namath predicted that the New York Jets would win Super Bowl III and they did. He came to symbolize NYC’s ability to beat all the odds and succeed. After the attack of 9/11 then Mayor Rudy Giuliani represented the collective resiliency and determination of city residents. The mention of Michael Bloomberg evokes a vision of a mayor who is waging a campaign to make a NYC in his image, regardless of the rights the he might trample in the process. In my opinion the person who best symbolizes what it is to be a New Yorker was former Mayor Edward Koch. He is often affectionately called “Mr. New York.”

Tevi D. Troy noted in his February 1, 2013 post in the City Journal that Koch “was a character, a media celebrity and quick with a glib.” As a three term Mayor of the Big Apple Ed Koch handled the media, criticism and the voters with a deft hand that was always geared towards consensus building. His political skills raised him to the office of mayor in 1977. Some of his critics describe him as brash, condescending, arrogant and out-of-touch with his day’s political parties. But it was just this chutzpah that earned him the respect and admiration of all New Yorkers, including many his political critics. Edward Koch passed on February 1, 2013. The City lost an iconic symbol of what it means to be a New Yorker. Importantly, he led the effort to reform of campaign spending laws in NYC. These laws ushered in an era of greater democracy and citizen participation in the political process.

In 1978 I returned for good to the City after years of study in Michigan. Decay and disarray had spread like a cancer NYC for years. When I arrived its infrastructure had badly deteriorated was in complete disrepair. I was not ready for a city that had fallen “so far down the tubes.” The streets were dirty with garbage littered about. The subways were filthy, service was spotty and irregular. The subways cars had not heat in the winter and no air conditioning during the hot summer months. Crime below and above the ground was rampant. To make matters worst the City was on the verge of fiscal bankruptcy. The average New Yorker had long ago lost hope that the things could be turned around. As the newly elected mayor Edward Koch had to deal with an ever-deepening fiscal crisis, blackout riots, and the wounded psyche of the average New Yorker. Yet Mayor Koch offered hope, solutions and took concrete steps to turn the City’s fortunes around. I remember running into him in lower Manhattan. He was greeting the average New Yorker with his coined phrase; “How I am doing?” Ed Koch was not afraid to be judged as Mayor. He welcomed and actively solicited comments about on his performance. Can anyone name one well know politician with the nerve to ask his (her) constituents to publicly evaluate his performance?

Given the difficulties that Mayor Koch faced I think he saved NYC from itself. He forever changed the way NYC operates and conducts business. These subtle and pronounced changes allowed the City to escape the fiscal abyss that it had sunk into. Koch, the ever astute politician and consummate consensus builder, crossed political lines in order to move the City towards a more stable footing. He often feuded with other politicians and community leaders only to later bury the hatchet. Even after retiring from public office Mayor Koch remained in the public spot light until his passing.

We should thank Edward Koch for his tireless work and dedication to restoring pride in being a New Yorker. He proved to us New Yorkers that we live in dynamic and special city. He was truly a political liberal with a fair amount of sanity. Today’s politicians should take a page for Koch’s political playbook and put aside rigid ideological constraints and govern by consensus with the public’s interests as the primary goal.

America’s Dance at the Edge of the Fiscal Cliff

Every once in a while each one of us sits down with pencil and paper to go over our budget. We are determined to make sure that our expenses can be covered by our income. If it is discovered that we might be operating in the red we panic mode sets in. We look for ways to close the budget gap. Businesses go through the same process but on a larger and more technical scale. The universal quest is to have a balanced budget. After the financial crisis of 2007-2008 no one wants to finance their budgets by taking on more and more credit. Money borrowed must be repaid with interest. Substantial interest payments can break any well thought out and controlled budget.

Unfortunately the Eurozone nations (EZ) and to a lesser degree the United States find themselves struggling with a sovereign debt issue. The European financial bloc has struggled for the past two years to bring its member nation’s national debt down to sustainable levels. The EZ has had to bail out the economies of Greece, Portugal and Iceland to prevent their economies from collapsing. Politicians, financial organizations, experts and an assortment of pundits have debated the appropriateness of stimulation packages versus austerity measures. Spending more money to stimulate an economy is politically popular but, in the end, might exacerbate the debt problem. Austerity measures are designed to cut back governmental spending and lessen its role in supporting the economy. Because austerity normally leads to drastic changes in the standard of living residents have taken the European streets to protest the hardships that go with drastic reductions in governmental spending. On November 8, 2012 the Greek parliament again approved a series of austerity measures which legislators hope will entitle the nation to continued bailout funds. The debate of the measures and their final approval was greeted by street protests and wild-cat strikes. Austerity measures have often provoked massive protests and civil unrest. For the time being it seems that Greece will continue as a member the EZ.

The contentious U.S. presidential election is finally over. Most Americans are happy that they will no longer be bombarded with campaign ads loaded with political rhetoric that the candidates have not intention of adhering to. President Obama won reelection and he deserves to be congratulated.

Before November 6, 2012 it was generally agreed that budget woes awaited the winner of the election.  An excellent piece appeared in the Atlanta Daily World about the problems the winner would face. Last year Congress passed the Budget Control Act of 2011 (Budget Act) which was signed by President Obama. The Budget Act was a response to the political debate surrounding the need to continuously raise the nation’s debt ceiling. Treasury Secretary Tim Geithner told CNN that a deal had to be reached. He argued that America’s faith and credit should not be held hostage to politics. Experts had predicted that if the debt ceiling was not raised there would be higher interests rates, home values would sink even lower, the stock markets would lose much of their value and a half of million jobs would be lost.

Last year it seemed like there was universal support for raising the nation’s debt limit. There was much disagreement on the terms and condition for raising it. Because Congress was not able to agree on a permanent solution to the U.S.’s growing sovereign debt problem the nation’s legislators agreed to sever cuts in various programs, impose spending caps, increasing debt ceilings and to allow certain tax exemptions to expire. These automatic measures are to take effect on January 1, 2013 if no further legislative compromise can be reached.

The legislation also established the “Super-Committee.” This is a 12 man committee with 3 members from each party and each chamber of Congress. This group was tasked with cutting the deficit by $1.2 trillion over the next ten years. If deficit cutting legislation is passed the President could again borrow more money. Importantly Congress cannot amend or filibuster any plan; it can only approve or reject it. The committee has met and considered the options. Unfortunately for the nation the members are evenly split on their proposals and thus no plan has been sent to Congress. This impasse and the impending cuts and caps have been termed the “fiscal cliff .”

It is fair to accuse both major political parties of playing politics when it comes to raising the debt limit. When Congress is in Republican hands they tend to pass legislation that raises America’s borrowing ceiling while the Democrats oppose it. When the Democrats control Congress they support legislation to raise the debt ceiling while the Republicans take a contrary position. The political debate surrounding the consideration of the Budget Act showed a shifting of political position of the parties, albeit some of their members had a clear understanding of the problem. Because the national debt is so large the interest payments are astronomical. The nation is continuing raising the debt ceiling to borrow more and more money to pay the interest due on the staggering debt. Some of the newer Republican members of the House of Representatives refused to follow the Party’s leadership and voted against the Budget Act. They did not believe that the debt ceiling should be raised without legislation that would greatly and permanently reduce