Gotham Goes Broke?
CANNATO, VINCENT J.
Gotham Goes Broke? One New Deal was enough. BY VINCENT J. CANNATO In 1918, the philosopher John Dewey wrote about the "social possibilities of war." World War I presented Progressives like Dewey...
...This historical amnesia also goes hand-in-hand with a sometimes snarky tone that substitutes caricature for sound historical and political judgments...
...But this will most likely not deter other voices from joining the "social possibilities of war" chorus, the latest of whom is Pulitzer Prize-winning historian Mike Wallace...
...What we need, I think, is a new New Deal...
...Proponents of greater government activism try to evoke memories of the Great Depression as a rationale for their policies...
...Adrift and confused, the left has little to offer other than a longing for a misunderstood past...
...And nearly every-one—left and right—agrees that urban renewal and high-rise, low-income, public housing were well-intentioned government failures...
...Even the scandals surrounding companies like Enron have barely budged Schumer's "tectonic plates...
...He wrote that the "the tectonic plates beneath us are inexorably moving us to larger federal involvement" and that a "'new' New Deal is upon us...
...Ever since, liberals have been looking for war's moral equivalent...
...Higher taxes, economic planning, and the regulation of wages and work hours were all unthinkable in peacetime...
...Yet nostalgia, that most reactionary of emotions, seems to have crept into the ideology of our most "progressive" thinkers...
...First, we must firmly reject the notion that 'there's no money...
...In 1939, only 4 million people paid personal income taxes (out of a population of around 130 million...
...Liberals dismiss talk about taxes as a form of selfishness on the part of an ungrateful or ungenerous public...
...He also is right that the tactic of corporations finagling large tax breaks from local government by threatening to move is often a velvet-gloved form of extortion...
...From reviving and diversifying the city's economy, to improving its infrastructure, to increasing affordable housing, many of Wallace's ideas are culled from various organizations, think tanks, and interest groups throughout the city...
...Conjuring up images of noble relief programs, compassionate social insurance plans, and grand public works projects, Wallace wants Americans to abandon their skepticism about government and their aversion to taxes and warmly embrace the spirit and policies of the New Deal, not just for New York but for the entire country...
...Yet Wallace's dark view of the American economy is unconvincing...
...Maybe these outbursts mask something deeper...
...Wallace gamely tries to convince the reader that the recent mild recession is 1929 all over again with "palsied producers, listless investors, persistent unemployment, maxed-out consumers...
...expensive) response from the federal government...
...Of course, if things were as bad as Wallace says, why would the average taxpayer in tight financial straits want to pay more taxes to support the grand vision of government set forth in A N^'w Deal f^or New York...
...Tax the rich, they say...
...Although Wallace pays lip service to the idea of entrepreneurial energy, it seems that too often the private sector is seen merely as a cash cow to finance the schemes and dreams of academics and activists...
...Wallace also needs to convince those pesky taxpayers that these new programs will actually work...
...New York senator Charles Schumer articulated this view in the Washington Post two months after the terrorist attack...
...it isn't true...
...That's why Democrats speak of the "worst economy since Herbert Hoover...
...As people like Pat Moynihan have repeatedly pointed out (and Wallace acknowledges), New York simply does not get as much back from the federal government as it sends to Washington in taxes...
...Nor should we want to...
...Wallace does little to suggest that a "new New Deal" would be any different...
...Fighting the war on terrorism, rebuilding lower Manhattan, and strengthening national security all seemed to demand a powerful (and Vincent J. Cannato teaches history at the University of Massachusetts, Boston, and is an adjunctfellow at the Hudson Institute...
...Ideas for the city's renewal—some reasonable and some half-baked—leap from nearly every page of the book...
...take for example Social Security, the Securities and Exchange Commission, and the Federal Deposit Insurance Corporation...
...I quickly gave up tallying the cost of all the programs Wallace proposes, as well as the amount of the new taxes needed to pay for them...
...So it came as no surprise that after September 11, many American liberals saw opportunity in tragedy...
...But is this really what the country needs...
...One need not rehash the dire economic numbers of the 1930s to know that our current economic situation, if not ideal, is hardly catastrophic...
...This democratization of taxation has greatly affected attitudes toward government, and defenders of activist government still haven't quite come to grips with it...
...Creating a system of national health care, contrary to Wallace's most urgent wishes, is not going to stimulate the commercial energies of the city or nation...
...Phrases like "the Lay/DeLay Axis of Avarice" or the repetitive use of "Big Guv'mnt" might elicit howls of laughter from Wallace's colleagues at the Radical History Review collective, but they quickly become tiresome and cheapen Wallace's overall argument...
...there's plenty of money around...
...But the recent off-year election shows how little has actually changed on the domestic front...
...This is not to say that government can't do anything right, but the shoulders of bureaucracies (especially in cities) are simply not strong enough to bear the kind of burden that Wallace, Schumer, and others want them to carry...
...Suffice it to say, the numbers are substantial...
...It was not until World War II that the tax burden began to hit the middle class in any real way, leading to the institution of the payroll deduction...
...The urban policies of Rudy Giuliani were not in the New Deal tradition and therefore Wallace has little use for them...
...It should come as no surprise that what Wallace really means is that taxes are too low...
...Yet the rationale for a "new New Deal" is hardly self-evident...
...Many historians criticize the Federal Housing Administration and the Home Ownership Loan Corporation for subsidizing suburban development at the expense of cities...
...Liberals often accuse conservatives of yearning for a more traditional past where women did not work outside the home and a laissez-faire government kept its nose out of the economy...
...The New Deal still exerts a considerable influence over modern America...
...The nation was more united than it had been in decades...
...Wallace's A N^'w Deal f^^ N^'w York begins with a compendium of ideas for rebuilding New York in the wake of 9/11—not just lower Manhattan, but the entire city...
...Wallace supports a government-funded venture capital program, yet why should government be any better at picking successful businesses than the market...
...Beneath the surface of this book lies a deep mistrust, bordering on distaste, for the private sector...
...Like Schumer, Wallace sees the war on terrorism as an opening for something more far-reaching...
...Barring another Depression to rival the 1930s, it's highly unlikely that America will grant Wallace's wish...
...He is the author of The Ungovernable City: John Lindsay and His Struggle to Save New York...
...Robert Moses, New York's New Deal hero of the 1930s, is now condemned for sabotaging the city with his road-building obsession...
...Curiously, Wallace ignores the right-of-center Manhattan Institute...
...Catastrophe," he writes in the spirit of Dewey, "has presented us with a great, historic opportunity...
...But progressive federal taxation has hurt New York City, with its hyper-wealthy enclaves...
...The rebirth of New York City in recent years is one of the great stories of the 1990s, but one would be hard-pressed to find a good word about it in this book...
...The article was triumphantly entitled "Big Government Looks Better Now...
...Politics aside, this section of the book teems with energy and a love for New York that is unmistakable...
...He is correct that for decades New York has largely ignored its manufacturing sector and that the city's economy needs to diversify beyond finance...
...As historian John Patrick Diggins has written, "nostalgia is one way to ease the pain of the present...
...World War I presented Progressives like Dewey the opportunity to voice support for their vision of government's role over the economy...
...To this debate, Wallace's book is a welcome addition...
...The New Deal was a historically distinct era, created in reaction to very serious problems unique to the 1930s, and supported by a political coalition that has long since vanished...
...The great flaw of FDR's New Deal was that it ultimately failed to spur much economic growth...
...One reason for the popularity of the New Deal was that so few people actually paid to fund it...
...If Wallace's quest for a "new New Deal" is at best quixotic, he still makes some good points...
...Every time Jerry Nadler and Charlie Rangel call for more federal taxes, they are simply digging a bigger hole for their city...
...The redevelopment of the former World Trade Center site has opened up discussion about further improvements in the city's infrastructure...
...The answer to many of the nation's ills, he argues, is to be found "inside the box" with "a massive program to create and enhance the nation's social capital...
...The issue of taxation has indeed been the Achilles' heel of modern American liberalism...
...Yet what is oddly missing from this book is any acknowledgment of the strides New York City made in the last decade toward economic and social revitalization...
...Skepticism of New Deal-type programs, though, is not restricted to free-market models...
...Wallace is quite cavalier about financing the many proposals throughout his book...
...Yet war brought with it a sense of national unity that provided a rationale for the dreams of men such as Dewey...
...Could this mean an end to the Reagan-era skepticism about big government...
...We can't restore the New Deal any more than we can recreate the administration of Calvin Coolidge or the mythical world of The Waltons...
...But Wallace does not stop there...
...He needs to explain how a government that can't operate an efficient Department of Motor Vehicles can run an increasingly larger share of the economy...
Vol. 8 • February 2003 • No. 23
