It’s hard to remember now, but at some point it was considered a stroke of genius: President George W. Bush and Republicans from across the country would celebrate their quadrennial party convention in New York City, site of the terrorist attacks that defined Bush’s first term. In New York, he’d be greeted by Michael Bloomberg, one of the few big-city Republican mayors, in a performance that would showcase Bloomberg’s national clout and Bush’s strength, compassion, and crossover appeal. All that would be left would be tabulating the Republican landslide.
What a fantasy. By the time the gathering starts on August 30, the host of this party, Mayor Bloomberg, will be quietly battling with his guests, President Bush and the GOP-controlled Congress, on almost every issue of importance to the city. When Bush, Bloomberg, and the Republican leadership climb the stage at Madison Square Garden for their inevitable photo ops this summer, the tight smiles and awkward backslapping will mask a simmering feud between New York and Washington over billions of dollars that some say are being fleeced from the city. Just about the only thing Bloomberg’s alliance with the Republicans has gained him is a ballot line to run on.
When it comes to New York’s relationship with Bush, almost all the media attention since 9/11 has focused on whether Washington really delivered the $20 billion in post-attack aid that Bush promised the city. Some Democrats point out that almost $5 billion of that aid was in the form of tax breaks that were never used and are about to expire. Others complain that the $20 billion was a floor, not a ceiling, and that the city needs much more. But many Democrats privately concede that for the most part, Bush has kept his word on the $20 billion. “There is a collective thought out there that New York got screwed on 9/11 funds,” a senior aide to Senator Chuck Schumer whispered to me recently. “That is really not the case.”
The spotlight on the 9/11 money has obscured a more comprehensive look at how Bush and his Republican colleagues have treated New York over the past four years. From the parochial perspective of New York City, the problem with Bush and the Congress is that they seem to screw New York on everything else.
Each February, a team of Bloomberg’s wonks scours the Bush budget to figure out how bad its impact will be on the city. In April, the mayor releases the fruit of that process, a thick, richly detailed book that outlines New York City’s agenda in Washington. This obscure 300-page document is the bible for understanding how the Bush administration treats the city. Every federal issue of importance to New York is described along with a comparison of how the Bush administration and Congress plan to treat it. The book sometimes reads as if it were written by the Democratic National Committee. On issue after issue, the Bloomberg administration, sometimes in withering language, describes how Bush’s proposals are bad for New York. One of the most common phrases appearing in the book is “Position: Oppose.” It crops up again and again when summarizing the Bloomberg response to Bush policies.
Once upon a time, Bloomberg’s Republican pedigree was seen as an advantage in diverting federal money to the city. In fact, the opposite may be true.
On education, the mayor accuses Bush of shortchanging the No Child Left Behind Act. He criticizes Bush’s proposed cuts to federal funds for child care. He argues that Republicans promised $700 million to implement the new election law passed in the wake of the Florida debacle, yet Bush finds only $40 million in his budget for it. He opposes the proposed cuts to bioterrorism funds, the $110 million reduction in a program for dislocated workers, the $240 million cut to a program that helps New York City fight poverty, the elimination of Justice Department grants that Bloomberg uses to help fight drugs and pay 911 operators, the slashing of millions from public housing, a Republican proposal that would siphon transportation dollars from New York and ship them to states like Texas, and Bush’s paltry spending on the Low Income Home Energy Assistance Program. The criticisms go on and on. On criminal-justice issues, Bloomberg attacks the Republican approach to gun legislation as irresponsible. On the environment, he argues that new EPA rules would “directly threaten the City’s air quality,” opposes Bush’s cuts for money to clean up brownfields, and even insists that the Bush budget “risks dealing a mortal blow” to a program that is eradicating a nasty beetle from China destroying New York’s trees. The city hates Bush’s proposal to slash money to fight HIV/AIDS and argues that without more federal funds than Bush proposes for immunizations, thousands of New Yorkers might die.
All of these cuts are especially galling when one considers the most important fact about New York City’s relationship with the federal government. In 2002, the last year for which data are available, New Yorkers sent $65.9 billion in federal taxes to Washington, and yet the federal government sent only $54.5 billion back, according to the mayor’s office. In one year, more than $11 billion was sucked out of New York and redistributed across America by the Republicans in Washington who control the federal budget.
Of course, ’twas ever thus. New York has a long record of getting screwed by the Feds. Like the city, the state has always been a donor, paying more in federal taxes than it receives in federal funds and services. The late Senator Daniel Patrick Moynihan would get so angry about this bias that his staff would produce an annual report documenting all the ways his constituents were being robbed by the rest of the country. Much of this funding bias has its roots in the rise of the welfare state. Many of the formulas that allocate money for federal programs were written decades ago. Often they were devised with the egalitarian intent of using money from wealthier regions of the country to help poorer ones. “When the New Deal was enacted, New York was a rich state,” says Congressman Jerrold Nadler, who has represented Manhattan’s West Side for twelve years. “The New Deal built the infrastructure that allowed the South and West to rise. Who paid for all those dams? It came from New York and the other wealthy states. The federal allocation formulas created in the thirties were written to help these other states. We’re no longer the rich state, but the formulas haven’t been changed.”
Unfortunately for the city, formulas that have been devised much more recently repeat these inequities. In the Bush years, some of the largest new streams of federal money are for protecting the homeland and combating bioterrorism. For homeland security, there are two large pots of money that once seemed promising for the city but that have recently been turned into slush funds to satiate congressmen’s appetites for pork. One pot, known as the State Homeland Security Grant Program, was designed by Bush and Congress using a formula that awards money to every state without regard to the actual level of terrorist threat. Billions of dollars in funds for first responders have been doled out this way. New York has been an Al Qaeda target numerous times in the past eleven years, and yet the state ranks 49th in per capita funding in this grant program. In fact, Wyoming, not known as a top bin Laden target, will get $38.31 per capita this year, while New York will get $5.47. The entire program is purposely blind to the fact that New York City, according to the intelligence community, is the highest-priority target in America. “There are 435 members, and they all want to get a piece of this,” says an aide to Bloomberg.
Even worse, the one homeland-security program that actually factors threat levels into its allocation formula has been turned into pork. The Urban Areas Security Initiative, which was designed to deliver funds to cities at the top of Al Qaeda’s target list, started out as one of Washington’s great gifts to New York. In 2003, the city received a quarter of the funds, which were divvied out to just seven high-priority states. But the Bush administration and Congress have steadily increased the number of cities and other entities deemed “high risk.” There are now 80 on the list, and New York’s share of the money has dropped to less than 7 percent. Bloomberg and his aides complain that the city’s allotment of high-threat funding has been slashed by two thirds since last year. “The chairman of the Appropriations Committee is from Kentucky,” says a Bloomberg aide, explaining how sympathy for New York has given way to pork-barrel politics. “He doesn’t want to go home and say, ‘Well, gosh, guys, I don’t see any Al Qaeda here.’ He wants to take some home, too.” Louisville is slated to receive $9 million this year.
Getting money for bioterrorism has proved to be even harder for New York. While the Bush administration says it’s willing to change the formula for some homeland-security grants, no bioterrorism money is distributed by threat level, and the administration hasn’t said it would change the formula. New York wants the money granted based on population density and risk. Amazingly, the city ranks 45th out of 54 states and municipalities in per capita funding on bioterrorism preparedness. New York Democrats often accuse the president of cheating the city on homeland-security matters, but some of the toughest criticism is quietly tucked into Bloomberg’s annual wish list, the federal legislative agenda. It points out that federal bioterror money has been reduced by $144 million. New York takes the brunt of these cuts. “Clearly, New York City bears a disproportionate risk of high-impact/high-casualty terrorist events, yet has consistently been shortchanged by federal funding by any measure of assessment,” the document notes.
Every inch of progress the city makes seems to be accompanied by a setback. Last month, Tommy Thompson, the secretary of Health and Human Services, funneled some extra bioterror money to New York, but last week, House Republicans voted to allow homeland-security funds to be used for natural disasters like floods and forest fires. This ridiculous change, the mayor argued in a letter, “would further dilute any effort to prevent and respond to international terrorism.” The legislation is being pushed by a Republican from rural Ohio.
There are real consequences to all the anti-terror money that is pickpocketed from New Yorkers. Recently, Bloomberg’s office wrote a nineteen-page memo cataloging $900 million worth of emergency-preparedness needs that are unfunded in the city. It’s a frightening list. The New York Police Department lacks $40 million needed for training its officers in counterterrorism measures. Four NYPD facilities, including One Police Plaza and the Police Lab in Jamaica, which are critical to command and control in the event of an attack, need $48 million worth of security enhancements, including bomb-blast protection and perimeter defenses. Other key NYPD sites lack bulletproof glass, anti-fragmentation film, and chemical detectors. The police are also facing a serious shortage of emergency-response vehicles. The Fire Department has $277 million worth of “urgent needs.”
The FDNY still needs $120 million to replace the outdated communications structure that so hampered the response to 9/11. It needs $40 million to upgrade a data network for dispatching fire and EMS personnel because the current system can be shut down entirely by an attack on one small part of the system. The FDNY also needs money for a large fireboat in the event of an attack on a cruise ship, bridge, or port, as well as a new hazardous-material battalion that will cost $25 million. Without it, Bloomberg’s shopping list flatly states, “the City of New York is inadequately prepared for a major chemical and/or biological incident.”
AMs the city fights on one front to save its anti-terror dollars from being redirected to Podunk, America, on another front it is battling Republicans who have attacked one of the few federal funding formulas that actually do benefit New York. Every six years, Congress passes a mammoth transportation bill paid for with federal gasoline taxes assessed at the pump. When the money is returned to the states, it is spent not just on highways and bridges that benefit the car owners who pay the gas taxes, but on mass-transit projects used by people who may never buy gas. Every six years, this quirk in the formula pits gas-tax donor states like Texas against states like New York. Last year, Tom DeLay, from Sugarland, Texas, launched a crusade to mandate that every state get back at least 95 percent of its gas-tax dollars. The current so-called minimum guarantee is 91.5 percent. DeLay happens to be the majority leader of the House and the person whom Bloomberg’s lobbyists consider to be the most consistently anti–New York member of Congress. “He seems to be the one that always gets in the way,” says a Bloomberg aide. “And he’s powerful.” If DeLay wins this fight, it will cost the state $300 million a year, according to Bloomberg, with most of that money coming at the city’s expense.
One of the most important streams of federal money for New York City comes through the Department of Housing and Urban Development. It’s also one of the fattest annual targets of Bush’s budget ax. “Our housing money is under attack,” a Bloomberg aide says, sighing. One of every twelve New Yorkers relies on the New York City Housing Authority, making it the largest entity of its kind in America. It mostly serves the poor, the elderly, and the very young. Since Bush was inaugurated, the Housing Authority has seen a drop of $175 million in federal funding at the same time demand for its help has soared. Last year, the city lost $3.8 million in Community Development Block Grants, which are used for dozens of different projects to make New York more livable, from neighborhood preservation to the cleanup of vacant lots to providing health- and day-care services in housing projects.
In addition, in next year’s budget, Bush has proposed to cut so-called Section 8 vouchers, used by poor tenants to pay for housing, by $107 million. The Bloomberg administration argues, “A loss of this size will have serious repercussions for the City of New York.” Earlier this year, as New York’s delegation fought to restore some of this money, it was blindsided by a technical ruling from the Bush administration that would drastically scale back how much Washington would pay for Section 8 vouchers from last year’s budget. The change would mean that New York would face a shortfall of some $50 million.
Even Bush’s signature housing initiative, the American Dream Downpayment Act (ADDP), which would help first-time home buyers afford a house, actually hurts New York City. New Yorkers, and everyone else, already have access to such funds under an existing program called the Home Investment Partnership Program (HOME). Unfortunately for the city, the funding formula for Bush’s new program is much less favorable to New York than home. Bush and Republicans want to move money from HOME to ADDP, which means that the city, which already has one of the lowest home-ownership rates in America, would actually receive less money to address the problem. The White House considers ADDP one of Bush’s major domestic-policy achievements.
Another domestic program the Bush administration has been especially proud of is his education law. It too has inflicted financial pain on the city over the past few years. It’s no wonder that New York’s response to Bush’s No Child Left Behind legislation is virtually identical to John Kerry’s. They both agree that Bush hasn’t delivered what he promised when the law was designed. Bush has consistently argued that education funding has rapidly increased on his watch, but Bloomberg undercuts this claim by noting that it hasn’t risen nearly enough to implement the sweeping reforms of Bush’s new law. Bloomberg wants billions more than Bush put in his budget this year. “Absent significant federal increases in the future,” the mayor’s office recently wrote, “effective implementation of new federal education reforms will be extremely difficult.”
Bloomberg’s budget team occasionally seems frustrated enough with Bush’s cuts that they sound like Democratic operatives. When explaining how Bush’s budget funds a program to educate disadvantaged children at only half of what the city is eligible to receive, the Bloomberg legislative agenda notes that “more than 200,000 low-income students are being left behind in New York City as a result of the federal shortfall.”
It’s not hard to explain why New York seems to be fighting Bush and the GOP Congress on almost every issue important to the city. At a macro level, the budget policies the Bush administration has pursued over the past four years are wildly out of sync with New York’s needs. Some of the biggest budget winners of the Bush years have been in the areas of defense, homeland security, and agriculture. New York has virtually no defense industry. And, not surprisingly, Bush’s massive increase in farm subsidies hasn’t exactly helped Manhattan. Meanwhile, Bush’s budget priorities that haven’t passed are hardly pro–New York. For example, his long-stalled energy bill would lavish tax breaks and subsidies on the oil and gas industries based out West.
The other major budgetary change of the Bush years has been huge tax cuts tilted to the wealthy. On the one hand, the city has one of the highest concentrations of rich people in the world, so many individual New Yorkers benefited from the tax cuts. But the city as a whole should hardly be thankful. Bush’s tax cuts worsened the very problems plaguing the city’s dysfunctional relationship with D.C. The tax cuts helped create the $500 billion federal budget deficit that has constricted the flow of dollars from Washington to New York. Bush’s response to the deficits has been to freeze or cut discretionary spending—money for health care, education, housing, the environment, etc.—which happens to be the part of the federal budget upon which New York disproportionately relies.
There is another often-untold consequence of Bush’s tax cuts for New Yorkers. A quirk in the tax code known as the Alternative Minimum Tax (AMT) hits the city harder than other parts of the country. The AMT was designed to ensure that wealthy taxpayers can’t take so many deductions that their burden falls to zero. In 2001, Bush slashed regular tax rates but didn’t cut the AMT rates. The effect is that millions of Americans are starting to pay the AMT for the first time. Those hit hardest are members of the upper middle class living in places with high state and local taxes, like New York. In fact, the percentage of New York City taxpayers getting ensnared by the AMT is more than twice that of the country as a whole. Thirty-eight percent of New Yorkers with an annual income of $100,000 to $200,000—people who hardly qualify as superrich, especially in a city where the cost of living can be shockingly high—are now paying the AMT, while nationwide, less than 10 percent of taxpayers in that income range pay it. And anyone paying the AMT isn’t getting Bush’s tax cuts. Republicans don’t have a plan to overhaul the problem, and some see a partisan bias in their cavalier attitude, since low-tax areas of the country, especially the South, are harmed the least by the AMT. “Tom DeLay comes here and his constituents get tax cuts and New Yorkers don’t,” complains Jonathan Sheiner, an aide to Congressman Charlie Rangel.
At the same time the city is facing a Republican agenda hostile to New York, it also has to deal with its diminishing clout in Washington. In general, the power and influence in Congress have been shifting south and west over the past few decades. For example, New York State lost two congressional seats in the most recent Census while Texas gained two. And the congressmen that New York does have are absent from the most important centers of congressional power. Of the fourteen committees or subcommittees that control spending in the House of Representatives, only two have chairmen from the Northeast. (One of them, from New Jersey, runs the subcommittee on the District of Columbia, not exactly a plum perch from which to win dollars for northeastern constituents.) The majority of the House appropriations chairmen are from the South and West. In the Senate, ten of the appropriations chairmen are from the South and West, two are from the Midwest, and two are from the Northeast. Of course, every chairman in both chambers is a Republican. In other words, the federal budget is controlled by conservative Republicans from the South and West, while New York City is represented by liberal Democrats from the Northeast. It’s not really a fair fight.
Once upon a time, Bloomberg’s Republican pedigree was seen as a potential asset to overcome this disadvantage. But it actually seems to be making things worse. Instead of picking high-profile fights that draw attention to the city’s priorities, Bloomberg is stressing unity with his GOP conventioneers. Last fall, Bloomberg singled out Tom DeLay as the city’s chief GOP nemesis. After a conservative outcry, Bloomberg backed down from his criticism. But Bloomberg aides are confident of at least one legislative victory this year. They think they will get the extra $25 million they need to protect the Republican confab later this summer. Congresswoman Carolyn Maloney likes to say, “The only time New York is going to get adequate homeland-security funding is when Republicans come to town for their convention.” It looks like she’s right.