NYC is faltering and a bailout from Washington is highly unlikely

This month marks the 50th anniversary of the New York City fiscal crisis of 1975. After years of budgetary and accounting shenanigans, the Standard & Poor’s ratings agency suspended the city’s A rating on its bonds, triggering a cascade of events that nearly resulted in the city filing for bankruptcy and only resolved when President Gerald Ford bailed out the city with federal loans.While pundits often misplay the notes of history to force a rhyme with today’s events, sadly, given the realities of the city’s current economic condition — a projected $5.5 billion budget shortfall for fiscal 2026 growing to over $13 billion in fiscal 2028 — the parallels to 1975 are unmistakable. The 1975 crisis was caused in large part by an exodus of high-paying industrial jobs from the city.Over the past decade, New York has witnessed a hemorrhaging of the financial industry sector.

A decade ago, one-third of America’s total securities industry jobs were found in New York City.Today, it is less than one-quarter.

In the decade leading up to the 1975 crisis, nearly a million middle class New Yorkers abandoned the city, replaced by an influx of poor and less-skilled workers.Similarly today, hundreds of thousands of middle class and well-to-do New Yorkers have left the city in the wake of the COVID epidemic, replaced by tens of thousands low-skilled migrants. Another factor that heavily contributed to the 1975 fiscal crisis was the reduction in federal aid to the city, with the arrival of the Nixon administration ending many of LBJ’s War on Poverty programs. Now with the arrival of DOGE, no one doubts that the windfall that benefited the city from the Biden administration’s spending programs will not be repeated.

In 1975, like today, inflation was stubbornly high and interest rates wreaked havoc on municipal budgets.And just like in 1975, New York state’s fiscal condition is not much better than the city’s.

Then, as now, elected officials in Albany and...