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What is said to have changed Koch's politics was stepping into a job that requires him to pay the bills himself. He took over a city that was not unlike his family in the Depression—only in worse shape because it owed more—and so he applied a Depression mentality to it. His basic governing maxim is: "Don't spend what you don't have." It sounds simple enough, but it was too difficult for Koch's predecessors, who spent a billion a year that New York did not have and pushed the city to the brink of bankruptcy. Owing is something Koch does not approve of.
There is in him a moral connection between owing money and owing political favors. The personal independence he prizes, and that sometimes gets on people's nerves, is the same sort of independence he seeks for the city, which he seems to regard as an extension of himself.
His first order of business, then, was balancing the budget. "And we've done it," he says, with pride. "If you recall where we were—no credit, the seasonal loans were running out. Nobody thought we would get the federal loan guarantees we had to have. Not Felix certainly. [Felix Rohatyn, chairman of the Municipal Assistance Corporation created in 1975 to borrow for the city, and New York's chief financial strategist.] I want to give full credit to Felix for his brilliant conception of what had to be done. But I take a lot of credit for getting it done."
It must be said too that New York's economic survival has been due to circumstance as well as human genius. While federal outlays have grown at an annual rate of more than 11% since 1978, Koch has held his city's spending growth to less than 4% a year. But an inflationary economy that increases revenues—even without a real increase in city taxes—has helped.
Koch's financial success has its dark side. His cutting back has established his reputation as an enemy of the poor. In response, Koch points first to housing, citing the 26,000 major apartment rehabilitations begun in the past two years that will almost entirely benefit the lowest income groups. His main point, however, is philosophical: "We spend 56% of our $14 billion operating budget on services that go only to those people below the poverty line, primarily to 26% of the people in this city. If you have a healthy city financially, who benefits? The poor. Because if you have an unhealthy city, who leaves? The middle class. The poor can 't leave." He adds that in the first half of the 1970s, before he took office, the city had lost more than half a million jobs. Since he became mayor, New York has gained more
than 100,000 jobs in the private sector.
Pleased as he is about balancing the 1982 budget (at $14.7 billion), Koch believes that his city is imperiled by President Reagan's own balancing act.
About one-sixth of New York's budget for 1982 depends on federal largesse, and if those funds are not forthcoming, Koch will face the impolitic Hobson's choice looming for most of the nation's mayors —that of raising taxes or further reducing the very services he needs to beef up. If Reagan's total proposal were to come through as is, Koch predicts that New York would