Elected in 1993, on the heels of the largest annual tax increase in the cityÂ’s history, Giuliani inherited a city crippled by high taxes, ballooning deficits, and stalled job growth. Despite these obstacles, Mayor Giuliani wasted no time in calling for $1 billion in tax cuts over the next four years, slashing city jobs, and cutting city-funded spending in real terms by more than $340 million. Over the rest of his eight years at GothamÂ’s helm, Giuliani reduced a slew of other taxes and kept spending at an all-time low.
Giuliani is often criticized for large spending increases during the surplus years, but it is instructive to compare his spending record with that of his predecessors and successor. Over the 1980’s, city spending increased by an average of 7.11 percent, while 1991-1994 saw an average spending increase of 4.68 percent. In contrast, city spending during Giuliani’s eight years increased just barely, by an average of 2.84 percent — a remarkable number given the 2.9 percent population-plus-inflation benchmark. In addition, city spending as a percentage of GCP (gross city product) decreased from 10.9 percent to 9.3 percent — meaning, the size of government as a percentage of the economy actually decreased under Giuliani’s tenure. Mayor Giuliani’s relative spending restraint is all the more impressive compared with the 10.01 percent average increase in spending under Mayor Bloomberg’s first term.
On both taxes and spending, Giuliani certainly deserves criticism for isolated indiscretions. During the surplus years, Giuliani loosened the purse strings, and much like his predecessor, David Dinkins, he continued to lavish corporate welfare on pet companies and projects, including his precious baseball stadiums. Giuliani opposed the federal line-item veto after Clinton vetoed a line-item forgiving New York StateÂ’s Medicaid debt, and opposed a number of tax cuts over his eight years.
Overall though, GiulianiÂ’s record on taxes and spending displays an intuitive appreciation for the vital role tax cuts play in growing the economy and a determination to cut the fat out of government. It is important to remember that GothamÂ’s economic revival was due, in large part, to GiulianiÂ’s determination to stimulate a stagnant economy by cutting taxes and spending, even in the face of fierce opposition. While GiulianiÂ’s record on taxes and spending is not perfect, he deserves a lot of credit for tackling a municipal culture long addicted to taxing and spending itself into the ground.
Giuliani demonstrated the same steely resolve and free-market mindset when it came to taking on New York CityÂ’s welfare rolls and overbloated bureaucracy, and fighting for school choice.
While Giuliani opposed federal welfare reform — even suing the government over the matter — his opposition did not stem from a philosophical disagreement, but from the burdens the legislation placed on local governments already in the process of implementing welfare. In fact, welfare recipients under Giuliani’s administration dropped from 1.1 million in 1994 to under 500,000 in 2001 — the lowest level in 35 years and a drop of more than 50 percent. This accomplishment marked the first time since July 1966 that New York City had less than 500,000 people on public assistance.
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