In New York, the Covid-19 brings back the specter of bankruptcy

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Middle school and high school students in the small town of Albany, the capital of New York State, have not returned to school and will eventually take their classes on the Internet. Is it because of the health risks associated with the Covid-19 epidemic? Not at all, but rather because of the financial consequences of SARS-CoV-2. Albany County voted Tuesday, September 8, to lay off 222 teachers and school employees, forcing schools to give up on-site classes.

In question, the decision of the democratic governor, Andrew Cuomo, to cut by 20% the subsidies of the State of New York (19.5 million inhabitants) to the schools. This is how the third crisis linked to Covid-19 is taking shape: after the epidemic, for the moment under control, and the pausing of the economy, here comes the bankruptcy of New York State and the city: 14 , 5 billion dollars (12.3 billion euros) of losses over two years for the State (for an annual budget of 177 billion dollars) and 9 billion dollars for Big Apple (on an annual budget of 89 billion dollars) of dollars).

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“New York City is facing the worst budget crisis since the 1970s”, headlined, at the end of August, the Wall Street Journal. It was the time of the movie Taxi Driver (1976), by Martin Scorsese, in an abandoned city, given over to drugs, in the midst of deindustrialisation.

In debt to finance its current expenses, New York City (NYC) had gone bankrupt and had been placed under budgetary supervision from 1975, for ten years, before being reborn in the mid-1980s, thanks to the boom in finance and real estate during the Reagan presidency.

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Today, the Democratic mayor of the city (8.5 million inhabitants), Bill de Blasio, would like to obtain authorization to take on $ 5 billion in debt. He needed permission from his fellow Democrats in Albany to do this: the answer was no.

“I don’t want a de facto bankruptcy, where New York State has to come in and bail out the debt. I focus on reimbursement, like most taxpayers ”, said Andrew Cuomo, who doesn’t get along with M. de Blasio.

The first wants a federal bailout, but, in Washington, the Senate, with a Republican majority, refuses to help the states most affected, which were, at least at the beginning, those led by Democrats, near the coasts, such as New York, New Jersey and California.

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