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New York City, November 1975 - July 1976 (4)
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The original documents are located in Box 79, folder "New York City, November 1975
- July 1976 (4)" of the L. William Seidman Files at the Gerald R. Ford Presidential
Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 79 of the L. William Seidman Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
November 18, 1975
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN PWS
SUBJECT:
New York City
The following issues are outlined to provide a focus for the
discussion of the New York City situation at the 3:00 p.m.
meeting today:
Issue 1: Should the Federal Government provide financial assis-
tance to New York City to meet its seasonal borrowing
requirements for essential services?
Option A: Turn down the New York request for Federal assistance
and recommend that additional actions be taken at the
state and local level.
Option B: Agree to support legislation authorizing Federal assis-
tance to meet seasonal borrowing needs for essential
services.
Option C: Seek agreement from private financial institutions to
provide financing the New York City's seasonal needs
and support legislation securing such financing with
future Federal payments otherwise due the State and
City.
If you decide in principle to support Federal assistance for New
York City's seasonal borrowing needs several additional issues
require your attention.
Issue 2: Should seasonal borrowing assistance take the form
of direct loans or loan guarantees?
Option A: Direct loans.
Option B: Loan guarantees.
GERALD
-2-
Issue 3: What types of conditions should be attached to the
provision of Federal assistance?
Option A: General condition that the lender (the Federal Govern-
ment) be satisfied that the borrower has the capacity
to repay the loan.
Option B: Mandate certain specific actions that must be taken
to qualify for the assistance.
Option C: Require that Federal loans or guarantees be secured
by a lien on future Federal payments otherwise due
the State and City. (An OMB memorandum on this issue
is attached)
Issue 4: What should constitute the control mechanism for any
Federal assistance?
Option A: Supervision of Federal loans or guarantees by a small
Board of Federal officials appointed by the President.
Option B: Supervision of Federal loans or guarantees by a single
Cabinet officer appointed by the President.
Option C: Supervision of Federal loans or guarantees by a small
Board of non-Federal Government officials appointed
by the President.
Issue 5: What should be the size and duration of any Federal
assistance to New York for seasonal borrowing?
Option A: Restrict Federal assistance initially to one year
duration and to the estimated $1.3 billion required
by New York City for the remainder of this fiscal
year (through June 30, 1976).
Option B: Restrict Federal assistance to three years and to
the estimated levels outlined in the New York plan
(through June 30, 1978).
Option C: Provide Federal assistance for the five years outlined
in the current House bill.
GERALD RIFURD VIDRARY
[11-19-75]
The President is gratified that the leaders of New York State
City appear to have accepted primary responsibility for solving
of hw socility
the financial problems / and are proceeding in the direction of a long-
ord the State Constitution "
term solution in accordance with State law> He is impressed with the
seriousness of their intentions as described by Governor Carey
in his letter to Secretary Simon and awaits further concrete actions
by the State and the other parties concerned If all parties continue
and take prompt action
to cooperate I the President now believes that a satisfactory solution
can be found. The President continues to give sympathetic consideration
and
to the well-being of the people of New York City and reiterates his
determination that their essential services will be maintained.
FORD is LIBRARY GERALD
STATEMENT BY THE PRESIDENT
Instead of continuing to press for massive Federal bailouts
for New York City, the leaders of New York are now taking firm
initiatives to solve their problems on their own. The serious-
ness of their intent is underscored in a recent letter sent by
Governor Carey to Secretary Simon.
In view of these encouraging developments, I will today submit
to the Congress legislation which will provide for tightly re-
stricted seasonal loans to the City. These loans must be re-
paid in full during the year in which each loan is made and
will be secured by future Federal payments to New York. This
assistance will also be earmarked for services only and is
intended to ensure, as I have pledged before, that the people
of New York City not suffer undue hardships as the financial
integrity of their City is restroed.
My support for these loans is contingent, of course, upon the
completion of appropriate fiscal actions by the leaders in New
York sufficient to ensure that these loans can be repaid. At
the same time, however, I must emphasize that the type of finan-
cial actions taken at the State and local levels are entirely a
matter for the leadership of New York to decide. Primary re-
sponsibility for the resolution of this matter continues to
rest in New York.
BERALD FORD LIBRARY
-2-
In the event the New York leaders fail to accept their respon-
sibilities, New York City could still be forced into legal
default. Therefore, I am asking the Congress once again to
enact special amendments to the Federal bankruptcy laws which
would ensure that the process of such a default, if it occurs,
is as orderly as possible.
FORD is LIBRARY GERALD
The President is gratified that the leaders of New York
appear to have accepted primary responsibility for solving
the financial problems of New York City and are proceeding
in the direction of a long term solution in accordance with
the State Constitution and State laws. He is impressed
with the seriousness of their intentions as described by
Governor Carey in his letter to Secretary Simon and awaits
further concrete actions by the State and the other parties
concerned. If all parties continue to cooperate and take
the prompt action the President believes that a satisfactory
solution can be found. The President continues to give
sympathetic consideration to the well being of the people
of New York City and reiterates his determination that
their essential services will be maintained.
11/19/75
FORD i LIBRARY GERALD
- -2-
In the event the New York leaders fail to accept their respon-
sibilities, New York City could still be forced into legal
default. Therefore, I am asking the Congress once again to
enact special amendments to the Federal bankruptcy laws which
would ensure that the process of such a default, if it occurs,
is as orderly as possible.
GERALD FORD LIBRARY
FOR IMMEDIATE RELEASE
NOVEMBER 19, 1975
Office of the White House Press Secretary
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
I am gratified that the leaders of New York appear to have accepted primary
responsibility for solving the financial problems of the City and are
proceeding in the direction of a long-term solution in accordance with the
State Constitution and laws. I am impressed with the seriousness of their
intentions as described by Governor Carey in his letter to Secretary Simon
and await further concrete actions by the State and the other parties
concerned.
The bail-out bill now before the House of Representatives is irrelevant
because it does not address the current situation and I would veto it.
I am convinced that if New York continues to move toward fiscal responsibility,
all parties concerned can look forward to a satisfactory resolution despite
the current obstacles.
If they continue to make progress, I will review the situation early next
week to see if any legislation is appropriate at the Federal level.
In the meantime, should New York leaders fail to implement their intentions,
New York City could still be forced into legal default. Therefore, I am
asking the Congress once again to enact special amendments to the Federal
bankruptcy laws which would ensure that such a default, if it occurs, would
be orderly.
#
#
#
F. Rohatyn
11/25/75
As part of the current 3-year plan, the following actions will have been
taken:
a.
Three-year Emergency Financial Control Board (EFCB) plan to
bring expense budget into modest surplus by fiscal year 1977-78.
Additional reduction in personnel of over 40, 000 employees (previ-
ous reduction 21, 000).
b. $200 million annual expense cuts have been approved by EFCB above
the original plan submitted by the City.
c.
Over $200 million of City taxes have been voted by the State
Legislature and will be imposed by EFCB.
d.
Moratorium legislation has been voted by the State Legislature with
respect to City short-term notes amounting to $2.6 billion.
e.
An exchange offer has been approved by the MAC Board for an
exchange of 10-year 8% MAC bonds for $1.6 billion of City notes
held by the public.
f.
The New York banks and pension systems have agreed to take
10-year 6% City securities as part of the moratorium in exchange
for $1 billion of City notes.
be
The New York banks and pension systems have agreed to take
10-year 6% MAC bonds in exchange for $1. 7 billion of MAC bonds
bearing higher interest rates and/or shorter maturities.
h.
New York City pension systems have agreed to purchase $2.5
billion of new MAC and/or City securities over the next three
years. This commitment is subject to appropriate trustee
indemnification which will be worked out over the next few days.
i.
$85 million of annual City contributions to the pension systems has
been shifted to the employees by legislation. The impact on the
employees is $107 million.
j.
Extensive management changes are being made in the City, including
a new Deputy Mayor of Finance and new Chief of Planning.
BEFAUDI LISBARY
2
k.
In the area of pension reform, the EFCB has passed a resolution
directing the City to terminate the practice of using, for budgetary
purposes, all income of the pension systems in excess of 4% per
annum. This will result in the first year, beginning July 1, 1976,
in approximately $136 million per annum of additional income to
the pension systems and of additional burden to the City's budget.
The EFCB has also directed the City management to take action
and report back within 30 days with respect to termination of the
practices resulting in the abuse of overtime in the last year of
employment, thereby creating excessive pension burdens on the
City.
1. Governor Carey has directed Mr. Richard Shinn, President of the
Metropolitan Life Insurance Company, to report to the EFCB by
December 31 on the actuarial soundness of the City pension fund.
The EFCB has directed the City to prepare and submit to the
Control Board such legislative requests and other amendments as
may be necessary as a result of the Shinn study to put the fund on
a sound actuarial basis and to have those recommendations to the
Control Board no later than January 31, 1976.
All of this is on top of actions this summer which, by December 1, will
have:
a.
Provided about $3.5 billion of financing to the City, of which about
$1. 5 billion was refinancing of short-term debt.
b. Layoffs of about 22, 000 people since January 1 and increased taxes
of over $300 million this summer (details to follow).
c.
A wage freeze and deferral being enacted this summer and fall.
d. Expense cuts being imposed at City University in an amount
equivalent to tuition.
e.
Increase in the transit fare from 35¢ to 50¢.
f.
Creation of MAC and EFCB control mechanism.
5.°
Identified $3 billion past deficit which is being amortized through
MAC over 10 years and approximately $600 million in expense
items in the capital budget which are being amortized in a similar
way.
THE WHITE HOUSE
WASHINGTON
November 19, 1975
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN
SUBJECT:
New York Financial Situation:
Possible Scenario of Events
Discussions with Governor Carey, Mayor Beame, and Felis Rohatyn,
Chairman of MAC, suggest that the following represents the most
likely sequence of events:
Wednesday, November 19
MAC passes requirement that New York City pension funds be
reformed and that skimming by the city of the interest earned on the
pension funds be eliminated.
Friday, November 21
New York State Teachers Fund advances $100 million of the $250
million needed to meet the State's financial obligation to the city.
Notice to city note holders offering to exchange their notes for long-
term bonds is mailed out.
New York banks reconfirm their willingness to adjust their obligations
as outlined in their letters to MAC.
Saturday, November 22
Michigan defeats Ohio State at Ann Arbor. Great joy reverberates
across the land.
FORD CIBRARY
2
Monday, November 24
New York State Legislature enacts legislation authorizing additional
New York City taxes of $200 million.
Trustees of New York City Pension Fund commit to loan New York
City $2. 5 billion.
Tuesday, November 25
New York City Council enacts additional New York City taxes of
$200 million authorized by the State Legislature.
Wednesday, November 26
Administration affirms its support of legislation to meet seasonal
financing for essential city services.
Arthur Levitt agrees to use $150 million of New York State Pension
Funds to meet the remainder of the State's financial obligation to the
City.
Monday, December 1
Legislation introduced to provide for Federal assistance for seasonal
borrowing to meet essential services.
Friday, December 5
Legislation for seasonal borrowing loans or loan guarantees signed
by the President.
Saturday, December 6
New York State battles out how it will meet its financial obligations.
BERALD
LIBRARY
THE WHITE HOUSE
WASHINGTON
November 15, 1975
MEMORANDUM FOR WILLIAM NICHOLSON
FROM:
ROGER PORTER
SUBJECT:
Request for a meeting with the President for
representatives of local New York City Utility
Workers Union and officers of the national
organization to discuss New York's financial
crisis
In responding to the request by representatives of the NYC Utility
Workers Union, I like your alternative of turning down an appoint-
ment with the President but offering them an opportunity to present
their views to Mr. Seidman, Mr. Cannon, or their representatives.
Bill has indicated that he would meet with them, if necessary. I
suggest that your letter indicate that he would be willing to meet
with them and suggest that they contact his office to arrange for an
appointment.
Developments are proceeding so rapidly that their request for and
interest in a meeting may be overtaken by events.
NEW YORK CITY CASH FLOW NEEDS
(dollars in millions)
Cumulative Needs
FY 1976-77
FY 1977-78
June
1100
1041
August
1462
1413
September
1197
1237
October
1585
1293
November
1614
1325
December
2063
1670
January
2062
1697
February
2017
1645
March
2120 peak
1994 peak
April
1528
1369
May
1103
996
June
0
0
Per Peter Goldmark
CC upon Mr. Goldmark's request to Bob Gerrard, Treasury.
11/17/75
STATEMENT BY THE PRESIDENT
Events of the last few days demonstrate that the leaders
of New York State and New York City now appear to have
accepted primary responsibility for solving their own
financial problems and are proceeding in the direction
of a long term solution. The seriousness of their in-
tentions is apparent in a recent letter sent by Governor
Carey to Secretary Simon.
I am gratified by these developments and now await further
concrete actions by the State and other concerned parties
which can open the way to a satisfactory resolution of
this matter.
11/18/75
FORD & LIBRARY GERALD
me
November 19, 1975
Dear Mr. Joy:
This is to acknowledge your telegram of November 5 to
the President requesting a meeting with him for repre-
sentatives of the New York City Utility Workers Union
and officers of the national organization to discuss
New York City's financial crisis.
Currently a time is not foreseen when this meeting
could be arranged in view of the President's schedule
commitments. We suggest, though, that you contact
Mr. L. William Seidman of his staff who is very fa-
miliar with the New York City financial crisis and
has expressed his willingness to meet with representa-
tives of the Utility Workers Union. His telephone
number is 202-856-2335.
With best wishes.
Sincerely,
William W. Nicholson
Director
Scheduling Office
Mr. James Joy, Jr.
Business Manager
AFL-CIO Utility Workers Union
386 Park Avenue, South
New York, New York 10016
FORD is LIBRARY GERALD
CC and incmg with file to Roger Porter
CC: 2 cys Nancy Gemmell
WWN:MMR:rg
1)MR
THE WHITE HOUSE
cc: Seiomm
WASHINGTON
November 15, 1975
FORD is LIBRARY GERALD
MEMORANDUM FOR WILLIAM NICHOLSON
FROM:
ROGER PORTER
RP
SUBJECT:
Request for a meeting with the President for
representatives of local New York City Utility
Workers Union and officers of the national
organization to discuss New York's financial
crisis
In responding to the request by representatives of the NYC Utility
Workers Union, I like your alternative of turning down an appoint-
ment with the President but offering them an opportunity to present
their views to Mr. Seidman, Mr. Cannon, or their representatives.
Bill has indicated that he would meet with them, if necessary. I
suggest that your letter indicate that he would be willing to meet
with them and suggest that they contact his office to arrange for an
appointment.
Developments are proceeding so rapidly that their request for and
interest in a meeting may be overtaken by events.
willing will 2335 Sadn SAY No time IS currently
Vt
forseen ON the Presidents
Sch. WE would Suggest you
CONTACT Mr Bill Saidman who
very familiar with the NYC
ISSUE. IS me She Saidm has 155 Expressed his Willings NESS to MEET with
the deps of the NWC Wilin Union. works
THE WHITE HOUSE
WASHINGTON
November 11, 1975
MEMORANDUM FOR:
ROGER PORTER
FROM:
WILLIAM NICHOLSON wan
SUBJECT:
Request for a meeting with the President
for representatives of local New York City
Utility Workers Union and officers of the
national organization to discuss New York's
financial crisis
Attached is a copy of a telegram requesting a meeting with the President
for representatives of the local New York City Utility Workers Union and
officers of the national organziation. How would you recommend this be
handled?
Two possible alternatives are:
Turndown appointment with the President and offer them
an opportunity to discuss their plight with Mr. Seidman,
Mr. Cannon, or their representatives.
Turndown appointment with the President and assure them
that their concerns will be brought to the attention of the
appropriate people.
What are your thoughts?
THE WHITE HOUSE
WASHINGTON
November 10, 1975
NOTE FOR BILL NICHOLSON
Bill -
The AFL-CIO Utility Workers Union in
NYC asks to meet with the President about
effects of default on their members - note
they say they are few uions which has
supported national and state candiates of
the Republican Party
Youw ill recall we asked advice on how
to reply to Blackand Puerto Rican Legislative
Exxxxxxxxxxxxxxxxxxxxxxxx Caucus of NY Assembly and a
draft was submitted which we did use
in replying to them
USE a similar response to the UnioN
or should we ask Seidman or Cannon
about this one?
MR
LIBRARY
2
3
4
5
6
The With House
Mashington
2
3
WHA#38 (1359) (2-026464E389)PD 11/05/75 1359
4
ICS IPMMTZZ CSP
1975 NOV 5 PM 2 08
is
FORD
5
6
2125327110 TDMT NEW YORK NY 168 11-05 #159P EST
7
PMS PRESIDENT GERALD FORD
GERALD
LIBRARY
8
9
WHITE HOUSE DC
10
11
MR PRESIDENT, THE NATIONAL UTILITY WORKERS UNION REPRESENTING 65,000
12
WORKERS ENDORSED AND WORKED FOR RICHARD NIXON FOR PRESIDENT AND THIS
13
LOCAL ENDORSED AND LABORED STRENUOUSLY FOR HIS ELECTION AND FOR THE
14
15
ELECTION OF MALCOLM WILSON AS GOVERNOR OF NEW YORK OF WHICH BOTH MR
16
NIXON AND MR WILSON ARE PERSONALLY AWARE. THIS LOCAL UNION
17
18
REPRESENTS 20,000 EMPLOYEES OF THE CONSOLIDATED EDISON COMPANY IN
19
NEW YORK AND WE WERE ONE OF THE VERY FEW FORMER CIO UNIONS WHICH HAS
FORM 0805 PRINTED STANDARD REGISTER COMPANY, U.S.A
20
21
EVER SUPPORTED NATIONAL AND STATE CANDIDATES OF THE REPUBLICAN PARTY
22
NOW OUR MEMBERS IN NEW YORK CITY ARE FACED WITH UNEMPLOYMENT
23
24
I MMEDIATELY UPON THE CITIES DEFAULT BECAUSE OF ANY FAILURE BY NEW
25
YORK CITY TO MEET ITS GAS AND ELECTRIC UTILITY BILLS WE SHOULD LIKE
26
2
3
4
5
6
2
3
4
5
6
VERY MUCH TO HAVE A MEETING WITH YOU ALONG WITH OFFICERS OF OUR
7
NATIONAL UNION TO EXPLORE WAYS THAT COULD BE PRODUCTIVE OF BOTH
8
9
YOURS AND OUR OBJECTIVES
10
11
1) JAMES JOY, JR., BUSINESS MANAGER 2) AFLCIO UTILITY WORKERS UNION,
12
13
14
3/386 386 PARK AVE SOUTH 4, NEW YORK, n.g 10016(2125327118) 18816
NNNN
15
16
17
18
19
FORM 0805 PRINTED BY THE BY THE STANDARD REGISTER COMPANY, 4. S.A
20
21
22
23
24
FORD i LIBRARY 074870
25
26
November 7a 1975
Dear Mr. Ebe:
The President asked me to acknowledge your October 30
telegram on the New York City fiscal situation sent
in behalf of the NNW York State Black and Puerto
Rican Legislative Caucas. Be appreciates receiving
your views, but regrettably his schedule does not
permit a meeting.
I can assure you, however, that any further comments
you may have will be conveyed to appropriate officials
for careful consideration.
With kind regard and appreciation of your concern.
Sincerely,
William K. Nicholson
Director
Scheduling Office
Kr. Arthur 0. Ebe
Chairman
Black and Puerto Rican Legislative Caucus
New York State Assembly
LOB Room 735
Albany, New York 12224
WWN:jem
cc: 2 cys nancy gemmell
FORO & LIBRARY GERALD
Resolution adopted by the Emergency Financial
Control Board at its meeting on
November 19, 1975
RESOLVED, that the Emergency Financial Control Board
accepts and endorses the City's commitment, after receipt of a
report from the Mayor's Management Advisory Committee, to update
the assumptions regarding interest earnings, salary progressions,
mortality tables and similar matters in the computation of the
City's contribution to its actuarial pension funds; to initiate
any legal and legislative steps required in that connection; and
to revise its financial plan as appropriate and to submit it to
the Board by January 31, 1976; and, included in such revisions,
there should be no further extension of the provisions of law
(Chapter five hundred ninety-five of the Laws of nineteen hundred
seventy-four and Chapter eight hundred one of the Laws of nineteen
hundred seventy-five) which authorized the City of New York to
reduce the City's contributions to its retirement systems by
the income in excess of four percent estimated to be earned on
pension fund investments during the fiscal year.
LIBRARY
Resolution adopted by the Emergency Financial
Control Board at its meeting on
November 19, 1975
WHEREAS, payment for excess overtime work in the last year
of employment before retirement is considered as
part of the salary of that year for purposes of
computing pension benefits; and
WHEREAS, overtime work should be limited to the minimum
required for efficient operations; and
WHEREAS, it appears that excessive overtime work by employees
of the City of New York and covered organizations in the
last year of work preceding retirement has inflated
the pension costs of the City;
NOW THEREFORE, be it
RESOLVED, that the City and the Executive Director of the
Emergency Financial Control Board are directed to report
to the Board, within thirty days, concerning overtime
practices and costs in the City government and covered
organizations, and t.o eliminate abuses of overtime,
particularly as it inflates pension costs.
LIBRARY
LONG VERSION
DRAFT - 11/21/75
NEW YORK CITY: Draft of Possible Announcement
For many months, leaders of New York have been struggling
to overcome the financial difficulties of New York City.
During most of this period, the essence of their position
has been that the Federal Government - and not New York
itself -- should assume primary responsibility for restoring
the city's financial integrity.
Six months ago and again two months ago, representatives
of New York met with me and insisted that they had exhausted
their own resources. What we needed they said, was massive
and immediate intervention by Washington. To be specific:
-- They maintained that there was no possibility
for them to raise taxes to cover their own expenses;
-- They maintained there was no possibility of
renegotiating city labor contracts which were plainly excessive;
-- They maintained that State and local pension funds
could not be used as a source of funds;
SHORT VERSION
11-24-75
NEW YORK CITY: Draft of Possible Announcement
For many months, leaders of New York have been working to
overcome the financial difficulties of New York City.
During most of this period, the essence of their position has
been that the Federal Government -- and not New York itself -- - -
should assume primary responsibility for restoring the City's
financial integrity.
I could not agree with that view.
It seemed evident to me that New York's political leaders
could do far more to help themselves.
I alsodid not want to be party to any plan which eroded the
fundamental idea of our republic that cities and states should govern
themselves -- that Washington should not make all the decisions and
pay all the bills. Neither New York nor any other city should ever
become a permanent ward of the Federal Government.
GERALD
of
DRAFT - 11/21/75
NEW YORK CITY: Draft of Possible Announcement
For many months, leaders of New York have been struggling
to overcome the financial difficulties of New York City.
During most of this period, the essence of their position
has been that the Federal Government --- and not New York
itself -- should assume primary responsibility for restoring
the city's financial integrity.
Six months ago and again two months ago, representatives
of New York met with me and insisted that they had exhausted
their own resources. What we needed they said, was massive
and immediate intervention by Washington. To be specific:
-- They maintained that there was no possibility
for them to raise taxes to cover their own expenses;
- They maintained there was no possibility of
renegotiating city labor contracts which were plainly excessive;
-- They maintained that State and local pension funds
could not be used as a source of funds;
BERALD
- 4 -
-- They maintained that their payment obligations to
holders of New York City notes and bonds could not be
renegotiated; and,
-- They maintained that every possible cut had been
made in the New York City budget.
The only realistic option, they said, was for Washington
to rush to the rescue with a huge assistance program -- a
program that would inevitably have continued for years.
I could not agree to those terms.
It seemed evident to me that with a sufficient amount
of imagination and political courage, New York's political
leaders could do far more to help themsleves.
I could see no reason why working people across America
should be forced to pay for a level of extravagence they
often could not afford in their own home towns.
SEAL
I also did not want to be party to any plan which
eroded the fundamental idea of our democracy that cities and
States should govern themselves -- that Washington should
not make all the decisions and pay all the bills. Neither
New York nor any other city should ever become a permanent
ward of the Federal Government.
For all of these reasons, I have been steadfastly
opposed to a Federal bailout of New York City and I remain
opposed today.
Many said it was right for me to stand tough. Others
said it was wrong because I supposedly betrayed a callous
insensitivity to the needs of the city. I will leave it to
the American people to decide whether my stand has led to a
more honorable and more equitable resolution of this crisis.
The fact is that in September, the New York State
Legislature passed a plan that would tide the city over
LIBRARY
4
through early December. For the first time, pension funds
were tapped. The first cuts began to come in municipal
expenses. The financial books that had been juggled for so
many years were brought more into line. The unions, the
banks, the political leaders --- all began to work together
in a more cooperative and earnest way.
Yet even that was not enough. It was only a temporary
bandaid, and everyone knew it. In fact, some believed that
the temporary relief was intended to give the politicians
of New York more time to lobby Washington. I continued to
receive urgent pleas for a Federal bailout, and we saw the
beginnings of a campaign to stampede the Government and the
people of this country into submission.
Such scare tactics were intolerable, and I said SO.
We were not about to have the mortgage payments for New York
frightened out of the American taxpayer.
Before the National Press Club on October 29th, I said
that I was prepared to veto any bill which had as its central
purpose a Federal bailout in order to prevent a default. As
I said, a bailout would reduce, rather than increase, the
prospects that the City's budget might be balanced. It
would only encourage more of the same "politics as usual" in
New York. The politicians of New York City have proved
repeatedly in the past that they could not face up to the
City's massive network of pressure groups so long as any
other alternative were available.
As I indicated, the primary beneficiaries of a bailout
would be the very New York officials who would thus escape
responsibility for solving the problems of their own making.
any
The second beneficiaries would be the major holders of New
York City obligations -- large investors and financial
institutions. Set against these, one had to count the
victims of a bailout -- working people across the country
GERALD
who had no hand in creating this crisis and, indeed, the
citizens of New York City who for so many years had been led
down the primrose path by their politicians.
Accordingly, I proposed that in the event New York was
unable or unwilling to meet its own obligations, the Federal
government should ensure two things:
One, that the process of default be as orderly as
possible, which would require a change in the Federal
bankruptcy laws; and,
Two, that essential services for the people of New York
City be continued, which would require an infusion of Federal
assistance limited to that single purpose. It is imperative
that the innocent victims of this ordeal, the eight million
people of New York City suffer no undue harships.
At the time I made this proposal, it was unclear whether
GERALD RIFORA
- 7 -
New York's political leaders chould muster the courage and
the will to take the initiative on its own. It seemed
apparent to me that the only way to put them to the test was
to withhold any promise of Federal assistance prior to an
actual default. Once we gave such a signal, their political
will might magically disappear and the American taxpayer
would be left holding the bag.
Now, at the eleventh hour, I believe we are witnessing
a revival of the "can do" spirit of New York that was once
the pride of the Empire State. Lacking an easy way out, the
political leaders of New York are facing up to hard realities.
has
They have rediscovered the backbone which always made America
stand so tall within the family of nations.
In the last three weeks, there has been a concerted,
all-out effort within New York to put the finances of the city
and the State on a sound basis -- exactly what we have been
asking them to do all along.
GERALD
The outlines of their plan were first presented to
my Administration two weeks ago. Since then, many additional
details have been hammered out so that all of us have a
better understanding of exactly what New York is planning
to do for itself.
Let me outline the essence of their self-help program:
One, almost $1 billion in new city and State taxes
will be raised;
Two, payments on the city's debts will be postponed
and interest payments will be reduced;
Three, for the first ime, municipal employees will be
required to bear part of the cost of their pension contributio
and other reforms will be made in the pension funds;
Four, significant additional cuts will be made in the
cost of running the city through personnel reductions, welfare
payments and other economies; and,
- 9 -
Five, the city pension system is to provide additional
loans of up to $2.5 billion to the city.
All of these steps are part of a broader effort to balance
the State's budget now and to bring the city's budget into
balance within three years.
All of these steps are also precisely what was said to
be out of the question only a few months ago. The distance
between what was said to be impossible then and what is
actually being done today is the best measure of how far
New York has come toward accepting primary responsibility
for this crisis.
This is a tough, constructive program, and the leaders
of New York, including the Governor, the Mayor and the
public-spirited citizens who have served so ably on the
State's Emergency Financial Control Board and in other
capacities, are to be warmly commended for their efforts.
GREATS 1000 GBRARY
Governor Carey, in particular, deserves public praise: he
pledged to me
days ago that he would carry out a tough
program of reform, and he has been a man of his word.
Even this program, however, will not be totally sufficient.
In the next few months, New York City will still lack enough
revenues to cover its day-to-day operating expenses. In
effect, because the city's tax receipts come late in the
year, the city fathers need to borrow funds for a short
period of time early each year to ensure that essential
services are provided.
Because the private credit markets remain closed to them,
representatives of New York have come to me and said, in
essence: we have done everything you asked us to do
originally. New York will take care of all of its old debts
without a Federal bailout. We need your help, the help of
the Federal Government, to assist us in a single, narrow
area -- to help us on a short-term basis in providing
essential services to the eight million Americans who live
in the nation's largest city.
My fellow Americans, New York in recent weeks has done
what is fair and what is right. They have built nearly all
of the bridge back to financial safety. Now we can --and
should - put the last span in place on their bridge.
To that end, I will now ask the Congress for authority
to provide a temporary line of credit of up to $
billion
to the State of New York to enable it to supply seasonal
financing of essential services for the people of New York
City. Money would be lent to the State during the period
when the city experiences a revenue shortfall -- the period
from December through March -- and would be repaid to the
Federal Government during April, May and June. If New York
continues to act affirmatively in its own behalf, I believe
we can say with reasonable confidence that all Federal loans
will be repaid in full with interest.
LIBRARY
The officials of New York -- including the Governor,
the Mayor, the banks and others -- have already provided me
with written assurances that they will carry out their
program. Moreover, since my statement last week that I
would await further concrete actions by the State Legislature
substantial progress has been made in Albany toward enacting
portions of this plan.
There should be no illusions about my position. I am
not prepared to endorse any further Federal assistance. In
the event that local parties fail to abide by the New York
plan, I am prepared to terminate all Federal assistance.
Given the turbulent history of this tragedy, it would be
prudent for the Federal Government to have in place a
workable arrangement for the possible future default of New
York City. I say to the officials of New York that I will
work with you to see that your plan succeeds. In return, I
ask that you work with me to amend current Federal laws,
- 13 -
so that, in the unhappy event that the New York plan fails,
there can be an orderly resolution of the resulting default.
But this is not a day for recriminations or a lack of
faith. If anything, the developments of recent days have
provided evidence that our local political leaders can still
remain masters of their own destinies and that the process
of self-governing remains strong and viable in the United
States.
Many observers have said recently - and I count myself
among them -- that the crisis of New York City illustrates
what can happen to the United States itself unless we put
our financial affairs in order. A nation, just like a city
and a family, cannot continually live beyond its means.
There is certainly much that we can learn from the spend-
thrift way that New York City has been run over the years.
GERAL ARRUMA
Yet I would suggest today that the way in which the
people of New York City and New York State are rallying
to overcome their crisis is also rich in meaning for our
nation.
The process of facing up to reality and then dealing
with it has at times been halting. At times all of us have
held our breath wondering whether they would pull themselves
back from the brink. But the essential point is that they
are succeeding. They are proving once again that when
Americans realize there is no easy way out, they can still
overcome even the greatest of adversities.
Certainly, this nation has had its share of adversities
in recent years.
We have had to overcome the shock of losing national
leaders to the bullets of an assasin.
LEDRARY
We have had to endure a long and very divisive war.
We have had to regain our faith in the political process
after a President resigned from office.
And we have had to begin rebuilding our economic
foundations after we suffered the worst siege of inflation
and recession in more than a generation.
The American spirit has truly been put to the test.
But we have not only endured; we have prevailed.
Sixteen years ago, before this long train of events
began, Carl Sandburg was speaking at Gettysburg on the 150th
anniversary of Lincoln's birth. What he said there has as
much relevance today as it did then. :
"Long before this time of ours, America saw the faces
of men and women torn and shaken in turmoil, chaos and storam.
Always the path of American destiny has been into the
BRARY
- 16 -
Unknown. And always there arose enough of reserves of
strength, balances of sanity, portionsof wisdom, to carry
the nation through to a fresh start with an ever renewing
vitablity. "
Now in 1975, there is a new vitality again in our land.
Let us resolve today that we shall carry it ever forward into
our future.
Thank you.
GERALL
LIBRARY
NEW YORK CITY: Draft of Possible Announcement
For many months, leaders of New York have been working to
overcome the financial difficulties of New York City.
During most of this period, the essence of their position has
been that the Federal Government -- and not New York itself --
should assume primary responsibility for restoring the City's
financial integrity.
I could not agree with that view.
It seemed evident to me that New York's political leaders
could do far more to help themselves.
I also did not want to be party to any plan which eroded the
fundamental idea of our republic that cities and states should govern
themselves - that Washington should not make all the decisions and
pay all the bills. Neither New York nor any other city should ever
&
become a permanent ward of the Federal Government.
-2-
I have been steadfastly opposed to a
Federal bailout of New York City and I remain opposed today.
Many said it was right for me to stand tough. Others said it was
wrong because I supposedly betrayed a callous insensitivity to the needs
of the City. I will leave it to the American people to decide whether
my stand has led to a more honorable and more equitable resolution
of this crisis.
The fact is that in September, the New York State Legislature
passed a plan that would tide the City over through early December.
For the first time, pension funds were tapped. The first cuts began
to come in municipal expenses. The financial books that had been
juggled for so many years were brought more into line. The unions,
the banks, the political leaders -- all began to work together in a more
cooperative and earnest way.
Yet even that was not enough; it was only temporary, and everyone
knew it.
3
Only in the last month, when it was made clear that the City
would have to balance its revenues and expenditures without the help
of the Federal taxpayer, has there been a concerted effort within
New York to put the finances of the City and the State on a sound
basis.
The outlines of their plan were first presented to my
Administration three weeks ago. Since then, many additional details
have been hammered out so that all of us have a better understanding
of exactly what New York is planning to do for itself.
Let me outline the essence of their self-help program:
One, additional cuts have been approved to reduce the cost of
running the City;
Two, more than $200 million in new taxes will be raised;
Three, payments to the City's noteholders will be postponed
&
and interest payments will be reduced through passage of legislation
by New York State;
GERALD
4
Fourth, banks and other large institutions have agreed to
defer collection of their loans and reduce interest rates;
Fifth, for the first time in years, municipal employees will
be required to bear part of the cost of their pension contributions
and other reforms will be made in the pension funds;
Sixth, the City pension system is to provide additional loans
of up to $2. 5 billion to the City.
All of these steps are part of an effort to provide financing
and to bring the City's budget into balance by the fiscal year starting
in 1977.
The distance between what was thought impossible a few weeks
ago and what is actually being done today is the best measure of how
far New York has come toward accepting primary responsibility for
this crisis.
&
This is a constructive program. It accomplishes many of the
necessary sacrifices that would have been forced in default, without
5
the need for formal court action. The leaders of New York, including
the Governor, the Mayor and the public-spirited citizens who have
served so ably on the MAC Board and in other capacities, are to be
warmly commended for their efforts.
Even this program, however, will not make them self-sufficient.
In the next few months, New York City will still lack enough funds to
cover its day-to-day operating expenses. The City needs to borrow
funds for a period of time each year to ensure that essential services
are provided.
Because the private credit markets remain closed to them,
representatives of New York have come to me and said that they have
acted but that they still need help on a short-term basis in providing
essential services to the eight million Americans who live in the
Nation's largest city.
r
My fellow Americans, New York in recent weeks has started
building the bridge back to financial safety. Now we must put the last
6
span in place on their bridge.
To that end, I will now ask the Congress for authority to
provide a temporary line of credit of up to $
billion to the State
of New York to enable it to supply seasonal financing of essential
services for the people of New York City. Money would be lent to
the State on a seasonal basis, normally being loaned from July through
March and repaid in April, May and June. If New York continues
to act affirmatively in its own behalf, I believe we can reasonably
expect that all Federal loans will be repaid in full with interest at the
end of their fiscal year.
I recognize that this is only the beginning of the process and
not the end. As always, the local officials must provide the leader-
ship. There should be no illusions about my position. In the event
that local parties fail to abide by the plan, I am prepared to
terminate all Federal assistance. Given the turbulent history of this
7
tragedy, it would be prudent for the Federal Government to have in
place a workable arrangement for any contingency. Accordingly, I
ask the Congress to act promptly to amend current Federal laws so
that, in the event that the New York plan fails, there can be an
orderly resolution of the resulting default.
But this is not a day for recriminations or a lack of faith.
If anything, the developments of recent days have provided evidence
of the vitality of our Federal system and that the process of self-
government remains strong in the United States.
Emergency Financial Control Board
November 25, 1975
RESOLVED, that the taxes imposed by Chapters 877, 879, 880,
883, 884 of the Laws of 1975, and Chapter 882 of the
Laws of 1975 as amended by Chapter 886 of the Laws of
1975, are necessary; and be it further
RESOLVED, that the revenues derived from those taxes shall
be expended in accordance with the provisions of the
New York State Financial Emergency Act for the City of
New York.
The Board hereby directs the Chairman to immediately provide
a copy of the above resolution to the appropriate officers
named in such Chapters.
GERALD
SIBRARY
THE WHITE HOUSE
WASHINGTON
November 25, 1975
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN
fws
SUBJECT:
New York City Materials
Two documents in draft form relating to the announcement of
your position on New York City are attached. The first is
the draft legislation, the New York City Seasonal Financing
Act of 1975, prepared and cleared by the Departments of Jus-
tice and Treasury, OMB, and the White House Counsel's Office.
The second is a Fact Sheet outlining your position, summar-
izing the proposed legislation, detailing the measures taken
by New York officials, providing a section by section analy-
sis of the legislation, and including some likely questions
and answers.
BRALD GERALD TIBRARY FORD
DRAFT OF 11/25/75
A BILL
To authorize the Secretary of the Treasury to provide
and facilitate seasonal financing for the City of New York.
WHEREAS it is necessary for the City of New York to obtain
seasonal financing from time to time because the City's revenues
and expenditures, even when in balance on an annual basis, are
not received and disbursed at equivalent rates throughout the
year; and
WHEREAS the Congress finds that at the present time the
City is or may be unable to obtain such seasonal financing from
its customary sources; and
WHEREAS the Congress finds that it is necessary to assure
such seasonal financing, in order that the City of New York may
maintain essential governmental services.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
this Act may be cited as the "New York City Seasonal Financing
Assistance Act of 1975".
Section 1. Definitions.
The words and phrases used in the Act have the following
meanings:
(a) The terms "City" and "State" mean the City and
State of New York, respectively.
GERALD FORD LIBRARY
(b) The term "Secretary" means the Secretary of the
Treasury.
(c) The term "Guaranteed Obligation" means any
obligation of the City guaranteed by the Secretary under
Section 3 of this Act.
(d) The term "default" with respect to Guaranteed
Obligations means the failure of the City, for whatever
reason, to make payment of any installment of interest on or
of the principal amount of such obligations on the date or
dates specified on the face of such obligations.
Section 2. Loans.
(a) Upon written request of the City, the Secretary may
make loans to the City subject to the provisions of this Act.
(b) Each such loan shall mature not later than the
last day of the fiscal year of the City in which it was first
issued, and shall bear interest at an annual rate established
by the Secretary at the time of the loan.
Section 3. Guarantees.
(a) Upon written request of the City, the Secretary
may guarantee the timely payment of interest and principal
on obligations of the City, subject to the provisions of
this Act. In connection with each guarantee under this
section the Secretary is authorized to collect from the
- 2 -
GERALD LIDRARY
City a guarantee fee not to exceed one per centum of the
principal amount guaranteed.
(b) Each Guaranteed Obligation shall state on its
face a maturity date not later than the last day of the
fiscal year of the City in which such Guaranteed Obligation was
first issued and shall further bear on its face the following
legend: "The United States has guaranteed the timely payment
of the interest and principal of this obligation pursuant
to Section 3 of the New York City Seasonal Financing Assistance
Act of 1974.
(c) In the event that the City defaults with respect
to any Guaranteed Obligation, the Secretary shall, upon
demand, pay the holders of such obligation the unpaid princi-
pal amounts thereof and the interest thereon to the date
when the holders of such obligation shall first have the right
to demand payment of the principal amounts of such obligation.
In such case, the United States shall have a claim against
the City for the amounts paid to the holders of such obligation.
Section 4. Security for Loans or Guarantees.
In connection with any loan or guarantee under this Act,
the Secretary may require the City and, where necessary, the
State, to provide such security for the City's timely satis-
faction of its obligations under this Act as he deems appropri-
- 3 -
GERALD
ate. The Secretary may take such steps as are necessary to
realize upon any collateral in which the United States has a
security interest pursuant to this section to enforce any
claim the United States may have against the City pursuant to
this Act. Notwithstanding any other provision of law, the
Secretary may withhold any payments from the United States
to the City, either directly or through the State, which may
be or may become due pursuant to any law and offset such
withheld amounts against any claim the Secretary may have
against the City pursuant to this Act.
Section 5. Limitations and Criteria.
(a) The Secretary may make or withhold loans or guarantees
under this Act as he may in his sole discretion see fit, and
such action shall not be subject to review in any court by
mandamus or otherwise. Without limiting the generality of
the foregoing, the Secretary may condition the making of a
loan or guarantee upon identification of revenue sources
adequate to satisfy the obligations incurred or secured thereby;
and may require such terms and conditions to be included in the
instrument of loan, the instrument of guarantee, or the instru-
ment of Guaranteed Obligation, as he may deem appropriate.
(b) At no time shall the outstanding amount of loans
under section 2 of this Act plus the outstanding amount
- 4 -
GERALD
LIBRARY
of Guaranteed Obligations issued under section 3 of this
Act exceed in the aggregate $2,300,000,000.
(c) No loan or guarantee shall be provided under this
Act unless: (i) the City shall have repaid according to their
terms all prior loans under this Act which have matured,
(ii) the City shall have paid the interest on and principal
amount of all previously issued Guaranteed Obligations accord-
ing to the terms of such obligations 1 and (iii) the City shall
be in compliance with the terms of any such outstanding loans
or Guaranteed Obligations.
Section 6. Remedies.
The remedies of the Secretary prescribed in this Act
shall be cumulative and not in limitation of or substitu-
tion for any other remedies available to the Secretary or
the United States.
Section 7. Funding.
For the purpose of making any loan or any payment to a
holder of a Guaranteed Obligation under this Act, the Secre-
tary is authorized to use as a public debt transaction the
proceeds from the sale of any securities issued under the Second
Liberty Bond Act, as amended, and the purposes for which securi-
ties may be issued under that Act are extended to include the
making of such loans and payments.
- 5 -
GERALD
Section 8. Guaranteed Obligations Taxable.
Section 103(a) (1) of the Internal Revenue Code of 1954
(relating to interest on certain governmental obligations) is
amended by inserting before the semi-colon at the end thereof,
the following:
", except in the case of an obligation guaranteed
by the Secretary of the Treasury pursuant to
Section 3 of the New York City Seasonal Financing
Assistance Act of 1975. "
Section 9. Termination.
The authority of the Secretary to make any loan and to
enter into any guarantee under this Act terminates on June 30,
1978. Such termination does not affect the carrying out of
any transaction entered into pursuant to this Act prior to that
date, or the taking of any action necessary to preserve or
protect the interests of the United States arising out of any
loan or guarantee under this Act.
- 6 -
GERALD
LIBRARY
DRAFT
AS:TN 11/25/75
1. Definitions. The words and phrases used in the Act have
the following meanings:
(a) The terms "City" and "State" mean the City and
State of New York, respectively.
(b) The term "Secretary" means the Secretary of the
Treasury.
(c) The term "Guaranteed Obligation" means any
obligation of the City guaranteed by the Secretary under
Section 3 of this Act.
(d) The term "default" with respect to Guaranteed Obli-
gations means the failure of the City, for whatever reason,
to make payment of any installment of interest on or of the
principal amount of such obligations on the date or dates
specified on the face of such obligations.
2. Loans.
(a) Upon written request of the City, the Secretary may
make loans to the City subject to the provisions of this Act.
(b) Each such loan shall mature not later than the
last day of the fiscal year of the City in which it was first
issued, and shall bear interest at an annual rate established
by the Secretary at the time of the loan.
3. Guarantees.
(a) Upon written request of the City, the Secretary
may guarantee the timely payment of interest and principal
GERATE JORNEY
on obligations of the City, subject to the provisions of
this Act. In connection with each guarantee under this
section the Secretary shall collect from the City a guarantee
fee of one per centum of the principal amount guaranteed.
(b) Each Guaranteed Obligation shall state on its face
a maturity date not later than the last day of the fiscal
year of the City in which such Guaranteed Obligation was
first issued and shall further bear on its face the following
legend: "The United States has guaranteed the timely payment
of the interest and principal of this obligation pursuant
to Section 3 of [insert name of Act] 11
(c) In the event that the City defaults with respect
to any Guaranteed Obligations, the Secretary shall, upon
demand, pay the holders of such obligations the unpaid princi-
pal amounts thereof and the interest thereon to the date
when the holders of such obligations shall first have the right
to demand payment of the principal amounts of such obligations.
In such case, the United States shall have a claim against
the City for the amounts paid to the holders of such obligations.
4. Security for Loans or Guarantees.
In connection with any loan or guarantee under this Act,
the Secretary may require the City and, where necessary, the
State, to provide such security for the City's timely satis-
- 2 -
GERALD
faction of its obligations under this Act as he deems appropri-
ate. The Secretary may take such steps as are necessary to
realize upon any collateral in which the United States has a
security interest pursuant to this section to enforce any claim
the United States may have against the City pursuant to this
Act. Notwithstanding any other provision of law, the Secre-
tary may withhold any payments from the United States to the
City, either directly or through the State, which may be or
may become due pursuant to any law and offset such withheld
amounts against any claim the Secretary may have against the
City pursuant to this Act.
5. Limitations and Criteria.
(a) The Secretary may make or withhold loans or guarantees
under this Act as he may in his sole discretion see: fit, and
such action shall not be subject to review in any court by
mandamus or otherwise. Without limiting the generality of
the foregoing, the Secretary may condition the making of a
loan or guarantee upon identification of revenue sources
adequate to satisfy the obligations incurred or secured thereby;
and may require such terms and conditions to be included in the
instrument of loan, the instrument of guarantee, or the instru-
ment of Guaranteed Obligation, as he may deem appropriate.
(b) At no time shall the outstanding amount of loans
under section 2 of this Act plus the outstanding amount
- 3 -
GERAL
of Guaranteed Obligations issued under section 3 of this
Act exceed in the aggregate $2,300,000,000.
(c) No loan or guarantee shall be provided under this
Act unless: (i) the City shall have repaid according to their
terms all prior loans under this Act which have matured,
the City
(ii)/shall have paid the interest on and principal amount of
all previously issued Guaranteed Obligations according to the
terms of such obligations and (iii) the City shall be in
compliance with the terms of any such outstanding loans or
Guaranteed Obligations.
6. Remedies.
The remedies of the Secretary prescribed in this Act
shall be cumulative and not in limitation of or substitu-
tion for any other remedies available to the Secretary or
the United States.
7. Funding.
For the purpose of making any loan or any payment to a
holder of a Guaranteed Obligation under this Act, the Secre-
tary is authorized to use as a public debt transaction the
proceeds from the sale of any securities issued under the
Second Liberty Bond Act, as amended, and the purposes for which
securities may be issued under that Act are extended to include
the making of such loans and payments.
- 4 -
8. Guaranteed Obligations Taxable.
Section 103 (a) (1) of the Internal Revenue Code of 1954
(reláting to interest on certain governmental obligations)
is amended by inserting before the semi-colon at the end
thereof, the following:
", , except in the case of an obligation guaranteed
by the Secretary of the Treasury pursuant to
Section 3 of the [insert name of this Act] ;". .
- 5 -
FORD is LIBRARY BERALD
THE WHITE HOUSE
WASHINGTON
November 25, 1975
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN
SUBJECT:
New York City Speech
An agreement involving actions by New York State, City, union
and financial community officials is expected to be consumated
today at 3:00 p.m. A discussion at the EPB Executive Committee
and with Ron Nessen, Bob Hartmann and others has produced the
following options for consideration regarding the announcement
of your position on New York which you indicated last week you
would make after reviewing the actions taken by New York offi-
cials.
Announcement of your position would be contingent on a success-
ful consumation of the package put together by New York offi-
cials. Draft legislation has been prepared and cleared by the
Departments of Treasury, Justice, the White House Counsel's
Office, and OMB. A Fact Sheet for release following any
statement or speech is being prepared.
There is general agreement that:
(1) The appearance of a"cave in" on the New York issue should
be avoided and that your announcement should make clear
that seasonal financing will not impose costs on the
American taxpayer.
(2) Any announcement should consist of a well reasoned ex-
planation of your position and that your announcement
should be allowed to "stand" at least overnight.
(3) Any announcement should be preceeded by notification of
key congressional members and State and local government
officials.
Options
Option 1: Deliver a medium length (10-15 minute) address from
the Oval Office at Noon tomorrow. (Wednesday)
2
Advantages:
A Noon announcement would likely be carried live
by the major networks and would also receive maxi-
mum coverage in the network evening broadcasts.
A Noon announcement has two advantages over a
Thanksgiving Eve night time announcement when
large numbers of people could be expected to be
travelling and when it would not receive coverage
in the nightly network news programs.
Option 2:
Deliver a medium length (10-15 minute) address from
the Oval Office at 7:30 p.m. tomorrow. (Wednesday)
Advantages:
It is expected that the major networks would pro-
vide time for live coverage.
Option 3:
Request network television time for coverage of an
announcement of your position at a meeting with
designated New York officials (Governor Carey, Mayor
Beame and a few others) in the Cabinet Room.
Advantages:
O
This would provide a new setting and permit you to
commend the New York officials personally on the
measures that they have taken. New York officials
who have been quietly approached on their reaction
to such a meeting have indicated that they would be
receptive to the idea and that they would respond
positively during such a meeting.
Option 4:
Deliver a short (2-3 minute) address from the Oval
Office taped late this afternoon for use on the
major network evening news broadcasts.
Advantages:
Would occur the day that the news of the successful
consumation of the measures by New York officials
was released.
3
Disadvantages:
Would make notification of congressional and State
and local government officials prior to your an-
nouncement extremely difficult.
A short (2-3 minute) address could not include a
full explanation of your position and could there-
fore result in misunderstanding.
THE WHITE HOUSE
WASHINGTON
NOVEMBER 25, 1975
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN
fus
SUBJECT:
New York City Speech
An agreement involving actions by New York State, City, union
and financial community leaders is expected to be consumated
today at 3:00 p.m. A discussion at the EPB Executive Committee
and with Ron Nessen, Bob Hartmann and others has produced the
following options for consideration regarding the announcement
of your position on New York which you indicated last week you
would make after reviewing the actions taken by New York offi-
cials.
Draft legislation, the New York Seasonal Financing Assistance
Act of 1975, has been prepared and cleared by the Departments
of Treasury, Justice, the White House Counsel's Office, and
OMB. A fact sheet for release following any statement or
speech is being prepared and should be completed by the end of
the day.
Options
Option 1: Deliver a medium length (10-15 minute) address from
the Oval Office at noon tomorrow.
Advantages:
A noon announcement would likely be carried live by
the major networks and would also receive maximum
coverage in the network evening broadcasts.
o
A noon announcement has two advantages over an even-
ing announcement when large numbers of people could
be expected to be travelling on Thanksgiving Eve and
when it would not receive coverage in the nightly
network news programs.
2
Option 2: Deliver a medium length (10-15 minute) address from
the Oval Office at 7:30 p.m. tomorrow.
Advantages:
O
It is expected that the major networks would provide
time for live coverage.
Option 3: Request network television time for coverage of an
announcement of your position at a meeting with
designated New York officals (Governor Carey, Mayor
Beame and a few others) in the Cabinet Room.
Advantages:
This would provide a new setting and permit you to
commend the New York officials personally on the
measures that they have taken. New York officials
who have been quietly approached on their reaction
to such a meeting have indicated that they would be
receptive to the idea and that they would respond
positively during such a meeting.
Option 4: Announce your position on New York in a prepared
statement at the beginning of a press conference
tomorrow.
Advantages:
An announcement of your position in the context of
a press conference maintains the visibility of such
an announcement while permitting attention on other
issues at the same time (i.e. the China trip) and
thereby reducing the perception that your announce-
ment represents a major change in your position.
THE WHITE HOUSE
WASHINGTON
November 25, 1975
MEMORANDUM FOR:
BILL SEIDMAN
FROM:
BOB WOLTHUIS RKW
Members of Congress to be notified regarding Presidential decision on NYC
Mansfield
McClellan
Albert
Mahon
Scott
Young
O'Neill
Cederberg
Byrd
Muskie
McFall
Brock Adams
Griffin
Bellmon
Rhodes
Latta
Curtis
Michel
Tower
Reuss
Brooke
Albert Johnson
Hruska
Rodino
Buckley
Hutchinson
Javits
John Anderson
Proxmire
Eastland
Optional Notifications
New York State GOP Congressmen
NY State Democratic Congressmen
Lent
Pike
Badillo
Wydler
Downey
Bingham
Peyser
Ambro
Ottinger
Fish
Wolff
McHugh
Gilman
Addabbo
Stratton
McEwen
Rosenthal
Pattison
Don Mitchell
Delaney
Hanley
Walsh
Biaggi
LaFalce
Horton
Scheuer
Nowak
Conable
Chisholm
Kemp
Solarz
Hastings
Richmond
Zeferetti
Holtzman
John Murphy
Koch
Rangel
Abzug