Bonds of Affection

News that Standard & Poor’s, the bond-rating agency, has upgraded New York City’s credit is both astonishing and routine.

The astonishing part is for those of us with long memories. Anyone who can recall the bad old days of the 1970’s, when the city literally had no bond rating—no bond rating!—knows that only a generation ago, many believed New York was destined for bankruptcy and collapse. The notion that New York City would not only be back on its feet, but would be stronger than ever, seemed a fool’s dream in 1975. So, yes, it is astonishing to reflect on the city’s 21st-century prosperity. Some of us clearly have learned from history.

And yet the Standard & Poor’s decision also seemed routine, almost ho-hum, if your frame of reference is the last decade. Since the mid-1990’s, New York has become not only the safest big city in America, but one of its best-managed cities as well. As a result, the banks and bond raters love New York, never more so than now. S&P now rates the city’s general obligation bonds as AA, one of the highest designations the agency hands out.

The rating means that the city will pay a lower interest rate on its debt, which will translate into millions in savings. The prudent fiscal policies of the Giuliani and Bloomberg administrations have brought tangible rewards: S&P has upgraded the city’s credit three times over the last two years.

But the bond rating carries important symbolic value, too. Just over a quarter century ago, New York’s credit was so bad that it could only dream of junk-bond status. Today, its credit is roughly on par with some of the best-managed cities in the world.

The agencies no doubt are impressed by the city’s strong financial numbers. New York is operating in the black to the tune of more than $4 billion. That kind of success is not just the result of good budgeting. All of the success the city has enjoyed—in fighting crime, in raising test scores, in keeping streets clean—feeds into our fiscal performance. Middle-class and affluent people aren’t fleeing the city, as they were 30 years ago. They’re moving here from other places, buying homes, and they’re staying.

All of this is the result of no-nonsense, post-partisan, problem-solving government. The recent administrations have moved the city away from the toxic politics of ideology and the wasteful practices of the clubhouse. They understood, as perhaps their predecessors did not, that the city must retain a stable middle class, and that affluent people increasingly can live and do business anywhere. New York must be safe and well-run if it is to retain its position as a capital of commerce, the arts and culture.

The measure of their success is the city we enjoy today.

Bonds of Affection