In what may be best remembered as the "shrug of the shoulders" election, New Yorkers in a low-turnout stunner last Tuesday expressed their strong preference for none of the above. With three-quarters of the electorate staying home despite balmy weather, incumbent mayor Michael Bloomberg garnered just 51 percent of the vote even after spending over $100 million on saturation advertising and costly field operations in the most expensive bid for local office in American history.

Under Bloomberg, New York has experienced the collapse of its civic life. In 1989 roughly 60 percent of registered voters turned out in the mayoral election, by 2001--Bloomberg's first victory--it was down to 38 percent, and this year it hit a record low of 25 percent. That translates into 800,000 fewer voters in 2009 than in 1989, even as the city's population has grown by half a million in the same stretch. The civically engaged middle class has either left the city or withdrawn from its politics. Increasingly those that continue to play the game are the city's public employee unions and subsidy seeking real estate developers, two groups with direct financial stakes in government spending. Call it the Al Sharpton phenomenon. In a decade of runs for city and state offices, Sharpton kept his vote total roughly constant while the Democratic party shrank around him. Bloomberg has extended that trend to the city as a whole--he'll spend what it takes to win, even as he alienates the city government from its citizens.

Gotham's political process has become so meaningless that even politicians don't bother to vote. The State Senate's two most powerful members from the city, Democrats John Sampson and Pedro Espada, skipped the primary runoff election. Less than 5 percent of voters effectively picked who would fill the only other citywide offices--public advocate and comptroller. The winners, Bill De -Blasio and John Liu, immediately emerged as 2013 mayoral frontrunners.

In this mayoral election, New Yorkers were forced to choose between an incumbent of limited accomplishments and unlimited wealth who overturned the city's term limits law--twice ratified by popular referendum--to remain in the spotlight and a challenger in Comptroller Bill Thompson who wasn't able to put together the talking points of his campaign until the week before the election.

When Thompson promised to expand every city subsidized housing program, Bloomberg "countered" by vowing to leverage even more money to create subsidized housing. When Thompson said he would extend a $16 million voucher program used almost exclusively by Orthodox Jews to subsidize their day-care expenses, Bloomberg reversed himself and concurred. And so it went.

Right now the city budget is being propped up by federal stimulus money and the virtually interest-free funds being shoveled by the Fed into the coffers of Goldman Sachs and JP Morgan. This is an unsustainable situation. During the campaign, the contenders not only ignored the city's weakened economy and the fiscal storm clouds on the horizon but bid against each other to offer individual groups and broad swathes of the electorate pricey promises while saying little about how they'd pay for them with a massive budget hole looming just beyond the electoral horizon.

It's easy to see New York's civic anomie as a local matter. But this election also has national implications that both parties would do well to consider. Democrats in Congress now represent both the most affluent and best schooled districts in the United States and the poorest and least educated districts. It's a head-scratching top-bottom alliance. But what's new for the country is old hat for New York City. Forty years ago New York mayor John Lindsay--like Obama the symbol of a "new" and "transformative" politics--rode to reelection on just such an alliance, leaving the middle class out in the cold.

In part because so-called "fusion" voting allows candidates to run on multiple ballot lines, New York State has long been the trendsetter for strange political alliances. (The Conservative party candidate who forced the Republican out of the race before falling just short in New York's 23rd Congressional District is only the most recent example of how the state's third-party politics anticipates national trends.) The contemporary conservative movement was created not just by the Goldwater campaign of 1964, but also by William F. Buckley's 1965 run for mayor of New York. In the course of campaigning, the famously aristocratic Buckley discovered that the people who most identified with his politics were Gotham's working class Catholics. These "street-corner conservatives" were precursors of the Reagan Democrats. Similarly much of what came to be known as neoconservatism had its origins in the response of middle-class Jews to the depredations of New York City street crime and the dysfunctions of the city's welfare system which couldn't keep the streets clean despite taking citizens to the cleaners with taxes.

Bloomberg's narrow win foreshadows the Democratic party's national future. The mayor has close ties with the Obama administration--one prominent supporter reportedly called Valerie Jarrett to kindly suggest that "we stayed out of your race, now you stay out of ours"--and his low turnout triumph represents a new version of the two-party system.

In New York City, the traditional parties have atrophied. The Republicans exist largely as a ballot line ready to be sold--currently to the billionaire Bloomberg--while the leaderless Democrats will have gone, despite their dominance of the electoral rolls, nearly 20 years without electing a mayor. Locally neither party commands either enthusiasm or respect. In their stead comes a billionaire's party and a public sector union party. It's an exaggerated version of the national alliance between George Soros and the public sector unions that helps drive the Democrats' national agenda.

Bloomberg, a Democrat turned Republican turned independent, ran not only on the wink-wink Republican line but also on the Independence line created by fellow billionaire Tom Golisano, who made his fortune in upstate New York before the most recent round of state tax hikes sent him fleeing to Florida. Of course most of the party's nominal members think they've signed on as actual independents and have no idea they belong to a political party at all, let alone a shell ballot line controlled in New York City by the remnants of the New Alliance party, an anti-Semitic therapeutic cult. It was the Independence line that gave Bloomberg his margin of victory.

The Independence party exists because of a quirk in New York State's byzantine election laws, intended to protect incumbents (nearly half of all the ballot access suits filed nationally are filed in New York State), which allows for candidates to run on more than one ballot line. With nearly all elections in the city decided in the Democratic primaries, a second line can be an invaluable edge.

Bill Thompson, who received only sotto voce support from fellow Dems like President Obama, New York governor David Paterson, and New York City Council speaker Christine Quinn, tried to attach himself to the new political vehicle in town, the Working Families party. The party has less than 20,000 members, but thanks in large part to its very effective union field operations it has largely taken control of a Democratic party with well over 3 million members.

The city has lost more than 100,000 private sector jobs since the downturn, but the public sector has suffered neither layoffs nor a reduction in its pay hikes which are well in excess of inflation. Secure in the saddle, the unions hedged their bet. When asked to define the middle class in a debate, Bloomberg farcically offered up only one specific group--"municipal workers, 300,000 of them." The average city worker receives $107,000 a year in salary and benefits, while the median annual salary for New York families is $50,000. Some of the union leaders backed Bloomberg, while the Working Families party itself backed Thompson. No matter who won the election, the public sector unions would be winners in the next administration.

The Manhattan Institute's Nicole Gelinas points out that local taxpayer-supported spending has risen 31 percent under Bloomberg--to $41.5 billion a year, a spike of more than 20 percent in real dollars and more than the budgets of most states. Pension costs now eat up a third of the money the city takes in ($13.6 billion). Add in education spending, which has spiked 40 percent in real dollars under Bloomberg to $21.8 billion, and the city-funded part of the budget (excluding state and federal contributions) is entirely consumed by what the mayor likes to refer to as "uncontrollable" costs. They rise every year as he adds to the benefits baseline the city is committed to pay in good times or bad.

The city's record-low turnout last Tuesday was partly a matter of demography. The civic-minded middle class (especially anyone with children of school age) has headed for the exits and the promise of a better life elsewhere. According to a recent Brookings Institution study, the city has the second-smallest share of middle-income families in the nation, trailing only Los Angeles. In what was perhaps his best line of the campaign, Thompson, referring to the roughly 1 million New Yorkers who've left the city since 2000, defined the middle class as "the people who are leaving .  .  . squeezed out by Bloomberg's tax hikes." They have been replaced, but by new immigrants with more pressing concerns than municipal politics. And they too will head for the exits as soon as they move up into the middle class. The New York Post nicely captured the dynamic recently when it ran two stories side by side: "Tax refugees staging escape from New York" and "Bloomy sees bright future."

But New York's civic anomie is more than just a matter of demography. New York is home to a vast nonprofit sector. Civic and charitable organizations that were once largely autonomous representatives of civil society have been annexed to government by the flow of social service contracts, as well as vast private contributions from the mayor's fortune. The effect is that much of civil society is now, for all practical purposes, part of the public sector.

New York City has become France on the Hudson. Its highly centralized, highly politicized government employs one-seventh the number of federal civilian employees with less than one thirty-sixth the population of the United States at large. In New York, big government and Wall Street profits are fiscally incestuous twins. The profits enable the city to offer subsidies not only to the poor but also the middle class. It was middle class housing subsidies that triggered the 1975 New York fiscal crisis. But the cost of living keeps rising. Teachers, who've received a 43 percent increase in pay over these past eight years of Bloomberg, complain they're being priced out of New York. And no wonder, it's New York's vast public payroll (and benefits, which since 2000 have grown twice as fast as those in the private sector) that makes the city so expensive. In other words, the public-sector middle class is increasingly chasing its own tail--even as the costs of government drive away private-sector jobs.

Government in New York is now not a matter of elections but of cutting backroom deals. The levers of power are accessible only to the very wealthy, such as the real estate barons Bloomberg has favored with hefty subsidies and the generals of the public employee unions. For the vast majority of well educated and well off New Yorkers, local politics is someone else's business. The people who do bother to participate in elections have been bought in one way or another either by Bloomberg's money or by government connections. The underside of Bloomberg's generous giving, some of it to highly worthy causes, is that it taints everything he touches. Is someone supporting Bloomberg out of conviction, however weak, or out of an elegantly greased palm?

While Bloomberg's generous donations preceded his decade in politics, they spike every time he runs for election. Last year, he was the single largest charitable donor in the United States with gifts of $235 million, much of that going to groups in the city who are then put in a position where they can't offend their patron. The supporter who phoned the White House, for instance, is Geoffrey Canada, head of a nonprofit called the Harlem Children's Zone, which has received $600,000 in personal donations from the mayor. This year he spent $200 a vote to gain victory.

Bloomberg, who's asked to be judged on the performance of the schools under his leadership, has spent an additional 8.5 billion public dollars on the schools to no effect. National test scores are flat despite the torrent of spending and Bloomberg's vast PR campaign promoting the illusion of academic improvement. The mayor has to date bribed the teachers--that 43 percent increase in pay over the last eight years--to buy into his pretense of progress. But with a new teachers contract up for negotiation the price Bloomberg is willing to pay for union cooperation could be the first test for his third term. In one of his few memorable lines during the campaign, Thompson spoke of Bloomberg's claims about test score improvements as "the Enron of education."

There's a small incident that symbolizes Bloomberg's failings--and Thompson's failure to exploit them. In the East Flatbush section of Brooklyn a crack gang caught on tape making more than a 100 sales to undercover cops discovered a business more profitable and less dangerous than dealing drugs. They systematically sue the city for civil rights violations and, thanks to Bloomberg's policy of aggressively settling lawsuits rather than risk court judgments, the gangsters have raked in more than a half-a-million dollars. They are richer and the neighborhood is cowering. The story ran two days in a row on the front cover of the Daily News, but when asked about the problem Bloomberg replied, "That's just the real world .  .  . you're settling for small amounts of money compared to what they could win in a jury trial."

New York is still generous for many of the wealthy. Goldman and Morgan are turning out record profits in the midst of the downturn, and as always the lower end service economy is still churning out jobs. But jobs ladders for the upwardly mobile are few and far between. Unfortunately Thompson with his tin ear and ties to the public sector unions--he had been especially vocal in calling for raises for the Transit Workers Union that shut down the city's public transportation with an illegal strike in 2006--was unwilling or unable to effectively raise the issue of New York's bifurcated class structure. In the words of New York writer Eamon Moynihan, "It's 1973 all over again."

In the 1973 mayoral election, with a fiscal crisis around the corner, Gotham's parochial politicians, demonstrating formidable powers of self-delusion, fought among themselves to satisfy the interest groups. Then the skies opened, and the city sank into near bankruptcy. The city was rescued, in large part, by the state government. But today Albany has descended into dysfunction, and New York City is on its own. The 2009 election was a rerun of 1973, but this time around there will be far less in the way of middle-class civic capital to draw on when the crisis breaks.

Fred Siegel is a contributing editor to the Manhattan Institute's City Journal and a visiting professor at St. Francis College in Brooklyn. Harry Siegel is an editor at Politico.

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