Despite recent political woes, New Yorkers Hillary Clinton and Rudy Giuliani continue to lead their respective parties in the national polls. Should they falter and lose the nominations to, say, Barack Obama of Illinois and Mike Huckabee of Arkansas—the current favorites to win the Iowa caucuses—-that would open the way for New York’s billionaire mayor, Michael Bloomberg, to enter the race as an independent. Not since the 1950s, when disputes raged about whether the best center fielder in baseball was the Yankees’ Mickey Mantle, the Giants’ Willie Mays, or the Dodgers’ Duke Snider, has such a trio of New Yorkers figured so prominently in public debate.

How did we get here? By most measures, the Empire State is far less of a factor in American political and economic life than it was when Mantle, Mays, and Snider were patrolling outfields. Back then, New York State was the center not only of finance but of manufacturing and corporate headquarters. It boasted a nation-leading 47 electoral votes, 12 more than second-place Pennsylvania. But in the years since the Dodgers and Giants left for the West Coast, New York has fallen to third place, with 31 electoral votes, trailing California’s 55 and Texas’s 34. By 2010, the state is projected to fall to fourth, with Florida moving ahead of it.

New York, today a deep-dyed blue state, was once a much fought over swing state. In three of the four presidential elections since the Civil War in which one state produced both nominees, the candidates hailed from New York. In 1940, it was Franklin D. Roosevelt running for his third term against Wall Street lawyer Wendell Willkie, and in 1944 it was FDR again, this time against New York’s racket-busting former district attorney and sitting governor Thomas Dewey. In those years, a still-vital upstate powered a still-vital GOP and balanced the Democratic stranglehold on New York City. But the balance between the city and upstate was unintentionally broken during Republican Nelson Rockefeller’s spend- and spend-much-more governorship, which ran from 1959 to 1973.

By imposing the cost structure of big government on the rest of New York while the state’s manufacturing industries faced increased competition, Rockefeller sent upstate into a long-term decline from which it has yet to recover. At the same time, Rockefeller’s fellow liberal Republican, New York City mayor John Lindsay, badly mishandled Gotham’s demographic transition. As rural southern sharecroppers, unprepared for urban life, arrived in the city, the upwardly mobile children of turn-of-the-century immigrants departed for the suburbs, and the city joined the state in a seemingly un-reversible slide. Between 1969 and 1975, thanks to Lindsay’s Great Society-style programs, the city’s economy shrunk by 11 percent, while government spending grew by 30 percent. By the mid-1970s, the once-mighty metropolis, overwhelmed by crime, shaken by social disorder, and hemorrhaging jobs, was all but formally bankrupt.

Thanks to the Reagan-era deregulation of the financial services industries and Ed Koch’s strong mayoral hand, however, the city avoided bankruptcy and even took some steps forward. In the Koch years of the 1980s, the combination of a surging stock market and over-generous city subsidies sparked a Manhattan building boom. But the perennial problem of crime meant that the boom was largely confined to the best areas of Manhattan. It was only after Mayor Giuliani and police chief William Bratton, starting in 1994, engineered a huge drop in crime, and the stock market revved up again, that the city began to reinvent itself. The five boroughs have seen so much new construction over the last decade that only the old timers can remember what the dark days of the 1970s were like. “Any city,” noted famed New York journalist A.J. Liebling in the 1940s, “may have one period of magnificence, but it takes a real one to keep renewing itself until the past is perennially forgotten.”

If the city restored itself, the same couldn’t be said for New York’s political parties. The Clintons moved to New York State instead of, say, Los Angeles, not only because by the late 1990s, Gotham was once again “the only place to be,” but also because, as journalist and historian Richard Brookhiser has noted, the state Democratic Party was in as much despair and disarray as its GOP counterpart. Accusations of Hillary’s carpet-bagging thus never got much traction, because she was the white knight riding in to save a party that had lost both the mayoralty and the governor’s mansion, despite overwhelming voter majorities. Her arrival set up the almost-match against Rudy in 2000 for the retiring Daniel Patrick Moynihan’s senate seat. When Rudy bowed out, Hillary coasted to victory.

Meanwhile, the transformation of the city, and ultimately the events of September 11, made Giuliani into a national player. His successor, Bloomberg, taking the reins of a now-thriving city, had a ready-made platform from which to mount the national stage. As Hillary had done with the Democrats, Bloomberg engaged in a semi-friendly takeover of the state’s Republican Party, though in his case it was an entirely unleveraged buyout, financed out of petty cash. It was a fitting scenario for a city short on civic life but long on young hedge-fund tyros. In sum, it was the Giuliani mayoralty, along with the extraordinary growth in stock values set in motion by the Reagan presidency, that together have been the sine qua non for New York’s two-and-a-half candidates.

As a result, in this presidential primary season, local New York politics has become national politics. Congressman Charles Rangel of Harlem, a prominent liberal, was a close ally of former New York mayor David Dinkins, the man Giuliani defeated in a bitter 1993 contest. As the Democratic chair of the House Ways and Means Committee, Rangel recently proposed a sizeable tax increase, and in doing so made trouble for Hillary. Giuliani’s subsequent attack on the Rangel plan was a twofer, since it gave him a chance to damage Hillary as well. “We certainly shouldn’t raise taxes the way Charlie Rangel wants to,’’ said Giuliani. Rangel’s plan, he insisted, “would devastate the economy.’’ Clinton quickly distanced herself from the proposal.

Then there’s the politically combustible issue of illegal immigration. Eight states now allow illegal immigrants to acquire driver’s licenses. But it was New York governor Eliot Spitzer’s plan to do so that made the Clinton campaign wobble. Similarly, Giuliani’s campaign has been buffeted by the legal troubles of his former police commissioner Bernard Kerik, followed by stories about peculiar billing methods for the police protection that the mayor enjoyed when, still married, he visited his girlfriend Judith Nathan in the Hamptons. The Hamptons story prompted furious speculation about who had been the source for the reporter, the Politico’s Ben Smith. Was it Fran Reiter, Giuliani’s former deputy mayor, now working for the Clinton campaign? Was it New York City comptroller Bill Thompson, hoping to help his fellow Democrats? How about former New York governor George Pataki, who was either at odds with or overshadowed by Giuliani when both were in office? If this has the look of an Agatha Christie plot, where a dozen suspects all have good motives, that’s because Giuliani made plenty of enemies as he turned New York around and advanced his own ambitions. The local story has gone national.

And if he surmounts these hurdles to become the Republican nominee, we can also expect that his old foe, the Reverend Al Sharpton, will take time off from his regular round of shakedowns to hound him. The rise of Barack Obama has undermined Sharpton’s business model, and the former Democratic presidential candidate will no doubt welcome a Giuliani nomination as a chance to return to the national stage and drum up clients. Giuliani won’t mind, since hostility from the Reverend Al can only increase his vote count.

Giuliani’s first TV ad in New Hampshire wasn’t about September 11, when he became “America’s mayor,” but rather about taming New York’s self-destructive liberal political culture. The text reads:

The world’s 17th largest economy. Swimming in red ink. Record crime. Runaway taxes. A million on welfare. That was New York. Until Rudy. He cut taxes 9 billion. Welfare 60 percent. Crime in half. The most successful conservative turnaround in 50 years. In America’s most liberal city, Rudy delivered. And he can do it again, in a place called Washington, D.C.

Republican candidate Fred Thompson responded by complaining that Giuliani “relates everything to New York City. Well, New York City is not emblematic of the rest of the country, I don’t think. I think the sentiments of those people in the rest of the country are in support of the Second Amendment—which is where I’ve always been and I don’t think he’s ever been.” Thompson scored some points with NRA voters, but he seemed to miss the ad’s subtext – the pas de deux that Giuliani is dancing with Senator Clinton.

Giuliani fits the classic image of New Yorkers as fast-talking, hard-edged characters who aren’t afraid of a fight. But his outer-borough personality turns convention on its head when he campaigns against a city that he turned around, a city whose liberal politics had turned it into a sinkhole of crime and pathology before he came to power. The New York Times got it partly right when it accused Giuliani in a recent article of trying to impose the “mores of Mayberry on New York.” Before September 11, Giuliani endeared himself to conservatives around the country as much for his enemies—such as the Times—as for his accomplishments. When Giuliani attacked the lavishing of public money on a dung-pocked painting of the Virgin Mary, he marked himself as a man who shared the outlander’s sense of what was wrong with his city. As Daily News columnist Michael Goodwin observes, Giuliani is “running away from New York even as he touts his record of reforming it.”

Should Giuliani and Clinton face off in the political World Series, his two-step will come to the fore. Though both candidates are the beneficiaries of generous campaign contributions from hedge funds, Giuliani will do his best to paint Senator Clinton as the representative not only of Manhattan’s liberal elites, but of a political culture that caters to the very wealthy and the very poor but has little room for the middle class. Giuliani will present himself not so much as an outer-borough ethnic, but as the sort of upwardly mobile, middle-class American who, like his Brooklyn forebears, left the city’s liberal philosophy behind in pursuit of a better life.

There is a danger for the city, though, in having two New Yorkers on the ballot at a time when the country is anxious about the inequality and insecurity produced by globalization. A New York versus New York election will remind voters of the city’s centrality in all things financial, and the global financial industries that have remade the city are likely to come under almost as much scrutiny as the candidates. Even so, Gothamites can’t help but chortle about the possibility of a Rudy/Hillary matchup. Whatever happens, it certainly won’t be dull.


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