“CETA” refers to the Comprehensive Employment and Training Act, a law passed during the Nixon Administration that facilitated job training and public sector jobs for people in need of work, such as low-income high school students or the long-term unemployed. While the program wasn’t specifically an urban program, many of the jobs did go to impoverished residents of struggling cities in this era. Here, “counter-cyclical aid” refers to federal government aid given to cities during economic downturns, like what the US experienced in the mid-1970s. The logic was that local governments lost revenue during times of economic hardship (e.g., declining consumer spending led to lower sales tax revenue) but still needed to provide services to residents. Federal counter-cyclical aid could fill the fiscal gaps that might emerge as the result of a recession.

Host Robert MacNeil’s reference to urban governments as “junkies” who suffered from “dependency” on outside aid channels a perspective held by Americans who were critical of “bailouts” to struggling cities. According to this point of view, to the extent certain cities were in economic crisis, they only had themselves to blame: municipal government spending was out of control; party machines controlled local governments and were corruption was rampant; public sector unions held politicians hostage and made it politically difficult to make necessary cuts to government workers. Thus, federal aid was futile or even counterproductive, since it enabled city governments to continue their bad habits rather than making necessary reforms.

Most cities collect revenue through sales taxes (collecting a percentage of the value of purchases made at local stores) and property taxes (collecting a tax proportionate to the assessed value of a home or other piece of property). During the urban crisis of the 1970s, these streams proved insufficient. Sales tax revenue was declining as residents had less money to spend, and property tax revenue plummeted as more affluent property owners moved to the suburbs. Additionally, as Mayor Gibson notes, a particularly high proportion of Newark property was untaxable because it was owned by federal or state government (e.g. the port authority). Most states in the US, including New Jersey at this time, do not allow local governments to collect income tax, shutting off another potential revenue stream. Eventually, Newark was allowed to start collecting a 1% income tax from local employers.

The fiscal situation in Cleveland provided the impetus to this particular episode of The MacNeil Lehrer Report. The city had recently defaulted on its loans to local banks (the first major city to do so since the Great Depression), leading to a political crisis. Mayor Dennis Kucinich had publicly announced that he would lay off hundreds of government workers and increase taxes to stabilize the city’s fiscal situation. City councilmen said Cleveland should instead sell a city-owned electrical power plant, while unions threatened to strike if Kucinich followed through on the proposed layoffs. The political crisis was just the latest example of the economic crises that were facing deindustrializing cities across the country.