Fiscal Commitments

At the core of New York's turnaround in the 1990s was Mayor Giuliani's unconditional understanding that the corrosive tax and spend culture that permeated the city for almost half a century must come to an end. For the city to thrive and reverse its course of decline and decay, Mr. Giuliani knew that strong fiscal management and discipline wasn't just the order of the day — it had to be the order of every day.

As two of Mr. Giuliani's budget directors — and later deputy mayors — we saw firsthand how he grappled every day to reduce New York City's uncontrollable bureaucratic bloat. He recognized that every decision he made — whether it was reducing crime, reforming welfare, encouraging tourism, or fixing potholes — had financial implications. Rearranging the priorities of the city's budget to fund efficiently and effectively only what was necessary became the bottom line.

After inheriting a mismanaged budget with an in year deficit of approximately $1 billion, Mr. Giuliani's disciplined and conservative budgeting philosophy eliminated the first year's deficit and turned a surplus in just six months. During his two terms in office, his budgets resulted in multi-billion dollar surpluses, all while cutting taxes, eliminating inefficient bureaucrats, and stimulating private sector job growth.

New York City emergency responders have a saying: "Plan for the worst; hope for the best." It is also excellent advice for fiscal management. Before Mr. Giuliani, it was customary to base the city's spending on overly optimistic revenue estimates. This created unrealistically high expectations, which were consistently undercut when budget shortfalls inevitably emerged. The city overpromised and underdelivered.

But, Mr. Giuliani stopped this roller coaster. At his insistence, the budgets were based on conservative revenue estimates. Single-year revenue windfalls — such as a boom year on Wall Street — were never made the basis for multi-year financial plans, and the city wasn't at the mercy of temporary economic downturns. In good economic times, a surplus was built, taxes were cut, and our city grew economically stronger.

Often, New York's chronic budgetary crises were compounded by the city's knee-jerk instinct to tax and spend. Revenues were decreasing as people and businesses were fleeing. In order to compensate for this revenue loss, prior mayors just raised taxes even higher. This, of course, only made the situation worse. The old political guard took the private sector for granted — nothing more than a cash cow that could be endlessly taxed. But Mr. Giuliani advanced a novel and revolutionary idea for New York: that when the private sector thrives, people thrive.

Because of Mr. Giuliani's efforts, taxes were cut 23 times, saving individuals and businesses more than $9 billion while New Yorkers enjoyed the lowest tax burden in decades. He also changed the terms of debate: by the time he left office, the same Democrat-dominated City Council that used to argue about which taxes to raise, and how high to raise them, began offering competing plans to cut taxes.

This turnaround was a conscious shift in fiscal philosophy that can be replicated by any chief executive seeking to gain control of an organization's destiny.

Like the fiscal situation Mr. Giuliani faced in the city, irresponsible spending in Washington is out of control. In the last decade, non-defense spending increased 72% because of anonymous earmarks, concealed budgeting, and the influence of powerful special interests. Mr. Giuliani wants to change the culture of Washington.

Constant vigilance on spending is integral to Mr. Giuliani's philosophy of strong fiscal management. He wants to make the federal government more accountable and transparent by forcing Congress to stop irresponsible earmarks and require a cost estimate on any bill before Congress votes.

The former mayor's commitment to restoring fiscal discipline and cutting wasteful Washington spending is one part of his 12 Commitments to the American People, Mr. Giuliani's roadmap for his presidency. He chopped the size of NewYork's bureaucracy by nearly 20,000 workers, while increasing the number of cops on the street and teachers in the classroom. Mr. Giuliani will follow the same principle by making the federal government smaller and smarter. He pledges to reduce the federal civilian workforce by more than 20% through attrition and retirement, saving taxpayers $21 billion each year.

He would require federal agencies to identify between 5% and 20% of their savings in their annual budgets. Mr. Giuliani regarded this omnipresent budget-cutting exercise as essential during his time as mayor.

By requiring city commissioners to propose 5% to 20% cuts from their budgets each and every year, even as the economic conditions improved, Mr. Giuliani kept his managers focused on constantly improving the efficiency of their organization while offering real value for taxpayers.

His strong fiscal principles helped New York turn from "the ungovernable city" to one that remains in control of its economic destiny.

This is the exact kind of commitment to fiscally responsible leadership and focused discipline that Mr. Giuliani will bring to Washington.

Mr. Lhota was the deputy mayor for operations for Mr. Giuliani, and Mr. Harding was the deputy mayor for economic development for Mr. Giuliani. Previously, both served the former mayor as budget directors.