Economically, New York faces few good options in the face of Washington’s hostility.
Donald Trump’s double-barreled assault on cities — budget and administrative damage on the one hand, and attacks on immigration on the other — will severely hurt New York and other metropolitan areas. But although the actions of the Trump administration are exceptionally harsh in degree, they are sadly consistent with America’s long anti-urban history.
Trump’s attacks are compounded by America’s dysfunctional metropolitan form — core cities that drive the economy, surrounded by suburbs that benefit from urban economic strengths (scale, agglomeration, specialization, innovation) but at best only partially share the full costs of the city’s problems, including high rates of crime, substandard schools and a housing crunch.
The sad truth is that New York and other cities will struggle to deal with Trump’s attacks because they are fighting with one hand behind their backs thanks to politically independent suburbs and the reality that state government effectively controls many city actions.
A three-pronged attack
The Trump administration’s attack on cities has three principal components: cutting budgets, reducing immigration and advancing economic policies that will damage urban areas.
Federal budget cuts will be very harmful to New York. Gov. Kathy Hochul’s office estimates that the impact on healthcare will cost $13 billion annually statewide, including $8 billion in direct cuts to hospitals and the healthcare system. New York City is estimated to suffer $7.9 billion of those cuts annually. Cuts in food assistance, both in direct SNAP benefits and additional costs for state and local administration, could cost another $1.4 billion annually across the state.
Overall, State Comptroller Tom Di Napoli now estimates the state faces budget gaps of more than $34 billion over the next three years, driven not only by the federal budget cuts but also by a weakening economy. Many of those budget gaps and fiscal pressures will flow down to the city.
To be fair, New York City is not without fault here. To the extent it controls its budget, it has let it increase at a far faster rate than the rate of inflation in recent years. It is legitimate to criticize the City for failing to discipline spending, and for paying insufficient attention to government efficiency. But that having been said, the city is where it is — and the federal fiscal attack is going to do serious damage.
Attacks on immigration are a second damaging blow. Immigration has long been a major driver of New York’s growth and prosperity, especially in comparison to less immigrant-friendly cities like Philadelphia or Detroit. About 38% of New York’s current population is foreign-born, and by some estimates, around 60% of New Yorkers are either immigrants or second-generation. (Even with the recent surge in undocumented migrants, the percentage of undocumented immigrants hovers steadily around 15%, and estimates for New York State are that most undocumented immigrants have been in the country for more than 10 years.)
In 2023, foreign-born workers made up 44.3% of the city’s labor force, with very high concentrations in construction (69.5%), transportation and utilities (65.3%) and manufacturing (54.7%). Other sectors, like health care, food delivery and hotels and restaurants, also have large concentrations of immigrant workers, many of them women. Undocumented workers are especially likely to work in construction, food services and home care. Many of these jobs are understandably categorized as “essential,” and dramatically reducing the number of people available to occupy them could have a devastating impact on the health of the city.
Finally, Trump’s overall economic policies, especially his trade and tariff wars, could push up inflation and induce an economic slowdown or even a recession. Cities are especially exposed due their greater integration into international trade, and unlike agricultural regions, the federal budget doesn’t provide payments to offset the impact of retaliatory tariffs. The Center for New York City Affairs reports that the slowing of international trade in the wake of tariffs means “New York City’s unemployment rate is likely to increase while its GDP growth may decrease in the short run.” There has already been a sharp drop in foreign visitors and tourism, with the New York City Tourism and Conventions office foreseeing $4 billion less tourist spending this year.
The city’s economy is feeling the effects. The Office of Management and Budget estimates that only 5,079 private sector jobs were added in the first seven months of 2025, compared to over 68,000 by this time in 2024 of 2025. And health care, especially lower-wage home health aide jobs, is the principal source of net new jobs, not finance or higher-paying industries. The slowdown is driven in part by macroeconomic factors beyond anyone’s individual control, but also by a toxic brew of uncertainty caused by erratic federal policy around taxes, regulation and investment, and increasing cost pressures from tariffs that serve to restrict hiring and job creation, especially for small businesses.
American animus against cities
Trump’s hostility to cities is well documented. He’s called American cities “rotting” and “cesspools of blood.” Atlanta? “A killing field.” San Francisco? “Worse than a slum.” Los Angeles? “A trash heap” that has been “invaded and occupied by illegal aliens and criminals.” Milwaukee (the site of the 2024 Republican convention)? “A horrible city.” And in justifying his takeover of policing in Washington D.C., Trump said the city suffers from “crime, bloodshed, bedlam, and squalor and worse” even while the city’s violent crime rate is at a 30-year low.
No one should deny that cities wrestle with real problems, but Trump’s hyperbolic and racially-coded attacks are worse than we’ve heard in recent decades
That said, his approach echoes a long-standing American animus against cities. Thomas Jefferson, in 1800, reflecting on a yellow fever epidemic in Philadelphia, viewed the disease as “producing some good…(by) discouraging the growth of great cities in our nation… I view great cities as pestilential to the morals, the health, and the liberties of man.”
The Constitution disadvantaged cities, allocating two senators each to both urban and rural states. In 1956, the great historian Richard Hofstadter wrote “The United States was born in the country and has moved to the city,” while clinging to a “sentimental attachment to the rural way of life” even as the economy and society urbanized.
American cities were — and are — disadvantaged not only at the federal level, but by state governments. In the late 1800s, disputes about whether cities could issue their own bonds and regulate railroads independently led to a series of legal battles, which culminated in states having virtually absolute sovereignty over their cities.
This was formalized in 1868 by Iowa Judge John F. Dillon, in what has come to be known as “Dillon’s Rule.” Dillon wrote, “Municipal corporations (cities) owe their origin to, and derive their powers and rights wholly from the (state) legislature…As it creates, it may destroy. If it may destroy, it may abridge and control.” I don’t here suggest that cities should be independent entities; as a matter of law, states are going to remain much more powerful. But the power imbalance is extreme, and unfortunate, and harmful to cities.
Why New York will have a hard time fighting back
After World War II, American cities experienced a paradox: A booming economy was driven by growing metropolitan areas, but urban cores themselves faced persistent declines as wealth and political power shifted to suburbs. As my 2023 book “Unequal Cities” documents, suburban growth was fueled by racially and economically exclusionary federal housing and transportation policy. So even though central cities typically remained the hubs of the metropolitan and national economies, they suffered from poverty, crime, housing and education problems that the suburbs generally didn’t help pay for.
Economists know cities drive economic prosperity; economist Edward Glaeser calls them “our greatest invention.” They are the source of growth, innovation, jobs, tax revenues and population. America’s metropolitan areas produce around 90% of GDP and the vast majority of patents and innovation.
But most American cities are disadvantaged by our urban form: a core city surrounded by exclusionary and sometimes hostile suburbs, even though those suburbs’ prosperity depends on being in thriving city-centered metropolitan areas.
Government fragmentation in metropolitan areas has real costs in efficiency and policy coordination. The Houston region has more than 1,200 separate governments; the Chicago region has more than 1,300; and the New York City tri-state region has over 2,000. This creates inefficiency and inequality, as suburbs that depend economically on their metropolitan location have higher tax bases and residential incomes, supporting better schools and housing that are not shared with the core city. That might be tolerable if suburbs could regularly be counted on to support urban priorities in the state legislature, but that is often not the case. In state government, suburbs often ally politically with rural areas against cities.
Even with its powerful economy and large population, New York City has long grappled with this problem. The city’s economy on its own produces close to 60% of state GDP, and if the suburban New York counties are included, the GDP share rises to around 80% of the state total (despite being home to only about 65% of the state’s population).
Metropolitan tax revenues fuel the state budget. In 1905, Tammany Hall’s George Washington Plunkitt (the man who coined the phrase “honest graft”) called the city “the milch (milk) cow of the state” with “the politicians up in Albany…after the last drops of milk in the udder.” Today, roughly 70% of the state’s tax revenues come from the New York metropolitan region.
Yet New York City’s ability to act on its own is constrained by the state. Among many other issues, Albany has mandated costly pension changes for city employees, imposed class size limits in public schools without funding them, authorized property tax abatements and exemptions that affect housing construction, regulated city borrowing, set bail laws and court procedures that have been controversial for some advocates, and even controlled whether the city can install red light and speed cameras for traffic control.
To be sure, New York City has cost problems it has brought upon itself. Its government is no paragon of efficiency. I don’t suggest that if left to its own devices, the nation’s largest city and other cities would automatically be well managed. The point, rather, is that the ingrained structural constraints make it far harder for cities to get out of the box.
What the future holds
Given the fiscal and power imbalances baked into the political system, New York faces few good options under Trump’s anti-urban regime.
The severe budget cuts will likely force contentious political battles over how to spend limited resources. Should the state and city pay additional billions to cover the health insurance and hospital cuts being imposed by Trump? What about the gaps in food assistance, housing, transit and other services? Should taxes or borrowing be raised to cover these gaps, much less Mamdani’s new and expensive proposed transit and social programs?
Trump’s policies hurt New York in other ways. His anti-immigrant hostility seems to be reducing the population, labor force, tuition-paying college and graduate students and tourism. Jobs and businesses in construction, health and elder care, hotels and restaurants are all being hit, and the lost paychecks from those employment declines will cut consumer spending and tax revenue.
Without more authority over their metropolitan economies, New York and other cities will have a hard time crafting appropriate strategies in response to Trump’s policies. Lost federal revenues might be replaced by increased local taxes, but Albany’s control over city tax policy, especially with a gubernatorial election in 2026, make this unlikely.
The city does have some levers under its control. We can (and should) keep making it easier for the private sector to build housing, through both new construction and converting offices. If enacted, the proposed City Charter amendments on housing will help, as will the changes made in zoning under the “City of Yes.” Continuing to support immigrants, including undocumented ones, will help keep up the city’s labor supply, and ongoing education and training for all the city’s workforce should be a priority. Mobilizing new streams of investment capital also should be on the table. And streamlining regulatory policies to make decisions faster and less uncertain could also help growth.
But if suburbs and states didn’t hold as much structural power as they did, cities would have even more ability to adapt to the hostile new climate.
No matter the outcome of this November’s mayoral election, the winner will face enormous budgetary and economic pressures. The constraints on city autonomy in our fragmented metropolitan economies, grounded in America’s anti-urban bias, will combine with the additional blows coming from Trump’s anti-urban policies. A new mayor — and all of us — face a very tough challenge.