vicious cycle

New York City isn't alone. According to a recent survey by the National League of Cities, 64% of 319 cities queried say they're less able to make budgetary ends meet than in 2007. That's a huge turnaround from last year's survey, in which 70% of cities said they were in better shape than in 2006. State governments -- pretty much everybody but the government in Washington, D.C., which can print money -- are in the same boat.

The vicious economic cycle this sets off works like this: A slowing economy reduces tax revenue, which leads to budget cuts, which reduces economic activity even more. Which cuts tax revenues. Which leads to even deeper budget cuts.