Now that New York City’s first transit strike in a quarter-century has been settled, a furious debate has begun over who actually won. This time the union leadership and the Metropolitan Transit Authority (MTA) are on the same side, insisting that their agreement is the greatest transit contract since the opening of the IRT subway in 1904, while the union’s left opposition thunders that the contract–which has yet to be approved by the membership–is a huge and disastrous sellout.
But if the result of the strike is sharply disputed, no such disagreement surrounds its cause. Union president Roger Toussaint and MTA chair Peter Kalikow agreed: The epic tussle was caused by pension-fund problems. “Were it not for the pension piece,” said Toussaint, “we would not be on strike.” Kalikow, for his part, pointed a trembling finger at a coming “tidal wave” of pension costs. Commentators across the political spectrum are chanting in chorus that New York’s labor pains grow out of soaring, uncontrolled pension obligations–a national problem. “The states can no longer deny the math,” advised the New York Times editorially in a December 25 Christmas card to the transit workers. Something has to give, the paper argued. If union members are so touchy about the erosion of their pensions, better for them to give up some health benefits (as in fact they did, agreeing to pay 1.5 percent of their wages toward healthcare premiums). “The workers won’t like that,” the editorialists predicted, “but it’s unlikely they will find much empathy from riders, most of whom…have been paying toward their own premiums for a long time.” But before succumbing to holiday-season resentment, perhaps we should recheck the MTA’s math.
Some Big Apple skeptics won’t believe any numbers put out by either the MTA or by Kalikow. A couple of years ago, the MTA got caught by both the city and state comptrollers keeping two sets of books to justify a fare increase–one for the public, the other for those with a need to know. “It is impossible for people to be this incompetent,” observed the city’s comptroller. “This was clearly willful.” Kalikow angrily denied there were two sets of books.
Fortunately, though, we don’t have to take either Kalikow’s word or the MTA’s on the authority’s actual financial condition. Independent budget analysts agree that while pension costs are going up, they’re not the biggest problem. The real budget buster–twice as large as the pension shortfall and going up faster–are debt-service costs. And the reason they are out of control has more to do with dubious financial management and the MTA’s all-embracing culture of inside self-dealing.
A Votre Service, Messieurs
For more than a decade now, under Governor George Pataki, who controls entry onto most board seats, the MTA has evolved into a five- star, tax-supported French restaurant for the city’s FIRE elite (finance, insurance and real estate). A throng of hungry, elegantly tailored freeloaders can be regularly found at the MTA’s Madison Avenue headquarters feasting at the public weal: investment bankers seeking no-bid bond business, developers angling for bargain properties, landlords who want the MTA as a generous tenant, mobbed-up contractors seeking construction business and fabulous fixers like Al “The Fonz” D’Amato–the former US senator who plucked Pataki from his Peekskill, New York, obscurity and who, in 1999, got paid $500,000 for one call to the MTA chief on behalf of an MTA landlord. They’re all chowing down under the eyes of MTA maitre d’ Pataki, who guides them to their customary tables while receiving generous tips.