Author: Larry Littlefield

It seems like only yesterday that Jay Walder left his post as Chairman of the MTA, and I wrote a sarcastic “job posting” for his replacement. The job of the MTA Chairman, I asserted, was to preside over the re-destruction of the metro New York mass transit system, and eventually therefore its economy, while shielding those responsible for it from blame and providing rationalizations. At first by denying it was occurring, and then by taking the blame for it. It is no surprise that like Jay Walder, Joe Lhota has decided to leave that job to someone else.

So this time I’m going to say what the job of the MTA Chairman actually should be, given the situation that has been created by the decisions, non-decisions and deals of the past, if the transit system – or at least some weaker, worse version of it, is to be saved. The job of the MTA Chairman should be to tell people to go to hell. The transit unions, the riders’ advocates, the construction unions and contractors, taxpayers, the state legislature, the City Council, the Mayor and even the Governor. To always bring up the past when discussing the future. As in “you or those who preceded you decided to hand out these benefits to your interest group then, and shift the cost to a future that has now arrived. And any attempt to avoid your share of the resulting pain now is simply a social injustice against everyone else.” The job would consist of a desperate, angry battle with no friends and as many enemies as possible, a constant and much resented attempt to break down any sense of entitlement. That is what would be required to save not only the mass transit system, but also any other institution, in the public or private sectors, in the wake of Generation Greed.

Bet you didn’t you see this one coming. Merry Christmas. “Just over 200 years since traders first met under a buttonwood tree on Wall Street, the institution they created, the New York Stock Exchange, was acquired by an upstart electronic marketplace, the IntercontintalExchange (ICE), nominally based in Atlanta, Georgia, but more accurately located in the electronic stratosphere,” according to The Economist magazine.

“The deal was announced on December 20th, with little advance leakage, possibly because the participants did a particularly good job of keeping it a secret, or possibly because the importance of the exchange, owned by NYSE Euronext, has faded so much that few cared.” The stock exchange was already merged into Euronext in a “merger of equals.” No such fig leaf now.

State budget crisis.org, the Ravitch/Volker group, has just released its report on New York State's financial situation. Among the findings (p. 28) is yet another analysis showing the New York State pension plans, which also cover local employees outside NYC, are among the best funded in the country, with the NYC plans among the worst — worse than New Jersey. Even though NYC taxpayers have paid far more into the plans over the decades as a percent of employee wages, according to data from the U.S. Census Bureau.

The report is a disappointment, in that it doesn't explain this. No one else had either. And the text is almost exclusively about the state plans, not the city plans. How taxpayer contribution levels fell to zero around 2000, how they are now soaring (to a level far below NYC but they don't say so), etc.

In my previous post, I rehashed some arguments that were made when federal tax policies now in effect were first proposed, and showed that the promises of the time were not realized. Yet the same arguments are still made for the same policies, by national Republicans and certain economists. Without much thought about why things went wrong, and with no thought of adjustment. The Republican era at the federal level, now seemingly coming to a close, was not without its successes, but even in those cases lessons were not learned.

Let me join the “fiscal cliff” negotiations. That is sure to lessen the hostility between the supposedly two irreconcilable sides. Because after hearing from me, it would be clear that the two are mostly on the same side.

This may be hard for anyone under age 40 to believe, but at one time in the recent past the Republican Party was the party of ideas. While older generations of Democrats simply repeated nostrums from the 1930s, and younger generations of Democrats chanted slogans from the 1960s, Republicans were examining evidence of what did and did not work, and proposing solutions. And many of those solutions were implemented during the 30 years of Republican political dominance, often with the support or at least acquiescence of Democrats who couldn’t come up with anything better.

Times sure have changed. Some of those Republican/Conservative/Free Market ideas worked as promised. But most others have failed miserably, except as means to redistribute income upward, and from worse off younger generations to older generations that voted Republican, which is NOT what was promised. So, are Republicans examining the evidence and proposing alternatives? Hardly. They are simply saying the same things over and over, but shouting instead of speaking reasonably. I’m not just talking about Tea Party fools, and spinning candidates for office. I’m talking about think tanks and PhD’s, such as R Glenn Hubbard and Greg Mankiw. Those with conservative leanings but open eyes, such as David Frum, are no longer welcome. This isn’t an ideology anymore. It’s a cult. Since they won’t, let’s get in the wayback machine, look at some of the promises, and some of the results.

State and local government employment has been falling, and the propaganda machine has noticed. “There is something historically different about this recession and its aftermath: in the past, local government employment has been almost recession-proof. This time it’s not. Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. But since the latest recession began, local government employment has fallen by 3 percent, and is still falling.” And why is that? Tax cuts? Republicans in Congress? “Note that a Republican was president after the 1981, 1990 and 2000 recessions. Public-sector austerity looks a lot better to conservatives when they’re out of power than when they’re in it.”

Austerity, huh? So state and local taxes, not just federal taxes, have been falling as a share of the economy? And therefore we deserve less in public services in return? Is that what is going on? I’ve seen several reports implying this is so. But let’s look a little closer at what this austerity constitutes.

Can be found in a single blog post from The Economist magazine. Read this and you will understand the situation we are in, and what we are facing. Read it, and you will understand why we are facing ten-plus years of decisions about who will be made worse off, and in what way, due to the financial and fiscal frat party of the past 30 years. It wasn't just the public sector. It was businesses and individual households. It was beyond my understanding, and contrary to my values.

The popular thing to do, what most people wanted to do, was to satisfy the "I want for me now!" impulse. This was done by selling the future. The deal was cut in New York, and the fees were large. And now it is the future. The executive/financial class may promise three percent GDP growth if you keep their taxes low and their pay sky high, and the political/union class may promise seven percent returns on public employee pension funds to put off sacrificing the rest of us for the deals they did with themselves. Not true.

In the wake of the Frankenstorm disaster, New York Governor Andrew Cuomo has called for New York to be built smarter, given the likelihood of rising seas and more powerful storms. But that is not the way rebuilding generally occurs. What you have, rather, is a rush to get shattered lives back to normal as quickly as possible, which usually means putting back a somewhat cheaper and worse-built version of what was there before. Witness the reaction, to politicians from elsewhere, to the assertion in 2005 that that parts of New Orleans should be rebuilt elsewhere, instead of below sea level, in the wake of Hurricane Katrina. Or, for those with less power and fewer resources, the consequence is often no rebuilding at all. As one sees in that city’s Lower 9th Ward.

Some combination of these two is what is likely to occur on the Rockaways and in Staten Island, more likely due to a series of non-decisions than to any decisions. Any suggestion of possible change in the current emotional post-disaster political climate is likely to provide an opportunity for a cheap political shot, and be about as popular as holding the New York City Marathon as planned. And by the time feelings have cooled, any available resources are likely to have been already committed. If people come back later with demands for more resources to rebuild a second time, this time differently, other needs elsewhere will almost certainly take priority. But what if it actually were possible to come with alternatives quickly? I spent 15 minutes thinking about it, just slightly less than those who might want to make (or even allow) changes would have, and here is what I came up with.