As the MTA rushes headlong toward financial ruin, a few questions have repeatedly popped up in the debate over the authority’s future: Could the agency declare bankruptcy to escape its debt obligations? Who is to blame for the the fiscal state of such a vital part of the New York City (and state) economy? In today’s Post, Nicole Gelinas and E.J. McMahon of the Manhattan Institute tackle those two questions. Although the piece features some of Gelinas’ concerns over the MTA’s escalating labor and pensions costs, it mostly focuses on those who have allowed the MTA to slip toward financial ruin.
The two point fingers at Mayor Bloomberg, Gov. George Pataki, MTA heads, labor heads and the state legislature all for failing to rein in costs, and on that front, they’re right. More important, however, is the discussion on the parallels between the Urban Development Corporation’s fiscal state in the 1970s and the MTA’s in 2010. When the UDC defaulted on its short-term debt obligations, it triggered a crippling financial crisis in 1970s New York. If the MTA has to do the same soon, the outcome could be disastrous for everyone.
19 comments
Bankruptcy, if possible, could turn out to be a blessing. The MTA desperately needs to be able to eliminate archaic positions, and to have their benefits obligations reduced and normalized.
It should be noted that the author is not exactly a neutral observer. The Manhattan Institute is an economically conservative think tank.
I think that a more accurate characterization of the Manhattan Institute is “right of center.” They’re not that conservative.
They had Charles Murray as a fellow. So yes, they are that conservative.
A sampling rate of 1 is not credible.
It’s not just Murray. It’s Heather MacDonald, and the idiot who blamed global warming on third world birth rates.
And personally, if an alumnus of my thinktank ever published a book arguing that black people are genetically inferior, I’d take lead role in attacking said alumnus.
They have some good writers (Ms. Gelinas is one) and some not so good (I won’t name names, but many of the “morality” and “war on terror” pieces are skippable). The point is, on local economics at least, they provide a perspective that none of the major local media will.
Well Russell, if you equate bankruptcy with breaking union contracts legally entered into with protection from obligations to the bondholders and creditors then I suppose it matters whether the Manhattan Institute is “right of center” or “conservative”. I think the more important distinction is between “The New York Post” and “journalism”. Besides on this blog, and the New York Post/Manhattan Institute money pits, where is there a direct discussion of “bankruptcy?” Has there been a piece in, say the Wall Street Journal, or some like-minded “liberal” paper? And if by chance their editorial page has ventured there, did it have any effect on the bond ratings of the MTA? If you really believe that bankruptcy is impending and inevitable, and you really believe in these free markets (I do by the way) then you ought to be able to make a killing shorting futures in MTA bonds. Isn’t that the way these markets are supposed to work? Or do you think the bonds actually will increase in value through “bankruptcy” because you can screw a bunch of working class retirees out of pensions they worked their lives for? If that is your position then you should go long. That is, if you ever put your money where your mouth is, like those retirees did.
Your snarky, overly presumptive, and inaccurate comments aside, its unlikely that retirees will lose their pensions. The federal government has a mechanism for that.
Oh, and I’ll pass on the bonds. I like SPX much better, thank you.
The New York Post is not a money pit. It’s profitable; it’s what funds Murdoch’s money-pit thinktanks.
The Post has run a loss every single year since Murdoch bought it.
Really? Hmmm…
Then what profitable venture funds it – the Sun? Fox?
Money from Fox, Sky, and the many other profitable parts of the News Corp empire. The profit for Murdoch is having a widely read paper that propounds his political line.
They could simply raise fares. They have no legal obligations about that. This is a phoney crisis to break the unions.
I believe the MTA could do something called a Chapter 9, that could reduce their debt load without mandating pension cuts.
Or they could avoid the whole crisis by passing congestion pricing and various other reforms, some of which we can even get lots of money for (education money from the stimulus plan, for example).
It’s good to worry about bond ratings, but if the NYS legislature would simply start to act rationally and pass the reforms that we all so badly need, the pain would be spread around and the MTA, and the state, would be saved.
If the State Legislature passed congestion pricing today, could it even be implemented in time to avert the crisis?
In bankruptcy court, they can fire all their union workers and rehire everyone at reasonable salaries and IRAs like us civilians have to experience. A taxi driver should earn more than a subway driver. Subway drivers don’t get robbed, shot, fare refused, have to steer, or tboned by another subway train, so why do they earn more? Civilians don’t get paid for not working from 9-10 and 2-5 like MTA track workers. Civilians don’t get paid for 5 of them standing around talking about the weather while 1 of them is doing something. Civilians don’t say “pressing that button on the train isn’t part of my job description and I’m calling my union rep”. Civilians don’t say they are calling OSHA and their union claiming “unsafe work conditions” when told to stop standing around watching and do something. If this were the military, there wouldn’t be enough room to incarcerate all the workers charged with mutiny.
Unlike the civil servants of NYCT taxi drivers don’t HAVE TO work during snow emergencies. Bankruptcy court cannot fire civil servants. The constitution of The State of New York would have to be ammended. Really it’s much simpler to raise the fare.