The financial capital of the U.S. empire cannot function without its subway system, which is the savior and curse of every New Yorker’s existence.
More than 5 million people ride it on an average weekday. Though it can be maddeningly packed, filthy, delayed or suddenly stalled anywhere along its 842 miles of track, the Americas’ most extensive and busiest subway will take you pretty much anywhere in the city’s 5 boroughs, 365 days a year, 24 hours a day.
It is a marvel of 19th-century engineering, which forces a degree of social interaction among office workers, homeless people, tourists and Occupiers in a way that few American cities can match. The subway is a hygienist’s nightmare, and an anthropologist’s delight. Today it is facing a hidden crisis.
The disgusting infestation that’s inspired Spot the Rat games among riders cooling their heels on platforms across the city may grab headlines, but the more troubling rodents aren’t making off with a pizza crust along the third rail. Like the culprits of the housing crisis, these rats wear Armani.
Michael Stewart from the grassroots community coalition, United NY, in co-sponsorship with the Center for Working Families and the Strong Economy for all Coalition, has prepared a 20-page report called “Money for Nothing: How interest rate swaps have become golden handcuffs for New Yorkers.” In detailed charts and blessedly jargon-free prose, the report explains how New York’s taxpayers are being legally bilked out of billions of dollars. Our storied transit system is being gutted to appease Wall Street’s insatiable lust for profits.
In essence, the Metropolitan Transit Authority (MTA), a public company which runs the city’s subways and buses, entered into agreements with Wall Street’s biggest banks in hopes of protecting itself against financial instability. Instead, the very banks that engineered the global crisis and were later bailed out by taxpayers, have trapped the MTA “in a web of toxic swaps,” writes Stewart.
As someone barely capable of balancing a checkbook, I’m hardly qualified to explain complicated financial doings in the lingo of economists, though Stewart’s report does an admirable job. “Money for Nothing” details how Wall Street will collect hundreds of millions of dollars more from taxpayers through these swap deals than it paid out to the MTA in the first place.
The scam lies in the fact that the economic turmoil created by the banks, which led to a dramatic drop in interest rates, is what turned the MTA’s financial planning into a windfall for Wall Street. It amounts to a second bank bailout, in this case, from the riders, workers and all the rest of the taxpayers of the city of New York.
Like a Third World nation that appeals to the IMF for desperately needed aid and later finds itself starving its population to service the debt, the MTA is in hock to men for whom inconvenience is having to actually walk between their limo and private jet.
Today, 16 percent of the MTA’s revenue goes toward servicing this debt. That means that nearly $17 of what a straphanger pays for a $104 monthly MetroCard goes toward paying off a set of financial products that will cost at least $1.3 billion by the time they expire — in 2030.
In a deal the envy of a Soprano, the MTA would have to pay $714 million in termination fees to stop the hemorrhaging, an amount that went up more than 40 percent in just three months this past fall.
To grasp the enormity of this boondoggle — currently padding the pockets of 1%ers at AIG, Citigroup, JPMorgan Chase and others — “Money for Nothing” lays out the impact of swap payments in 2010, the year of the deepest cuts and most layoffs in decades of the transit system.
The MTA’s net swap payments in 2010 alone, if spent on transit instead of payments to banks, could have spared the riding public from deep subway and bus service cuts and cleaning reductions, as well as 1,012 MTA workers at New York City Transit from layoffs and the elimination of 749 positions associated with these cuts — with over $40 million to spare.
The Transit Workers Union (TWU) Local 100 is facing a contract deadline January 15, 2012. Workers are told they must agree to steep givebacks that, in the union’s words, “would cost the average transit worker thousands of dollars per year and significantly degrade the quality of work life.” None of this is necessary.
As the report itself concludes, deals can be renegotiated. Just as the federal government upended what was perceived as financially possible to save the banks’ profits in 2009, workers and riders, who are, of course, also largely workers, can force a new deal on these institutions.
Occupy Wall Streeters are planning solidarity actions to stave off these cuts, including a possible day of action where riders will refuse to pay. These bankers — most of whom never deign to ride the subway — cannot be allowed to hijack the budget of the nation’s largest transit system, and certainly not without a fight.
As the union’s campaign slogan to save subway maintenance workers’ jobs goes, “New Yorkers deserve a rat-free subway.”