Chasing the Metal Rabbit
How much more would the federal government have to spend on health care to provide universal health insurance? How much more would New York State have to provide in state education funding to provide every New York City child with a qualified teacher and an a national average class size? How much more would the MTA have to borrow to build long promised improvements such as the Second Avenue Subway? Now imagine you were asking these questions in the early 1990s, when former President Clinton held up a card and promised universal heath care and the Pataki, Silver and Bruno era began in Albany. What numbers have you arrived at? Chances are, that much and more has been borrowed and spent since. But like a football held by Lucy Van Pelt, these benefits have been pulled away at the last moment, and the money has gone elsewhere.
The number of uninsured has continued to climb, particularly among working people and the young, as businesses either drop health insurance or turn their new employees into “independent contractors” without such insurance. Meanwhile, the cost of insurance for those lucky enough to have it continues rise, as does the federal tax break that subsidizes that insurance, in order to pay for more and more health services at a higher and higher prices. Medicare spending keeps rising too, benefiting the senior citizens who do not have to pay taxes for it and financed, in part, by the working uninsured who do. The cost of public employee health benefits, as well, keeps soaring. In New York State in 2002, the Health Care “Reform” Act was passed to pay more for those already receiving health care, so the health care industry could pay itself more. And now the seniors have a new federal prescription drug plan, already costing far more than “expected.”
If any of those already receiving extensive government financed or subsidized health benefits had been made to settle for smaller gains, universal health insurance could have been paid for. Our pols decided that others matter more.
The same may be said of New York State education. Public school spending, staffing and pay was far higher than the national average in the part of New York State outside New York City in the early 1990s, but staffing and (if the cost of living is taken into account) was far lower within the city’s boundaries. That was true even though city residents’ share of state income and sales tax payments was lower than its share of state school aid, with the state in effect transferring education resources away from the city’s children, who were (and are) far needier than average. If spending and aid elsewhere had been kept in check, and the city’s schools had merely given the state education resources funded by the city’s own taxpayers, those schools might have had a chance to recover.
Instead, the incoming Pataki, Bruno, Silver administration cut school aid to New York City while increasing it to the rest of the State in FY 1996, a tremendous blow. At Mayor Giuliani’s urging, the state enacted an age 55 retirement for the city’s teachers, many of whom lived in the suburbs, who then retired en masse and were replaced by low-cost, zero experience, uncertified instructors, many of whom didn’t’ stay through the school year, a situation that became worse as the economy improved and school enrollment grew. To keep school districts in the rest of the state in a position to outbid New York City for scarce teachers, the state created the STAR program, which provides those outside the city with more school aid precisely because they spend more. School staffing and spending in the rest of the state soared even more, pushing up property taxes. So, just recently, the state enacted Son of STAR, with even more state funding outside the city to pay for it (just imagine the reaction elsewhere if New York City drastically increased spending, raised taxes, and then said it needed more state funding for tax relief).
And, the state passed another big pension enhancement in 2000, pushing pension costs up to 21 percent of salary for the city’s teachers. That is instead of paying more to the teachers the city has to hire, and to those who work in tougher schools or with scarce skills, or reducing class size. And, just this year, the legislature passed another age 55 retirement plan for teachers, one that has yet to become law.
And the Second Avenue Subway? Well the MTA has borrowed billions of dollars, but almost all of it has gone to ongoing normal replacement of existing equipment. Why didn’t the MTA use ongoing revenues to pay for ongoing normal replacement? Because the city and state cut off funding for the MTA capital plan and, to much applause, the base fare was kept constant from 1995 to 2002 while discounts were added, in effect cutting the average fare drastically. Money was borrowed to make up the difference.
That turned out to be a great deal for construction contractors too, because when you are paying for current expenditures with current dollars, additional spending must be offset by higher fees, higher taxes, or lower spending elsewhere. Costs, therefore, are an important concern. But when you are spending borrowed dollars, “no one” is disadvantaged, and cost concerns go out the window. As my frustrated former boss in capital budgeting puts it, “capital money is less green.” And now the fare has gone up, and it will have to keep going up as services are cut, to pay for debt service and (yes) the pension enhancements. By the way, the state legislature passed another pension enhancement for transit workers, not yet signed into law, with retirement at a full pension at age 50. How may of you reading this have a pension at all?
All this time New Yorkers have been told about plans for Second Avenue Subway, consultants were (well) paid, hearings were held, and a bond was approved (as it had been in the 1950s and the 1960s). But forget it. Our pols are just waiting for the next recession to announce that it is “inevitable” that due to “circumstances beyond their control” the subway will not be built. The real question is whether the LIRR to Grand Central and the new tunnel to New Jersey for suburban commuters will be built. Maybe, maybe not. In fact, the MTA is so deep in hock that ongoing normal replacement may end after the current 2005 to 2009 capital plan, sending the transit system into a downward spiral and allowing this generation of politicians and transit workers to win as great a victory over the future of the city as their storied predecessors who left the city in ruins in the 1970s.
The Second Avenue Subway is like a metal rabbit. So are universal health care and fair school aid funding for New York City’s children. They aren’t real. We are like dogs on the track. We keep working, keep paying taxes, keep voting for the incumbents with their plans and their promises which are always right around the corner, postponed but coming soon. The benefits for others, meanwhile, keep adding up, and the bill, much of it deferred, keeps accumulating. To them we may as well be dogs. While we are running around the track after our imaginary meal, they are in the clubhouse with the politicians of both parties, eating steak.
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