Business Groups Push to Axe Subway Conductors; Strip NYC Retirees of Traditional Medicare Benefits

“It’s ridiculous—this effort to dehumanize the mass transit system. We see it as a trend going on around the world and we are going to resist it.” — TWU International President John Samuelsen.

By Bob Hennelly

Is the MTA’s Addiction to Tax Exempt Borrowing Making Wealth Inequality Worse?

Talks are making progress this week between the Metropolitan Transportation Authority and the Transport Workers Union Local 100 which represents the 40,000 workers who run the city’s vast subway and bus network, according to John Samuelsen, TWU international president.

But Samuelsen added that an op-ed earlier this month by three civic non-profits dominated by Wall Street investment banks and corporate interests that called for the elimination of subway conductors was “an organizing gift” for the union because it galvanized the union to stand their ground on preserving the 2,500 conductors that are usually ‘the first responders’ when riders are ill or at risk.

In a May 17 City & State op-ed Andrew Rein, president of the Citizens Budget Commission; Tom Wright, president and CEO of the Regional Plan Association; and Kathryn Wylde, president and CEO of the Partnership for NYC, wrote “improvements in signals, new subway cars, and investments in safety mean it is time for the MTA to expand One Person Train Operation (OPTO), which other systems embraced decades ago.”

In addition to concerns about the impact on the riding public from the loss of conductors, union officials note that reducing worker presence in the subway system would make those still working in the subway more vulnerable to assault, a chronic problem for years in the system.

George Arzt, the former press secretary for Mayor Koch, leads one of the city’s leading strategic communications firms. In a phone interview he said the letter from CBCNY, RPA and the Partnership for NYC was poorly timed with mounting concerns about the riding public’s safety and the death earlier this month of an emotional disturbed undomiciled man at the hands of a rider who felt threatened.

“Most people will feel more vulnerable without a conductor, not that the conductor could have necessarily prevented it, but from the public relations point of view this wasn’t the thing to be putting out with the Neely Jordan altercation just in the rear-view mirror,” Arzt said.

“The uniformed Local 100 members like the conductors are the first line of defense for the riders,” Samuelsen said on WBAI. “They are that front line that the elderly sees, that lost children see and that sick riders turn to. It’s ridiculous—this effort to dehumanize the mass transit system. We see it as a trend going on around the world and we are going to resist it.”

Samuelsen said that some of the progress he was seeing at the bargaining table was management backing off of the elimination of the conductors. The MTA was circumspect about the status of the negotiations.

“We value the transit work force that kept New York moving during COVID,” said Shanifah Rieara, MTA Senior Advisor for Communications & Policy. “They deserve a raise, and we are trying to work out increases consistent with the approved state budget, and in line with recent labor agreements. We look forward to continuing negotiations with TWU Local 100 to get a deal done that both rewards the NYCT work force and assures adoption of common-sense practices that benefit all New Yorkers.”

The boards of the RPA, the CBCNY and the Partnership for NYC are dominated by the captains of Wall Street, real estate magnates, and multinational CEOS including J.P Morgan’s Jamie Dimon, Dr. Albert Bouria, Chair and CEO of Pfizer and Rob Speyer, president, and CEO of Tishman Speyer.

These non-profit boards also include former high ranking elected officials who have gone on to lucrative careers in municipal finance like former New York City Comptroller Bill Thompson who is the chief administrative officer and managing director for Siebert, Williams, Shank Co. LLC, an investment bank.

While Rein, Wright, and Wylde did describe the TWU Local workers as essential workers who kept “the city moving during the pandemic” they made no reference to the more than 100 TWU Local 100 members who died mostly before the rollout of the COVID vaccine. There was also no reference to the impact of long COVID on the workforce.

The op-ed continued, “New York City’s employers, riders, drivers, and taxpayers have all been asked to all step-up support. Labor should also contribute to the MTA’s stability and flexibility.”

The trio did suggest that transit workers needed to return to pre-COVID attendance levels and complained that “over the last two decades, the average number of days worked annually by subway and bus workers shrunk by 19 – nearly an entire month’s work.”

Rein, Wright, and Wylde also recommended that the MTA and TWU “should follow the lead of New York City and its recent contract negotiations by switching retirees to a high-quality Medicare Advantage plan. Doing this would save the MTA millions without reducing benefits.”

The trio’s sanguine assessment of Medicare Advantage is contradicted by in-depth reporting last year by the New York Times and Kaiser Health News which raised alarming questions about the nation’s largest Medicare Advantage insurers including Humana and Aetna.

“Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits,” the Times reported. “And four of the five largest players — UnitedHealth, Humana, Elevance and Kaiser — have faced federal lawsuits alleging that efforts to over diagnose their customers crossed the line into fraud.”

Several groups of New York City municipal retirees, led by the New York City Organization of Public Service Retirees [NYCOPSR], continue to protest the push into Medicare Advantage — an effort dating back to the de Blasio administration — citing a profit-making business model that relies on delaying and denying people care through the use of prior authorizations. Roughly 1,000 retired civil servants and their supporters rallied outside the gates of City Hall ahead of an April 11 City Council hearing to protest the Aetna contract. They rallied again outside City Hall on May 24. 

The union is trying to close a deal with an MTA that is mired in structural debt with New York State Comptroller Tom DiNapoli noting that the MTA’s “outstanding long-term debt climbed from $11.4 billion in 2000 to $42.3 billion in 2022 and will reach $56.7 billion by 2028.”

By 2023, the MTA expects 17.9 percent of its revenue will go toward debt payments and approach 20 precent by next year.  Wall Street and the world’s highest end earners snap up the MTA bonds, because they are tax exempt, and provide a great way to put billions of dollars of wealth beyond the reach of the tax man while earning interest.

James Henry is a leading international economist and attorney who is an expert on tax justice and development finance.  He was the Director of Economic Research for McKinsey & Co and served as a Senior Fellow, Columbia University Center for Sustainable Investment. 

“It’s a scandal that this arrangement is entirely beneficial to the people that ultra-high income that buy these tax-free municipal bonds, but state, localities and authorities compete with each other to offer these bonds,” Henry said. “It’s outrageous that we have these polices and they are widely used for estate tax purposes, and it’s absolutely part of what’s driving the structural wealth inequality that continues to get worse.”

Back in the early 1930’s President Franklin D. Roosevelt opposed the use of such tax exemptions for municipal bonds because it would give an unfair advantage to the nation’s wealthiest taxpayers according to historian Jameson W. Doig, in his Empire on the Hudson: Entrepreneurial Vision and Political Power at the Port Authority of New York Authority.”

“For more than twenty years Secretaries of the Treasury have reported to the Congress the growing evils of these tax exemptions,” Roosevelt said in April of 1938. “A fair and effective progressive income tax and a huge perpetual reserve of tax-exempt bonds can not exist side by side.”

Henry maintains that rather than using the MTA’s borrowing capacity to generate tens of billions of dollars in what amounts to tax shelters, the State of New York should stop the practice that it started in the 1980s of refunding back to Wall Street the NYS Stock Transfer Tax, a nickel per $100 transaction tax on the books since the early 20th century.

Henry estimates that since 1982 more than $350 billion has been handed back to Wall Street investors, most of whom live outside of New York State. A steady stream of such revenue that would only increase with high volume automatic trading, would permit the MTA to develop more of a pay as you go strategy for capital projects while reducing the bond underwriting fees which Wall Street relishes.  

“I have been in favor of that for a long time because it’s a long-term sustainable funding source for public transit,” Sameulsen said. “Isn’t it ironic that the forces that stand in opposition to that are the same people that want to take the conductors off the train and try to make the subway less safe for the riders of the City of New York.”

“New York City is the poster child for the finance curse, just like the oil rich countries like Nigeria have the oil curse where they think they are rich, but they have actually been captured by their elites,” Henry said.