New Jersey's Tunnel to Nowhere

Don't start projects you can't pay for.

The New York Times reports:

The largest public transit project in the nation, a commuter train tunnel under the Hudson River to Manhattan, was halted on Thursday by Gov. Chris Christie of New Jersey because, he said, the state could not afford its share of the project's rising cost. Mr. Christie's decision stunned other government officials and advocates of public transportation because work on the tunnel was under way and $3 billion of federal financing had already been arranged - more money than had been committed to any other transit project in America.

New York is America's most dense city by far; if ever there was a place in our country where heavy-duty public rail transportation makes sense, the Big Apple is it.  It is not physically possible to build enough highways for all New York's commuters to drive to work; and even if it were, where would they all park?

For well over a century, rails have been the sinews, arteries, and backbone of Manhattan, despite running up horrendous losses each and every year.  Without the subways and commuter rail, New York as we know it simply could not exist.  Being an island simply makes Manhattan transit even more challenging.

Yet there has not been a major long-distance heavy-rail tunnel built to Manhattan in a century.  The city has been surviving off of the investments made by earlier generations, which are now crammed beyond capacity.  If people can't get to work, the jobs will go elsewhere.

What's more, New Jersey wasn't paying the full cost of the tunnel.  Both the feds and the Port Authority were chipping in major contributions.  By canceling the project, Gov. Christie is spurning other people's money, something most politicians would never do.

The tunnel is important, needed, and would be good for everyone in the area.  Yet Gov. Christie made the right decision.  How can this be?

Important Doesn't Mean Priceless

Unfortunately, the clear reasoning the Governor gave for his decision is being ignored in the furor:

The governor, a Republican, said he decided to withdraw his support for the project on Thursday after hearing from state transportation officials that the project would cost at least $2.5 billion more than its original price of $8.7 billion. He said that New Jersey would have been responsible for the overrun and that he could not put the taxpayers of the state "on what would be a never-ending hook."

New Jersey, like most states these days, is nearly bankrupt.  Yes, the tunnel would be helpful, but the state simply does not have the money to build it, even with the federal subsidy!  Governor Christie is not being especially wise or prudent; he's being realistic.  What's the point of writing a check if it's only going to bounce?

The problem is actually worse than a rubber check.  If the state knew, for sure, what the total cost would be, then it might be a legitimate infrastructural investment worth taking out special bonds which would be paid off by the revenue.

After all, improved New York access would rationally raise New Jersey property prices and wages, and thus tax revenues; it might be possible for the state to turn a profit in the long term.  This was actually how many of New York's original subways were built: the new lines ran out into the countryside, which then got built up and paid far more in taxes.

Alas, they don't know the cost.  Construction has barely begun, and already the projections have increased by a third.  American government construction projects of the last few decades have a sordid history of costing many times what was originally claimed; that's why the Federal government has learned to explicitly cap its contribution.

The Feds wound up throwing vastly more into Boston's Big Dig than they ever expected to; somewhere, there must be a bureaucrat who has sworn "Never again!"  New York's Mayor Bloomberg has already refused to help cover the overruns for precisely the same reason.

The buck has to stop somewhere, and apparently that's with New Jersey.  Gov. Christie has no confidence that he knows the total bill, no confidence in the project's schedule, no confidence that his state's dire financial position will improve.  How could he rationally make any decision other than to cancel the project?

The Forgotten Possible

Naturally, the usual suspects are screaming in fury.  6,000 desperately needed jobs lost!  Politicians with no vision!  Lefty shill Paul Krugman fulminated:

It was a destructive and incredibly foolish decision on multiple levels. But it shouldn't have been all that surprising. We are no longer the nation that used to amaze the world with its visionary projects. We have become, instead, a nation whose politicians seem to compete over who can show the least vision, the least concern about the future and the greatest willingness to pander to short-term, narrow-minded selfishness.

He's right, but for the wrong reasons.  Yes, American used to build large infrastructure projects which we no longer can.

America also used to be able to stick to a budget.  San Francisco's Golden Gate Bridge was estimated in 1932 to cost $35 million; $35 million worth of bonds were sold to pay for it; and the final cost was... $35 million.

Obviously inflation would change the numbers; the Inflation Calculator says $35 million in 1932 dollars would be worth somewhat over a half-billion today.  Yet the bridge's official website estimated it would cost $1.2 billion in 2003 dollars - nearly three times as much.

What's changed?  The website gives the answer:

The total price depends on a many factors including the extent of the environmental reviews and the cost of labor and materials.

The problem is, we don't just build infrastructure like we used to, not because we can't, but because politicians won't let us.  The Golden Gate Bridge was built in a handful of years; the tunnel Christie canceled has been in planning and studies for two decades.

If you're building a highway through Yellowstone National Park, it makes sense to do an environmental review - but in New York City or San Francisco, where there hasn't been a single natural element in anyone's lifetime?  Tolerance of greedy unions not only raises the direct construction costs, but sucks up state resources that should go to infrastructure.  Eliminate needless environmental studies and overpriced consultants, allow open bidding by non-unionized companies for all government projects, and both the cost and the overruns would plummet.

It is possible to build things on time and in budget today, if the need is desperate enough that the politicians will get out of the way and force all the other leeches to do the same.  When Oakland's MacArthur Maze freeway interchange suffered a tanker fire and collapsed, everyone thought the traffic would be snarled for months; one contractor said he could replace it in a month if they'd let him, and he did.

Oh, and about those 6,000 lost jobs - simple math tells you that each job would have cost nearly $1.5 million without any cost overruns.  How is that cost-effective?  How much of that excess is caused by the infamously powerful and overpaid unions of the New York City area?  How much is allowance for endemic corruption and theft that, the planners know, will never be prosecuted thanks to political kickbacks?

A Brighter Future?

Gov. Christie never said the tunnel wasn't needed or wasn't important.  He didn't even say he didn't want to build it - quite the contrary, during his campaign he said he supported the project.  Even now after the official cancellation, he has called for urgent discussions about ways to cut costs and perhaps revive the idea in a more feasible form.

He simply said that, as currently proposed, his state simply didn't have the money - it's already been robbed blind.  This is nothing less than the truth.

It's a crying shame that New York and New Jersey won't get a desperately-needed new rail tunnel anytime soon, but anyone blaming Christie is ignorant, a liar, on the take, or (most likely) all three.

The fault lies with the greedy, grasping, over-controlling, intrusive thieves and petty tyrants who run the myriad of regulatory agencies and unions whose only purpose is to steal and impede what they could never create or build themselves.

Fortunately, Gov. Christie is attacking and defeating the unions which infest his state; he may well also attack the thicket of red tape that prevents anything from being done.  He'll not be governor long enough to see the tunnel built for a reasonable price under sane conditions, but if there's any justice, whoever's around then will spare a thought for Christie's essential leadership and wise decision-making.

Maybe they'll name the tunnel after him?

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Politics.
Reader Comments

The media will portray this as a "I voted for the bridge after I voted against it" moment for Christie.

Thankfully, the media is no longer relevant for many voters.

October 12, 2010 10:08 AM

"The governor, a Republican,..".. elsewhere we find other "Lefty" admonishments- the writers at Scragged are known for their amnesia regarding Senator Stevens- a Republican- and the hundreds of billions of bailouts & wars in the not too distant past, all endorsed by the socialist Republicans who see our money as fodder for their schemes...
By using such idiotic phrasing you demean and trivialise your essay..

October 12, 2010 2:07 PM

Why should the rest of the country spend billions of dollars to make it easier for people to go work in NYC so they can be taxed? NYC has enough people working there now. As their taxes go up, fewer people will want to work there. The Internet lets more and more businesses move their back offices over to NJ anyway. Why pay for infrastructure that isn't needed?

October 12, 2010 5:59 PM


We (desperately) need both you and Gov. Christie in the White House.

Christie deserves a medal for his (inhuman) courage and integrity.

Could he have escaped from Area 51, you think?

And Paul Krugman needs to be shipped to a leftist hellhole without delay.

Thanks again for yet another insightful article.


October 12, 2010 6:20 PM

The WSJ agrees with you. Late, but they agree:

New Jersey Gov. Chris Christie has come under intense criticism for threatening to cancel the largest infrastructure project in the nation, a new rail tunnel connecting New York City with the Garden State. But Mr. Christie is right to be skeptical.

Much of the censure is coming from an "infrastructure über alles" crowd that too readily ignores that the costs of these big projects are often grossly underestimated and their benefits significantly exaggerated.

The rail tunnel, known as the Access to the Region's Core, or ARC, is meant to relieve the overcrowding in the already-existing rail tunnels under the Hudson River shared by Amtrak and New Jersey Transit trains. Currently, many commuter trains have to deposit passengers at an alternate rail station in Hoboken, N.J., where commuters then take subway-style trains into Manhattan. The ARC would create a direct link to midtown Manhattan for many of these commuters.

The tunnel has been in planning for two decades and during that time cost estimates have soared to nearly $9 billion from the original $5 billion. Mr. Christie says a recent analysis by the Federal Transit Administration estimates the final price tag would actually be nearer to $14 billion.

But the amounts committed by the federal government and the transportation agency (the Port Authority of NY & NJ) are capped at $6 billion ($3 billion each). Jersey taxpayers would be responsible for cost overruns-and the state's transportation trust fund is already entirely devoted to servicing previous debt.

The transportation fund is tapped out in part because the legislature has for years swept money from the gas tax into the general budget, where it has financed everyday operations instead of build roads, bridges and tunnels. And residents are in no mood for more taxes.

The fiscal track record of mega-projects like this rail tunnel is not good-not in New Jersey or elsewhere. Boston's Big Dig, which involved burying the city's central artery highway and carving out a new underground tunnel to Logan Airport, was projected in 1982 to cost $2.8 billion. The final bill was nearly $15 billion. Bay State taxpayers had to pony up half of that because, as in New Jersey, the state was responsible for most cost overruns.

The Big Dig, completed in 2005, remains controversial because it drained away money that might have gone to other, more modest road projects. Mr. Christie fears that would happen in New Jersey, where roads are already rated by the Reason Foundation's Performance of State Highway Systems as among the worst in the nation. Improving them might be a better way to spend money.

The state has bitter experience with runaway public construction projects. A decade ago the state Supreme Court ordered the legislature to build and refurbish urban schools. The project was supposed to cost $2 billion. The legislature expanded the program to include more schools, running up the tab to $8.6 billion. The public authority formed to manage the project proved so corrupt and inept that it did only half the work before it ran out of money. The politicians had to borrow another $3.9 billion to finish the job.

The economic benefits of the new rail tunnel would have to be enormous to justify its growing cost. Are they? One group, the Regional Plan Association, has estimated that the tunnel would increase property values along train routes in New Jersey by some $18 billion and produce some $375 million a year in additional real estate taxes.

Such lofty estimates ignore that property taxes are already so high that they are constraining the growth of property values, as fewer and fewer potential buyers show up willing to pay the premium necessary to live in prime commuting towns.

October 16, 2010 7:19 PM
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