Recession Will Never End If This Tunnel Isn't Built: Joe Mysak
Then he said he’d think about it.
The project in question is an 8.8-mile commuter railroad tunnel under the Hudson River, estimated to cost $8.7 billion. Christie’s advisers told him the tunnel would really cost more than $11 billion, and maybe more than $14 billion.
Of course, if you are a cynic, that means the final tally will be in the $20 billion-or-more range.
And that, as some mothers are wont to say, is why we can’t have nice things. Thieving, fraud and abuse, on top of the inevitable and legitimate cost increases, will drive up the price of building the tunnel to unconscionable levels, and New Jersey’s residents will be stuck paying the bill.
Christie has a point. Remember the “Big Dig”? The plan to do away with the strands of elevated highway in downtown Boston by means of tunnels was first put at $5 billion. The final cost: $15 billion, which doesn’t include maintenance.
I still didn’t hear a lot of applause when Christie said “No thanks.” That’s because the tunnel is a good idea, a necessary investment in infrastructure. And New Jersey isn’t paying the entire bill. Both the federal government and the Port Authority of New York and New Jersey have committed a combined $6 billion to the project. Senator Frank Lautenberg this week said he was trying to salvage the tunnel by bringing in another partner.
I repeat: The tunnel is a good idea. I know there are a lot of skeptics, not to say haters, of rail travel, but the tri- state region, with its population density, is one of the few places where it works. The new tunnel is an enhancement, and one that is probably overdue. The existing arrangements are a century old.
That’s another reason to like this project. We’re not going to Mars. We know how to build railroad tunnels under rivers, this one in particular. The New York Times called the completion of the first Hudson Tubes (conduit of today’s PATH trains), “a feat greater than the building of the Panama Canal.” That was in 1908, and Theodore Roosevelt was in the White House.
So it’s not as if this tunnel is some bold, inspiring, extravagant new piece of infrastructure. The only thing inspiring about it, especially in the New York region, is that it might get done at all, and ease the abomination that is travel between the two states.
Pay As You Go
New Jersey can’t afford it.
Well, perhaps, New Jersey can’t afford it at the moment.
That’s why states and municipalities sell bonds, so they can borrow money to build projects that will last 100 years, and spread the repayment over time. You don’t finance these things on a pay-as-you-go basis.
The announcement that the tunnel was canceled says two things, neither of them good.
First, it says it’s impossible to monitor or prevent waste, fraud and abuse, even with the example of the Big Dig fresh in mind, and even as we all awaken to the need to pay attention to public finance (things ranging from interest-rate swaps to employee compensation). So why even try? This Hudson surrender says we are helpless to prevent insane cost overruns.
Second, the cancellation of the tunnel seems to say that the Great Recession, at least in New Jersey, will never end. Business will never revive, people will stop moving in, property prices are going to collapse. Incessant doom-mongering is a favorite pastime of bloggers who want to make it onto business television with their grimmest prognostications.
The last I checked, though, economies were still cyclical in nature. Maybe if New Jersey makes it a little easier to get to work, more people will want to live there. Think of an even bigger version of what happened after New Jersey Transit introduced its Midtown Direct service in 1996.
The new Hudson River tunnel is an investment in the future. I hope Governor Christie changes his mind.
(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)
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