Christie and Infrastructure Folly
I used to characterize the contemporary GOP as a party whose economic policy is “let’s eat the seed corn,” but perhaps that was unfair, and informed too much by my interest in infrastructure policy, as opposed to tax policy or regulation, where, at least in my ignorance, I can imagine Republicans faring better.
But Chris Christie is doing a good job of validating my characterization. Killing the ARC project is a crystal-clear example of destroying long-term prosperity for a trivial short-term fiscal advantage. The really sad thing is that the short-term fiscal advantage isn’t even terribly significant, especially since New Jersey will have to cut a $300 million check to the federal government immediately to pay the Federal Transit Administration back for the money it’s already spent on construction. The governor’s worry that the project could cost much more than expected is a reasonable one, and the moratorium to investigate projected costs and their associated risk for the New Jersey budget was prudent, but cancelling an absolutely essential project to safeguard against cost overruns is like euthanizing your beloved pet dog to make sure he doesn’t run away.
For a broad view of the economic realities that Christie either doesn’t understand or has chosen to ignore, read Aaron Renn’s analysis at Urbanophile.
Also, an update that may make the decision seem less totally crazy: Ray LaHood, the US Secretary of Transportation, is going to Trenton, along with with the head of the Federal Transit Administration (FTA). It’s possible that Christie announced the project’s cancellation merely to establish a negotiating position with the FTA. Depending on what he’s negotiating for, that could be a smart move. If he’s just trying to ensure that New Jersey isn’t on the hook for cost overruns I can’t blame him, but foisting the risk on the FTA or the Port Authority won’t improve the project by itself. If he can negotiate for a different route (the ARC route is far from optimal) or for better project management, then this political stunt, if that’s what it turns out to be, could end up benefiting the project, and in turn benefiting taxpayers and commuters.