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Thursday, October 7th, 2010

NJ Gov. Chris Christie Channels His Inner “Chainsaw Al” Dunlap

New Jersey Governor Chris Christie today officially pulled the plug on an $8.7 billion plan to build new rail tunnels from New Jersey to New York. Commuter and Amtrak trains today are limited to a single pair of tracks that is already at capacity, meaning New Jersey has in effect permanently decided never to expand commuter rail connectivity to New York.

I’ll admit I kind of like Chris Christie. His east coast combative style is entertaining, but what’s more important, he’s tackling the entrenched interests in New Jersey such as the leadership of the teachers’ unions head-on, and also starting to restore fiscal sanity to the state. Unfortunately, Christie also embodies the worst aspect of his breed, notably a tendency by some Republicans to see the entirety of public policy in terms of simplistic cost cutting, a sort of political version of “Everything I Need to Know to Run a State I Learned in Kindergarten.” Alas, Christie appears to be a graduate the infamous “Chainsaw Al” Dunlap school of management, where there are no problems that can’t be solved by firing a few thousand people, and the budget ax is a substitute for strategy. Just cut the budget, then cut some more. Rinse, repeat. Actually coming up with a positive program for transportation or anything else is not required.

The sad thing is, the ARC tunnel project is a debacle, and most sensible transportation advocates are up front about that. There are better options out there (Alt-G, for example). I was optimistic Christie would look at this and change course in a more sane direction, to deliver the value New Jersey needs at much lower cost.

As it turns out, he just wanted to cancel the whole thing, and it seems likely the real motivation was to seize the $2.7 billion the state had allocated to it to paper over a budget hole at the state department of transportation. Once that money is depleted, New Jersey will be right back where it started, and with North Jersey’s connection to the regional economic engine of New York probably permanently capacity crippled.

Christie rationale is that the project looks like it might run over budget. Well if so, whose fault is that? Isn’t it actually Christie’s job to manage New Jersey’s projects to a successful on time, on budget completion? I mean, at $8.7B, nobody can complain that the budget isn’t generous. It sounds to me like Christie’s saying that the people of New Jersey elected as their governor someone without the executive and managerial competence to run the programs the state has undertaken. Perhaps that’s not surprising. Cutting budgets is easy, actually managing the accomplishment of a major project is hard. Why bother even trying when you’re already a star on the town hall You Tube video circuit? All you can do is screw it up.

The crazy thing is, this was already largely an OPM project – Other People’s Money. The federal government had committed $3 billion – the largest commitment to a transit capital project in US history. The Port Authority was chipping in another $3 billion, of which we can assume half or so is coming from New York. So to grab $2.7B back for him to play with in the state budget, he’s forfeiting $4.5 billion in non-New Jersey cash plus abandoning long term infrastructure investment in New Jersey future’s. New Jersey already looked to be getting a good ROI on it’s share of the money. By reversing the transaction, that return is the interest paid, and I’m yet again reminded of someone who is so desperate for cash he’s running down to the local check cashing store for a pay day loan to tide him over till the next election rolls around.

Future generations will pay the price for failing to invest in infrastructure. A guy who gets it completely when he talks about the bills now coming due for previous promises around pensions and such can’t seem to wrap his head about the same bill coming due for not investing in infrastructure these past decades.

Ironically, Christie railed against the federal bureaucracy for Race to the Top when a clerical mistake cost his state money. But who’s complaining now as Christie throws $3B back in the feds’ faces? US DOT should promptly redirect the money from this project and let New Jersey know in no uncertain terms it isn’t going to play these reindeer games anymore. Next time New Jersey applies for a discretionary federal grant, Washington ought to stamp it “Return to Sender, re:See ARC Tunnels.”

I’ll contrast Christie with another fiscally conservative Republican, Indiana Gov. Mitch Daniels. Daniels understands the difference between operating bloat and investment, and the need to balance the short term and long term view. He didn’t rob Peter to pay Paul by shuffling money around. Rather, he did a creative lease of the state’s money losing Toll Rd., generating $3.9 billion to finance the largest road construction program in the state’s history, eliminating a huge part of the state’s backlog of projects. That money has been flowing full steam ahead while operating budgets are trimmed elsewhere to deal with fiscal reality. This investment will pay dividends for years to come for Indiana the same way a refocused, better, lower cost ARC project would have done for New Jersey. Conveniently, New Jersey does have a Toll Road – one far more lucrative than Indiana’s. Tapping that as a financing vehicle for the highway infrastructure deficit would have been the way to go.

As Christie pulls the cord to fire up his chainsaw once again, I’m sure he’ll talk about the need to balance budgets. But as I noted before, if you can’t afford your infrastructure, and you can’t afford to provide basic services, what you’re really saying is that you can’t afford to be state and are holding a slow motion going out of business sales. Budgets have to be balanced, but New Jersey’s problems – it’s ahead of only the District of Columbia on the Small Business Survival Index, for example – go far beyond that.

New Jersey is slowly sinking into the muck. In his preening on about costs, Christie is missing the big picture around the change New Jersey – and too many other states – need to make to carve out a prosperous role for themselves in an ever more competitive, globalized, changing wold. If that doesn’t change, the state can look forward to day when its stock is inevitably delisted by residents and investors. See you on the pinks, Christie.

20 Comments
Topics: Public Policy, Strategic Planning, Transportation
Cities: New York

20 Responses to “NJ Gov. Chris Christie Channels His Inner “Chainsaw Al” Dunlap”

  1. Vin says:

    I made a variation on this point on your previous post, Aaron, but it’s worth reiterating: the problem with guys like Christie is that they look at these projects an they see “cost.” That’s it. Full stop. There is no consideration of the potential long-term benefits of a project. Investments are not investments, they are government boondoggles.

    This is a peculiar neurosis of the American right and it’s downright poisonous. Obviously, there are some on the right, like Mitch Daniels, who seem to get it. But as long as we have a political party whose knee-jerk answer to any kind of government investment in anything (outside of defense and, for political convenience, entitlement sinkholes) is “No,” we’re never going to get anywhere.

    It’s a shame because there is definitely room out there for a constructive, right-leaning vision of the role of government. Sadly, I suspect we won’t see anything of that sort until the current generation of conservatives – reared, as they were, on Reagan-era anti-government tropes – loses influence.

  2. Alon Levy says:

    Aaron, thanks for this post.

    While I think No Build is better than $8.7 billion for Alt P, it’s completely true that Christie should have managed instead of just cut. As I said on another blog, American government waste is begging for review by a European right-wing liberal party, but all we’re getting is right-wing populists.

    Don’t get me wrong, ARC is a colossal waste. At $3 billion, it’s an investment. At nearly $9 billion, it’s a boondoggle. But all of the benefits and even more could be obtained for a fraction of the cost, and that’s what good government is about.

  3. This would make me feel a lot better if Christie wasn’t going ahead with major road-building projects like the Turnpike widening. New Jersey doesn’t just have one toll road, it has two, and instead of raising the toll to pay for other transportation projects, he’s using bond money to widen the toll road. He’s a world class hypocrite.

  4. Meant to provide a link discussing the bond issue.

  5. Jonathan says:

    Aaron, thanks for the sensible discussion and the Daniels comparison. I have the opportunity to delve through layers of state bureaucracy for multiple states at my day job, and I have to say that New Jersey is about the worst for bureaucracy and meaningless forms and permissions. For instance, in many states, it’s easy to file a lien on a motor vehicle. In NJ, you need to establish a business presence in the state first. So realistically, I can’t lend money to finance NJ vehicles without opening a premises in the Garden State (and hiring someone to come by and open the doors, answer the mail, water the plants, etc.). Honestly, I love Jersey (my grandmother was born there) but I would never open a business in the state knowing what I do now.

    Seems to me that Gov. Christie could do something about that, rather than screw up projects built, as you say, with other people’s money.

  6. Brandon says:

    Wow. So your column and almost all the commenter agree that the ARC project is incredibly wasteful and that New Jersey is in a deep budgetary hole, and Gov. Christie is an idiot b/c he’s just so darn responsible? Pardon me for breaking up the self-serving kudos you’re offering each other, but this discussion is coming off as fairly puerile.

    I love infrastructure projects, which is of course one of the reasons I follow this blog. At the same time, however, I recognize the eons-old need to figure out financing decide on budget priorities. Should I now be derided because all I really know about budgeting I “learned in Kindergarten”?

    Aaron, you sound like every other special interest advocate that comes to D.C. and state capitols around the country to demand funding for their pet passion. If you don’t agree that program X should be funded at the level, in the manner, advocated, then you’re stupid.

    Unfortunately, no matter you’re tone, this really is a worthy project the should require of you a more serious approach to the cost and the manner of the financing. This is likely a good time to reach out to your more fiscally-conservative minded transportation/infrastructure friends and ask if they agree the Gov. Christie is just stupid not to agree with you. After all, you already agree that the current ARC project is a debacle. And for that matter, the existing rail tunnels were built entirely with private money.

  7. Aaron M. Renn says:

    Brandon, the Christie fallacy is to assume that there are only two choices: ARC as is or do nothing. There are other choice – and yes, some of those involve reaching out to the private sector for creative financing solutions. A real fiscal conservative who was interested in governing would be looking for ways to improve the project and reduce costs. That would be real leadership. Christie just wants to take the easy way out. It’s always easier to do nothing than something – and it conveniently gives him a one shot budget bailout.

    This is hardly the only example of his creative accounting. For example, he’s deferring contributions to his state’s already underfunded pension plan. He says he wants to force reform. But conveniently it also helps him balance the budget. This is the same trick Illinois Democrats have been using for quite some time, with predictable results.

  8. aim says:

    Brandon,

    Did you actually read what Aaron wrote? He’s took Christie to the woodshed because instead of taking on the challenge of cost-overruns and finding a way to make the project work for less, Christie punted. Instead of finding a way to invest in infrastructure that’s needed, Christie is borrowing against the future to pay for today’s projects. Instead of using a resource – the Turnpike – as a way to finance improvements, he’s incurring long-term costs by bonding for other improvements. All make the case that Christie’s decision was both wrong in the short-term and the long-term. Apparently, you missed that in your read through.

  9. Chris Barnett says:

    Fairness compels me to note the overuse by progressives of the term “investment”. Clearly, government spending on long-term public assets like roads, bridges, tunnels, sewer systems, aircraft carriers, space station, etc. represents public investment.

    Unfortunately the Obama administration has called all manner of government print-money-and-spend-it schemes “investment”: auto-industry and bank, bank bailouts (TARP), housing bailouts (NSP). This has tainted the term IMO, and has given the screwball right the opening to challenge “real” public investment as unnecessary and wasteful even when it could pass a cost-benefit screen.

    I agree with Aaron: it’s hard work to wisely whittle cost from public investment projects (and public services) so that the benefits will obviously outweigh the costs. “We the people” should expect our mayors and governors to hire good people who will do just that.

  10. Jon says:

    Aaron,

    This is one of your finest columns yet. Spot on.

  11. JayinPortland says:

    @ Cap’n #3 – Actually, New Jersey has three toll roads. Don’t forget the AC Expressway…

  12. the urban politician says:

    GREAT post, Aaron!

    Points to, as Vin pointed out, the neurosis going on with America’s Right today.

    But it doesn’t matter, because the dud-heads that make up 95% of America’s population are going to give them a big boost next month anyhow.

    As long as the neurotic right can win votes, why not engage in mindlessness such as this instead of trying to actually solve problems? The American people don’t know their head from their tails anyhow and are more focused on who wins America’s Got Talent anyhow.

    A Republican that I would actually vote for, such as Mitch Daniels, is unfortunately the exception rather than a rule. They are an angry, bitter, and dangerous party that no longer is interested in anything other than destroying the progress of anything not accomplished under their reign.

  13. Brian says:

    Does Christie’s short-sightedness also effectively kill Amtrak’s latest HSR-NextGen proposal?

  14. shorebreeze says:

    @Brian: not necessarily, as Amtrak tired of the bureaucratic turf wars among the commuter rail agencies and has decided to pursue its own additional set of tunnels. But in practice I think the political fallout from this is so damaging that it threatens the infrastructure and the economic base of the entire Northeast Corridor. How do you get approval even for Amtrak’s scheme when Tea Partystan (i.e. New Jersey) stands as a 70 mile barrier in the middle of it? What are you supposed to do in such a case, drill the world’s longest tunnel from north Philadelphia to Manhattan?

    Things are also awkward in the northeast because bureaucracies are institutional stronger, and the geography more fragmented between more states. One small holdout can bring lots of things crashing down. Contrast this with the Chicago region, where you are dealing with fewer bureaucracies and geographically bigger states, and where the only real troglodyte running for statewide office is Scott Walker for Governor of Wisconsin (jeopardizing Madison-Milwaukee rail, for example). You have Daniels in Indiana, who is a rail skeptic but at least not some kind of bomb-thrower (although his Toll Road deal has its own problems; in the long run he gave up a lot of money by going with the lease rather than raising rates directly, with the result that the lessee will make far more than the state). You have in Illinois both the major candidates for governor, Pat Quinn and Bill Brady, supporting high speed rail there. You have Amtrak proceeding with renovating Chicago Union Station. You have a debate not over whether to do anything but over which projects. And none of the proposed projects are obviously stupid in the manner of ARC’s deletion of connections to Penn and Grand Central. Although you have a lot of waffling and mumbo jumbo and downright scary creative financing when it comes to balancing budgets you do at least — Walker excepted — have politicians with some faith in the future.

    Could it be that national and international capital will simply pick and choose the less dysfunctional regions? I see a lot of capital flight from the US to other countries in the future given the Tea Party mentality. But I also see capital fight from politically broken regions like New York/New Jersey where they can’t get along and parts of the South where they simply won’t invest the money to places that still “can do.”

  15. Alon Levy says:

    Amtrak already owns everything it needs to own in Jersey. Even over-expensive plans involve little additional work in Jersey, where just two nontrivial curve easements are required, both of which would involve few property takings. The catenary would need fixing, but Jersey has no say over that. The serious money and political capital under any HSR plan would be spent in Connecticut.

  16. Elaine says:

    Agree with Aaron about pretty much all of this. Two additional things bear mentioning, though: First, New Jersey has among the lowest state gas taxes in the country. Raising that tax would have paid for Christie’s road improvements, but, as the New York Times’ Paul Krugman says, in Christie-land no tax can be raised, ever.

    And second, former Governor Corzine tried hard either to raise turnpike tolls or to privatize the turnpike, and was instantly shouted down. It would be fascinating to see whether Christie could get either of those things done, should he decide to try (which I doubt). At some point we are going to have to admit that we can’t get something for nothing.

    And to Chris Barnett, above, in the interests of accuracy: TARP was signed into law under George W. Bush. (And has turned out to be a pretty good deal for the taxpayer.)

  17. Chris Barnett says:

    Yes, Elaine, TARP was signed by Dubya after the majority-Democrat Congress passed it…one of the rare recent acts of bipartisan leadership in DC. (Dubya probably wasn’t worried about the tea partiers since he was a lame duck.) I should have been more specific, and should also have listed the non-infrastructure portions of ARRA.

    Whether TARP will ultimately pay off won’t really be determined until the coming crunch in commercial real estate (and CMBS based on it) is resolved. The regional banks especially have not been repaying TARP funds because of their looming problem loans.

    I suspect Christie could get turnpike lease deals done if the money helped plug budget holes…but as Aaron has pointed out, selling long term interest in a public asset to plug a hole in the operating budget is shortsighted in the extreme.

  18. Brandon says:

    @Aaron, Fair point about the two choices fallacy. There are clearly more choices, and as you sussed out, like you, I would appreciate the pursuit of another choice as well. But here’s where we arrive at the greatest danger for all such infrastructure projects throughout the USA.

    Your point withstanding, my basic problem with your take still remains. Why does the anger over the “false choice” fall at the feet of the only government official involved who has applied basic budgeting principles to the ARC? Wouldn’t that be the equal responsibility of the government officials who ignored their fiduciary responsibilities? Shouldn’t they too have sought other ways to fund the ARC?

    Fact is, over-budget, crony-driven, undisciplined mega projects paid for only through taxpayer financing weaken the prospects of the next vital mega project.

    For instance, why didn’t the Big Dig in Boston beget a succession of similar projects? Because, of course, it was an over-budget, crony-driven mess…not to speak of the fact that it barely produced any engineering or industrial innovations that might otherwise promote similar tunneling projects.

    Will the current 2nd ave subway extension in NYC encourage any future similar expansion of the subway? Of course not. If anything it will deter future, similar expansions.

    Aaron, I do not doubt your intention to support a positive outcome for the ARC no matter what happens going forward. But I suggest that it may benefit your long-term infrastructure interests if you focus more on the officials who want to move ARC forward at any expense and despite any organizational failure.

  19. Alon Levy says:

    Brandon, there’s a buck-stops-here argument to be made. Yes, the people who run NJT are incompetent for having chosen Alt P and then clung to it through severe budget overruns. But ultimately the decision rested with the Governor. In fact, back in January, when Port Authority asked to put the project on hold over concerns that the required takings would lead to lawsuits, some of the proponents of Alt G told me that they were trying to lobby the new transportation commissioner to make a last-minute switch.

    If I had to guess, I’d say that as soon as Christie heard that the project was over budget, he refused to hear anything else. That a better tunnel could be built for one-third the cost didn’t matter to him; he just wanted to stop spending. The ultimate outcome is good – even No Build is better than Alt P at $8.7 billion – but the fact that he chose this path still says bad things about him.

  20. Jake formerly of the LP says:

    We have a similar dimwit to Christie in Milwaukee in County Executive Scott Walker, who has constantly cut bus transit and is now running for governor with a platform that includes trying to stop funding the Midwest High-Speed Rail expansion from Milwaukee to Minneapolis via Madison. This is also another OPM situation, as the stimulus has set aside the money to upgrade and build the rail line to Madison, and the only ongoing state costs being about $8 million in estimated operating subsidies- a drop in the bucket compared to the billions in road spending Wisconsin does (and Walker is planning to continue to do despite the state being in a $3 billion budget hole).

    Why candidates feel neglecting infrastructure and offering options in transportation in the name of tax savings (which are usually offset by lower productivity and community desirability) is beyond me. But the media and right-wing radio seems to want to get the anti-transit message out over the Silent Majority that want these options, and are more than willing to allocate pur tax dollars toward this improved infrastructure.

    I know in the long term the transit argument wins (even more than it does today), but I fear even this short-term blip that these posers are in power is enough to set back the cause a good 10 years, and be much more expensive to pick up once this tea-bagging luddites go out of style.

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