Delays to commuters and Amtrak passengers caused by a bridge malfunction are putting pressure on the Trump Administration to fund the $20 billion Gateway project, which would reconstruct bridges and tunnels connecting New York’s Penn Station with north New Jersey. Although New York and New Jersey politicians claim that this project is vital to the region, none of them are willing to ask their constituents to put up a single cent towards its completion.
Instead, they want the federal government to pay half the cost up front, and to put up the other half in a federally guaranteed, low-interest loan. Considering that neither New Jersey Transit nor Amtrak have the revenues needed to repay that loan, there’s a good chance the federal government would end up paying for it all.
Though this seems ridiculous, transit advocates have tried to make it appear that Trump is the bad guy here. In fact, the bad guys are the local politicos who want someone else to pay for their pork-barrel projects.
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Of course, there are those who say that the whole country benefits from what New York City produces. Think about the dot-com crash, the 2008 financial crisis, and numerous other economic downturns caused by bank mismanagement and say that again with a straight face. The reality is that commercial banks don’t need density to create financial crises; they create those crises just as well in relatively low-density areas such as Menlo Park, California. Wall Street’s densities are merely the residue from a city that was built in the nineteenth century.
If New York and New Jersey want to tax themselves to maintain the subways, commuter trains, and all the infrastructure to support those systems and densities, then they should do so. But they don’t want to; they want everyone else to pay for it. So maybe it’s time to explore some other options that don’t require multi-billion-dollar infrastructure projects that will never pay their way.
If the Gateway Project is such a good deal, why aren’t the New York and New Jersey state and local employee pension funds lining up to lend them the money?
The author convientely doesn’t mention how New Jersey also pays more to the federal government then it gets back.
We’re talking about one of the single richest places on the planet. New Jersey has a GDP of $650 Billion. New York’s is nearly $2 TRILLION. If this tunnel really made sense to build, they would have already used their _OWN_ considerable wealth to get it done.
@prk166
“If this tunnel really made sense to build, they would have already used their _OWN_ considerable wealth to get it done.”
You argument is what we call a non sequitur. You could also say that if those two states got more pennies on the dollar back from the federal government than what they currently put in they wouldn’t be asking the federal government for assistance.
The argument that X state pays more in federal taxes than it gets back is utterly irrelevant. Most states can say the same, and the sum of all states also has such a deficit. Why? Military spending and foreign aid. The US Military spends little money in New Jersey and New York, but those states benefit from the security they provide in equal measure.
But I’m happy to accept the argument anyway, because it leads to a inevitably conclusion – the federal government shouldn’t tax at all. If the highest goal of the federal government is to spend in each state in exact proportion to the taxes raised there, then why have a federal tax system? The only way to achieve such perfect balance is to let the states pay for everything – even the costs of coordinating activity across state lines. I’m with you, Sketter – let’s turn Washington DC into a ghost town!
@pokep
“Most states can say the same, and the sum of all states also has such a deficit.”
That statement is blatantly false, only 14 states get back less than $1 for each $1 they spend in federal taxes not ALL 50.
https://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/
Everybody thinks that they pay more in taxes than they get back. Thanks to high housing prices, New York has a high percentage of highly paid people who pay a lot of taxes. Are those the people we should be subsidizing?
I’m sure a lot of states give more to the fed than what they receive in returned expenditures. It’s not an argument. 70-80% of federal spending is on two things Defense and entitlements (medicare, medicaid, social security) the allocation depends on the population of personnel & bases and recipients respectively.
Infrastructure spending on the state level took a turn for worse after the 60’s. Prior to that there were only a few major rail transit systems in the US. New York, Chicago, San Francisco, Boston, Philadelphia. After the Mass Transit act was passed but only after lengthy debate whether the federal govt should intercede on behalf of the legacy systems, other states found this unfair, after the passage of the act, virtually every state jumped on the bandwagon and built rail systems whether they had a significant market share or not, after all “They’re not paying for it or half of it”. In essence it was like the no interest sub prime mortgage fiasco of the transit world. After that, states became innocent damsels in distress when it came to financial unrest over infrastructure dilapidation even though they’re responsible for the financial pitfalls of wanting to build it in the first place. Increased federal intervention encourages “learned helpless-ness” on the part of state and local governments. The result has been a massive perversion of spending priorities as states try to play the game of one-upsmanship and keeping up with the jones. Beyond just rails and highways there’s pathways to reform infrastructure wise.
– Canada has long since privatized it’s Air Traffic Control systems as a self funded non-profit corporation. The one example of Canadian model we can copy.
– Tennessee Valley Authority was nothing more than a rural electrification program for one of the most impoverished regions in America, after the 1930’s it was the epicenter for aluminum production for wartime aircraft. And inevitably the Atom bomb. With more than 30 dams, many of which are obsolete, the TVA can privatize it’s electric utilities and remove it’s unnecessary dams. Most of what goes thru TVA’s locks are coal which can just as easily be moved via rail alongside the restoration of the valley’s river ecology.
– America’s major airports are owned by state and local governments, but they get federal aid for capital improvements. Hundreds of airports around the world have been privatized, including almost half of those in Europe.
– The Civilian portion of the Army Corps of Engineers can be privatized. The civilian portion constructs and maintains outdoor water infrastructure namely harbors, locks, waterways, floodwalls, levees and beaches. It fills roles state agencies could do.
The problem with federal aid for infrastructure is it enlarges the status quo of fiscal incompetence and wetdreams over grand projects and reinforces the notion that more federal money will solve the problem magically. The federal govt only owns a small portion of America’s public infrastructure yet has sweeping authority and regulatory dominance over local and state projects.
Japan serves as a lesson for what grandiose infrastructure spending can ravage the economy and set you down the path of sweeping debt. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world; a whopping 180% of their GDP. In total, Japan spent $6.3 trillion on construction-related public investment between 1991-2009. However having neglected its roads, bridges, water treatment plants and more over the years, the United States is bound to generate a significant payback for such reinvestment than say Japan. Reinvesting in crumbling infrastructure rather than building new stuff seems like a wise use of dollars.
@antiplanner
If they are tax paying citizens I don’t see why not. Saying “Everybody thinks that they pay more in taxes than they get back.” is irrelevant because the data doesn’t support their claim.
If the highest goal of the federal government is to spend in each state in exact proportion to the taxes raised there, then why have a federal government?
Fixed it.
No one suggested the highest goal of the federal government is to spend in each state in exact proportion to the taxes raised there but comments on hear seem to ignore the fact that NJ and NY residents pay federal taxes but for some reason they feel those same residents should not receive services or funds from the Federal Government. Now if someone wants to talk about the devolution of taxes to the state or local governments that a different conversation but in the current US tax system NY and NJ residents pay federal taxes just like every other US citizen but those same residents as a whole get less back. That’s why I find it hypocritical when a legislator from Alabama or Mississippi cries about some time of infrastructure in NY or NJ being funded by federal funds when it is essentially those NY and NJ citizens taxes and they just took a detour through DC before they go back into their states.
It sounds like there’s bipartisan support to eliminate the 16th Amendment to the Constitution [emphasis mine]:
It’s been around since 1913 and it modified these original Constitutional provisions:
No one suggested the highest goal of the federal government is to spend in each state in exact proportion to the taxes raised there but comments on hear seem to ignore the fact that NJ and NY residents pay federal taxes but for some reason they feel those same residents should not receive services or funds from the Federal Government.
It seems as if residents in blue states receive more in federal benefits than either red or purple states residents, on a per capita basis:
Are Red States Tax Takers And Blue States Tax Makers?
Against a national average of $1,935 in intergovernmental spending per American, red states receive just $1,879. Blue states get considerably more, at $2,124 per resident.
@CR
That article never mentions NY or NJ
Sketter says, “No one suggested the highest goal of the federal government is to spend in each state in exact proportion to the taxes raised there” . . .
Yes, Sketter. You are suggesting exactly that when you say things like, “That’s why I find it hypocritical when a legislator from Alabama or Mississippi cries about some time of infrastructure in NY or NJ being funded by federal funds when it is essentially those NY and NJ citizens taxes and they just took a detour through DC before they go back into their states.”
If it’s federal money, there could be nothing hypocritical about citizens from every state weighing in on the use of the funds. But you explicitly state that the funds are “essentially” state funds, that “just took a detour through DC”. You are no longer describing a federal government – you are describing a bank. Personally, I love that idea, as I believe that very few projects should be funded at the federal level, but that’s not the reality that we live in and you aren’t allowed to present it that way just because it is rhetorically convenient.
There is nothing convenient about that statement. It is irrelevant to the question of whether or not the federal government should fund an expensive, local pork-barrel project.
If New Jersey residents are so concerned about this fiscal imbalance then they should vote for a smaller federal government that isn’t so willing to control the allocation of resources.
@MJ
If its irrelevant to the question then why did the author mention “dot-com crash, the 2008 financial crisis, and numerous other economic downturns caused by bank “?
@pokep
Specifically what statement did I make that said the “HIGHEST GOAL” of the federal government is to spend in each state in exact proportion to the taxes raised there?
The rich states want all their money back from the federal government? That is the Democrat platform now? Then of course they support more Trump tax cuts too, right?
We’re talking about one of the single richest places on the planet. New Jersey has a GDP of $650 Billion. New York’s is nearly $2 TRILLION. If this tunnel really made sense to build, they would have already used their _OWN_ considerable wealth to get it done.
There’s also an out of service train bridge across the Hudson River at Poughkeepsie.
Still, government policy is anti-rail, roads are not expected to be profitable to survive :$