New Jersey Governor Chris Christie says he cancelled the second rail tunnel under the Hudson River because the state can’t afford it, but Paul Krugman says it’s a “terrible, short-sighted move… We have the need… we have the resources… and the price is right.” With interest rates on debt at near-record lows, Krugman says it’s a great time to borrow for long-term investment.
But American politics these days is anything but rational. Republicans bitterly opposed even the modest infrastructure spending contained in the Obama stimulus plan. And, on Thursday, Chris Christie, the governor of New Jersey, canceled Americaâ€™s most important current public works project, the long-planned and much-needed second rail tunnel under the Hudson River.
It was a destructive and incredibly foolish decision on multiple levels. But it shouldnâ€™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.
Paul Krugman never met someone else’s tax dollars that he didn’t want to spend.
I think the $1 billion (and counting) cost overrun might have had something to do with the cancellation, too.
â€œWeâ€™re involved in a dangerous game,â€ former Fed chief Greenspan warns, referring to the â€œscaryâ€ deficit. â€œWeâ€™re increasing the debt held by the public at a paceâ€ that will soon dwarf U.S. borrowing capacity. Yesterday, Treasury restructuring chief Jim Millstein castigated Greenspan for falling asleep at the wheel on bank oversight.
â€œWeâ€™re involved in a dangerous game,â€ Greenspan said yesterday at a foreign-exchange conference in New York sponsored by Bloomberg LP, the parent of Bloomberg News. â€œWeâ€™re increasing the debt held by the public at a pace that is closingâ€ the gap between our debt and â€œany measure of borrowing capacity,â€ Greenspan said. â€œThat cushion is growing very narrow.â€
U.S. companies may be holding back on investment because of the rising federal deficit, which causes uncertainty about future tax policies, Greenspan said in an opinion article for the Financial Times this week. Weak investment by businesses in capital equipment and fixed assets has helped to crimp the U.S. economic recovery, he said.
â€œYou needâ€ austerity, said Greenspan, a paid speaker at the event. â€œWeâ€™re going to have to start to cutâ€ from government entitlement programs, he said, adding that reducing the budget is better than raising taxes in closing the U.S. budget deficit. Still, Greenspan reiterated that he supports allowing tax cuts enacted under President George W. Bush to lapse at the end of 2010.