How Trump’s Hudson Tunnel Feud Threatens the National Economy

Economic risks keeping Americans up at night include the hastily rewritten tax code and the possibility of a global trade war set off by U.S. tariffs. Consider another cause for insomnia: President Donald Trump’s opposition to a new rail tunnel linking New York and New Jersey beneath the Hudson River.

The current link is shot, corroded by age and chemical-tainted flood water. That’s unnerving enough for the 820,000 passengers a day traveling to New York City jobs or some other U.S. Northeast destination. For those farther afield, there’s the chilling fact that a tunnel predating World War I is key to 20 percent of the nation’s gross domestic product.

The first locomotive chugged through the Pennsylvania Railroad’s 2.5-mile tunnel in 1910. Amtrak, its current owner, says it’s still safe, albeit unreliable, and in constant need of temporary fixes. But say its haywire electrical system finally goes kaput, or its cracked concrete walls and ceilings yield to the river’s muck. There goes the New York City commute for Wall Streeters, big-city accountants and lawyers from New Jersey suburbs, plus the legions that work in health, tech, tourism and retail. Beyond New York, that’s the end of Boston-to-Washington service on the nation’s busiest passenger-rail route.

A rail-improvement plan called Gateway has as its centerpiece a new tunnel. The tube could double capacity along a 10-mile stretch of the Northeast Corridor between Newark, New Jersey, and Pennsylvania Station in Manhattan, the busiest station in America. Right now, that area of track induces daily headaches for 200,000 Amtrak and NJ Transit passengers. A 113-year-old swing bridge refuses to open and close properly, overhead power lines fail, backed-up trains idle at the tunnel’s entrance. But the new tunnel has been mired in politics for years, most recently when Trump pulled away support from a cost-sharing agreement. Last week, he is said to have told congressional leaders not to fund it as retaliation for Democratic Senator Chuck Schumer’s opposition to his nominees.

“We don’t build this, and these tunnels fail, the whole economy will collapse,” Schumer, who like Trump is from New York, told transportation planners in December 2016. “There will be a deep recession in the New York metropolitan area and a recession probably in the whole country.”

We had this mess figured out, and blew it—twice. Congress was set to spend $8.7 billion on a second crossing until Governor Chris Christie, worried about cost overruns, declared, “I cannot put New Jersey taxpayers on a never-ending hook,” and killed it. Five years later, President Barack Obama stepped up with a federal and state cost split for a Plan B, Amtrak’s Gateway tunnel.

Then came Trump—with a real-estate fortune that flourished thanks to commuter access to his native New York City—and his federal budget that yanked the U.S. cost share. “There is no such agreement,” K. Jane Wiliams, deputy administrator of the Federal Transit Administration, wrote in a Dec. 29 letter to New York and New Jersey officials.

The story involves money and hubris and risk, with a human toll. The last chapter, yet to be written, has all the plot threads of an economic catastrophe.

The Northeast accounts for 30 percent of all jobs in the U.S. and contributes $3 trillion annually to the U.S. economy. It’s home to 51 million people—one in 7 Americans—a figure expected to hit 58 million by 2040.

The Northeast Corridor is its backbone. It’s the most heavily used passenger rail line in the U.S, both in ridership and service frequency. It extends 457 miles from Union Station in Washington to South Station in Boston, carrying more than 2,200 trains daily. On the high-speed Acela Express between those cities, more than 75 percent are business travelers—the biggest such population, by far, on any Amtrak line. In 2016 those 3.48 million riders spent $593.7 million on seats, for more than 25 percent of Amtrak’s ticket revenue.

On any weekday, Amtrak and eight commuter-rail operators move 820,000 riders on the Northeast Corridor. About one in four shoots beneath the Hudson River in the North River Tunnel, the only passenger-rail connection between Manhattan and New Jersey, and the northern and southern portions of the Northeast Corridor. It has two tubes, each with a single track for electrically powered trains, and extends from North Bergen, New Jersey to 10th Avenue in Manhattan.

The tunnel has deteriorated because of age, exhaustive use and saltwater infiltration during Hurricane Sandy in 2012. In 2014, Amtrak estimated that the passage had up to 20 years of service left. It needs an overhaul that will require each tube to be taken out of service for 18 months. Closing just one would reduce capacity to six trains per hour, a 75 percent cut.

In a country in need of almost $1 trillion for crumbling bridges, tunnels and roads, this tunnel would be among the most expensive tasks. The estimated cost of Gateway, plus rehabilitation of the existing link, is $12.9 billion. Gateway’s other phases, including more tracks and new bridges, makes the total price approach $30 billion.

Amtrak, which calls Gateway “the most urgent infrastructure program in the country,” knows that $30 billion is a big ask. The railroad’s selling point: Even under the most conservative assumptions, Gateway benefits would amount to $2.16 for every dollar spent, or a ratio of 2.16.

It’s easy to think of this as a New Jersey problem: It’s their trains, their commuters. But Gateway may be a boon more to New York City than its neighbor. Almost 13 percent of Manhattan’s workforce consists of New Jersey residents. For New York State, that represents more than $3 billion in payroll-tax revenue.

From 1950 to 2004, New Jersey gained 2.3 million jobs and New York City gained 82,000, according to Amtrak analysis of Bureau of Labor Statistics data. Then, the city began adding jobs in larger numbers than New Jersey. From 2004 to 2014, New York City added 550,000 jobs while New Jersey lost 27,000.

Wages for Manhattan workers on average are 92 percent higher than those elsewhere in the region. In 2014, 14 percent of Manhattan’s workforce consisted of New Jersey residents, and 8 percent of all New Jersey workers commute to Manhattan. The total income earned in Manhattan by New Jersey commuters is at least $33 billion annually.

You say you don’t need trains? The Washington and Boston stations, Amtrak’s second- and sixth-busiest, have a combined 6.7 million riders a year. At least 71 percent say that without Amtrak, they’d fly or drive. Think about it: If that antique Hudson River tunnel is taken out of service before a second one is built, some of the nation’s most trafficked highways and airports will have to accommodate millions more travelers, all of them eager to get somewhere. Just like you.

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