American Political Class Projects - Promises, Progress, and Economic Estimates That Never Materialize

A recent article in the September 4, 2010 issue of The Economist magazine reminded how the promises, progress, and economic estimates made by the politicians in America never materialize. The article's title was "Atlantic City - A Struggling City By The Sea." Atlantic City had long been a famous and quality place to vacation in the summer, beginning with the local Lenni-Lenape Indians who summered in the place where the city exists today. In 1850, a local doctor started to develop the area which received a big boost a few years later when a rail line brought city residents to Atlantic City for their vacations.

However, a little over a century later the city was facing hard times. It had become rundown from an infrastructure perspective with a high crime rate and a declining tourism industry. Someone in the political class came up with the great idea of allowing casino gambling only in Atlantic City. The political thinking and the argument they used to force through the legislation was that casino gambling would rejuvenate the city while also contributing some of the gambling taxes to other state programs in New Jersey. As a New Jersey resident, I remember Governor Brendan Byrne telling us how much money would flow into Atlantic City and how it would create a tourist mecca right there on the Jersey shore.

Let's fast forward to today and see what the Economist article has to say about Atlantic City:

• The unemployment rate is 12%, more than two percentage points higher than the national average.
• 24% of the housing units in the city are empty.
• The city's poverty rate is slightly higher than it was in 1978 when casino gambling was introduced.
• Outsiders view the city as unsafe and unclean.
• The main industry of the city, casino gambling, is in the decline with the Casino Control Commission recently reporting that the city's casinos had reported a 23% decline in operating profits in the second quarter of 2010.

Thus, the promises, progress and economic estimates that Governor Byrne presented to the state's residents never permanently materialized. Poverty, high unemployment, and a bad reputation still exist, and rejuvenation is still a dream. And it may forever stay a dream since many surrounding states are opening their own gambling options to make up for state government shortfalls. After more than thirty years, the political class could not deliver on its promises in Atlantic City.

But Atlantic City is not an isolated situation. The political class has had some spectacular failures in recent years that drawf the failed political agenda and goals of Atlantic City. These failures came up far short of the promises, progress and economic estimates they used to sell their ideas to the American public:

• The Big Dig was a massive Boston road and tunnel building project that was supposed to relieve Boston downtown traffic and get rid of some unsightly overpass roadways in the middle of the city. In 1985 the original estimate to build out the system was $2.8 billion. By 2006, the actual costs had reached $14.6 billion, five times higher than the original estimate. A July 17, 2008 Boston Globe article estimated that the final costs, when you account for higher interest payments to finance the buildout, would be $22 billion, almost 8 times the original estimate. Not only did the political class blow the budget, they also blew the implementation with numerous problems still plaguing the project and at least one death which occurred when faulty cement roof tiles fell on and killed an unsuspecting motorist.
• The original incremental costs of executing the 2003 invasion of Iraq by the Bush adminstration was estimated to be about $60 billion. Looking back, that estimate looks quaint. Depending on your measurement methodology and what is included and not included as a cost of the invasion, a conservative cost estimate of the Iraq war will be at least one TRILLION dollars. This is about 16 times more than the original Bush estimate. Missed that estimate also, more spectacularly than the Boston Big Dig.
• The Obama administration claimed that the health care reform legislation that was passed earlier this year would cost less than $900 billion and would actually help offset the national debt to the tune of $135 billion over ten years. However, the underlying numbers that led to these conclusions are already starting to come apart. The Associated Press has pointed out in their analysis that the cost of many of the programs in the legislation were not included in the budget estimate. Thus, the Congressional Budget Office estimate of the of the $135 billion in cost savings may actually be closer to only $20 billion over ten years in order to accurately compare what is in the legislation with the cost of providing what is in the legislation. On a more detailed basis, the Cato Institute estimated in their analysis that Obama Care will actually cost the nation $2.7 TRILLION, no $900 billion, and will add $352 billion to the national debt, not save $135 billion. I would tend to trust Cato than the political class, especially since Nancy Pelosi was widely quoted prior to the passage of the legislation that "We need to pass the bill so you can find out what's in it." With inane statements like this and the track record of the political class when it comes to over promising and under delivering, I have much more faith in Cato's numbers and estimates than Obama's.
• And finally, lets go back to New Jersey. According to an October 8, 2010 Associated Press article, Governor Chris Christie has decided to scrap  New Jersey's plans to build a new rail tunnel from New Jersey into New York City. The reason to scrap the project that has Federal spending and is already underway? The original  budget estimate for the project in 2005 was $5 billion. By 2008 the budget estimate had grown to $8.7 billion. Recently, a Federal official has stated that the project is likely to cost between $9 and $10 billion, doubling in size in just five years. Christie stated in the article that the cost of the project could now be between $11 billion and $14 billion. If Christie is right, the cost estimate could be almost three times larger than the political class estimated in 2005. As you look at the shifting numbers you get the deja vu feeling of the Boston Big Dig project all over again: costs keep going up unchecked and timetables keep slipping. I applaud Governor Christie for putting his foot down to unlimited wasting of taxpayer money, something that was not done in Boston. His exact words were: "I simply cannot put the taxpayers of the State Of New Jersey on what would be a never ending hook." Compare this with the statement from one of the state's Federal Senators, Senator Frank Lautenberg, who stated that cost overruns on a project of the tunnel's size were inevitable but said Christie's numbers were inflated. Note that he did not say that the Federal official's estimate of $9 to $10 billion was inflated, double the original estimate.

This is what we are dealing with. Political class promises never materialize, the progress they promise never happens, and from an economic perspective, the taxpayer always gets the short end of the deal. And we should not be surprised. We have politicians that need to pass legislation before they understand what is in it and what the impact will be (Pelosi), we have politicians that have finally admitted that their estimates are worthless since cost overruns are "inevitable" (Lautenberg), we have politicians that are either to naive or are being dishonest when presenting their budget and economic numbers (Bush and Iraq, Obama Care, and the Big Dig), and we have politicians that will promise rejuvenation that never occurs (Atlantic City gambling). Why should we believe anything they tell us?

And, that is the crux of the problem facing the nation today. We trust no one in political office, especially if they are from the "other" political party. Without trust, the opportunity to solve the major issues facing the country is virtually non-existent. Thus, until the political class is replaced with new people that have some degree of integrity and will tell us the truth, not some shabby, low ball estimate that they use to get their plans approved, we can expect to overpay for under performance, whether it is for health care, transportation infrastructure, or foreign policy.

We can start a new era of integrity in November by dumping all of the incumbent politicians that are party to the never materializing promises and progress (and lies) and start over with a clean slate. Longer term, the implementation of term limits as proposed in Step 39 in "Love My Country, Loathe my Government is the best way to turnover politicians and prevent them from eventually turning into the types of people of low integrity we have today.




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