"I feel violated," New Jersey resident Leon Keylin told USA Today after hearing the dirty details behind the Bridgegate traffic jam that choked the city of Fort Lee last September. The politically motivated gridlock that paralyzed Keylin's hometown attracted the interest and ire of the nation, in no small part thanks to the presidential ambitions of New Jersey Gov. Chris Christie.
But while Christie's office has taken most of the heat for screwing over drivers on and around the George Washington Bridge, another directly responsible party has so far dodged most of its share of the well-deserved blame. The Port Authority of New York and New Jersey, the government agency that ordered up the punitive gridlock, is a bastion of power, patronage, and bureaucracy that violates commuters and taxpayers on both sides of the bridge every day of every year.
The basic details of the scandal are by now well known: Last August, a top aide to Gov. Christie emailed David Wildstein, a Christie appointee at the Port Authority: "Time for some traffic problems in Fort Lee." Wildstein then ordered the closing of two entrance lanes to the George Washington Bridge, ensnaring the town in a four-day traffic nightmare. The ostensible goal was to punish Fort Lee's mayor for declining to endorse Christie in the last election, though competing theories of retribution have surfaced. The US Attorney's Office, the FBI, and the New Jersey state legislature are all investigating the episode, which has put a damper on Christie's expected bid for the White House.
It would be easy to dismiss this as a case of a few bad apples abusing their power. But it's actually just the latest example of how an organization that was supposed to rise above politics became a tool for politicians to act out their worst impulses. The Port Authority-and the countless public authorities it inspired nationwide-demonstrate the lasting folly of the Progressive Era ethos that good public policy is all about entrusting smart people to run things.
The Technocratic Temptation
Founded in 1921, the Port Authority controls much of the transportation infrastructure around New York City and North Jersey. The agency systematically squanders its wealth and mismanages its assets; it charges high tolls and puts off necessary maintenance work; and it serves as a permanent cesspool of dirty politics. An organization designed to be the antithesis of old-school Tammany Hall machine politics has devolved into a patronage mill for Christie's cronies.
Ironically, the Port Authority was originally tasked with breaking through the logjams that made building big projects so difficult. Before the agency existed, cities generally financed bridges, tunnels, and roads with tax revenues, which often required direct approval from voters-a major obstacle to getting even the most worthwhile projects past the planning stages.
In 19th-century New York City, the construction of roads, parks, and railways provided opportunities for members of the powerful political club Tammany Hall to enrich themselves and extend their influence. The first plans to build the New York subway system were hatched toward the end of the Civil War, for instance, but construction didn't start until 1900-in part because the infamous Boss Tweed had his own plans to build an aboveground boondoggle called the Viaduct Railway. Issuing bonds to finance the subway ultimately required a public referendum, which took years of political organization. In other words, local governments struggled to meet the challenge of building the infrastructure necessary for cities to advance and thrive.
The Port Authority, modeled after a similar organization in London, was designed to solve the problem of too much democracy, as Jameson Doig details in his excellent 2002 history of the agency, Empire on the Hudson. Julius Henry Cohen, the visionary behind the agency's founding, wanted to create an organization shielded from "the hurry and strife of politics," to borrow President Woodrow Wilson's phrase. It would be run by wise technocrats empowered to carry out the best plans for society without politicians and party bosses getting in their way. The Authority was supposed to have all the efficiency of a private firm, but with the higher aim of furthering the public good.
Public authorities were empowered to raise money by issuing bonds that would eventually be paid back through user fees, such as bridge tolls. That meant projects didn't require direct voter approval, and mayors and governors didn't have to account for infrastructure projects in their budgets.
In its early years, the Port Authority lived up to its promise of technocratic efficiency. The George Washington Bridge-the Christie administration's tool for petty political retribution-was a symbol of the triumph of good government over provincialism when it opened in 1931. Othmar Ammann, the Port Authority-appointed engineer for the bridge, ably steered the project through choppy political waters on both sides of the Hudson.
But the Port Authority's institutional culture eroded over time as it assumed control of more and more of the region's infrastructure, including airports, a bus terminal, various real estate holdings, and the World Trade Center. Today the agency makes a practice of draining money from some holdings to float others.
The Port Authority's bridges and tunnels generated excess cash flow of $453 million in 2011, but a 2012 audit found it was failing to carry out routine maintenance work. Its airports generated $892 million in excess cash in 2011, and yet it can't afford to fund the major capital upgrades needed at LaGuardia, Newark, and JFK airports. Instead, the money goes toward sopping up losses elsewhere in the organization, such as the agency's estimated $7.4 billion tab for construction at the World Trade Center site, a figure that keeps rising because of outrageous cost overruns
A major reason New York's three major airports provide such a lousy experience for travelers is that they're all operated by the Port Authority, so they don't have any reason to compete for customers. The agency imposes a rule that prevents most flights traveling more than 1,500 miles from departing out of LaGuardia-a form of turf protection for Newark and JFK. And what's the rush to replace outdated infrastructure? LaGuardia's new state-of-the-art terminal isn't expected to be finished until 2021.
"The Port Authority has been a money tree, an ATM machine a place [the governors of New York and New Jersey] can go to do projects that they can't get through their budgets," Stephen Berger, a former Port Authority executive director, said at a September 2012 breakfast forum held by the Citizens Budget Commission. During Berger's tenure, New Jersey Gov. Thomas Kean pushed the agency to underwrite an office building in downtown Newark that had nothing to do with transportation. In 1992, New York Gov. Mario Cuomo got the Port Authority to buy a portion of the Aqueduct Racetrack for $40 million to help plug a budget shortfall. The organization's primary virtue-its ability to raise money off budget-also became its primary defect.
Like many a monopolist, the Port Authority ballooned into a bureaucratic sprawl that spends much of its wealth on itself. Today, the agency is flooded with middle managers paid handsome salaries based on time served, not the quality of their work. The total compensation package for the average Port Authority employee exceeds $143,000, stemming in part from out-of-control overtime payments and other pricey perks.
Template for Lousy Governance
Nevertheless, the Port Authority inspired countless imitators. In the 1960s, New York Gov. Nelson Rockefeller formed hundreds of public authorities to advance pet projects without voter approval. In 2004, the New York State Comptroller's Office attempted to tally all the public authorities in the state and found 643, but later discovered there were an additional 87 that it had overlooked. New York's public authorities now have a combined debt projected at $55.9 billion, which comprises 94 percent of the state government's outstanding liabilities.
These quasi-public organizations, which are hardly confined to the Empire State, have contributed to municipal debt crisis in cities and states nationwide.
In the destitute city of Harrisburg, Pennsylvania, for example, former Mayor Stephen Reed drew blank checks from the Harrisburg Authority-an organization charged with maintaining the city's waste and water supply-to purchase Old West memorabilia, build a Civil War museum, and sink money into an incinerator project that ultimately destroyed the city's balance sheet. How can the bankrupt city of Detroit afford to move ahead with plans to borrow $450 million to build a hockey arena for the Red Wings? The city's Downtown Development Authority will own the structure and assume much of its debt.
Public authorities also served as local conduits for money and power allocated through the federal urban renewal program, which was among the biggest public policy fiascoes of the 20th century. In The Power Broker, a 1974 Pulitzer Prize-winning biography of New York government official Robert Moses, author Robert Caro recounts how Moses used a network of public authorities to build a political empire, clearing away entire neighborhoods to make way for his megaprojects. Louis Danzig, another unelected bureaucrat who ran the Newark Housing Authority from 1947 to 1969, oversaw the leveling of vibrant black and immigrant communities to build new housing that failed to live up to its promise of reversing middle-class flight from the city. Edward Logue wielded similar powers, first as head of the New Haven Redevelopment Authority and later as chief of the Boston Redevelopment Authority.
In a classic 1959 essay for The Nation, "The Shame of New York," journalists Fred Cook and Gene Gleason pinpointed a key flaw in allowing even the best-intentioned bureaucrats to wield so much power. The goal of Progressive Era reformers was to seize control of cities from corrupt politicians, but "even in the worst days of Tammany Hall," Cook and Gleason wrote, "the political machine had…its finger on the pulse of the block and ward and, when the pulse beat stepped up to angry tempo, it heeded the warning-or ignored it at its peril."
This shift in power out of neighborhoods made it possible for men like Moses, Danzig, and Logue to carry out their grand and misguided visions despite overwhelming community opposition. "This is not the rebuilding of cities," the activist and urban theorist Jane Jacobs wrote in her 1961 classic, The Death and Life of Great American Cities. "This is the sacking of cities."
How can we build new infrastructure quickly and efficiently without creating powerful organizations that function as a shadow government? The answer is to get the public sector out of the infrastructure business to the greatest extent possible and allow private markets to take over.
A funding mechanism called "project finance" offers a way of introducing competition to the business of building infrastructure while keeping plundering politicians at bay. In this arrangement, a government entity selects a private firm to borrow the necessary capital to build a project, tasks it with overseeing construction, and then allows it to collect tolls to pay off its debt and fund operations. If revenues fall short, the firm in charge may have to declare bankruptcy and default on its obligations. The key is to create incentives for companies to keep their costs in line. (While it would be preferable if the government had no role in building roads and bridges whatsoever, that's generally unrealistic given that the public sector often owns the underlying land.)
Robert Poole, the director of transportation policy at the Reason Foundation, the nonprofit that publishes reason, has written extensively about these arrangements, which are common in Europe. In the U.S., Poole points to the construction of express toll lanes on the Capital Beltway in northern Virginia and on the LBJ Freeway in Dallas as examples of successful public-private partnerships that utilize project finance.
The South Bay Expressway in San Diego County, which had major cost overruns and yielded lower-than-expected toll revenues, landed in bankruptcy in 2010. The project's owner, Macquarie, and the banks that loaned it money took a major haircut. This demonstrates the success of this model, Poole argues, because investors instead of taxpayers bore the risk.
In the case of the Port Authority, the Bridgegate scandal won't be enough to unravel the organization, which is what would happen in a better-run world. The governors of New York and New Jersey, who jointly control the agency, have no interest in cutting off the supply of easy money and plum jobs for their friends. An organization designed to be insulated from obstructionist politics in order to better serve the public has become a private bank and enforcement arm for the powerful.
So the Port Authority, and its many imitators nationwide, will keep inviting ever-larger abuses of power. The Progressive Era may be long gone, but its hooks in public policy are deep and corrosive.
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