U.S. SENATOR CHARLES E.

SCHUMER
Remarks for Crain’s Breakfast Forum
January 18, 2011

Building for New York's Future

When I last came to speak to a Crain's breakfast, in March 2009, it was at a moment of
great economic uncertainty. We had avoided, it seemed, the worst case scenario of
another Great Depression, but it wasn't clear how soon we would again see economic
growth, and what kind of growth it would be.

Today, we are without doubt in a better place. The economy is beginning, albeit slowly,
to recover. We have now had 5 quarters of economic growth, and most economists, both
private and public, expect that to continue, and even to be quite strong. Locally, both
New York City and New York State have done better than the rest of the country in terms
of not just preserving but adding jobs.

But the recovery remains fragile, and it remains vulnerable. And that means that above
all, we must avoid doing things that will set the economic recovery back. This is
especially difficult in a moment when all three levels of government – Federal, state, and
local – face severe fiscal problems. There can be no question that it is imperative that we
address our long term fiscal issues. But whatever we do to address the deficit federally,
and the budget gaps at the state and local levels, we must be mindful of the need for
future economic growth. Without fostering economic growth, reducing the deficit will
be a truly hollow accomplishment.

The growth of the American economy, what has made us the leading economic engine of
the world, has always been about the entrepreneurialism and dynamism of the American
private sector. But, historically the dynamism of the private sector has also been matched
by a recognition that we must provide the public goods that allow entrepreneurialism to
flourish. This is exactly what the government is supposed to do. Whatever your
ideology, whether left, right or center, there is little dispute that government must
continue to provide these public goods. If the people sitting in this room are the chefs
that create the great seven course meal that is our economy, than the role of government
is to continue to provide the right ingredients, the sharpest knives, and the best kitchen to
cook in.

And, for years, we did that. We built a primary education system that was the envy of the
world. We have a higher education system that remains so. We made sure that we
continued as a nation to attract the best and brightest from around the globe, and made it
possible for them to stay and start new companies. We funded basic research and
encouraged its commercialization. We aided our firms as they sought to compete abroad
by supporting institutions that ensured global free trade. And, perhaps most importantly,
we built and maintained a state-of-the-art transportation infrastructure that allowed the
easy and efficient movement of goods and people. It is this transportation infrastructure
along with our education system that have been the public goods most responsible for the
economic growth and prosperity that have been the hallmark of the United States for the
last 100 years, and made us the envy of the world.

In other words, we invested in the future. And that investment led directly to economic
growth, and created the largest, most successful middle class in the world.

And that is what I want to speak about today. Over the next few months, you will
continue to hear a lot of talk about deficits. It is important. There is work, hard work, to
be done, work that can no longer be avoided at any level of government. But in trying to
fix the long term problems we face, it would be counterproductive to reducing our long-
term deficits if we eat our seed corn. We can't abandon investment in the very economic
growth that is the key to improving our economic future.

Over the next two decades, the United States is expected to average real GDP growth of
about 2%. That's a full percentage point less than the 3% growth we averaged from 1975
to 2005. The difference between that two and three percent? A difference of over $4
trillion in output by 2030 and millions and millions of jobs, not to speak of the
reductions in the deficit that such growth would bring. At 3% growth, we would see an
additional $800 billion in government revenue in 2030 alone. Increased growth will do
more than any other tool at our disposal to put people back to work, to restore to the
American middle class the increased standard of living that they have a right to expect,
and to reduce, and potentially even eliminate, the deficit. That is where our focus should
be. And continued investment is an absolute if we are to improve our growth trajectory.

Throughout the world, wherever you look, you see other nations investing in their brick
and mortar in ways we have not.

China is currently spending 9% of GDP on infrastructure. In India, they're spending 5%.

Brazil, Korea, and the Gulf states are all making significant infrastructure investments as
well.

And it's not simply emerging markets. Other mature economies invest at rates greater
than we do. In Europe, where they face deficits of their own, they continue to spend on
infrastructure at a rate of roughly 5% of GDP each year, or double what we invest. Prior
to the passage of the stimulus bill, the comparable number in the United States was below
2.5 of GDP, and that’s likely what we’ll be budgeting again this year, a formula that will
clearly hurt economic growth, and our competitiveness, in the future.
The need for infrastructure spending is great. The American Society of Civil Engineers
estimates that we need 2.2 trillion dollars in infrastructure spending over the next 5 years
simply to bring our current infrastructure – our roads, our bridges, or rail systems and our
waterways - to a state of good repair. That is over $1 trillion more than we have
currently budgeted.

As an urban center, in New York, we are competing with cities across the globe, and that
is where much of that infrastructure spending is going. In London, they are building a
high frequency rail project to link commuter areas, the center city, and Heathrow. In
Paris, they have proposed the world's longest automated rapid transit line that would
connect the airports, the business center, and the university area in one continuous link.
In Shanghai, already the longest subway system in the world, they are investing billions
of dollars both to build new subway lines, and expand the lines that exist. In Seoul and
Munich, they are building the infrastructure for electric vehicles, so they can be prepared
for the new transportation technologies that arise.

This is what we are competing with, both as a nation, and a region. We cannot fall
behind.

Historically, the vitality of maintaining a healthy urban infrastructure is something we

have always recognized in this city, and in this region. Quite frankly, it's the secret to our
success. With eight million people living in one city, and twenty million in the region,
ease of travel is what has allowed us to thrive.

Public transportation is what separates the New York region from almost every other
American city and surrounding suburbs. That we can move so many people in and out of
such a dense environment is essential, and one of the reasons that, even today, New York
is the largest metropolitan region in this country, with 5 million more people than live in
and around Los Angeles.

And public transportation is also one of the key reasons that our city is growing once
again in the 21st century. Mass transit allows this city and this region greater density of
population than any other in our country, and with it comes a density of job opportunities,
economic cross-fertilization, cultural, educational and social opportunities. On any given
weekday, there are two million people commuting into Manhattan alone. And it is this
very density, which only mass transit allows, that has always allowed our region to attract
the wealthy, the middle class, and the poor, all seeking one or more of these
opportunities.

We live in close quarters and we work in close quarters, and many experts would tell you
the interconnections that having so many people in one place gives rise to is one of the
reasons that we have become a dominant financial center, a dominant media center, and
now, increasingly, a dominant high-tech center. The density that mass transit facilitates
will only become more important as we move further into the 21st Century information
age.

It has been one of the particular geniuses of New York going back centuries that we have
always recognized the importance of investing in infrastructure, even when others did
not.

This is true going back to the early 19th century, when New York was battling with
Philadelphia and other eastern cities for supremacy in the young Republic. We became
the greatest city first in the United States, and then in the world, in large part thanks to the
bold visions that our political and civic leaders embraced.

In 1817, after years as Mayor advocating for a canal to connect Lake Erie to the Hudson
River, DeWitt Clinton became governor, and allocated the funds for a project that would
change the face of New York – the Erie Canal. The project was ridiculed, and had even
been rejected by the Federal government. The result of "Clinton's Ditch" when it was
completed in 1825: The transformation of New York City into the economic center of
the nation. To his credit, Clinton had predicted that, as a result of the canal, New York
City would "become the granary of the world, the emporium of commerce, the seat of
manufactures, and the focus of great moneyed operations." And so it did. New York
went from being just one among many leading East Coast cities into the busiest port by
orders of magnitude, and the dominant economic engine of the nation.

A decade later, when it became clear that New York City’s water system was not
sufficient for the needs of the growing city, New York set out on another large
infrastructure project, to tap water upstate. The building of the Croton water system in
1842 is another, now long forgotten, infrastructure project that was essential for the
growth of New York City and the region. And its continual expansion – to the Catskill
and Delaware systems we have today has made it the preeminent urban water system in
the world. Our water system is arguably our most valuable asset, delivering 1.2 billion
gallons a day to the region. And it's why we've continued to invest so heavily in it.

In 1883, it was the opening of the Brooklyn Bridge that transfixed the country. It
provided a physical tie between the cities of Manhattan and Brooklyn, and was an
essential link in the creation of greater New York fifteen years later. It helped create the
physical city we know today.

At the turn of the century, New York invested in the creation of its subway system. By
1913, it was already carrying nearly a billion people a year. By 1930, that it was carrying
more than two billion. The subway system led directly to the development of much of
the outer boroughs, as they finally had a direct physical link to the business centers of
Manhattan. To this day, New York has one of most well-travelled and extensive subways
systems in the world, and it drives economic development throughout the city.
Even in the midst of the Depression, New York continued to build. Many of the essential
and iconic pieces of transportation infrastructure that we rely upon today were built at the
height of the great Depression – the George Washington Bridge opened in 1931, the
Triborough Bridge in 1936, the Lincoln Tunnel in 1937, and LaGuardia Airport in 1939.
The city could not function without them.

All of these projects reflect a city that has always pointed itself forward, whose leaders
have understood that, more than any other place in the United States, we are a city and a
region that focuses on the future.

There have been moments of disinvestment and disrepair, but New York's periods of
success have most often coincided with its support for and investment in its physical
infrastructure. We need to maintain what we have while we continue to build for
tomorrow.

One of the hallmarks of the last few years, and one that I am most proud of, is that
despite the awful blow that we took on September 11th nearly ten years ago, we have
continued to build for the future. We can see this throughout the city.

Downtown, we are at long last seeing the fruits of all the effort that has gone into
rebuilding the World Trade Center site. If you have not been down to the site recently,
you should go and take a look. To see 1 World Trade Center going up is something to
behold. Construction has reached the 52nd floor, which means it's nearly half way to its
full height. The management agreement between the Port Authority and the Durst
organization, as well as the commitment by Conde Nast to be an anchor tenant, are
wonderful developments, and gives me great confidence about the future of Lower
Manhattan.

The agreement that was reached between Larry Silverstein, the Port Authority, the city
and the state last year assures us that the entirety of the site will continue its commercial
development.

And thanks to the successful negotiations between the Lower Manhattan Development
Corporation, Verizon and Con Ed, we have been able to put additional money to
important projects, including funds for the Memorial, and the Performing Arts Center. It
is also my hope that we can include the renovation of Pier 42, so we will finally complete
the ribbon park around all of Lower Manhattan, and create a world class waterfront park
at the water’s edge downtown.

In Midtown, the city is moving forward with the 7 train extension, a project that I have
long advocated. This was a key proposal of our Group of 35 report in 2001. In
particular, I have always been a major proponent of adding a 7 train stop at 10 th avenue as
part of the original plan to extend the 7 train before it turns south towards the Javits
Center. The 7 train extension is essential for the development of that area, which has
always been limited by its lack of subway access. With its completion, w will be one
step closer to the goal of revitalize the Far West side, midtown’s last frontier of class A
office space development.

On the Upper East Side, the Second Avenue subway is finally becoming a reality.
Although progress remains slower than we would like, the fact that we are in the ground
and actually moving ahead after eighty years of discussion and abortive starts is a great
achievement.

It remains vital that as we proceed with this project, we do everything we can to work
with the community to minimize the disruption that construction is causing. But the
benefits of being able to reduce the overcrowding on the Lexington Avenue line, and
being able to move people from the East Side into midtown, speak for themselves.
Ultimately, when all four phases of the Second Avenue Subway are completed, we will
be improving the commute of over half a million riders every day.

And finally, we have been able to move forward with Moynihan Station. When I was last
here at Crain's, we announced our intention to pursue stimulus funds to kick start what
had become a too long idled project. I'm pleased to say that we were able to get that
funding, and now Moynihan station is idle no longer. In October, we had an official
groundbreaking, and we are moving forward in finally righting a terrible wrong by
turning the Farley Post Office, the architectural partner of the original Penn Station, into a
transit hub.

Right now, the Moynihan Station Development Corporation is conducting abatement and
survey work, and by summer time, construction will begin. I expect by the end of the
year, two significant contracts will be awarded to do the West End Concourse extension
and platform ventilation work. When it is finally completed, we will at long last have
fulfilled Pat Moynihan's vision of an iconic train station, reminiscent of the former
Pennsylvania Station, as a grand entranceway to New York City Moynihan station.

The new station will be a key to the further development of the Far West Side. High-
volume transit hubs have always been a spur to private development in New York City -
this is how Park Avenue and Third Avenue developed, and I am confident Moynihan
station, in conjunction with the extended 7 train, will have a similar impact on the
surrounding area.
As I mentioned before, the genius of New York has been our ability to move so many
people in and out of such a dense place. But recently, our ability to grow has been
stymied. You need look no further than our bridges and tunnels during rush hour. Try to
get out of Manhattan on the George Washington Bridge, or take a drive along the BQE.
One of the reasons Congressman Nadler has been such a vociferous advocate of a rail
freight tunnel is that it would take truck traffic off the bridges and out of the tunnels, and
alleviate some of the traffic congestion.

But even our existing options to alleviate the increasing commuter gridlock have been
limited by constraints on our mass transit capabilities. This has become increasingly
clear over the last decades. The train tunnels bringing people in and out of the city, both
from the East, from Long Island under the East River, and from the West, from New
Jersey under the Hudson, have reached their limits. Without increased capacity,
Manhattan, and the surrounding areas that depend on it, would stop growing. Our
competitive advantage would become a disadvantage if something was not done.

Fortunately, leaders throughout the region recognized the need to ensure that did not
happen. On the East Side, we made the East Side Access project a high priority, and it is
moving towards completion. Once it is finished, we will finally have a link between the
Long Island Railroad and Grand Central. It is a vital project for commuters from Long
Island. For the 60,000 commuters who take the LIRR to Penn Station every day but who
work on the east side, East Side Access will save them an average of 40 minutes on their
daily commute. Growth in LIRR ridership has exceeded all expectations over the past
decade, increasing by 20 percent, and that will only continue. Eventually, it is expected
that the East Side Access tunnels will serve 179,000 daily commuters.

But most importantly, we are ensuring that the Long Island suburbs can continue to grow.
Without the East Side Access, there is no room for another train to come into Manhattan
from Long Island. It’s one of the reasons that a single problem on the LIRR can back up
the entire system. We have a bottleneck. Once the East Side Access is completed, that
will no longer be the case. By adding 50% to the capacity of the East River tunnels, we
will increase the LIRR's capacity by 45%, and we will continue to be able to move people
in and out of the Long Island suburbs easily.

We face a mirror image problem to the West of Manhattan, in the train tunnels under the
Hudson. And the recognition gave rise to a mirror image project, – the Access to the
Regions Core Project, or ARC. As most of you know, this was a project that would have
created an additional tunnel beneath the Hudson to connect the New Jersey commuter
lines into midtown Manhattan, providing additional rail service to the West that is
desperately needed.

The benefits of the ARC were starkly evident. It would have led to significant decrease in
commuter times for people coming into New York at rush hour. It would, according to a
recent RPA study, even have significantly raised property values in New Jersey. But
most importantly, it would have been a central component allowing the region to
continue to expand.

The numbers are clear. The growth in the outer suburbs of New Jersey has been
significant over the past decades, and it is projected to grow even further. And the near
suburbs, like Hoboken and Weehawken, are exploding. Like Brooklyn, these are the
communities to which young, ambitious, entrepreneurial men and women come from all
over the country to gain access to the benefits and opportunities Manhattan has to offer.
And with that growth has come more and more commuters who enter the city every day
from the West. There are already more than a quarter million people a day who commute
from and through New Jersey into New York each day. That number is going to grow by
at least 25% if not more in the next decades. The current tunnels that bring commuter
trains in are at 100% of capacity as it stands.

ARC was designed to alleviate the congestion these tunnels face, and to provide the same
benefits to the West that the East Side Access would provide to the East. This was not
just a project in the planning stages. There were explicit funding commitments, both
from the Port Authority, as well as the Federal government. And construction had
begun. But in October, Governor Christie decided to halt the project.

I will be honest and direct here. Though I am extremely sympathetic to the fiscal
problems Governor Christie clearly faces, and I recognize there are not easy choices to
make, I believe pulling the plug on ARC was a terrible, terrible decision.

Practically, by failing to increase our tunnel capacity, we are simply going to force more
people into their cars. You think traffic on the George Washington Bridge and in the
Lincoln and Holland Tunnels is bad now, just wait. And if you don't think that's a
disincentive for people to come to this area, let alone to commute into New York, you
haven't spent enough waiting in the helix to get into the Lincoln Tunnel during rush hour.

It also was a project that would have created in the short term thousands of jobs. At this
moment in time, those construction jobs are sorely needed, and would have helped the
fiscal situations of many of the local communities, as well as the state.

But beyond that, by not completing the ARC tunnel, we are doing exactly what
generations of regional leaders have worked to avoid – sacrificing the growth of region’s
future for the exigencies of the moment. The ARC tunnel was exactly the sort of project
that the political leadership of this region have always embarked upon because of the
recognition that the region only can grow if we are able to continue to move people in
and out quickly and easily.

Historians may well look back at this decision – to put a stop to the largest transit project
in the country – as a turning point, as a moment that the region, and the nation, stopped
looking towards the future. If we do not continue to build grand projects, to seek the
solutions that are necessary for ensuring our economic future, I fear we will end up
paralyzed, at best treading water, as our competitors overseas pull further and further
ahead. I’ve been surprised that there hasn’t been a greater outcry over the end of this
project. Senator Lautenberg, to his credit, has spoken up loudly and frequently. But we
need more voices speaking up, to make clear to the Governor the importance of this
project, and that we hope, with all due respect, that he will reconsider.

To his credit, the Mayor has recently put forward a proposal to extend the 7 Train to New
Jersey as a substitute for ARC. I applaud him for this, and I am fully supportive.

But let's be honest – this is Mayor Bloomberg taking lemons, and trying to make a little
lemonade. We don't know that running the 7 train under the Hudson is even possible
from an engineering perspective – the Mayor's office is studying it now. And quite
frankly, the billions of dollars that were promised for the ARC are not fungible. Though
I will do everything I can to get Federal support for this project if it proves viable, there
are no assurances. Quite frankly, when you turn down the money once, you don’t usually
get a second bite at the apple. While the Mayor deserves credit for creativity, we
shouldn’t be in this position.

And now we face a second, and perhaps even more perilous danger. Governor Christie,
faced with very real and very difficult budget decisions, has turned to the Port Authority,
and the money that was originally dedicated to the ARC project. While I would certainly
support using the funding the Port Authority had committed to ARC to extend the 7 train
to New Jersey, I do not think it is appropriate to use Port Authority funds for what are
essentially maintenance projects.

Governor Christie's proposed idea that 1.8 billion dollars of what was originally
committed by the Port Authority for the ARC for other projects is to compound one
mistake with another, perhaps even a greater one. These are smaller projects aimed at
maintaining existing roadways that would otherwise be funded with New Jersey
transportation dollars. In essence, the Governor wants the Port Authority to help fill his
budget gap. Again, I am sympathetic to his budget gap and the large problems that he
has begun to courageously wrestle with. But asking the Port Authority to take capital
funds and redirect them on this scale, a scale never before contemplated, would be a
mistake that rivals, and perhaps even surpasses the cancellation of the ARC tunnel as a
risk to our region’s future.

It could well begin the cannibalization of Port Authority dollars and could mark the
beginning of the end of the long-term ability of our region to respond to its major
transportation needs. The Port Authority as an agency has always been committed to the
long-term, the future, to building out the infrastructure of the region so that we can
accommodate future growth. While it is a creature of politics, and certainly not immune
to them, it has also managed to retain over its history an independence that has served the
entire region. Because it has dedicated revenue stream, the Port Authority has been able
to plan and complete projects, regardless of the momentary crises that the states
themselves have sometimes faced. We cannot allow the agency to be cannibalized in
order to solve short term budget problems, however acute. Following New Jersey’s lead,
New York could well request the Port Authority to provide dollars for similar repairs,
like fixing the Belt Parkway. And were this to become the norm, then where would be?
If we allow the Port Authority to be turned into a rainy day fund, used year to year to fill
gaps, or if we allow it to become a bank of last resort to make up for shortfalls, it’s the
end of the agency as we know it, and of its ability to fulfill its function, which is to
support the future economic growth of the region.

There are too many important current projects on the Port Authority’s plate, including the
need to continue to upgrade our airports, as well as to make sure the Port itself is able to
accommodate the new post Panamax ships that will soon be making their way through
the Panama canal, for us to allow it to be diverted from its core mission. I plead with the
commissioners on both sides of the Hudson to resist this proposal. Even more, I hope
Governor Christie will reconsider his request to use scarce Port Authority funds for his
own legitimate budget problems. Nothing less than the future of the agency and the
future of our region are at stake.

And we do need to build for the future. It's clear that even as we complete the projects
that are currently on our plate, there is more we need to do. We must not lose sight of
the large projects that will allow the city and the region to grow.

We still lack the Holy Grail for airport commuters – the single seat ride. The airtrain to
JFK has been a great link between the airport and the subway system, but we must
continue to think about ways to get a single seat ride to LaGuardia to ease that trip for
travelers. As anyone who has traveled abroad can tell you, nearly every major urban
center has a direct link between center city and the main airports. That ease of airport
access is one area in which our competitors have a distinct and noticeable advantage.

We must ensure that our airport capacity can match the increased demand that we are
going to see in the next twenty years. We are already straining to accommodate the
travelers we have. I have always been a proponent of expanding the regional airports,
such as Stewart, and making them more accessible. But we are also going to have to find
ways to further utilize the main airports as well. Funding and implementing the Next
Generation Air Transportation System will have to be part of this.

We also must continue to focus on high speed rail, a Federal responsibility. Though high
speed rail may not make sense in other parts of the United States, it clearly is an
important transportation solution in our region. This is as true Upstate as it is in the
Northeast corridor, where many cities remain too far by car, but too close for air travel to
really make sense. For example, it makes far more sense to take a train from Syracuse to
Albany, as it does from Philadelphia to New York. Even as we work to make
incremental improvements to the Empire Corridor, we need to continue to explore a high
speed corridor upstate. A high speed rail corridor from Niagara Falls to New York City
would without question be a boon to the upstate economy. And in the densely populated
Northeast corridor, high speed rail could be real game changer. If we can add two high
speed tracks between Washington and Boston, it is equivalent to adding 14 lanes to
Interstate 95.
For New York to continue to thrive in the 21st century, we must continue to make major
investments in its transportation system. These are the projects which will fuel the
region's economic growth for the coming decades.

Over the last twenty years, New York City's population alone has grown by over 1
million people. Over the next twenty years, it is expected the population of the region
will grow by another 3 million. That growth is being fueled largely by two dynamic
groups of people – new immigrants from all over the world and creative, well-
educated, young people, flocking to New York from all over the country. Over the past
decades, both groups of newcomers have spurred a fantastic renaissance of the city and
the region.

To make sure these newcomers succeed, we must grow and we must create new jobs.
And I believe that we cannot create significant new and good paying jobs without
significant new investments in transportation. This is as true nationally as it is in New
York. Without continuing to invest in the future, to provide the backbone for the
entrepreneurs and the innovative industries they create, we will literally and economically
stand still. The New York regions’ advantages have always been first and foremost our
ability to attract talented people. Our diversity and our tolerance, dating back to the
Dutch, has always attracted creative, ambitious men and women from all over the
country, and the world. But it is the infrastructure that has allowed them to stay here, and
to flourish. In today's competitive global economy, to stand still is to fall further and
further behind. We cannot let that happen.