Donald Trump's administration is "trying to kill" textbook economic practice in New York City, setting up roadblocks for Mayor Zohran Mamdani.
Nobel Prize winner Paul Krugman believes opposition to congestion charges and a new rail tunnel under the Hudson River are examples of Trump meddling with Mamdani's plans for the city. Writing in his Substack, the award-winning economist suggested the administration has "repeatedly attempted" to curb the traffic policy, and is showing so signs of stopping.
Krugman wrote, "Contrary to what many people seem to believe, congestion fees aren’t a left-wing idea or an attack on The American Way of Life. They’re straight Econ 101."
"The logic runs as follows: Someone who chooses to drive into a congested area makes traffic worse and thereby imposes a cost on everyone else driving in that area. Yet potential drivers have no incentive to take these costs imposed on other people into account."
"Charging a fee helps align private and public interests, inducing people who have good alternatives to driving to use those alternatives, while making traffic faster for those who must drive."
Though the fee could aid the economic outline Mamdani has presented, it appears the Trump administration has continued its stand-off against the newly elected mayor.
Krugman explained, "Despite this clear logic, the prospect that New York would actually implement textbook economics inspired hysterical opposition, with claims that it would create huge hardships and destroy the city’s economy."
"The Trump administration has repeatedly attempted to kill the program, and is still trying, even though it’s really hard to see why New York’s traffic policy should be a matter of federal concern. But as Curbed put it, “one thing [Trump] loves is the opportunity to stick it to anyone who’s earnest about activist good government.”
"Indeed, back in October Trump announced that he had 'terminated' the long-delayed project to build a new rail tunnel under the Hudson River, although this assertion — while it helped Democrat Mikie Sherrill win the New Jersey governor’s race — may have been empty showboating."
The economist has suggested it "will be hard to kill the congestion fee" but that the Trump administration will likely remain opposed to it.