New York magazine has a really good article on the foot dragging with getting the new Penn Station, really Moynihan Station, relocated in the Farley Post Office across the street from current dingy Penn Station. Writer Chris Smith calls the project "the middle child of New York City development projects":

Ground zero, which will always claim the greatest emotional attachment, is the firstborn. The West Side stadium, which can do no wrong in the eyes of its indulgent parents, is the favored baby of the family. Moynihan Station—earnestly playing by the rules, reluctant to complain—has been rewarded for its obedience by being ignored.

Even in spite of support from Presidents Clinton and Bush, Senators Schumer and Clinton, and other politicians, there's still question as to how much money the station will get from federal funds (of course the Republicans are trying to reduce the amount - and when Gothamist says "of course," we are simply recalling all the other times that the Repulican-controlled Senate tries to cut funding for NYC projects). Not to mention how much it will actually cost to build the station (the 1993 costs esimated it at $315 million; today it's over $1 billion). And why does the PATH station at Ground Zero (which will be gorgeous) get $2 billion, when Penn Station with ten times more passengers (550,000 daily) get $600 million? It's pretty upsetting, because Penn Station, as it is now, is depressing, so Gothamist hopes that daughter-of-Senator-Daniel Maura Moynihan is successful in getting politicians to do something.

Gothamist on Moynihan Station and Wikipedia's history of Pennsylvania Station.