Homeownership Myths
In a recent Washington Post op-ed, Professor Joseph Gyourko, chair of the Wharton School’s Real Estate Department, lists what he sees as the five biggest myths about home-ownership. Given the central role of federal housing policy, particularly Fannie Mae and Freddie Mac, in our recent financial crisis, it is worth following Professor’s Gyourko’s suggestion and question whether a national policy of ownership, all the time for everyone really makes sense.
Professor Gyourko’s five myths:
1. Housing is a great long-term investment.
2. Homebuyer tax credit makes buying a house more affordable.
3. Homeowners are better citizens.
4. It’s safe to buy a house with a very low downpayment.
5. Owning is always cheaper than renting.
You’ll have to read the op-ed to see his explanations. An important qualification on his analysis is that in many cases what can be good for buyer, such as putting no money down, may not be good for the economy if it results in additional foreclosures.
The Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- The federal government is assuming a larger share of the Medicaid bill
- General Electric might eventually need to be renamed Government Electric
- The government’s mail monopoly lost $3.8 billion last fiscal year and could lose more this year
- The $98 billion in improper payments made by the federal government last year undermines the case for expanding its role in subsidizing health care
- Cost overruns in British government mirror same problems in U.S. government
Filed under: Government and Politics; Tax and Budget Policy
Will America Copy England’s Self-Destructive Class-Warfare Tax Policy?
After several posts about crazy decisions by the U.K. government, mostly involving extreme political correctness, it’s time to get back to basics and look at tax policy. A financial services consulting firm in London has just released a survey with the stunning finding that one-fifth of entrepreneurs are thinking of escaping the county because of punitive taxes — particularly the new top tax rate of 50 percent. Here’s what Tax-news.com reported:
The results of a new survey suggest that one-fifth of UK-based entrepreneurs earning more than GBP150,000 are planning to flee Britain in search of countries with more favorable tax rates. The poll of more than 300 entrepreneurs by business advisors Tenon also found that many more may follow in an attempt to escape the 50% rate of income tax, due to be introduced from next April on annual incomes above GBP150,000, with nearly half of the respondents (48%) still deciding what action to take. …Tenon points out that in the last month, high profile names such as the actor Sir Michael Caine and the artist Tracey Emin have threatened to change their tax residency to countries with more favorable tax rates. Popular locations for redomiciling include Monte Carlo, Guernsey, Liechtenstein, and the Cayman Islands. Andy Raynor, Chief Executive of Tenon Group, noted that entrepreneurs are showing their disapproval of the tax measures by “letting their feet do the talking.”
The Mayor of London, meanwhile, is much less restrained regarding the foolishness of Gordon Brown’s class-warfare policy. Here’s what he has to say in the Daily Telegraph:
Not everyone can be relied upon to mourn the departure of Tracey Emin and her duvet. …Some readers may feel that the country can rub along without her. …And then there may be people who don’t give a monkey’s that Michael Caine is thinking of vamoosing, or that we are about to lose Eddie Jordan, the former Formula One chief, or the milk tycoon Lord Haskins. Some of you may not care a tinker’s cuss if the former bookshop king Tim Waterstone deserts these shores, and as for the impending absence of Hugh Osmond, an entrepreneur who has had a role in everything from pizza to insurance, you may feel that we just have to dry our eyes and get a grip on our feelings. …the 50p tax rate that is beginning to drive these people away is a disaster for this country, and it is a double disaster that no one seems willing to talk about it. When Margaret Thatcher’s government cut the top rate of tax to 40 per cent in 1988, she was completing a series of reforms – beginning with the removal of exchange controls and followed by the Big Bang – that helped to establish London as the greatest financial centre on earth. Britain had been transformed from a sclerotic militant-ridden basket-case to a dynamic enterprise economy, and the capital became a global talent magnet. …So it is utterly tragic, at the end of the first decade of this century, that we are back in the hands of a government whose mindset seems frozen in the wastes of the 1970s. If Gordon Brown remains in power – and perhaps even if he does not – Britain’s top rate of tax will soar far above that of our most important global competitors. …even on the Government’s figures it is only due to raise £2.5 billion of the £700 billion required – and those estimates may be wildly optimistic. This tax is predicted to drive away at least 25,000 people; it may simply encourage more avoidance; it may actually cost money, not bring it in. After all, when Mrs Thatcher cut the top rate in 1988, the Treasury saw yields go up. People stopped avoiding taxation; people thought it worth their while to get up at 5am and work that extra bit harder – and the share paid by higher-rate taxpayers actually increased as a result of the tax cut. What Gordon Brown wants to do is therefore economically illiterate.
By the way, I’m not picking on England. America is soon going to be making the same self-destructive mistake. Here’s my video on the broader subject of class-warfare tax policy.
Filed under: International Economics and Development; Tax and Budget Policy
Cost Overruns: It’s the Same in Britain
The Taxpayers’ Alliance has published a new study examining a sample of 240 government capital projects in Britain, including weapons systems, highway projects, computer upgrades, health care spending, and other items. The results mirror the serious cost overrun problems we have in the U.S. federal government.
The Alliance study found that 32 percent of projects sampled had cost overruns, while 24 percent came in under budget, but that the projects with overruns were generally much larger. As a result, the average net cost overrun on all the projects was 38 percent. Thus, when the government says that a new project will cost taxpayers 1 billion U.K. pounds, on average it will actually cost them 1.38 billion.
The study also explores the reasons why U.K. government projects run into trouble, and I have observed that most of the same problems are also chronic in our government. To me, this provides more evidence that the inefficiencies in government stem from deep, structural factors, not the skills of the particular politicians or administrators in office.
Filed under: International Economics and Development; Tax and Budget Policy
Weekend Links
- Just in time for Thanksgiving, the turkey has arrived: How Harry Reid’s health care “reform” bill is stuffed with extra costs.
- A few things you might not know about the Chrysler bankruptcy.
- Why you should not blame Obama for Bush’s 2009 deficit.
- Standing against the storm: Nien Chang, 1915-2009.
- Podcast: Think the Federal Reserve is independent? Think again.
California Grubbing
Kids often have a tremendous sense of entitlement. Well, there are a lot of kids in California colleges — and running them.
You probably have heard about the University of California Regents voting yesterday for a 32-percent tuition hike over the next two years. Not surprisingly, many students are angry, some enough that they were arrested protesting outside the Regents’ meeting.
Now, a 32 percent hike over two years isn’t small. But here’s the thing: California has typically charged students very little relative to both state taxpayer funding and national averages. As you can see in the chart below, which uses data from the State Higher Education Executive Officers, net per-pupil tuition revenue (meaning revenue from tuition minus any state financial aid) in California has hovered around $1,200 over the last 25 years, and has only gone up about $18 per year. Meanwhile, state taxpayers have been shelling out around $7,300 per pupil per year, with about a $3 annual increase. So state taxpayers have been furnishing the vast majority of funding for California college students, and students have done very little to make up the vast gulf between what they pay and what taxpayers shell out.
How does California compare to the rest of the nation? On average for all states, net per-pupil revenue from students has risen from just about $2,000 to $4,000, putting the ever-growing average around $3,000, or close to three times what Golden State students have been furnishing. Funding from state and local taxpayers, meanwhile, has been just slightly lower nationally than in California.
So California students have been getting a heck of a deal, which is no doubt one among many reasons the state is on fiscal life support. Sooner or later bills come due, and that has left the state little choice but to make students pay more for the education of which they are by far the biggest beneficiaries.
Naturally – but still shamelessly – students are acting like victims now that the decrepit gravy train is slowing down a bit. Unfortunately, the adults in charge of California colleges are also naturally — but perhaps even more shamelessly – stoking student anger so that they don’t have to do things that make their jobs less pleasant.
Despite the utterly unsustainable taxpayer funding for higher education that California has doled out for decades, for instance, UC president Mark Yudof had no qualms about declaring that:
We’re being forced to impose a user tax on our students and their families. This is a tax necessary because our political leaders have failed to adequately fund public higher education.
Last I checked, what a customer pays for a service is called a “price” not a “tax.” A tax is what has been used to make taxpayers bear by far the biggest part of California’s higher education burden while students have furnished but a token amount. And please don’t give us the “failed to adequately fund” line. UC Berkeley Chancellor Robert Birgeneau has been happily trotting out that disproven dreck in a grab for federal taxpayer dollars at the same time it has been discovered that he’s been pushing millions of dollars intended for academic and other purposes to Berkeley athletics.
It’s hard enough to accept the underfunding bit when the data clearly show it not to be the case. It’s even harder when college leaders push their precious dollars to water polo and golf.
It’s time in California for the adults to stop acting like kids, and for the kids to start paying their share. But don’t get your hopes up, at least in higher education. It seems that no one there is without a shameless sense of entitlement.
Filed under: Education and Child Policy; Tax and Budget Policy
Net Neutrality Regulation: Consequences for Investment and Consumer Welfare
The American Consumer Institute has released a collection of essays addressing the likely consequences of ”‘Net Neutrality” regulation for investment in broadband and for consumer welfare. These are important things to consider, in case it needs saying.
GAO: Dept. of Ed. Suffers Oversight Deficiencies
A report released today by the federal government’s non-partisan General Accounting Office finds deficits in the Department of Education’s financial and program oversight. According to the GAO, “These shortcomings can lead to weaknesses in program implementation that ultimately result in failure to effectively serve the students, parents, teachers, and administrators those programs were designed to help.”
The GAO’s findings are consistent with the longstanding pattern: for forty years, Americans have steadily increased spending on public schools without any resulting improvement in student performance by the end of high school (see the figures here and here).
The Obama administration has touted its $100 billion in education stimulus spending as a key to long term economic growth. What the data show, however, is that higher spending on public schools over the past two generations has not improved academic outcomes. And economists such as Stanford’s Eric Hanushek have shown that it is improved academic achievement, not higher public school spending, that accelerates economic growth.
So if the administration is serious in wanting education to boost the American economy, it must support reforms that are proven to significantly raise achievement, such as those that bring to bear real market freedoms and incentives — programs like the DC private school choice program that the administration has decided to kill despite its proven effectiveness.
The Third Strategic Actor
I agree with Chris Preble’s assessment of Steve Simon’s opinion piece in the New York Times Tuesday. “Why We Should Put Jihad on Trial” is animated by a sound understanding of the strategic logic of terrorism. Simon knows that the proper response is outclassing terrorists in terms of ideology and legitimacy. Trying KSM transparently in New York is just, and doing justice is powerful counterterrorism. The procedural and security fears about it are poorly founded.
It’s useful to compare another opinion piece, written with welcome thought and care, but missing a key point about counterterrorism. In “Holder’s al Qaeda Incentive Plan,” Wall Street Journal “Main Street” columnist William McGurn assesses the incentive structure terrorists face if they are accorded the niceties of a trial should they attack civilians in the United States, compared to the rough treatment they would and should expect were they caught attacking U.S. troops on a foreign battlefield.
It’s a troublesome irony, and it’s very smart on McGurn’s part to game out the thinking of terrorists rather than indulging impulses to react as they would have us do. But terrorists are not the actors a trial in New York is most meant to influence.
In her book, How Terrorism Ends: Understanding the Decline and Demise of Terrorist Campaigns, U.S. National War College professor of strategy Audrey Kurth Cronin writes:
Most people think of terrorism as a dichotomous struggle between a group and a government. However, given their highly leveraged nature, terrorist campaigns involve three strategic actors—the group, the government, and the audience—arrayed in a kind of terrorist “triad.” More specifically, the three dimensions are the group that uses terrorism to achieve an objective, the government representing the direct target of their attacks, and the audiences who are influenced by the violence.
Similarly, at Cato’s counterterrorism conference, I argued that terrorism seeks to induce overreaction on the part of victim states, driving support to terrorists from their geographical and ideological neighbors. Declining to overreact, and having the discipline to meticulously accord terror suspects fair treatment, dissipates the gains terrorists want and expect: increased support from their neighbors.
This is why a public trial—for all its costs and complexities—is worth doing. It’s to gain advantage with the third strategic actor.
Frum’s World
David Frum’s new vehicle is called “Frum Forum,” but judging from this debate over American foreign policy with Andrew Bacevich on Bloggingheads, it might as well be called “Frum’s Alternate Universe.” The clip below features Frum arguing that U.S. foreign policymakers’ views on Indochina in 1965 were “right and smart.” At one point Bacevich furrows his brow and incredulously asks “David, are you reviving the domino theory?” It’s like another dramatic reading of Jack Snyder’s Myths of Empire. Have a look:
Thursday Links
- European Union to install its first president.
- How delayed economic reform in India killed 14.5 million children. More details, here.
- It always starts with “good intentions:” How urban planners destroyed the small-town atmosphere in Portland, Oregon and made congestion even worse.
- Lots of talk but little action from the Obama administration on education.
- Podcast: If the Obama administration was serious about job creation in the stimulus plan, why weren’t dollars targeted at states with higher unemployment?
The Long Road to Copenhagen
There are two different stories coming from the same political party on global warming, leading to only one conclusion: President Obama is about to (or has) ordered the Environmental Protection Agency (EPA) to mandate some type of cap on U.S. carbon dioxide emissions.
Harry Reid and other democratic leaders in the Senate have clearly indicated that cap-and-trade legislation will be put off at least, until what they call “spring”, which is long after the upcoming UN climate conference in Copenhagen next month. At the same time, President Obama has said that the U.S., along with China, will announce some type of emissions cap in Copenhagen. Obviously this cannot refer to legislation that has yet to be voted on in the Senate.
President Obama keeps using the language “operationally significant” when referring to what the U.S. will agree to in Copenhagen. The only way that he can get around the Senate and still have a credible position in Copenhagen is for the EPA to announce specific regulations for carbon dioxide emissions between now and the conclusion of the Copenhagen meeting in mid-December.
“I E-Verify”: Do Businesses Agree With Your Values?
My March 2008 paper, Franz Kafka’s Solution to Illegal Immigration, detailed the problems with electronic employment verification systems. The paper concludes that successful “internal enforcement” of immigration law requires a national ID—and ultimately a cradle-to-grave biometric tracking system.
The Department of Homeland Security has started a program called the “I E-Verify” campaign for businesses that use the federal background check system on its employees. If you see businesses with “I E-Verify” decorations or insignia, they at least indirectly support a national ID system in the United States. This can help you decide whether or not you want to spend your dollars with them.
Filed under: Cato Publications; Telecom, Internet & Information Policy; Trade and Immigration
$98 Billion in Improper Payments
The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year — $55 billion of which came from Medicare and Medicaid — ought to raise suspicions about that claim.
According to Reuters, OMB Director Peter Orszag told reporters that the embarrassing figures from Medicare and Medicaid demonstrate the need for health care reform. I would concur if “reform” meant reducing the government’s role in health care. However, he means the opposite, which raises the question of how giving more money to an already waste-prone and bureaucratic federal health system can possibly make sense for the economy.
The administration has promised to cut down on improper payments with the aid of a new executive order. According to the Associated Press:
Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn’t meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take.
Somehow I doubt this will amount to much of a deterrent. The AP also said the administration plans to impose penalties on government contractors who receive improper payments. But last month it was reported that “the Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.”
Democrat Tom Carper, chairman of the Senate subcommittee on federal financial management, seemed to partly understand the broader meaning of the improper payment estimates:
It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits…Unfortunately, these numbers may still be just the tip of the iceberg since they don’t even include estimates for several major programs, including the Medicare prescription drug plan.
Yes, Senator, which is precisely why bigger government – be it stimulus, bail outs, or health care reform – is an inferior option to letting the marketplace provide for our wants and needs.
Carper is also right about the $98 billion figure being the “tip of the iceberg.” As has been noted here before:
The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.
See this essay for more on fraud and abuse in government programs.
McCain: Interests of Defense Contractors May Conflict with US National Interest
USA Today reports that retired military officers join the boards of directors of, or become employees of, defense contractors and take home big bags of money doing so. Not surprising. At the same time, the paper reports, lots of them are being paid by the Pentagon to be “senior mentors” of their former colleagues. Not being government employees, but rather independent contractors, these folks aren’t subject to government ethics rules. To take one example, as chairman of BAE Systems, Gen. Anthony Zinni is clearing almost a million a year, in addition to his $129,000 per year government pension. In addition to all that, the Pentagon pays him about $2,000 per day to “mentor” people at DOD.
As the article points out, information is almost invaluable to the defense contractors in these contexts. The knowledge of what’s going on at DOD is extremely useful for planners at the defense companies, and so while the retired officers are protesting that being paid nearly $2,000 per day by DOD for their work as mentors is “way below the industry average,” it increases their value to, and presumably their compensation from, their military-industrial employers. As one coordinator of the mentors program told the retired officers, “you’re getting paid in two ways–monetarily and informationally.”
This isn’t too surprising a story, but the crowning irony comes as Sen. John McCain calls for an ethics rewrite and offers his view that “the important thing is that [the involved officers] avoid the appearance of conflict.” This is a puzzling remark coming from a man whose top foreign-policy adviser was collecting hundreds of thousands of dollars from the Georgian government to lobby McCain at the same time he was being paid by McCain to advise him on foreign policy.
McCain’s thoughts about conflict of interest in that instance? He was “so proud” of his lobbyist-cum-adviser. Presumably once McCain issued his ridiculous “today we are all Georgians” fatwa it became a patriotic duty to take money from foreign governments to represent their interests. But in the case of the proposed reforms–which would attempt to institute some semblance of transparency in these mentoring deals–one can only wish the senator from Arizona the best.
What Will the Reid Bill Cost?
Michael Cannon has some astute analysis of the Senate health care bill below. I posted these thoughts at Politico’s Arena:
According to the Chamber of Commerce polls, strong majorities in every state they polled believe the health care bills will increase the deficit. In this case the public’s cynical instincts are almost certain to be more accurate than the computer models of the CBO. As David Dickson of the Washington Times reviewed yesterday, government health care programs have a history of cost overruns.
And not small overruns, like overdrawing your checking account — massive, order-of-magnitude cost overruns. Is that because politicians intentionally overstate the benefits and underestimate the costs of their proposals? Or just that computer models aren’t very good at predicting how entitlements programs change behavior? Either way, just look at the record: In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion. In 1987, Congress projected that Medicaid would make special relief payments to hospitals of less than $1 billion in 1992. The actual cost, just five years after the projection, was $17 billion. Similarly, Medicare’s home care benefit was projected in 1988 to cost $4 billion in 1993, but the actual cost — again, just five years after the projection — was $10 billion.
The government is running a trillion-dollar annual deficit already, and Congress and the president propose to create a new program that promises to cover millions more people with health insurance, drag currently insured people onto government programs, and save billions of dollars in the process. No wonder levels of trust in government are at record lows.
Filed under: General; Government and Politics; Health, Welfare & Entitlements; Tax and Budget Policy
Tear Down This Wall … between the U.S. and Cuba
The House Foreign Affairs Committee is holding a hearing today on the almost 50 year old ban on travel to Cuba. The ban is part of a broader economic embargo in place since the early 1960s that was supposed to bring about change in the island’s oppressive, communist regime.
Instead, the embargo and travel ban have needlessly infringed on the freedom of Americans, weakened our influence in Cuba, and handed the Castro government a handy excuse for the failures of its Caribbean socialist experiment.
I wrote an op-ed recently advocating change in U.S. policy toward Cuba, and delivered a talk on the same theme at Rice University in 2005.
Will Congress finally change this failed U.S. policy?
Filed under: Foreign Policy and National Security; Trade and Immigration
Don’t Blame Obama for Bush’s 2009 Deficit
Some critics are lambasting President Obama for record deficits. This is not a productive line of attack, largely because it puts the focus on the wrong variable. America’s fiscal problem is excessive government spending, and deficits are merely a symptom of that underlying disease. Moreover, if deficits are perceived as the problem, that means both spending restraint and higher taxes are solutions. The political class, needless to say, will choose the latter approach 99 percent of the time. A higher tax burden, however, simply means that debt-financed spending is replaced by tax-financed spending, which is akin to jumping out of the frying pan and into the fire, or vice-versa.
In addition to being theoretically misguided, critics sometimes blame Obama for things that are not his fault. Listening to a talk radio program yesterday, the host asserted that Obama tripled the budget deficit in his first year. This assertion is understandable, since the deficit jumped from about $450 billion in 2008 to $1.4 trillion in 2009. As this chart illustrates, with the Bush years in green, it appears as if Obama’s policies have led to an explosion of debt.
But there is one rather important detail that makes a big difference. The chart is based on the assumption that the current administration should be blamed for the 2009 fiscal year. While this makes sense to a casual observer, it is largely untrue. The 2009 fiscal year began October 1, 2008, nearly four months before Obama took office. The budget for the entire fiscal year was largely set in place while Bush was in the White House. So is we update the chart to show the Bush fiscal years in green, we can see that Obama is partly right in claiming that he inherited a mess (though Obama actually deserves a small share of the blame for Bush’s last deficit since earlier this year he pushed through both an “omnibus” spending bill and the so-called stimulus bill that increased FY2009 spending).
It should go without saying that this post is not an argument for Obama’s fiscal policy. The current President promised change, but he is continuing the wasteful and profligate policies of his big-spending predecessor. That is where critics should be focusing their attention.
Filed under: Government and Politics; Tax and Budget Policy
Reid Health Bill Perpetuates the $1.5 Trillion Fraud
Senate Majority Leader Harry Reid (D-NV) has finally unveiled his massive 2,074-page health care bill. The Congressional Budget Office reports that the insurance-expansion provisions would cost the feds $848 billion over 10 years. To raise those funds, the bill would tax wages, medical devices, prescription drugs, sick people, health insurance premiums (twice), HSAs, FSAs, HRAs, and — why not? — cosmetic surgery. The remainder would supposedly come from $491 billion of Medicare cuts, even though Medicare’s chief actuary says such cuts are “unrealistic” and “doubtful.” But don’t worry. Somehow, this thing’s gonna reduce the deficit.
Of course, that $848 billion only accounts for part of the federal government’s share of the tab. There is other new federal spending. My read is that the CBO estimates $998 billion of total new federal spending — though I’ll be waiting for former CBO director Donald Marron to provide a more authoritative tally.
And then there are costs that Reid and his comrades have pushed off the federal budget. For example, the $25 billion unfunded mandate that Reid would impose on states. Total so far: just over $1 trillion.
But the biggest hidden cost is that of the private-sector mandates. In both the Clinton health plan and the Massachusetts health plan, the private-sector mandates –- the legal requirements that individuals and employers purchase health insurance –- accounted for 60 percent of total costs. That suggests that if the Reid bill’s cost to federal and state governments is $1 trillion, then the total cost is probably $2.5 trillion, and Harry Reid — like House Speaker Nancy Pelosi — is hiding $1.5 trillion of the cost of his bill.
Without a cost estimate of the private-sector mandates, Reid has not yet satisfied the request made by eight Democratic senators for a “complete CBO score” of the bill 72 hours prior to floor consideration.
Fortunately, by law, the CBO must eventually score the private-sector mandates. When that happens, the CBO will reveal costs that the bills’ authors are trying to hide. When that happens, the CBO will present the new federal spending on page 1, new state spending maybe on page 10, and the cost of the private-sector mandates on page 20 or something. Democrats will tout the figure on page 1. But the bill’s total cost will the sum of those three figures -– a sum that will reveal the costs that the bill’s authors have been hiding.
The House passed its bill without a complete CBO score. The Senate should not follow suit.
I’ve written previously about this massive fraud here, here, here, and here.
(Cross-posted at Politico’s Health Care Arena.)
Short of Funds? Give the Feds More Power
In 2006, the National Transportation Safety Board found that 298 subway cars in the Washington Metrorail system are “vulnerable to catastrophic telescoping damage” and should be replaced or reinforced immediately. They weren’t, which was a major reason why nine people died in a rail collision last June.
In 2007, supposedly fail-safe circuits in Metrorail’s train detection and control system began to “intermittently malfunction.” This contributed to at least one near miss before the fatal crash, and was the other major reason why nine people died in June.
Clearly, the Washington Metropolitan Area Transportation Authority is short of funds. It still has not begun to replace the 298 cars; instead, it is merely inserting them into the middle of trains so that, in the event of a crash, the will be buffered by newer (and hopefully stronger) cars.
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