Author Archive
Federal Funds for Cleaning Up Abandoned Mines
An article in the Wall Street Journal offers another example of the problem with the federal government tackling issues that should be left to the states to resolve. Congress passed a law in 1977 requiring coal companies to pay a fee that was to be used to help the states clean up abandoned mines. As is often the case, the distribution of funds to the states has been distorted by politics:
Wyoming officials figured they would get large payouts every year because their state was producing so much coal. But the money had to be “appropriated” by Congress, meaning lawmakers had to vote each year on who would receive it. That often didn’t happen, so a lot of the money sat unused, including hundreds of millions of dollars that Wyoming officials believed belonged in their state.
In 2006, as parts of the law were set to expire, Sen. Mike Enzi (R., Wyo.) won passage of a measure that allowed the money to flow as “mandatory” spending, meaning it didn’t have to be voted on by Congress each year. In addition, it allowed Wyoming, three other states and three Native American tribes to use their money, including funds not distributed in prior years, with virtually no strings attached. Those four states and three tribes were certified as having taken care of their most severe abandoned coal mine problems. Other states had to use the money more narrowly for mine problems.
The next year, the Wyoming legislature voted to spend $50 million in coal-mine funds to build a new science, technology, engineering and math building at the university. Groundbreaking for the building, to be named after Mr. Enzi, is slated to begin this year.
Federal and state officials from Wyoming argue that if their coal companies generated the fees, Wyoming should get the money. The Obama administration argues that the funds were supposed to be used for cleaning up abandoned mines, not renovating a basketball area at the University of Wyoming, which is what the state’s legislature intends to spend $10 million in federal mine cleanup money on.
Both sides have a point, but I think there’s a better, simpler solution: let Wyoming and the rest of the states with abandoned mines decide how to clean them up. Why must the fee (i.e., tax) money be laundered through Washington where it’s inevitably going to be manipulated by parochial-minded politicians? The answer is that it needn’t, but getting the politicians in Washington to part with a pot of money is like trying to take a bone from a bulldog. And for all their complaining about federal involvement in state affairs, state politicians love getting money from Washington to spend because it allows them to avoid having to directly ask their taxpayers to pony up.
See this Cato essay for more on fiscal federalism. See here for more on downsizing the Department of the Interior.
Welfare and Private Charity
A new policy paper from my colleague Michael Tanner analyzes the growth in the American welfare state and concludes that “throwing money at the problem has neither reduced poverty nor made the poor self-sufficient.” Michael makes an important point that—in my experience—most journalists don’t seem to appreciate:
In addition, whatever the intention behind government programs, they are soon captured by special interests. The nature of government is such that programs are almost always implemented in a way to benefit those with a vested interest in them rather than to actually achieve the programs’ stated goals… Among the nonpoor with a vital interest in antipoverty programs are social workers and government employees who administer the programs and business people, such as landlords and physicians, who are paid to provide services to the poor. Thus, anti-poverty programs are usually more concerned with protecting the prerogatives of the bureaucracy than with actually fighting poverty.
That’s one reason why you have federal officials actually celebrating the fact that more and more Americans are signing up for food stamps. Sure, adding millions of people to the food stamps roll is good for the Department of Agriculture’s budget, but is it good for the country? Perhaps if one thinks that government bureaucracies are ideally suited to provide for the less fortunate. However, that’s a tough claim to make given the fraud, abuse, and wasteful bureaucratic overhead costs associated with the government model. And let’s not forget that the government is not a charity; rather, it must resort to compulsion and force in order to carry out its politically-inspired objectives.
Instead of celebrating government dependency, we ought to be celebrating those private charities that are effectively meeting the needs of the less fortunate through voluntary donations. For example, Congressman Ron Paul (R-TX) recently went to the House floor to laud a private charity called Convoy of Hope. From Paul’s speech:
Unlike government bureaucracies and many top-heavy private charities, Convoy of Hope applies a uniquely results-oriented approach to serving people. You won’t find bloated salaries or patronage jobs at Convoy of Hope, nor will you find tony offices in New York or Los Angeles like so many nonprofits. In fact, the organization regularly spends only about 10% of its budget on overhead (a very low ratio in the nonprofit world), while employing a small staff of approximately 85. Watchdog group Charity Navigator consistently gives Convoy of Hope high marks for both its financial acumen and transparency.
About Those Postal Retiree Health Benefits
While Congress is busy trying to figure out how it’s going to continue screwing up the U.S. Postal Service, postal expert Michael Schuler has been busy analyzing the reasons why it’s so screwed up to begin with. Last week, Michael released a paper on congressional micromanagement of the USPS. A new paper looks at the complicated and controversial topic of postal retiree health benefits.
A common claim made by the postal unions and other defenders of the unsustainable status quo is that the USPS would be a-okay if a 2006 law hadn’t required the postal service to start setting aside money for future retiree health benefits. Here’s the background from Michael:
Before enactment of the Postal Accountability and Enhancement Act of 2006 (PAEA, P.L. 109-435), the U.S. Postal Service had been promising generous retirement health benefits to its workers without setting aside any money to pay the costs it would owe in future years. Because the Service was ignoring a very expensive fringe benefit in its income statement, its reported costs were artificially low and its reported income artificially high. The unfunded retiree health care obligation had mushroomed to $74.8 billion by September 30, 2006.
The 2006 law addressed the unfunded liability by requiring the USPS to annually set-aside an average of $5.6 billion from 2007 to 2016. However, USPS revenues began plummeting shortly after the PAEA’s enactment. The annual “prefunding” payments have been exacerbating the USPS’s financial woes. Naturally, postal management and the unions would like Congress to make the payments disappear. The problem is, eliminating the payments won’t put the USPS in the black, and it would merely set the stage for a major taxpayer bailout down the road. As Michael explains, moving to pay-as-you-go financing for retiree health benefits is a bad idea:
First, prefunding is always more transparent than pay-as-you-go. Prefunding shows the costs of commitments when they are made instead of ignoring the costs until years later. Second, pay-as-you-go with regard to deferred postal compensation is unfair because it transfers costs incurred for today’s mail service to future mail users or taxpayers. Third, pay-as-you-go is extremely risky for an organization like the Postal Service where the future obligations are huge while income is stagnating or declining. (It would not be dangerous if future obligations were small or if income were growing rapidly enough to easily pay future bills.) Fourth, a sometimes overlooked hazard of the pay-as-you-go method is that costs can appear deceptively low for many years and then suddenly climb as more workers retire and as retirees, with increasing age, need more medical care. In that vein, OPM estimated that if retiree health care financing had reverted to pay-as-you-go in 2010, the Postal Service’s pay-as-you-go expense would have been only $2.3 billion in 2010 but almost tripled to $6.4 billion by 2020. If PAEA had not moved toward prefunding, insolvency and the need for a massive taxpayer bailout would be virtually inevitable for USPS, although that might not have become clear to the public for several more years because of pay-as-you-go’s lack of transparency.
Michael says that the prefunding payment schedule should be stretched out given the USPS’s financial woes. However, the extended schedule should come with reforms that would “lower the extraordinary cost of USPS’s health care fringe benefit.” I think a common sense reform would be to eliminate retiree health care benefits for new employees. As I noted in an essay on the U.S. Postal Service, the health benefit is something that a decreasing number of private sector workers receive:
Opponents of pre-funding USPS retiree health benefits argue that private companies and the rest of the federal government are not legally required to do so. That is largely irrelevant. Retiree health care coverage is an increasingly rare perk in the private sector, and the federal government’s financial management is nothing to emulate. In 2008, only 17 percent of private sector workers were employed at a business that offered health benefits to Medicare-eligible retirees, down from 28 percent in 1997.
Federal Job Training Programs
The New York Times worries that “federal funds to train the jobless are drying up.” It’s not until the end of the article that the Times bothers to quote an economist who says that “Traditionally, we have found that job training has not been very effective for people who have lost their job recently.”
A Cato essay on federal job training programs by Chris Edwards and Daniel J. Murphy – a former special assistant in the Department of Labor’s Employment and Training Administration – explains that they aren’t very effective, are riddled with waste, and “don’t fill any critical need that private markets can’t fill”:
[T]he Department of Labor’s spending on employment and training not only lacks in effectiveness, but it is also dwarfed by the private sector’s investment in workplace training. According to the American Society for Training and Development, U.S. organizations spent $126 billion on employee learning and development in 2009.
Private training is likely to be more effective than government-sponsored training for a number of reasons. Business-led training is dictated by the real-world needs of workplaces and industries. It is driven by on-the-ground demand rather than by policy choices in Washington. Also, business managers are responsible for workplace results and the bottom line, and so they will adjust training decisions based on real economic needs. By contrast, civil servants are a few steps removed from the realities of production and competition in the marketplace. Private decisionmakers will dispose of ineffectual training approaches quickly, but federal programs favoring a failed approach may last for decades.
General Services Administration: Let the Taxpayers Eat Cake
The head of the General Services Administration, which is the federal government’s procurement and property manager, has resigned in the wake of a report from the agency’s inspector general that uncovered extravagant spending at a GSA “training conference” in Las Vegas.
Here’s the Washington Post’s summary of festivities:
Among the “excessive, wasteful and in some cases impermissible” spending the inspector general documented: $5,600 for three semi-private catered in-room parties and $44 per person daily breakfasts; $75,000 for a “team-building” exercise — the goal was to build a bicycle; $146,000 on catered food and drinks; and $6,325 on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects. The $31,208 “networking” reception featured a $19-per-person artisanal cheese display and $7,000 of sushi. At the conference’s closing-night dinner, employees received “yearbooks” with their pictures, at a cost of $8,130.
Politicians from both sides of the aisle have been quick to express their outrage. In particular, Republicans are anxious to paint the affair as emblematic of the Obama administration’s fiscal profligacy. Perhaps it is. However, the scandalous abuse of taxpayer money by the GSA isn’t a partisan issue. First, Martha Johnson is the second GSA chief to resign in the last four years. George W. Bush’s GSA chief Lurita Doan resigned in 2008 after a “tumultuous tenure in which she was accused of trying to award work to a friend and misusing her authority for political ends.” Second, bureaucrats have been wasting taxpayer money on conferences for years under the watch of both parties. For example, Sen. Tom Coburn (R-OK) released a report in 2008 that found that federal agencies had spent over $2 billion on conferences from 2000-2006.
As the politicians trip over one another to make empty promises to end such abuses, keep in mind that Bureaucrats Gone Wild is what you’re going to get when you give human beings the ability to spend gobs of other people’s money. The only sure way to stop government employees from wasting money is to stop giving them money in the first place, which means getting rid of the agencies that employ them. For the GSA, that means downsizing the federal government and thus reducing the need for its procurement and property services.
Postal Problems: the Role of Government Micromanagement
Postal expert Michael Schuyler has released a follow-up to his January paper that compared the recent financial performance of the U.S. Postal Service to foreign postal service providers. Not surprisingly, the USPS has fared relatively poorly in comparison to its foreign counterparts. In his new paper, Schuyler looks at the role government micromanagement plays and finds that “Foreign posts have much more flexibility than USPS to adjust operations to keep costs in line with revenue.”
The following are some key points:
- Foreign governments intervene in their postal markets, but “foreign governments often temper their demands and grant their postal services substantial operational discretion, in order that they not undermine their posts’ financial viability.”
- The USPS has reduced headcount by 29 percent since 1999, but in comparison to foreign operators, it has less flexibility when it comes to managing labor costs. For instance, “there have been few layoffs because contracts with postal unions contain no-layoff provisions that protect the jobs of most career postal workers…Although the reduction the Service accomplished through attrition and buyouts has been skillful, it has not been sufficient to bring the workforce into balance with reduced mail volume.”
- While many foreign operators have moved to five-day mail delivery, Congress continues to insist that the USPS deliver mail six days a week. Given the continuing – and permanent – decline in the demand for mail, the case for cutting back on delivery is getting stronger. Regardless of whether the USPS should move to five day delivery, the “requirement shows how the U.S. Postal Service is hamstrung in its ability to rein in costs through operational adjustments, compared to many foreign posts.”
- Congressional meddling makes it harder for the USPS to downsize its retail network to better reflect financial reality. When the USPS tries to close post offices and other facilities, “members of Congress often object vigorously to proposed closings within their jurisdictions and occasionally threaten to introduce legislation to block proposed changes.” As a result, the USPS usually backs down.
I’ll conclude by making my standard pitch for liberalization of the U.S. postal market, which would ideally lead to privatization of the USPS. The word “privatization” scares a lot of people, but it shouldn’t. If one were to spend a couple of years working in the U.S. Senate, as I have, there’s a good chance that he or she will conclude that continuing to allow 535 politicians to manage a business is a whole lot scarier.
How Not to Make the Case for Terminating Federal Programs
Republican presidential front-runner Mitt Romney recently gave the following response to a reporter’s question on what programs he would cut:
Of course you get rid of Obamacare, that’s the easy one, but there are others: Planned Parenthood, we’re gonna get rid of that. The subsidy for Amtrak, I would eliminate that. The National Endowment for the Arts, the National Endowment for the Humanities, both excellent programs, but we can’t afford to borrow money to pay for these things.
It’s good that Romney can actually name federal programs that he would terminate (even if they’re relatively small programs). But how on earth does he expect to garner support from Congress to terminate the NEA and NEH after having called them “excellent programs”? Sorry, but the “federal government is broke” argument won’t get the job done. In fact, it’s just a cop out that Republican politicians often use to avoid having to provide a coherent, principled justification for spending cuts.
Last year, I criticized the Boehner Republicans in the House for making a similarly weak case for spending cuts:
The Boehner Republicans argue that they did terminate dozens of federal programs. In a rebuttal to critics, Boehner stated that the “agreement terminates more than 40 ineffective programs at the U.S. Department of Education alone.” Unfortunately, the combined savings from these terminations don’t appear to trim even a billion dollars from an agency that will spend over $70 billion this year.
Notice also that Boehner soft-peddles the education terminations by labeling them “ineffective programs.” The entire Department of Education is an unconstitutional, costly failure. Sadly, the man who wrote No Child Left Behind with the departed Sen. Ted Kennedy felt compelled to convey a message to the public that the GOP is only interested in axing spare parts that even Beltway bureaucrats agree aren’t needed.
With the exception of more military spending for purposes of policing the world and defending wealthy allies, it’s hard to discern a coherent philosophy behind the GOP’s cuts. Yes, the House Republican leadership says that it’s committed to repealing “Obamacare.” Unfortunately, the charge is being mounted by individuals who helped ram through George W. Bush’s Medicare prescription drug liability.
Yes, we should cut spending instead of going deeper into debt. Yes, a program’s ineffectiveness is a reason to cut it. But even if the federal government was running budget surpluses and a particular program wasn’t a complete disaster, there’s a darn good chance that the program in question should still be terminated.
That’s why we created Downsizing Government. Give it a look, Mitt.
Conservative House Republicans’ Budget Proposal
The Republican Study Committee released its fiscal 2013 budget proposal this week and it’s not horrible. That’s probably a compliment given that the bar is so low on Capitol Hill that one would trip on it. According to the RSC’s numbers, federal spending as a percentage of GDP would recede to a bit over 18 percent in 2022. That’s a level of spending that hasn’t been achieved since George Bush and his fellow Republicans in Congress initiated the federal spending spree of the past ten years.
I give the RSC credit for wanting to rein in the size of the federal government. However, when it comes to budget proposals, I’m more interested in the potential impact on the federal government’s scope. Specifically, would it make it harder for the federal government to spend money on all the activities that it currently does? Unfortunately, that’s where the RSC’s budget proposal falls short.
- Not surprisingly, the proposal calls for the repeal of Obamacare. That’s good because the president’s health care law represents a massive expansion in the federal government’s scope. Hopefully, the Supreme Court is about to render that concern moot.
- The RSC also calls for Fannie Mae and Freddie Mac to be privatized. That would be a positive step toward reducing the federal government’s involvement in housing finance. But what about the Federal Housing Administration, which has dramatically increased its presence in the housing market and will likely need a taxpayer bailout? The RSC calls for reforming the FHA, but it ought to be abolished along with the rest of the federal government’s housing programs.
- The proposal calls for the complete elimination of the following programs: the Corporation for Public Broadcasting, Economic Development Administration (EDA), Legal Services Corporation, National Endowment for the Arts, National Labor Relations Board, the Presidential Election Campaign Fund, Trade Adjustment Assistance programs, the Universal Service Fund and a couple of higher education subsidies. I like those cuts, but there are just so many more federal programs that should get the axe. For example, the RSC is spot on when it says that the EDA “is an improper function of the federal government, essentially redistributing wealth in the name of ‘economic development.’” But the same could be said for the federal government’s entire portfolio of economic development programs. Getting rid of only the EDA won’t stop the federal government from continuing to stick its nose in economic development. How about abolishing the Small Business Administration?
- The RSC deserves credit for addressing agriculture subsidies. Specifically, it calls for ending direct payments to farmers, which were never supposed to become a permanent handout to begin with. The payments were supposed to end once farmers were transitioned off of the federal dole per the 1996 farm bill. The direct payments should be abolished, but the only specific farm subsidy that the RSC singles out for elimination is wool and mohair subsidies, which are a drop in the bucket. The proposal does call for the elimination of the Market Access Program and the Foreign Market Development Program, which are prime examples of corporate welfare. That’s good. But, again, the RSC’s proposal wouldn’t do anything to inhibit the ability of the federal government to continue its meddling in agriculture.
- The RSC calls for increases in military spending. That’s good news for the military-industrial complex and our wealthy allies who free-ride off our blood and treasure, but it’s not good news for taxpayers or even national security for that matter. It also eliminates any chance of the RSC’s proposal being taken seriously by anyone other than pro-empire Republicans.
- On the big money budget issue of entitlements, the RSC calls for reforming and “strengthening” Social Security and Medicare. The reforms include private insurance options and premium support for Medicare, and increases in the eligibility age for both programs. No mention of private accounts for Social Security, and the transformation of Medicare wouldn’t begin until 2023. So if you’re relatively young and understand that the federal government’s intergenerational redistribution programs are a bum deal, you’ll have to look elsewhere for a friend on Capitol Hill. Again, no reduction in the federal government’s scope.
- The RSC proposal would block-grant Medicaid to the states and freeze spending. That makes budgetary sense, but it would still mean that federal taxpayers are on the hook for an activity that is properly the domain of state government. In its “Constitutional Authority Statement,” the RSC notes the 10th amendment, which says that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Contrary to what the RSC says, federal taxpayers footing the bill for a federal program with fewer strings attached would not represent a step “toward restoring a more proper balance between the states and the federal government as defined in the 10th Amendment of the United States Constitution.”
In sum, the RSC deserves credit for trying to cut the size of government, but even if its proposal were to be enacted, it wouldn’t do much to rein in the scope of the federal government. That means that the RSC’s proposal only amounts to a vision for smaller big government.
Paul Ryan’s Budget: It’s Still Big Government
Chris Edwards provided an ample overview of Rep. Paul Ryan’s (R-WI) budget proposal, so I won’t rehash the numbers. Instead, I’ll just add a few comments.
Democrats and the left will squeal that Paul Ryan’s budget proposal is a massive threat to the poor, the sick, the elderly, etc, etc. It’s baloney, but a part of me thinks that he might deserve it. Why? Because the excessive rhetoric employed by the left to criticize lower spending levels for domestic welfare programs isn’t much different than the excessive rhetoric Ryan uses to argue against sequestration-induced reductions in military spending. For instance, Ryan speaks of the “devastation to America’s national security” that sequestration would allegedly cause. (See Christopher Preble’s The Pentagon Budget: Myth vs. Reality).
Now I’m sure that I’ll receive emails admonishing me for failing to recognize that the Constitution explicitly gives the federal government the responsibility to defend the nation while the constitutionality of domestic welfare programs isn’t quite so clear. Okay, but what are Ryan’s views on the constitutionality of domestic welfare programs?
At the outset of Ryan’s introduction to his plan, he quotes James Madison and says that the Founders designed a “Constitution of enumerated powers, giving the federal government broad authority over only those matters that must have a single national response, while sharply restricting its authority to intrude on those spheres of activity better left to the states and the people.” That’s nice, but then he proceeds to make statements like this:
But when government mismanagement and political cowardice turn this element of the social contract into an empty promise, seniors are threatened with denied access to care and the next generation is threatened with a debt that destroys its hard earned prosperity. Both consequences would violate President Lyndon B. Johnson’s pledge upon signing the Medicare law: ‘No longer will older Americans be denied the healing miracle of modern medicine…No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and their aunts.’ To fulfill Johnson’s pledge in the 21st century, America’s generations-old health and retirement security programs must be saved and strengthened.
Social contract? Well, so much for those enumerated limits on federal power.
Ryan’s “Statement of Constitutional and Legal Authority” only cites Congress’s general power to tax and spend. Based on the contents of his proposal, which would do little to rein in the federal government’s scope, one could conclude that Ryan’s view of federal power is almost as expansive as that of his Democratic colleagues. Yes, Ryan would reduce the size of government by reducing federal spending as a percentage of GDP. But as I often point out, promises to reduce spending in the future don’t mean a lot when you have a federal government that has the ability to spend money on pretty much any activity that it wants. And under Ryan’s plan, the federal government would be able to continue spending money on pretty much any activity that it wants.
Should the Small Business Administration Be Abolished?
That’s the question being debated at the Wall Street Journal’s website. Representing the pro-abolition position is Cato adjunct scholar Veronique de Rugy. Veronique and I wrote an essay for Downsizing Government that makes the case for terminating the Small Business Administration.
Veronique ably explains why the federal government should not be meddling in the credit market, so I won’t restate her arguments. However, a statement made by her pro-SBA opponent is worth noting:
The SBA played a key role in arguing for policies to force the nation’s biggest banks to resume lending to small businesses after the financial crisis hit in 2008.
I bolded “force” because it’s a telling word choice. As George Washington put it:
Government is not reason. It is not eloquence. Government is force; like fire it is a dangerous servant – and a fearful master.
Advocates for government intervention are seemingly indifferent to the dangers of allowing a relatively small number of individuals to collectively play God. In this case, politicians in Washington – of which probably only a tiny subset knows anything about economics or finance – have decreed that taxpayers shall back loans made to particularly-sized businesses. Even if the result is a net economic positive – and it’s not – granting such power to one large entity should give pause to those Americans who value their freedom.
I mention this because as Veronique notes, “politicians have successfully sold the SBA as a program to help small business—a widely held belief that’s almost as sacrosanct as baseball, motherhood and apple pie.” For that reason, some self-described proponents of a smaller federal government have a soft spot for the SBA. However, when one pulls back the curtain, what he or she will find is just another politicized bureaucracy that exists to enrich special interests and bolster the status of our federal masters.
CBO Perpetuates Small Business Administration Myth
A new brief from the Congressional Budget Office discusses the role of small businesses in the economy and how they’re affected by federal policy. The CBO cites the Small Business Administration as one example of how federal policy favors small businesses over larger businesses:
Assistance from the Small Business Administration (SBA), through loan guarantees that enable small firms to borrow at more attractive terms (for example, lower interest rates and fees) than they might otherwise obtain.
That’s the popular perception of the SBA’s loan guarantee programs, but I would argue that it’s inaccurate for two reasons:
- The Government Accountability Office has calculated that SBA 7(a) loans only account for a little more than one percent of total small business loans outstanding. Veronique de Rugy and I looked at the top 15 industries that received SBA-backed loans from 2001-2010 and found that only 0.5 percent of the small businesses that comprise these industries received loans backed by the SBA. Thus, rather than helping small businesses compete against big businesses, SBA loan guarantees mainly help a tiny share of small businesses compete against other small businesses.
- The real winner from the SBA’s loan guarantees is the banking industry—particularly large banks. In 2009, the top 10 lenders (out of 2,600 total lenders) accounted for close to one-quarter of the SBA’s flagship 7(a) loan guarantee program’s volume. Wells Fargo & Co. alone accounted for 7.3 percent of the total 7(a) loan volume. Other large banks in the top ten include J.P. Morgan Chase, U.S. Bancorp, and PNC Financial Services Group. Although lawmakers portray the SBA’s loan programs as a boost for small businesses, the programs are actually a form of corporate welfare for some of America’s largest banks.
See this Cato essay for more on why the Small Business Administration should be abolished.
Santorum’s Tunnel and Federal Transportation Policy
If, like me, you’re a Pennsylvanian who wants a smaller federal government, you’ve probably been scratching your head at Rick Santorum’s success in the Republican primaries. An article in today’s Washington Times on the former Pennsylvania senator’s lack of popularity in the Keystone State is instructive.
The Times singles out Santorum’s leading role in getting federal taxpayers to foot 80 percent of the bill for a tunnel project in Pittsburgh that even former Democratic Gov. Ed Rendell called “a tragic mistake.” (When “Fast Eddie” dings a government project, you know it’s bad.) Indeed, the North Shore Connector was originally projected to cost $350 million but the final price tag will be closer to $528 million. (The Obama administration kindly kicked in $63 million in stimulus funds to help get the over-budget project finished.) As one local critic notes, that’s a lot of money to provide “cheap public transportation” for “Steeler and Pirates fans too lazy to walk across one of four bridges that already connect downtown and the ballparks.”
According to the Times, Santorum’s zeal for the project stemmed from a “deal” he struck with the local trade unions that would benefit from its construction:
‘We had a deal with Santorum,’ said Mr. Brooks, whose Greater Pennsylvania Regional Council of Carpenters, along with other major building and construction trade unions, endorsed Mr. Santorum after the senator went to bat in Washington for construction of the tunnel under the Allegheny River. The tunnel’s only stop is at the two taxpayer-funded sports stadiums built with Mr. Santorum’s support. ‘Very seldom are you going to have a union endorse a Republican,’ said Mr. Brooks. ‘But the project created 4,000 jobs’ — even if they were temporary — for workers in the construction and building trades.
Santorum’s soul-selling is illustrative of the problems with the federal government financing transportation projects.
The tunnel project clearly has nothing to do with promoting the nation’s general welfare. It’s a purely parochial concern that should have been paid for by the people who would use it. But that’s just it – “Yinzers” would have never agreed to pick up the entire tab for the project. That leads to another problem: federal transportation dollars are often allocated on the basis of political, rather than economic, considerations. If you’ve ever taken the white-knuckle drive on I-70 near Washington, PA, then you know that that there’s no way that the money spent on the Pittsburgh tunnel was the best use of transportation dollars in western Pennsylvania. Then there’s the “Bud Shuster Highway” in central Pennsylvania, which only got built because the former congressman was able to use his chairmanship of the House Transportation Committee to bring home the bacon (see here).
In sum, Pennsylvania is a good example of why transportation policy should be devolved from the federal government to the states. Unfortunately, Rick Santorum’s purchasing of political support with federal taxpayer dollars shows why members of Congress won’t be in any hurry to give up the transportation golden goose anytime soon.
See here for more on downsizing the Department of Transportation.
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