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Exchequer

NRO’s eye on debt and deficits . . . by Kevin D. Williamson.


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Another Stimulus, Another Bailout

Pres. Barack Obama’s plan for yet another round (!) of stimulus spending, this time focused on highway infrastructure work, is, like so many products of this administration, something other than what it seems. What Obama is proposing is another backdoor bailout for spendthrift states, such as his political home state of Illinois, giving them large injections of federal money so that they can redirect spending that would be dedicated to highway projects to other areas—e.g., to the government-employees’ unions that are Obama’s most loyal constituency. Call it “No Blue-State Appropriator or Union Goon Left Behind, Part Whatever.”

The highway system in particular (and the transportation racket more generally) is a source of endless financial shenanigans and a rich seam of political patronage to be mined by Obama’s allies at the state and local levels. The federal highway system is maintained by a combination of federal and state spending (in a few cases, local spending as well) with the bulk of the states’ money coming from gasoline taxes and fees levied on car owners. Illinois, for example, levies a 39-cents-a-gallon tax on gas (the sixth highest in the nation, according to the Tax Foundation), and it also applies its general sales tax (another 6.25 percent) to gas. Once you figure in the total tax burden, government levies are probably a bigger contributor to the price of a gallon of gas in Illinois than is the crude oil from which it is distilled. So, what does Illinois get for its money?

Part of what it gets is the Illinois Department of Transportation (IDOT), one of those wonderfully, comically inept state agencies that does things that make political analysts laugh and taxpayers weep: things like deciding to suddenly stop doing roadwork because they are out of gas money (irony!) or threaten to start leaving roadkill on the highways unless the state gives them another $20 million.

Highway maintenance is important, of course. But that’s not all that IDOT does with its money. For instance, IDOT helps to maintain a vast network of full-employment programs for petty bureaucrats, called “regional planning agencies.” Every region in the state has one, and they are not small: The Chicago version lists 94 staffers on its website. Its budget of $16.7 million comes mostly from IDOT ($3.8 million) and the Federal Highway Administration ($11.5 million), with money reshuffled from other government agencies, local levies, and our friends over at the Environmental Protection Agency (no, really!) kicking in another $1 million or so. Nearly a hundred bureaucrats spending state transportation money, FHA money, and EPA schmundo, doing . . . what? Overseeing roadwork? Not exactly.

Because our entire government is turning into a bank, IDOT is in the business of making low-interest loans and grants for business-related projects that it likes under its Economic Development Program (EDP). These are supposed to be transportation-oriented projects, but “economic development” is a famously elastic definition under which to operate.

May I give you a little flavor for how carefully this economic-development business is managed? Here’s an excerpt from the minutes of a recent meeting of the Chicago Metropolitan Agency for Planning, or CMAP. Mr. Blankenhorn is CMAP’s executive director, Ms. Powell its chairman:

Mr. Blankenhorn said IDOT’s FY2010-11 budget includes $5 million to fund Metropolitan Planning Organizations statewide, with CMAP due to receive $3.5 million of that. He said the drawback is that all the money is supposed to be used for transportation planning, and while some of CMAP’s programs, such as community and economic development, can be tied in, most cannot. He said IDOT has promised to be flexible in what spending it will allow, but it’s really up to the General Assembly to provide funding for an agency it created to do more than transportation planning. He urged CAC members to mention the need for funding other areas if they meet with their legislators or people in leadership roles at other state agencies. Mr. Mellis asked if this means CMAP is fully funded for next year. Mr. Blankenhorn said the funding is buried in IDOT’s budget, but it’s in there. Ms. Powell said CMAP is technically not fully funded if it has programs it can’t pay for. Mr. Blankenhorn agreed and said he will no longer use the term‚ fully funded.

Buried in its budget, but they’ll be flexible! Sweet.

So, what does CMAP spend money on? Personnel, mostly — more than half of its budget goes to salaries and compensation: Just over $9.3 million is budgeted for FY2011, or about $100,000 for each of the 94 staffers listed. (I’m looking to see how lavishly compensated the top staffers are and will update you when I get the information.) If you start pumping billions of dollars into bridges and highway resurfacing, you free up a lot of money for the CMAPs and such of the world. But given the sorry record of previous “shovel ready” stimulus programs, don’t be surprised if the bridge-and-blacktop stuff is skipped altogether and the money goes straight into “community development” projects.

This is the sort of horsepucky upon which President Obama proposes to lavish another $50 billion. Stop him.

Kevin D. Williamson is deputy managing editor of National Review.

Tags: Bailouts, Debt, Deficits, Democrats, Despair, Doom, Fiscal Armageddon, Illinois, Obama, Stimulus

New on Exchequer. . .


COMMENTS   8

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   09/07/10 09:29

Another revealing article, Kevin...thanks!

Unfortunately, there's no shortage of this kind of material about the Obama administration.

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   09/07/10 11:28

Another excellent blog post from the always astute Mr. Williamson. Under Emperor Obama, nothing is what it appears to be at first blush.

This infrastructure "jobs" bill is merely more duplicitous posturing and deceit from comrade Obama, the first Marxist-Leninist President of the U.S. This proposal is more profligate financial aid to Obama's allies in unionized labor. We all know the final bill for this highway and rail spending will be astronomically higher than the initial cost estimates, once union labor gets involved. Of course, taxes will have to be raised and/or new federal debt issued to pay for this project. Then, of course, the bankrupt states are going to be stuck paying the annual bills for rail and road maintenance. Lastly, the financial viability of cross-country rail is doubtful. Amtrak cannot even turn a profit on the most widely used rail line in the country, the "Northeast Corridor" servicing Washington, D.C. to Boston, Mass. This is the most densely urbanized section of the United States. Rail infrastructure should be built when the free market deems it economically appropriate to do so, not when big government wants to casually spend taxpayers' money on its political allies.

There are apparently some Americans still working in the private sector, but Obama cares not a whit about them; only his buddies in the unions, with the rest of taxpayers being bled dry to provide them with a cushy pension and healthcare plan when they retire at age 52.

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   09/07/10 13:28

Thanks a lot, Kevin. Made my day (not).

a frustrated Illinois resident ...

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   09/07/10 14:49

Having had the opportunity to travel Chicago's toll roads this summer, I can testify that whatever money is being raised by tolls and taxes that is earmarked for roads, it is not getting there! The roads were TERRIBLE. Iowa's were much better.

From all this "infrastructure" spending that doesn't get there, one must conclude that the first and only priority of such government spending is to increase the size and scope of government - period.

My son and his wife, who live in Illinois, endured a months-long "repaving" project in their area that caused traffic to be rerouted for six miles for months and months - sidewalks were supposedly being poured. Suddenly, in the dead of night on a weekend, the barricades were removed and - voila - no sidewalks! Amazing.

In Oregon, we know that repaving projects are merely opportunities for signs to be posted along the torn up roads that advertise "Your government dollars at work"(or a variation thereof - such as the stimulus spending signs - how much was spent on THOSE?). And, it's fascinating how these projects and signs appear about four to six months before an election cycle.

I am completely disgusted.

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   09/07/10 17:01

Another real journalist doing the work the MSM used to do. Thanks, Kevin.

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   09/07/10 17:43

There is NOTHING these people do that is not corrupt. They even lie about the meals served in the WH.

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   09/07/10 18:42

Excellent article, this totally validates the bad feeling I got when I saw this stimulus money being thrown around by our President. I felt it was a money source for Democrats to spend. As I felt the BP Oil spill fund would be also. Having no checks and balances on this group of politicians, Republicans and Democrats, leaves us with no way of knowing if the stimulus of today and the past really went to it's intended purpose or if it got siphoned off for political purposes. I think it's time we get rid of high spending Republicans and Democrats. Tea anyone?

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   09/12/10 14:31

The only way to stop this nonsense is to vote for people of character who are interested in freedom rather than power. If we don't demand better, we won't get it.

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