My friend (and occasional co-author) Philippe Lacoude points me to this press release from Senator Claire McCaskill (D., Mo.) that touts her role in getting a $20 million grant from taxpayers to help pay for a $100 million streetcar project:
The U.S. Department of Transportation has awarded Kansas City a $20 million grant to help build its streetcar route through about two miles of downtown.
U.S. Sen. Claire McCaskill said in a news release Friday announcing the grant that the streetcar project will “encourage housing, construction, and business development in the city.” And she said that will mean for jobs for the region.
The project has an estimated cost of about $100 million. And voters previously approved a 1-cent sales tax increase and property tax increases to help pay for the streetcars, which will run from the River Market area to Union Station. Supporters hope it will be the first leg of a more extensive public rail system.
Here is Lacoude’s prediction:
Mark my words: It will cost more than $100 million because of unforeseen cost overruns, it will make traffic worse, it will not be used by the people at capacity . . . resulting in the city having to advertise the service through an expensive ad campaign conceived by a cousin of the mayor. Guaranteed by me or your money back!
I totally agree. I have mentioned it before, but it bears repeating: Infrastructure spending tends to suffer from massive cost overruns, waste, fraud, and abuse. For instance, a comprehensive study examining 20 nations on five continents (“Underestimating Costs in Public Works Projects: Error or Lie?” by Bent Flyvbjerg, Mette K. Skamris Holm, and Søren L. Buhl) found that nine out of ten public-works projects come in over budget. Cost overruns routinely range from 50 to 100 percent of the original estimate. For rail projects, the average price is 44.7 percent greater than the estimated cost at the time the decision was made. For bridges and tunnels, the equivalent figure is 33.8 percent; for roads, 20.4 percent.
In addition, I can promise that this new streetcar will not stimulate the economy in Kansas City in the way described above by the senator (think about Detroit, here). Finally, it isn’t the role of the federal government to pay for roads, highway expansions, and mass-transit systems in Missouri or elsewhere. These projects are local in nature, and the federal government shouldn’t have anything to do with them.
Tad DeHaven at Cato has a good way to describe what’s going on here and why taxpayers should be against it. Talking about California’s high-speed-rail projects, he writes:
If California’s voters and the officials they elect want to blow the state’s taxpayers’ money on high-speed rail, then so be it. But taxpayers in the other 49 states shouldn’t be on the hook. Likewise, Californians shouldn’t have to subsidize rail projects in the other 49 states. Indeed, the federal Department of Transportation acts like a money laundering operation: money taken from each state’s taxpayers goes to Washington, gets “washed” on Capitol Hill, and then gets sent back to the states (minus a cut for the bureaucracy) as directed by the Beltway bosses.
For more on this topic, see these Cato studies on high-speed rail and transit subsidies.