Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Monday, November 27, 2006

Porker of the Month

Washington, D.C. Citizens Against Government Waste (CAGW) today named Sen. John Thune (R-S.D.) Porker of the Month for helping to secure a record $2.3 billion federal loan for a railroad company.
xxx The loan guarantee from the Federal Railroad Administration (FRA) would allow the Dakota, Minnesota, and Eastern Railroad (DM&E) to expand and improve a rail line that is used primarily to transport coal from Wyoming to Minnesota. In apparent anticipation of the loan, Sen. Thune was instrumental in increasing the FRA’s loan guarantee authority from $3.5 billion to $35 billion in the 2005 Safe, Accountable, Flexible, and Efficient Transportation Equity Act. DM&E paid Thune $220,000 in 2003 and 2004 to lobby for the loan before his election to the Senate.
xxx According to BearingPoint (a strategic consulting firm), the loan would require an annual payment of $246 million on top of the $15 million from another loan. Even if the rail upgrade increases DM&E’s current annual revenue of $200 million, the deal presents a poor credit risk to taxpayers, who will be forced to foot the bill if the company defaults. A senior manager at BearingPoint stated, “This loan finances a project with many financial uncertainties, ultimately calling into question whether or not DM&E can repay the loan.”
xxx The DM&E loan is being compared to the $1.5 billion Chrysler bailout in 1980. However, at least that expenditure was the subject of intense public and congressional debate; the DM&E loan is quietly moving through Congress thanks to behind-the-scenes lobbying and legislative maneuvers.
xxx According to the FRA’s Railroad Safety Statistics Annual Report 2004, DM&E ranked last in safety among the nation’s 43 largest railroads. DM&E’s CEO pointed to safety as a reason to support the railroad’s “rehabilitation.” However, government handouts have failed to solve DM&E’s safety problems; its main track accident rate has escalated to eight times the national rate since its last FRA loan of $233 million in 2003.
xxx Furthermore, the coal fields of Wyoming are already served by two railroads; a government loan could adversely impact the marketplace. The president of a competing railroad said, “If the government allows non-market-based loans of this magnitude for certain carriers, that will have a negative effect on railroads’ ability and willingness to invest private capital” (Los Angeles Times, 10/29/06).
xxx Like most special interests, DM&E argues that its handout is in the national interest. Sen. Thune says it will “transform South Dakota’s economy for generations.” Such pronouncements fall apart next to the simple logic that if the project’s benefits vastly exceeded its costs, a federal loan would not be necessary. For championing a loan guarantee that puts taxpayers on the hook for billions of dollars, circumvents public debate, skewers market incentives, and rewards his former employer, CAGW names Sen. John Thune its Porker of the Month for November 2006.
xxx Citizens Against Government Waste is the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

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