- The Washington Times - Friday, January 9, 2009

ANALYSIS/OPINION:

If any doubt persisted about the futility of President-elect Barack Obama’s forthcoming economic stimulus plan, it can safely be put to rest now that one of its chief congressional architects has revealed his intentions.

Rep. James L. Oberstar, Minnesota Democrat and the powerful chairman of the House Transportation and Infrastructure Committee, recently proposed a shift in the plan’s infrastructure spending away from highways and bridges and toward mass transit.

This follows a successful vote in the House last summer dedicating tax dollars to fund the operating costs for bus and rail systems, the first time Congress has ever considered funding anything but capital outlays for local transit.

Mr. Oberstar’s bill would give mass transit 40 percent of the funding allocated for highways and bridges, a remarkable departure from current policy, but not so remarkable for Minnesota’s potentate of pork.

Mr. Oberstar has long sought to not only raise gas taxes, but to fund almost anything that comes across his desk as long as some of it winds up in Minnesota’s 8th District. In 2005, Mr. Oberstar touted his mastery in bringing home $12 million out of a so-called transportation bill. Yet $10 million was for non-road uses, such as pedestrian trails, bicycle paths and, yes, mass-transit centers for that burgeoning metropolis known as Duluth.

The shamelessness is nothing new. Long before Rahm Emanuel was admonishing liberal Democrats to “never allow a crisis to go to waste,” Mr. Oberstar was standing on the banks of the Mississippi River just days after the tragic collapse of the Interstate 35W bridge demanding a 23.4-cent federal gas tax. Rather than wait for the findings of the National Transportation Safety Board, which cited engineering defects when the bridge was originally built, Mr. Oberstar boldly, if not predictably, suggested that a lack of federal transportation revenue was somehow to blame.

But the Surface Transportation Assistance Act of 1982 has diverted 20 percent of each increase in federal gas tax revenues to the Mass Transit Account. Indeed, federal and state governments have spent billions of dollars on transit schemes that have done nothing to justify their supposed rationale of reducing congestion. In 2005, the now infamous $286 billion “bridge to nowhere” bill lost an astonishing $76 billion to transit and earmarks.

In short, we don’t have a spending crisis; we have an investment crisis.

For example, the three-quarter-billion, 12-mile Hiawatha light-rail line - sold as just the first step for the sprawling Twin Cities metro area - runs annual deficits (expenses less fares) of $10 million as far as the eye can see.

But the fact that only 4.8 percent of the area’s commuters use transit at all, according to the 2005 American Community Survey, didn’t stop Minnesota state politicians from dedicating $1.1 billion of last year’s $6.6 billion “transportation” tax increase for local mass-transit projects, including the Central Corridor light-rail project, scheduled to run from downtown St. Paul to Minneapolis.

Fundamentally, these costly rail schemes ($40 million to $50 million per mile) amount to little more than smart-growth subsidies for urban interests trying to force jobs and people back to the inner city. For the cost of the new Central Corridor line, transportation officials could widen the entire beltway around the Twin Cities.

Not that all road and bridge “investment” necessarily adds to the nation’s productivity either. The “bridge to nowhere” was a highway project and, contrary to conventional wisdom, the number of “structurally deficient” bridges has actually fallen in the past two decades.

So-called infrastructure projects may be the largest part of the massive $850 billion stimulus package. Yet many of these bureaucratic investments, as economist Henry Hazlitt used to say, actually bring “about a net reduction of the real national income, in spite of the fact that they increase it according to government figures.”

The latest spending scheme will collapse under its own weight as soon as people decide there are better places for their savings than 0 percent Treasuries. After all, loaning money to the federal government looks to be a losing proposition given the fact you’re unlikely to get even the principal back in inflation-adjusted dollars. Especially so considering the Federal Reserve’s historic injection of fiat money into the economy - going from lender of last resort to lender of first resort in a matter of months. And if the specter of trillion-dollar deficits persuades the Chinese and other foreign creditors to finally dump the dollar, the day of reckoning will be at hand.

At that point, Mr. Obama is left with a Hobson’s choice. To either massively raise taxes and let interest rates skyrocket (both killing the economy) or let the stimulus spending bubble burst - and with it all those government make-work projects and make-work jobs. Alas, we will be right back where we started from - only this time with a devalued dollar wiping out everyone’s retirement accounts.

Jason Lewis hosts a weekday talk show on KTLK-FM radio in Minneapolis.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide