Momentum Building Against DM&E Loan

On Friday, David Strom, the President of the Taxpayper’s League of Minnesota, came out forcefully against the Dakota, Minnesota & Eastern railroad’s proposed $2.3 billion loan from the Federal Railroad Administration. Here’s an excerpt of what he said:

What if I told you that right now the Federal government is considering making the largest loan guarantee in its history to a private company—a loan that dwarfs the size of the Chrysler bailout in its scope—and yet almost nobody has ever heard a word about this plan?

It sounds incredible, but unfortunately it is true. And in my mind, it is a prime example of what is wrong with the way that Congress spends your money.

Back in 1979, when Congress was considering extending loan guarantees to bail out Chrysler Corporation, there were vigorous debates about the propriety of such a large-scale government intervention into the marketplace. The size of the loan guarantees–$1.5 billion—was unprecedented at the time. It wasn’t until the Federal government stepped in to help the airline industry after the terrorist attacks of September 11, 2001 that there was such a large-scale government bailout.

But today, in a world where dead-of-night earmarking can move billions of dollars in Federal spending, a $2.3 billion loan to a struggling railroad can pass Congress without a moment’s scrutiny or debate.

Ah, progress!

While the Chrysler bailout was a bad idea—the government shouldn’t be in the business of picking winners and losers in the economy—at least there was a plausible excuse at the time for doing it. Chrysler employed over 100,000 people in 1979, and lawmakers worried that its financial collapse would have unacceptable consequences for the American economy.

Nothing so grand is at stake here. The Federal government, through the Federal Railroad Administration, is seriously considering loaning $2.3 billion to a struggling railroad called the Dakota Minnesota & Eastern (DM&E) to expand its service into the Wyoming coalfields.

Full disclosure: I work for Mayo Clinic, which has helped lead the Rochester, Minn. coalition opposing the DM&E expansion and this record taxpayer-backed loan.

It’s heartening to see a taxpayer organization come on to the scent of this stinky federal business. There’s no way taxpayers should be on the hook for a $2.3 billion loan to create a third railroad option for the Wyoming coal fields. It’s one thing to provide incentives to the railroads 150 years ago, when there were no transcontinental railroads and no other viable transportation options either.

Likewise, this morning’s edition of the Minneapolis Star Tribune has a strong

If you have followed the DM&E Railroad’s plan to upgrade tracks and send more trains through Rochester, carrying coal and tankers of toxic cargo by Mayo Clinic, you may wonder how such a bad idea has stayed alive so long…

This is not a NIMBY fight, nor a fair one, and the stakes are high: disruption to Minnesota’s fourth-largest city and risks to a world-class medical center. And there’s another reason the outcome should matter to people living far from Rochester: DM&E’s project is poised to get a $2.3 billion federal loan — more than the Chrysler bailout — despite opaque finances and a troubling safety record, and without a public hearing.

You can read the whole editorial here.

Author: Lee Aase

Husband of one, father of six, grandfather of 15. Chancellor Emeritus, SMUG. Emeritus staff of Mayo Clinic. Founder of HELPcare and Administrator for HELPcare Clinic.

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