By Andy Mannix
By Caleb Hannan
By Olivia LaVecchia
By CP Staff
By Aaron Rupar
By Jacob Wheeler
By Olivia LaVecchia
By Aaron Rupar
Last month, when Minnesota senators Norm Coleman and Mark Dayton were set to cast their votes on the controversial, 1,200-page federal energy bill, both lawmakers went to great lengths to hammer home a common point: Minnesotans, they claimed, stood to reap enormous benefits from the bill.
In the case of some Minnesotans, the senators were absolutely correct. If enacted, the bill would effectively double federal ethanol subsidies over the course of the next decade, a huge boon for the state's corn producers. It would also provide an assortment of generous tax credits and other subsidies for bio-diesel, which would benefit the state's soybean farmers. And then there is the most astonishing, Minnesota-specific provision: an $800 million loan guarantee to a fledgling Minnesota company--with no real assets or track record but good political connections--that plans to build a "clean coal" power plant on the Iron Range.
Coleman was so smitten by the latter project (and, undoubtedly, the prospect of making political inroads into the traditionally Democratic, but job-starved, Iron Range) that he announced his willingness to support a bill provision that would open the Arctic National Wildlife Refuge to oil exploration--a full reversal of his previous position on the issue. Even by D.C. standards, it was an egregious bit of horse-trading. As it happened, it was also unnecessary: The ANWR provision was ultimately stripped from the bill.
For his part, Dayton claimed that voting in favor of the energy bill was among the most difficult decisions of his political career. Like many critics, he bristled at its environmentally objectionable aspects, most notably a provision that eliminated liability for the manufacturers of a gasoline additive called MTBE, which has polluted water supplies across the country
Both Dayton and Coleman were conspicuously silent, however, on the biggest and most obvious problem with the bill. At a total cost to taxpayers of as much as $95 billion, it was as laden with pork as any piece of major federal legislation in recent memory.
As soon as the particulars were leaked from all those Republican-only, behind-closed-doors sessions in which the myriad giveaways and tax breaks were hammered out, the bill was widely and robustly derided as a public-policy train wreck. And it wasn't just Democrats raising hell. Republican budget hawks like John McCain, conservative think tanks like the Cato Institute, and countless others from across the political spectrum weighed in with a litany of criticisms. As it turned out, the outrage was enough to spark a filibuster in the Senate, which kept the bill from a final floor vote.
But while parliamentary maneuvering killed the energy bill in the short term, most observers expect it to be revived early in the new year, and in much the same form. And both of Minnesota's senators--the supposedly fiscally conservative Republican Coleman and the supposedly environmentally sensitive Democrat Dayton--will once again be counted among its key backers.
"He's voting for the bill because it's good on ethanol, and there's a significant project for the Iron Range," explains Chris Lisi, Dayton's communications director. "Any project that brings jobs to the Iron Range, Senator Dayton is not going to hesitate to support. And that's pretty much all we're willing to say on it. We just don't know enough to say anything else."
In the view of the energy bill's many critics, such narrow, grab-what-you-can thinking is precisely the problem. Consider the clean coal plant on the Iron Range. Most experts regard the project as a risky and wasteful commitment of public dollars. Environmentalists note that while the technology employed--called coal gasification--can reduce many of the harmful emissions associated with coal power plants, it won't do much to reduce the emission of carbon dioxide, the key global warming gas. Dollar-oriented critics doubt the plant will produce electricity at competitive prices.
"It's probably going to fail, and then we--the taxpayers--are going to be stuck with loan guarantees," says Keith Ashdown, vice president of the nonpartisan advocacy group Taxpayers for Common Sense. Ashdown observes that most clean coal plants in the country have been failures. At the same time the energy bill provides loan guarantees for clean coal on the Iron Range, he points out, it also provides loan guarantees to convert a shuttered clean coal plant in Alaska into a traditional coal plant.
Meanwhile, both Dayton and Coleman have positioned their support for ethanol subsidies as a push for more environmentally friendly fuel and a stab at reducing our national dependence on foreign oil. The evidence for such arguments is weak at best. According to a General Accounting Office study, for instance, an increased use of ethanol results in slightly lower carbon monoxide emissions. But it also results in slight increases in ozone precursors, owing to a higher rate of evaporation. Translation: For corn growers, ethanol may be the best thing since sliced bread; for the rest of us, it's a boondoggle. Besides, Ashdown adds, the legislation will only increase ethanol's share of the fuel market from 1.6 percent to 2.2 percent. "In terms of overall production, it's basically a hiccup," he says. "It will do very little, if anything, about our dependence on oil. This is probably one of the best financial guarantees for any industry in the history of the United States, but it has very little to do with the energy production."
When Congress reconvenes in the new year, the energy bill will not be the only major spending initiative set to test senators' commitment to ideology against their love of pork--and, in the case of Minnesota senators, their love of agribusiness giants like Cargill and Archer Daniels Midland. Consider the U.S. Army Corps of Engineers' pending proposal to spend as much as $2.3 billion on expanding and rebuilding the navigation locks on the upper Mississippi and Illinois rivers.
To date, Dayton has yet to take a formal stance on the project. Coleman, as well as several other members of the Minnesota congressional delegation, has already formally declared his support for "lock modernization." According to the Corps--and their politically powerful allies in agribusiness and the barge industry--the expansion is necessary to reduce shipping delays on the river and accommodate a projected increase in barge traffic.
If this sounds familiar, it's because the Corps came out with a very similar study justifying the project four years ago, only to suffer a colossal embarrassment when the agency's own economist, Donald Sweeney, blew the whistle on the Corps for cooking their books. Sweeney was removed from his position after concluding there was insufficient economic justification for lock expansion. After a major Pentagon investigation, Sweeney was vindicated and given whistleblower protection, while three top Corps brass were reprimanded for their roles in the fiasco.
So what does Sweeney make of the Corps's latest navigation study?
"In my opinion, it's absolutely worse," Sweeney asserts. "It's a decided step backwards." He points out that one of the chief forecasting tools used in the study--called a tow cost model--should not have been employed because it fails to account for what economists refer to as market elasticity. "The tow cost model is simply biased and will lead to large overestimates of the benefits. The two other models [employed in the study] use hypothetical numbers which are not derived from any analysis of real-world shipping patterns."
Sweeney, who is on leave from the Corps and no longer speaks for the agency, notes striking similarities in the flawed economic justification for the lock expansion project and the outright boondoggles of the energy bill. And he points out an intriguing irony: If the energy bill is passed in current form, much of the corn production that is supposed to drive up barge traffic on the river will instead be diverted by rail and truck to regional ethanol production facilities.
In other words, it will likely be a case of one pork project undermining another.
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