U.S. News questions proposed DM&E loan

The proposed taxpayer subsidized loan to the DM&E Railroad is making national news. Of the three national news weeklies — TIME, Newsweek and U.S. News & World Report — U.S. News is generally considered to be the most pro-business. Yet in the following article it calls into question how far the government should go in subsidizing private businesses.

Government bailouts of troubled businesses have a checkered history. Sometimes it's necessary and proves in the long run to be a good investment. But far too often the bailout ends up in the pockets of a few executives and key investors while small investors, creditors, employees and taxpayers get the shaft.

Read on:

Loading the Pork Train
A case study of why earmarks may be getting out of hand

By Danielle Knight
U.S. News & World Report, 5/29/06

The Mayo Clinic in Minnesota is internationally renowned for fighting cancer and other diseases. But lately it has been fighting a congressional "earmark."

During the final negotiations over the FY 2006 transportation bill, Sen. John Thune, a Republican from South Dakota, tacked on language that would dramatically expand a federal program and help a small railroad company in his state get a $2.5 billion government loan. The loan would allow the Dakota, Minnesota & Eastern Railroad to build new track right past the clinic, which says it would jeopardize sensitive equipment and increase the risk of nearby hazardous spills at one of the state's most important businesses.

Thune says he's helping his state. But Steve Ellis, with the budget watchdog group Taxpayers for Common Sense, calls it the "granddaddy of all earmarks," given its large price tag. Earmarks like this are getting a lot of attention in Washington these days. Earmarks, an increasingly popular form of pork-barrel spending, are special state or local projects attached to federal legislation, often without congressional debate. Earmarks are perfectly legal, though many of the current congressional corruption investigations revolve around lawmakers who are suspected of giving them out in exchange for campaign contributions, meals, gifts, and lavish trips.

(For the entire story, go here.)

LP