Ohio conservatives: Good riddance to a bad loan

"Unless wasteful requests are continuously flagged by taxpayer advocates and soundly rebuked, deals where only one party benefits will sneak by, while the nation's taxpayers and the economies of Ohio and Midwest foot the bill."

The following article is by two respected Ohio fiscal conservatives — Ken Blackwell, former secretary of state and Republican candidate for governor, and Brad Smith, a professor of law at Capital University Law School. Ohio coal-fired power plants were often mentioned as potential beneficiaries of the proposed DM&E railroad expansion into Wyoming's coal-rich Powder River Basin.

Midwest doesn't need to be railroaded

Ken Blackwell & Brad Smith

Nobel Prize-winning economist Milton Friedman once said, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit."

Government, however, is different. Exchanges often seem to take place in which one private party benefits, and the taxpayers lose. One such deal is an outrageous proposed taxpayer-funded subsidy currently brewing in Washington.

This week, the Federal Railroad Administration declined a $2.3 billion loan application from a small South Dakota railroad with an accident rate eight times the national average.

Dakota, Minnesota and Eastern Railroad (DM&E) wanted to build over 250 miles of new track so that it can expand its enterprise and ship Wyoming Powder River Basin coal to the Midwest.

The loan was nearly approved.

Taxpayers were saved from this bad deal because of the collective outrage expressed by taxpayer advocates like the National Taxpayers Union, Citizens Against Government Waste and others. Budget Director Rob Portman also played an important part in halting the loan.

In 2003, before the railroad company caught the attention of the nation's fiscal watchdogs, it received a $233 million federal loan. It stands as the single largest loan awarded to a railroad and one DM&E is still paying off. To put that loan in perspective, Amtrak ranks a distant second with a $100 million loan granted in 2002.

The rest is here.