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May 15th, 2011

Iowa’s Golden Spike

By Nathan Tucker

Iowa Congressman Bruce Braley (D) reminds us that 142 years ago “the Golden Spike was plunged into the ground completing the first Transcontinental Railroad.”  Because this “monumental event transformed commerce in our state and in our nation,” all future railroad endeavors will do likewise and, therefore, Governor Branstad should please “urge the State House to pass the [Iowa] Senate-passed provisions related to the Chicago-Iowa City passenger rail route.”

In October of 2010, the Federal Railroad Administration, a division of the U.S. Department of Transportation, awarded a $230 million Intercity Passenger Rail Grant Program to build an Amtrak route between Chicago and Iowa City.  The grant is contingent, however, upon Iowans paying $20 million of the construction costs of the project, something House Republicans are so far unwilling to include in the budget for FY 2012.

To encourage reluctant state legislatures to spend the $20 million, Braley promises that “the project will create hundreds of Iowa jobs, and the new rail service is expected to increase business activity by $25 million per year.”  Not to be left behind, Democratic Senator Tom Harkin pledges that it “will create 588 jobs per year for the first four years of design and construction.”

Unfortunately, those numbers appear to be a tad exaggerated.  According to an analysis by the Iowa Department of Transportation (DOT), the project only “creates 209 jobs each lasting four years during the design and construction period.”  That’s 209 total jobs lasting four years in duration, not 588 new jobs each year for four years.

Certainly, though, Iowans could expect that hundreds of permanent Iowa jobs would be created as a result of this $250 million taxpayer investment.  Not quite.  According to the Iowa DOT, the project would only create “31 new operations and maintenance jobs,” plus “one or two maintenance gangs of five to six people, and a small number of track inspectors.”

$250 million creates approximately 50 new jobs?  For the same amount of money the government could create Nancy Pelosi’s utopian economy in which “people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance” by paying 5 million people a $50,000 compensation package to do nothing.

But at least the $250 million investment is creating something profitable, right?  After all, Amtrak has a well-earned reputation for never having turned a profit since its creation and for costing taxpayers over $30 billion in federal subsidies.  And the news gets even better for Iowans, with the DOT predicting that Iowa’s share of the annual operating deficit will only be $3 million a year.

But what about Braley’s claim that it will “increase business activity by $25 million per year?”  According to the Iowa DOT, the project will only create “$6.76 million (2010 dollars) of ongoing new business revenues in Iowa per year for the next 30 years as a result of operation and maintenance of the service.”

$6.76 million a year, while a far cry from $25 million, almost appears to make the project worthwhile.  Almost.  Except the DOT explains that it came up with its $6.76 million figure based on the guesstimated amount of money the permanent new employees would pay for “housing, food, and utilities.”  Wait…the roughly 50 new employees will spend $6.76 million a year?  That comes to $135,400 per employee per year.  Forget being a Pelosi artist, become an Amtrak employee.

Enough is enough.  Amtrak is a bankrupt business that, if it were privatized, would no longer exist, and that Iowa, if it were a private investment firm, would reject outright the notion of giving the rail company $20 million.  As Rep. Nick Wagner (R-Marion), the vice-chairman of the Iowa House Appropriations Committee, recently noted, “this as an opportunity not only to save $20 million at the state level, but $230 million at the federal level.”

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About the Author

Nathan W. Tucker
Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at [email protected]

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