Explaining To CSX’s Governor Why Schools Make Better Stimulus Than Unnecessary Freight Highways

You may have heard that Gov. Charlie Crist, R-CSX, will introduce President Obama during today’s stimulus pep rally in Fort Myers. “I am eager to welcome President Obama to the Sunshine State as he continues to work hard to reignite the U.S. economy,” Crist said in a statement. Good for him.

The CSX deal may or may not come up. But clearly, the Orlando cabal and Crist are selling it now as badly needed stimulus for the ailing Florida economy. It’s their best argument. Clearly, as you can tell from my giant post at Metro I-4 News yesterday, I’m a stimulus proponent. So this argument makes me sigh and think self-importantly of Kipling’s line: “If you can bear to hear the truth you’ve spoken twisted by knaves to make a trap for fools.”

First of all, this deal is not “shovel ready.” The bids are screwy. There are problems with the rail cars. Who knows what other landmines lurk? But put that aside. If all other things were equal, I might acknowledge some useful stimulative benefit in the tiny commuter portion of the state spending. If the state was paying just the $150 million it first announced as the A-line price and not directly hurting other communities in the process and putting on the hook for CSX’s screwups on our line, I’d support this deal. But none of those things are the case.

It was announced yesterday, by CSX business partner JD Alexander, that the state deficit this year is likely to reach $6 billion. Polk schools were already expecting a 10 percent budget cut. That will go up. Leading to this question: What is the best use of the dead money now set aside for CSX? The state says it’s like $450 million. Others think it’s closer to $600 million, depending on the status of the Ocala-area overpass construction. There’s more state money involved, but it’s more complicated to identify.

In my long piece at MI4, I cited a fascinating story about Japan’s experience with stimulus and near depression over the last decade or so. Here’s the relevent passage:

“…Nowhere is it written that road-building is stimulus, and everything else is pork. That’s just head-smashingly stupid. Read this terrific story in the New York Times about Japan’s decade-plus-long economic morass, which avoided depression through massive and often wasteful stimulus spending focused on beautiful bridges-to-nowhere and other capacity-increasing projects.

Money quote from the piece:

Moreover, it matters what gets built: Japan spent too much on increasingly wasteful roads and bridges, and not enough in areas like education and social services, which studies show deliver more bang for the buck than infrastructure spending. (Emphasis mine)

“It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo. “One lesson from Japan is that public works get the best results when they create something useful for the future.”

Infuriatingly, the Senate version of the stimulus bill trades out direct aid for states, almost all of which would go to help stave off major health care and education service cuts, in favor of pointless tax cuts. That state aid would go immediately into economic circulation by paying doctors, nurses, or teachers, and it would provide a vital service in the process by keeping people healthy and/or educated. Without it, the Polk School District will be furloughing employees. And much worse will come next year.

Building, say, an unnecessary freight superhighway designed to give a private company a dominant future business position with $600 million in tax money isn’t as effective as sustaining the vital economic and social activity around which communities have built their existence.”

Ask CSX, and they’ll tell you that they don’t need this deal, beyond the freight hub in Winter Haven. And they’ll imply they don’t even care if it happens. I think they’re being disingenuous, but that’s what they say. They already have the capacity to do what they want to do. This deal creates more overcapacity, which is the entire problem our economy suffers from today. One cannot say that education and health care suffer from overcapacity when we are cutting vital supply. CSX/the state will employ some contractor – probably from out of state – for temporary construction work. And then the freight portion of the project – which is the largest portion – will produce nothing of value to anyone but CSX and JD Alexander over the long term. That wouldn’t be so bad if the state, led by JD Alexander, wasn’t fired up to cut existing vital services that do produce long-term value in and of themselves, and also provide direct economic stimulus by keeping people employed who would otherwise get fired. But that is the case. Dead money. That’s what the freight portion of this deal is. And as of right now, it can be said, objectively: Charlie Crist cares far more about assuring CSX’s longterm business prospects than he does about keeping teachers and nurses employed.

By the way, if you live near Lakeland and want to hear firsthand what the cuts for education will mean, come to Harrison School of the Arts, where my daughter is a sophomore (full disclosure) Monday, Feb. 23, at 7 p.m. Superintendent Gail McKinzie will speak. Perhaps you can ask her what Polk schools could do with
a fair portion of the CSX money.