The World’s Most Expensive Bus Station

California’s high-speed rail project is a gigantic boondoggle that’s expected to require at least 12 more years of construction and cost overruns before the first trains run. That timetable, however, didn’t stop the single-party solons who run California from constructing a massive train station in San Francisco that will open later this year–more than 11 years before any trains arrive. For all those years, the facility will sit mostly unused, serving only as the world’s most expensive bus station. Literally millions of taxpayer dollars will be spent just to provide security to prevent the homeless from turning the world’s most expensive bus station into the world’s most expensive urinal.

San Francisco’s over-budget and oversize $2.4 billion Transbay Transit Center will open in December — but it’s going to cost an estimated $20 million a year to run the place, and no one knows where all the money will come from.

The three-block-long behemoth was envisioned as the Grand Central Station of the West, a dynamic hub for buses and high-speed rail that would draw more than 100,000 visitors a day.

Come opening day, however, there will be no high-speed rail. Instead, for many years, the five-level showcase just south of Mission Street between Second and Beale streets will be little more than the world’s most expensive bus station — serving mainly the 14,000 transbay bus commuters who roll in and out daily on AC Transit.
That reality is starting to sink in and has city officials scrambling — because without the big crowds that trains were supposed to bring in, there are serious questions about where all the money needed to keep the place secure, clean and well lit will come from.

With the transit center expected to stay open around the clock, officials say it will take at least 65 private security guards — plus police and sheriff’s deputies — as well as a staff of janitors, maintenance workers and others to keep the place from becoming a giant homeless camp.

Taxpayers and bridge commuters will probably be on the hook to pick up millions of dollars in costs, although the exact amount still isn’t known.

Meanwhile, the authority has been working for months to find a master lessee to run the transit hub, and to line up tenants for the 100,000-square-foot mall that will occupy a good portion of the building.

But there’s a problem.

Without the foot traffic that high-speed rail could draw, the mall is looking a lot less attractive to potential renters. That means the authority may have to offer sweetheart deals to lure stores — which, of course, means less money.

If nothing else, this whole fiasco offers an object lesson in the perils of government planning. Remember, there are good reasons why the Soviet Union collapsed. When government can’t even coordinate the opening of a new railroad with its station within 11 years, do you really want to put them in charge of your healthcare? Do you really want to leave it up to government to decide which antibiotics people need, and in what quantities? Or, say, how many maternity beds to provide?

In any event, if something like this train station fiasco had to happen in America, it’s probably no accident that it happened in loony left California.

Can’t wait to see how long it takes California to complete its transition into Venezuela del Norte.

$7 Billion, Down the Rat Hole

Wanna know how the federal government spends your hard-earned tax dollars? A new report reveals that the Department of Education burned through $7 billion–that’s billion with a ‘b’–with literally nothing to show for it.

One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis.

Test scores, graduation rates and college enrollment were no different in schools that received money through the School Improvement Grants program — the largest federal investment ever targeted to failing schools — than in schools that did not.

The Education Department published the findings on the website of its research division on Wednesday, hours before President Obama’s political appointees walked out the door.

“We’re talking about millions of kids who are assigned to these failing schools, and we just spent several billion dollars promising them things were going to get better,” said Andy Smarick, a resident fellow at the American Enterprise Institute who has long been skeptical that the Obama administration’s strategy would work. “Think of what all that money could have been spent on instead.”

Yeah, I’ve thought about it. At the current median price of a new home ($305,000), it’s enough money to build 23,000 houses. That’s enough to put about 60,000 people–the entire population of a small city like, say, Canton, Ohio–into new homes. You could literally build a Canton from scratch.

At the average current price of a new mid-size car ($26,000), you could give every household in the state of Delaware a brand new car. Everybody in the whole state gets up in the morning to find a brand new car in their driveway.

But we’ll never see those new cars or homes because the federal government wouldn’t allow it. They left the taxpayers empty-handed.

If terrorists or an invading foreign army burned to the ground a small American city, we wouldn’t hesitate to go to war. But the Department of Education does the equivalent and nobody is even fired or demoted.

The Department of Education did not even exist for the first 200 years of the United States. It was created during the failed presidency of Jimmy Carter. Can we ever get rid of it?

On Rolling Back Government, GOP Talking Big

When it comes to rolling back the federal government, the GOP has been talking big lately.

Donald Trump is ready to take an ax to government spending.

Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned.

The changes they propose are dramatic.

The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.

The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely.

Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.

A trillion a year? I’d be gobsmacked if all this actually transpired. Does Trump really believe he can achieve all of it? Maybe he’d settle for less and this is just his opening offer to the Democrats.

Meanwhile, the GOP House has passed some very significant regulatory reforms. First, the REINS Act.

The Regulations from the Executive in Need of Scrutiny (REINS) Act would require any regulation which would have an economic impact of $100 million or more to pass Congress and be signed by the president. If the regulation failed to do so after 70 days, it would become null and void.

The REINS Act sounds like a huge step towards restoring Constitutional government, according to which laws are voted on by the people’s elected representatives in Congress, rather than imposed on the people by unelected bureaucrats in the executive branch.

REINS sounds great to me, but law scholar Richard Epstein has some objections to the ‘factual review’ provisions that are beyond my pay grade. Epstein likes better another bill that has been introduced in the House, the Separation of Powers Restoration Act (SOPRA).

Its key provision reads that any court reviewing administrative action shall “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.” “De novo” review means that the reviewing court gives no deference to the legal opinions of either the parties or lower court judges and administrators.

This compact and straightforward provision, which should be promptly enacted, takes aim at two of the most misguided decisions of administrative law that instructed courts to take a deferential stance toward agency actions interpreting the key statutes and regulations they administer. The first of these cases, Chevron USA Inc. v. NRDC (1984), written by Justice John Paul Stevens, insisted that in all ambiguous cases, reviewing courts should defer to an agency interpretation of its governing statute. Auer v. Robbins (1997), written by the late Justice Antonin Scalia, similarly held that for an agency’s “own regulations, [its] interpretation of it is, under our jurisprudence, controlling unless ‘plainly erroneous or inconsistent with the regulation.’”

Letting the courts smack down the bureaucrats’ interpretations of law sounds great to me. But one thing Epstein doesn’t mention is that none of these bills can get enough Senate votes to override a Democrat filibuster. There’s just no way they can become law in this Congress, and the House must know that very well. Which raises the question: if it can’t become law, then what’s the point? Political grandstanding?

Given that the GOP House knows the bill can’t become law, there’s no cost to the members in voting for it. Which also means there’s no evidence they really support the legislation. Passing a dead-end bill doesn’t prove they really mean it.

Trump: Schools are ‘Flush with Cash’

I didn’t watch President Trump’s inaugural address, but he apparently made a controversial statement about America’s schools being ‘flush with cash.’ This statement was denounced by the usual assortment of fraudsters and freeloaders who are the bane of what remains of our civilization.

Donald Trump lies.

If you haven’t learned that yet, America, you’ve got four more cringe-inducing years to do so.

Even in his inaugural address, he couldn’t help but let loose a whooper [sic] about US public schools.

“Americans want great schools for their children, safe neighborhoods for their families and good jobs for themselves,” he said. “But for too many of our citizens, a different reality exists. … An education system flush with cash but which leaves our young and beautiful students deprived of all knowledge.”

Los Angeles Unified School district routinely has broken desks and chairs, missing ceiling tiles, damaged flooring, broken sprinklers, damaged lunch tables and broken toilet paper dispensers.

They’re flush with cash!?

New York City public schools removed more than 160 toxic light fixtures containing polychlorinated biphenyls, a cancer causing agent that also hinders cognitive and neurological development. Yet many schools are still waiting on a fix, especially those serving minority students.

They’re flush with cash!?

At Charles L. Spain school in Detroit, the air vents are so warped and moldy, turning on the heat brings a rancid stench. Water drips from a leaky roof into the gym, warping the floor tiles. Cockroaches literally scurry around some children’s classrooms until they are squashed by student volunteers.

They’re flush with freakin cash!?

Are you serious, Donald Trump!?

Well, let’s take a look at the figures. The U.S. Census Bureau publishes data on school spending, but those figures are typically incomplete and underestimate the true amount of spending. A few years ago, Adam Schaeffer of the Cato Institute found that schools usually leave important categories of spending out of their reported figures. For instance, the Los Angeles Unified School District reports spending only about $11,000 per student, but this figure does not include capital spending financed by bond issues. Here are the figures Schaeffer estimated for fiscal year 2008:

New York City: $21,543 per student.

Los Angeles: $25,208 per student.

Keep in mind that those figures are from way back in 2008. Spending now must be considerably higher; LA in particular probably now exceeds $30,000 per student. By comparison, at private schools in the LA area, the average is something like $12,000.

Schaeffer did not obtain an estimate for Detroit, but the Census reports $14,197 for 2014, which is probably an underestimate, and in any event, above the national average and well above what private schools spend.

$30,000 in LA should be enough to send a pupil to a fancy private school with a polo field and a personal Uber ride to school every morning. But put government in charge and what we get for that kind of spending is “broken desks and chairs, missing ceiling tiles, damaged flooring, broken sprinklers, damaged lunch tables and broken toilet paper dispensers.” What a disgrace.

With the possible exception of the major news media (another Trump nemesis), public schooling must be the worst-performing industry in America. Kudos to Trump for pointing this out.

U.S. House Revives Rule Enabling Congress to Fire Bureaucrats

Civil service laws have had the unfortunate consequence of allowing the federal bureaucracy to become politicized and relatively unaccountable. That lack of accountability is why Franklin D. Roosevelt referred to the bureaucracy as the “fourth branch of government.” The bureaucracy badly needs to be reined in, but civil service laws prevent the president from firing even the lowliest bureaucrat.

Congress, however, can fire a bureaucrat anytime it wants. In fact, House Republicans this week reinstated a rule that allows a majority vote of both houses to eliminate the salary of any individual bureaucrat or group of bureaucrats. The rule is based on a law that dates back to 1876, but hasn’t been included as part of House rules since 1983.

The Washington Post report on this development is notably tendentious, taking the side of the bureaucrats, who make up a large part of the Post’s audience.

The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to propose amending an appropriations bill to single out a government employee or cut a specific program.

The use of the rule would not be simple; a majority of the House and the Senate would still have to approve any such amendment. At the same time, opponents and supporters agree that the work of 2.1 million civil servants, designed to be insulated from politics, is now vulnerable to the whims of elected officials.

Aw, so they can be fired on a whim? Well, so can every private sector worker in America. In the private sector, your boss can fire you even if he just does not like the color of your tie. This legal principle is called “employment at will.”

The government bureaucrats are supposed to be working for the taxpayers. If bureaucrats aren’t accountable to the taxpayers’ representatives in Congress, then to whom should they be accountable? To only their god? Does the Post propose to elevate the bureaucracy to a kind of privileged aristocracy?

The rule was the first thing House Minority Whip Steny H. Hoyer (D-Md.) railed against in a floor speech Tuesday.

“Republicans have consistently made our hard-working federal employees scapegoats, in my opinion, for lack of performance of the federal government itself,” he said.

Some, I presume, are hard-working, but many don’t do any work at all. A couple of years ago, EPA bureaucrats were caught watching porn for hours every day because they ‘didn’t have enough work to do.’ Thousands more bureaucrats are too incompetent to be trusted with responsibilities, so their supervisors give them no work to do. They literally do nothing, but still show up and get paid. This situation is sometimes called ‘internal exile.’ Is it OK with Hoyer if we fire the non-working bureaucrats in internal exile?

In light of recent inquiries by the Trump transition team about a list of Energy Department scientists who have worked on climate change, advocates for federal workers say they worry that bureaucrats could be targeted for political reasons.

But political reasons are the best reasons. Politics is just a term that refers to how a society makes choices. In a democratic republic, those choices are properly made by elected officials, not bureaucrats. If bureaucrats are to be fired, then the best reasons for doing so are political, not personal.

Democrats and federal employee unions say the provision, which one called the “Armageddon Rule,” could prove alarming to the federal workforce because it comes in combination with President-elect Donald Trump’s criticism of the Washington bureaucracy, his call for a freeze on government hiring and his nomination of Cabinet secretaries who in some cases seem to be at odds with the mission of the agencies they would lead.

So these bureaucrats who are supposed to be non-partisan and non-ideological nonetheless find themselves ‘at odds’ with Trump’s appointees. See, that’s the problem.

“This is part of a very chilling theme that federal workers are seeing right now,” said Maureen Gilman, legislative director for the National Treasury Employees Union, which represents 150,000 federal employees.

We’ll give the last word to Mr. Krabs.

PLEASE Abolish a Cabinet-Level Department

Every time the media issues a report that President-elect Trump has chosen someone to serve as Secretary of Such-and-Such federal department, I am overcome with a profound feeling of disappointment. Instead of staffing these departments, they should be abolished. Indeed, the existence of most cabinet-level departments–Energy, Education, Agriculture, Veterans Affairs, HUD, Transportation, etc.–cannot be justified on economic grounds. All these federal departments do more harm than good.

At the Washington Examiner, Peter Z. Grossman, an economics professor at Butler University, makes the case against the Department of Energy in particular. As Grossman correctly notes, DOE was created during the Carter Administration, a time when people wrongly feared that the world was rapidly running out of fossil fuels.

The DOE was conceived in dark and pessimistic beliefs and forecasts that have proven totally wrong. As Obama might say, the DOE is on the wrong side of history. As it stands the department needs to either be rethought or retired.

The original legislation justified a Department of Energy because, 1) we were rapidly running out of fossil fuels, especially oil and natural gas; 2) as a consequence of this we were becoming increasingly dependent on energy imports — dependence that made us vulnerable to embargoes and political blackmail; and 3) so therefore we needed “a strong national [read government-directed] energy program.”

The hysteria that prevailed at that time was reflected in a full-page ad that appeared in the Wall Street Journal in 1978. The ad asserted that within 9 years, that is by 1987, the world would completely run out of oil. That’s right; we were supposed to be out of oil thirty years ago! Instead, proven oil reserves currently stand at an all-time high.

Even before fracking proved the dire warnings to be utterly wrong, we had for the most part taken care of our energy dependence. We significantly reduced any possible vulnerability to an embargo by diversifying our suppliers; over sixty countries were supplying us with oil in the 2000s. Our No. 1 supplier? Canada. Mexico also has been in the top five. This information makes “foreign oil,” a bit less scary, no?

So DOE was created to protect us from a threat that did not really exist. And in the meantime, it has racked up a legacy of failure and imposed costly mandates on Americans.

[W]e’ve endured wasteful, panicked policies such as massive subsidies for the wind and solar power, and electric cars. Worst of all, Congress has saddled consumers with ethanol subsidies and mandates. These boondoggles cost us billions of dollars, and none of them are [sic] commercially viable in their own right. In fact, the DOE has produced no dramatic breakthroughs in energy technology despite 40 years of trying (and failing) to pick winners.

Grossman correctly points out (as Milton Friedman did long ago) that DOE’s very few useful functions can easily be taken over by other departments.

Many would argue that the DOE does some good, even essential work. It watches over nuclear waste, for example. And there is some useful research and development going on at many of the DOE laboratories.

But any valuable work done by the DOE could be carved off into independent agencies just as the Federal Energy Regulatory Commission (FERC) was created by Congress so that the DOE would not have control over natural gas prices. Nuclear power concerns should be part of the Nuclear Regulatory Commission (NRC), and the labs could be placed under an independent agency such as the Energy Research and Development Agency (ERDA) that existed from 1974 until it was folded into the DOE three years later.

Grossman notes that Trump’s nominee for Energy Secretary, former Texas governor Rick Perry, actually advocated abolishing DOE when he ran for president in 2012. Let’s hope Perry still believes that, and that he intends to take over DOE so he can dismantle it. I’m not holding my breath, however.

Below, check out the interview from 1999 with the great Milton Friedman, age 86 at the time. Out of 14 cabinet-level departments, Milt argues for abolishing nine and a half of them. At this point I would consider it great progress if the Trump Administration managed to abolish just one of those nine-and-a-half.

Revealed: The Pentagon Supports More than ONE MILLION Desk Jobs

We wrote previously about how we like to ask people how many bureaucrats work at the federal Department of Agriculture. Many people make only a four-figure guess like 3,000 or 5,000. Occasionally, someone will guess as high as 50,000. The real answer is about 106,000. What do all those people do?

Now for the first time a study has pierced the government’s veil of secrecy to report a summary of employment at the Pentagon. The Pentagon put together a board of “corporate experts” to do the study. As part of the study, the experts made a count of the number of people working desk jobs far from the front. These are people, mostly civilians, working in the Pentagon’s “business operations,” providing back-end support services such as logistics, procurement, accounting, and property management. So how many desk jobs does the Pentagon support? More than one million.

“We are spending a lot more money than we thought,” the report stated. It then broke down how the Defense Department was spending $134 billion a year on business operations — about 50 percent more than McKinsey had guessed at the outset.

Almost half of the Pentagon’s back-office personnel — 457,000 full-time employees — were assigned to logistics or supply-chain jobs. That alone exceeded the size of United Parcel Service’s global workforce.

The Pentagon’s purchasing bureaucracy counted 207,000 full-time workers. By itself, that would rank among the top 30 private employers in the United States.

More than 192,000 people worked in property management. About 84,000 people held human-resources jobs.

The one million includes the hiring of some 268,000 outside contractors, a shadowy business that ends up costing taxpayers an average of $180,000 per contractor.

Although the board of experts was commissioned by top leadership at the Pentagon itself, after the study uncovered massive waste, the Pentagon ditched the report and tried to cover up the findings. In particular, the Pentagon feared that the board’s plan to eliminate $125 billion in waste over five years would cause Congress to make budget cuts.

For the military, the major allure of the study was that it called for reallocating the $125 billion for troops and weapons. Among other options, the savings could have paid a large portion of the bill to rebuild the nation’s aging nuclear arsenal, or the operating expenses for 50 Army brigades.

But some Pentagon leaders said they fretted that by spotlighting so much waste, the study would undermine their repeated public assertions that years of budget austerity had left the armed forces starved of funds. Instead of providing more money, they said, they worried Congress and the White House might decide to cut deeper.

So the plan was killed. The Pentagon imposed secrecy restrictions on the data making up the study, which ensured no one could replicate the findings. A 77-page summary report that had been made public was removed from a Pentagon website.

In other words, the fact that the study uncovered so much waste shows that all that talk of austerity was a huge lie.

“They’re all complaining that they don’t have any money. We proposed a way to save a ton of money,” said Robert “Bobby” L. Stein, a private-equity investor from Jacksonville, Fla., who served as chairman of the Defense Business Board.

Stein, a campaign bundler for President Obama, said the study’s data were “indisputable” and that it was “a travesty” for the Pentagon to suppress the results.

“We’re going to be in peril because we’re spending dollars like it doesn’t matter,” he added.

While ordinary American households are clipping coupons to save a couple of bucks, the Pentagon is blowing through their hard-earned tax dollars like it’s play money.

throwing-money-away

Reminder: Nutritionists are Quacks

Writing in the Boston Globe, Barbara Moran has a pretty good piece summarizing how bad has been conventional dietary advice over the past several decades. Nutritionists and supposed experts told us with great confidence that low-fat was the way to go. In response, the food industry created a plethora of low-fat versions of traditionally fatty products: cookies, ice cream, yogurt, etc. But the science was not so settled as they led us to believe. As Americans ate less fat, they got fatter.

The problem is that a low fat product or diet almost inevitably replaces the fat with more carbohydrates, which causes the body to produce insulin. And insulin induces the body to store fat.

We digest simple sugars and refined carbohydrates (white rice, pasta, and bread) very quickly, causing elevated blood sugar. So our bodies tell the pancreas to release insulin, which lets our cells remove the extra sugar from the bloodstream. It’s a beautiful, elegant system, until we throw it off by eating three bowls of Froot Loops and spiking our insulin into the sky.

“Insulin is the Miracle-Gro for your fat cells,” says David Ludwig, a professor of nutrition at Harvard’s public health school and director of the New Balance Foundation Obesity Prevention Center at Boston Children’s Hospital. “When we eat foods that raise insulin too much,” he says, “it programs the fat cells to store more than their fair share of those incoming calories.” The result: hunger and more eating. “High-fat foods like olive oil, nuts, avocado, full-fat yogurt have a lot of calories but they’re intensely satiating, in part because they don’t raise blood sugar or insulin very much,” says Ludwig. “So the incoming calories don’t get as easily stored into fat cells and are more available for the rest of the body.”

Scientists like Ludwig blame the anti-fat years, in part, for today’s obesity epidemic. “I argue that the low-fat diet was a massive public health mistake, which is causing ongoing harms because it continues to pervade public consciousness and national nutritional policy,” Ludwig says.

Indeed, low-fat dogma does continue to “pervade…national nutrition policy.” Check out the following government-sponsored stupidity.

The 2012 National School Lunch Nutrition Standards banned whole milk but allowed chocolate skim milk with its added sugar. The National Institutes of Health website lists fat-free creamy salad dressing and fat-free sour cream as “almost anytime” foods while sticking nuts and avocados in the “sometimes” food category, alongside sports drinks and ginger snaps.

Even Moran’s article, although it challenges the conventional wisdom, does not go far enough in its defense of fat. She seems to be under the impression that only plant-based fats like nuts and olive oil are healthy, and not animal fats. In fact, the latest research shows that animal fats are healthy, or at least not unhealthy. We reported previously, for instance, on studies showing that whole milk is actually healthier than low-fat or skim milk.

In any event, Moran’s article is at least a step in the right direction, and evidence that people’s thinking is starting to change. There’s still a long way to go, however, and entrenched interests to overcome. For instance, when one doctor in Australia tried to tell the public the truth about fat, professional dieticians tried to use the regulatory agency to shut him up.

DR GARY FETTKE: What I have been advocating for some years is cutting sugar down, particularly the refined sugars in the diet.

Over time that’s evolved to what I call low carb healthy fat living.

It’s really not high fat eating, it is eating lots of vegetables and lots of pasture-fed meat and the right amount of oil in the form of nuts, avocado, cheese, olive oil and fish.

NATALIE WHITING: He started calling for changes to the food served in the Launceston general hospital and then criticising a lack of action.

DR GARY FETTKE: I can promise that I tried going to these areas of the hospital saying, “Can we meet? Can we meet? Can we discuss?” And it just didn’t happen.

And so ultimately I tried to get louder and getting louder within the hospital wasn’t happening so I then started going to another forum which was out to the public.

NATALIE WHITING: According to Dr Fettke an anonymous complaint from a dietician at the hospital sparked an investigation by the Australian health practitioner regulation agency known as AHPRA.

Two-and-a-half years later the watchdog found he was working outside his scope of practice and was not qualified to give specific nutritional advice and he was ordered to stop talking about the low carbohydrate, high fat diet or LCHF.

DR GARY FETTKE: I have been contacted by many doctors. I know that the AMA has been contacted by many doctors as well as the Medical Protection Society. What does it mean?

You go to your cardiologist and he tells you what to eat. You go to a neurosurgeon, he tells you what to eat.

Gastroenterologist – and all of them by definition don’t have a major training in nutrition but they are all giving advice.

NATALIE WHITING: It wasn’t just advice to patients that worried AHPRA. A website and social media accounts he operated also came under scrutiny.
[…]
MELANIE MCGRICE, DIETICIAN: Doctors and other health care professionals play a very important role but when it comes to medical conditions and tailored dietary advice that is where people need to going and speaking to an accredited practising dietitian.

Yeah, Melanie, the problem is that ‘accredited practising dietitians’ like you are the same people who dished out wrongheaded advice for the last forty years. That’s why we need robust and free debate and not attempts to use the fallacious ‘argument from authority’ to shut people up.

At this point, I’m adding dieticians to my list of ‘credential experts’ whose advice is so systematically piss-poor that you’re better off pulling a Costanza and doing the opposite.

  • Dieticians/ Nutritionists
  • Chiropractors
  • Environmentalists
  • Marriage counselors
  • Paul Krugman

No credibility.

expert

The Great Higher-Ed Bailout

A new report by the General Accounting office finds that the Department of Education dramatically underestimated losses on student loans. For loans made during the past eight years, the agency underestimated losses by more than half. For loans made between 1995 and 2017, GAO estimates that taxpayers will have to foot the bill for nearly…wait for it…40 percent of loans.

To help people manage their student loans, the Obama administration has expanded programs that cap monthly payments to a percentage of earnings and eventually forgives the balance. Enrollment in these income-driven repayment plans is soaring and so is the cost, but the government’s budget estimates are not keeping pace…

The GAO estimates that $215 billion, or 61 percent of the debt in income-driven plans, will be paid in full. Another $108 billion will be forgiven, with the remaining $29 billion discharged because of death or disability. But those estimates are only for loans made from 1995 to 2017. As more people sign up, the cost of the program will soar.

So the required taxpayer bailout for loans made thus far is already $108 billion, and as loans continue to be made, the cost is expected to increase exponentially. After just a few more years, we could be looking at $200 billion. As the old saying goes, a hundred billion here, a hundred billion there, pretty soon you’re talking real money.

Despite the size of this problem, it doesn’t seem to be stirring much controversy. I’m old enough to remember when the 1979 bailout of Chrysler was hugely controversial, even though the amount was only about $5 billion in terms of today’s income levels. The so-called Chrysler bailout wasn’t even a gift from taxpayers, or even a loan from taxpayers. It was just a taxpayer guarantee that enabled Chrysler to obtain private financing, and a few years later, Chrysler repaid the loan at no cost to taxpayers.

The 1989 bailout of depositors in the collapsed Savings and Loan industry did impose a cost on taxpayers, to the tune of about $250 billion in today’s dollars. That total might start to be approached by the student loan program, unless changes are made, after just a few more years.

“As the Trump administration comes into power they need to take a measured approach that develops a program that is well targeted to the neediest borrowers,” said Michelle Asha Cooper, president of the Institute for Higher Education Policy. “Regardless of who’s in power, the issue of college affordability is a real problem, and while these plans are helpful, they are not a solution.”

Federal subsidies to tuition purchases do not make college more affordable, they just allow colleges to keep overcharging. Subsidies to demand will inevitably bid up prices. That’s just basic supply and demand analysis.

It’s not the students who are getting bailed out by taxpayers. It’s the universities, or more specifically, the bloated university bureaucracies.

The Trouble with Stadium Subsidies

A reporter in Chicago asked me to comment on government subsidies for constructing new stadiums and sports arenas. Here was my reply.

Most studies show that sports arenas do not deliver the promised economic benefits. The idea is that the sports facility will attract commerce and revitalize the downtown area of the city. But studies show it does not work very well. People commute in from the suburbs to see the game, then go back out. Maybe they spend a little money at a nearby bar or restaurant, but it doesn’t amount to much.

Even to the extent that the policy might work, economists aren’t too impressed with it because it is a ‘beggar-thy-neighbor’ effect. That is to say, the additional commerce that occurs downtown comes at the expense of the suburbs. So people eat more meals downtown, supporting a few more downtown restaurants. But they eat correspondingly fewer meals at suburban restaurants, causing the suburban market to contract. The result is merely a shift in economic activity from one geographic area to another, but there is not more economic activity overall.

In any event, even the ‘beggar-thy-neighbor’ effect turns out not to amount to much in practice.

Another problem with stadium subsidies is that the money doesn’t always get spent wisely on the stadium itself, simply because nobody spends somebody else’s money as carefully as they spend their own. So with subsidies available, teams build a new facility even if the old facility still optimally has many remaining years of useful life. Then they opt for the grandest version of the new facility, spending on opulent amenities like perhaps a retractable dome that might not in fact be necessary.

Public funding of new stadiums amounts to a taxpayer subsidy of millionaire owners and athletes, at the expense of public services. The subsidies are unnecessary, because the sports industry can and should be able to privately finance its own facilities. Prior to the 1960s, virtually all sports facilities–most of them built for either boxing or baseball–were financed privately, by the teams themselves. That’s how all the classic ballparks like Wrigley Field, Fenway Park, and the first Yankee Stadium, were financed. There’s no reason why the same thing couldn’t happen today.

In 2006, Larry Hadley and I published a study in the Journal of Business showing that the additional revenue from a new baseball stadium would mostly cover the team’s financing costs. A new facility generates considerable additional revenue in the form of expanded ticket sales at higher prices, and in particular, new revenues from luxury boxes. Over time, these additional revenues can cover most or all of the construction costs.

Teams have gotten many public subsidies in recent decades not because of any economic necessity, but because they were able to execute a successful extortion racket against local taxpayers. The threat is that, if they don’t get the subsidies, they’ll move the team. And the league helps to make the threat credible by leaving at least one viable market without a team, like the NFL and Los Angeles.

If taxpayers everywhere were somehow able to resist the extortion, teams would have no choice but to pay for sports facilities themselves, the way they did prior to the 1960s. That would free up public money to spend on things other than further enriching people in the sports industry; things like actual public needs like crumbing infrastructure and unfunded pensions. I would like to turn back the clock to 1960 when teams were expected to build their own facilities, but I’m not sure how we get there.