The Heritage Foundation

Backgrounder #1502 on Federal Budget

November 8, 2001

November 8, 2001 | Backgrounder on Federal Budget

Lobbyists Continue to Use Tragedy to Raid American Taxpayers - An Update

Ordinary Americans discovered quite a bit about themselves in the aftermath of the September terrorist attacks.  Selfless and self motivated, individuals and families took the initiative, seized the moment, and organized themselves into a fearsome relief force that locked arms with strangers to save lives and comfort the distressed.  They also discovered an extraordinary capacity for sacrifice -- of time, of money, and of lives.  By the end of October, private contributions to disaster relief exceeded $ 1 billion.[2]

But they also discovered a lot about some of their government leaders, and probably more than they wanted to know about Washington's peddlers of influence and favor, many of whom saw the calamitous events as an opportunity to profit from catastrophe by wrapping themselves in the flag, or posing as victims.  Where ordinary Americans saw the terrorist attack as a challenge demanding a sacrifice of themselves for the good of others, many of Washington's elites saw an opportunity to sacrifice others for the good of themselves, or of their influential constituents.

Several of the Washington DC area officials were quick to prove they weren't cut from the same cloth as the hundreds of fireman who dug through the debris of the shattered Pentagon, or the dozens of local school children who made sandwiches for those rescue workers and, with their moms, delivered them to the crash site.  With as much as half of the $40 billion federal rescue package dedicated to disaster relief for Pennsylvania, New York and Virginia, Congressman Jim Moran (D-VA), who represents the Virginia suburbs, exclaimed "It's an open grab bag, so let's grab." Virginia's Governor Gilmore responded accordingly and asked for more than $3 billion, a sum that also includes transportation infrastructure spending unrelated to damage from the terrorist assault.[3]  

One state transportation official hopes that some of the money can be used to start the $3 billion proposed light rail line connecting the Virginia suburb of Falls Church with Dulles airport, eight miles away.[4]   In the assault's aftermath, local rail buffs argued the line could help evacuate Washington, DC, a need that last occurred in 1814 when the British attacked the city and set fire to the Capitol and White House.  The idea here, one supposes, is that in a similar emergency hundreds of thousands of workers will hop a train to Virginia and transfer to another heading for the airport.  Once there, well-to-do evacuees would presumably have the opportunity to fly to remote hideaways, while those of more modest means could mill around the long-term parking area until the all clear siren sounds.

Although the federal relief package offered no dedicated set aside for the city of Washington DC because it incurred no direct damage, local officials were undeterred in their pursuit of money. Mayor Williams of the District of Columbia first showed a rare and commendable measure of restraint when he asked for $150 million in federal aid, but the City Council wanted more. Republican Councilwoman Carolyn Schwartz demanded of Mayor Williams: "We should be asking for billions with a B.  I would run and grab as much as you can legitimately get…" [5] which the Mayor proceeded to do by upping the request to $900 million.[6]   Included were millions of dollars for the DC fire department, an understandable request given the embarrassing  allegations that some DC firemen had stolen costly high tech equipment from a Virginia fire department while both fought fires at the Pentagon.[7]  

Not to be outdone, New York's Governor George Pataki wants $54 billion for relief in his state, more than two and a half times the $20 billion Congress and the President set aside for the three states where planes crashed.  Although a majority of the Governor's request is said to be for direct disaster relief and damage repair, about $20 billion is being requested for economic stimulation and state-wide transportation projects, including a new high speed rail line connecting Schenectady, NY with New York City.[8]

Perhaps for reasons related to the warm and comforting sense of nostalgia that chugging trains evoke during days of stress and adversity, many of these requests illustrate the surprising extent to which passenger rail spending proposals are very much in vogue this year as objects to receive disaster relief, economic stimulation and/or defense security.  Early on Senator Harry Reid (D-NV) was flogging a package of spending that included $12 billion for Amtrak, and another billion or so dollars to start up "magnetic levitation" rail service between Las Vegas and Los Angeles.[9]   Senator Fritz Hollings (D-SC) introduced the Railroad Advancement and Infrastructure Law for the 21st Century (aka RAIL-21) which proposes to provide Amtrak with an additional $4.4 billion in up front cash subsidies and $42 billion of federal loans.[10]   It also encourages Amtrak to become perpetually dependent upon federal handouts by eliminating entirely the  existing statutory obligation that Amtrak become financially self-sufficient, an objective that nearly 2 million former welfare families have met over the past few years, but which has escaped the grasp of Amtrak's management since 1970.

Encouraging these and similar budget busting rail proposals are the tens of thousands of rail hobbyists who saw the terrorist attack as an opportunity to secure the survival of their costly obsession, now facing the imminent prospect of insolvency because of operating losses that have worsened year after year, and a market penetration rate that hovers around a one half of one percent share of all intercity passengers.

Within two days of the attack, the National Association of Railroad Passengers (NARP), an Amtrak support group, e-mailed members that "The tragedy and its aftermath raise the possibility that more Americans will see the need for more modern passenger trains. We will be pointing this out."[11]

Apparently, Americans did not see it as quickly or as clearly as NARP hoped, because Amtrak was not included as part of the airline bailout despite its best efforts to squeeze into a place at the trough.  Moreover, Amtrak's efforts to portray itself as a safer form of travel was also largely ignored by the traveling public because Amtrak's September 2001 ridership actually fell from year ago levels, and October's was up only slightly.  So NARP's next e-mail tried to make things clearer with the perversely accurate assertion that "Amtrak took on unusual importance right after the tragedy." Unusual was certainly a fitting description of its special role that day: Within hours of the attack, Amtrak trains scheduled to leave Washington, D.C., as well as those of the Amtrak-operated Virginia Railway Express, were canceled, stranding more than 5,000 commuters in a city under terrorist attack.

According to press reports, it was this multitude of costly Amtrak bailout proposals that led Office of Management and Budget Director Mitch Daniels to ask sarcastically: "Why not?  The fences are down and everyone is running loose."[12]

Amtrak, of course was not the only transportation industry to seek tax payer money for the good of the country. As congressional focus shifted from helping victims - real and feigned - to stimulating the economy, elected officials, trade associations and unions discovered new opportunities to loot the federal treasury. The Associated General Contractors and state highway officials urged Congress to support Senator Jim Jeffords' (D-VT) proposal to spend an additional $5 billion on highways, and identified 2,277 projects that could be started within 90 days.  Highway supporters claimed that each billion dollars spent on roads would create 42,000 new jobs.[13]

The road builders' job creation claim was nearly twice the magnitude of what the teachers' union promises from building new schools. In seeking an additional $20 billion in new federal spending for school construction, the National Education Association (NEA) argued that each billion dollars invested in school construction would create just 24,000 jobs.[14]   Note to NEA:  Get an new accountant.

Also seeking an extra $5 billion in taxpayer money to stimulate the economy through subsidized construction is the National Low Income Housing Coalition whose membership includes for-profit developers and builders as well as advocacy groups.  The Coalition wants this money allocated to HUD's HOME program for housing construction and preservation.[15]

Amtrak and road builders weren't the only transportation industry seeking support. Although scheduled bus service initially received a boost from passengers shifting from planes, the American Bus Association claims that the "U.S. motorcoach industry is in the midst of an economic crisis." Bus owners are now asking Congress for a grant program, low-interest loans, tax credits, repeal of the federal fuel tax, and a new government program to promote tourism.[16]

Not to be outdone by their bus industry rivals, some (but not all) of the car rental companies are seeking $1.5 billion in federal assistance to offset losses caused by reduced travel.[17] Even Washington DC's subway system wants in on the money, and is asking Congress for $190 million to boost security, including a back up command center costing $40 million.[18]

Travel agents, too, want an expensive piece of the action, and used the opportunity to display their overblown sense of self-importance when the American Society of Travel Agents (ASTA) declared, "Without travel agencies, the nation's travel industry cannot function." ASTA is seeking $4 billion in grants and no-interest loans.[19]

National security concerns were also used to help advance a $171 billion farm subsidy bill that insiders had thought would be defeated because of its budget-busting impact.  As currently written, this legislation would spend $74 billion more on farmers than would otherwise have been spent under existing law, despite the fact that farm income this year is expected to be at an all-time high.  Supporters now contend that "terrorist attacks have bolstered the argument that food production is a vital national interest." Apparently unaware that the terrorist attacks were confined to urbanized areas, trade associations representing the growers of more than 20 federally subsidized agriculture commodities wrote Congress on September 24 that "farmers, like other industries that Congress has helped since the terrorist attacks, are suffering economically."[20]

Introduced in July as the Agriculture Act of 2001, the bill was renamed the Farm Security Act of 2001 shortly after the September 11 attacks.  The name change apparently fooled enough House members into passing it by a vote of more than 2 to 1. Included in the bill is a provision to provide $3.5 billion in subsidies to the nation's peanut farmers, who until now had never been included in the government's crop price support programs.  Attempting to squelch any doubts about whether Mr. Peanut was really ready for war, Rep. Terry Everett (R-AL), who sponsored the peanut provision and who, as a peanut farmer, stands to profit from the bill, told colleagues that "The bipartisan Farm Security Act provides a strong safety net… and strengthens America's national security."[21]

Whereas most lobbyist wanted money, elected representatives from steel-producing states pandered to America's troubled steel industry by demanding further restrictions on imports of less costly foreign steel. In defending the urgency of such restrictions, one steel-state Senator said, "Without steel, we cannot guarantee our national security. Without steel, we cannot build from our tragedy."[22] How these objectives would be reached by policies that create shortages and raise prices was never explained, but that same mystery is probably behind Senator Jeffords' effort promoting economic stimulus by getting Congress to reauthorize the Northeast Dairy Compact.  Jeffords' Compact would re-create a dairy farmer cartel and impose higher milk prices on families living in New England and New York, just as unemployment soars.[23]

Confronting these and similar requests from the well heeled and the well off, one can only wonder how it is that the same country that produced the New York City firemen and policemen could also produce some of the members of the 107th Congress and the shameless lobbyists that swarm around the Capitol.  In an earlier Heritage report on the same subject,  members of Congress were urged to ask themselves, before each disaster-related decision: "Am I serving my country as well as the New York fireman and policemen served their city?"[24]    Judging by how few of these irresponsible requests have made it into actual legislation, most elected officials have been inspired by the sacrifice of others.

And so too have many business groups that stood up to pressure to join the melee for whatever could be grabbed. The trade association representing hotels and motels was one such organization whose response to such pressure is worthy of emulation.  While some members wanted the association to seek a bailout, others demurred, and stated " While the lodging industry has been negatively impacted to a severe degree, (the industry) realizes that the country's needs as a whole greatly outweigh the needs of any one specific industry.  Right now the country needs patriots, not profiteers."[25]   Hear, hear.

Ronald D. Utt, Ph.D., is a Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.


[1] This report updates Ronald D. Utt, "Lobbyists Use Tragedy to Raid American Taxpayers", Heritage Executive Memorandum No. 781, October 2, 2001

[2] Cheryl Wetzstein, "Charity Tops $1 Billion since Sept. 11", The Washington Times, October 18, 2001, p. A3.

[3] Craig Timberg, "VA Seeks $3 bIllion In Disaster Assistance", The Washington Post, October 13, 2001, p. B1.

[4] "VA Seeks $3 Billion…"

[5] Carol D. Leonnig, "DC council Pushes Mayor to Seek More Relief Funds", The Washington Post, October 6, 2001, p. B1.

[6] Sewell Chan and Carol D. Leonnig, "District Boosts Request for Anti-Terrorism Aid, The Washington Post, October 10, 2001, p. B1.

[7] "Burned at the Pentagon", The Washington Post, October  4, 2001, p. B1.

[8] "Governor Pataki Proposes 'Rebuild NY-Renew America' Plan to Help New York Recover, Rebuild & Revitalize", Press Release, Office of the Governor, New York, October 9, 2001.

[9] "Democrats Coalescing Around $40 Billion Plan", CQ Daily Monitor, October 2, 2001. Magnetic levitation trains would "float" on a magnetized space separating the train from the roadbed.  Laboratory experiments have demonstrated the feasibility of the concept, but not necessarily the cost effectiveness, and no such trains are now in operation.  

[10]   Railroad Advancement and Infrastructure Law for the 21st Century (S.1530), 107th Congress, 1st Session, October 1, 2001.

[11] All references to National Association of Rail Passengers (NARP) are derived from e-mail messages dated September 13 & 25, 2001 and  sent from NARP Executive Director, Ross Capon, to NARP members.

[12] Alex Keto, "OMB's Daniels:Quite Possible Govt to Run Budget", Dow Jones Newswires, October 11, 2001.

[13] "Survey Says 2,277 Highway Projects Ready; Waiting for Funds in Economic Stimulus", Daily Report for Executives, BNA Inc, October 22, 2001, p. A-16.

[14] "NEA President Bob Chase Remarks: News Conference on Economic Stimulus Package", Press Release, National Education Association, October 24, 2001 at http://nea.org/nr/nr011024.html.

[15] Memo to Members, The Weekly Newsletter of the National Low Income Housing Coalition, Vol. 6 Issue No. 41, October 12, 2001, p. 1.

[16] "Motorcoach Industry Status Report", American Bus Association, September 21, 2001 at http://www.buses.org/status_report.cfm.

[17] Micheline Maynard, "Some Rental Car Companies Lobby for U.S. to Back Loans", The New York Times, October 5, 2001, p. C1.

[18] "Metro Seeks $190 Million to Boost Security",  Associated Press, October 15, 2001.

[19]   "Travel Crisis News & Information -- Call to Action: Push Congress for Federal Aid", American Society of Travel Agents, September 26, 2001 at http://astanet.com/travel/information/info_write.asp.

[20] "Farm Bill Rises Early in House but Plods along in Senate", CQ Daily Monitor, September 26, 2001, p. 13.

[21] John Lancaster, "Federal Farm Subsidies Are Hardy Perennial", The Washington Post, October 2, 2001, p. A6

[22] "National Security Concerns Underscored in ITC Hearing on Steel Import Surges", Daily Report for Executives, BNA Inc., September 18, 2001, p. A-10.

[23] "Baucus Delays Markup to Allow More time For Changes to Economic Stimulus Proposal", Daily Report for Executives, BNA Inc., November 5, 2001, p. G-5.

[24] "Lobbyists Use Tragedy to Raid American Taxpayers"

[25] "AH&LA Proposes Economic Stimulus Package for Lodging Industry",  American Hotel and Lodging Association, October 5, 2001 at http://www.ahla.com/governmnet/view_advisory.asp?mstr=125.

About the Author

Ronald D. Utt, Ph.D. Herbert and Joyce Morgan Senior Research Fellow