This week in Congress

The House of Representatives is out of session this week. Unfortunately for our liberties, the Senate is in session this week.

First on the Senate's agenda is finishing up work on the Comprehensive Addiction and Recovery Act (S. 524), which I wrote about last week.  

Also on the Senate's agenda is taking another crack at the Energy Policy Modernization Act (S. 2012). Read about the problems with that bill here.

Progress on the Energy Policy Modernization Act was halted over attempts to attach an aid package for Flint, Michigan to the bill. The aid is designed  to help Flint deal with the after effects of its lead-contaminated water system.

Several weeks ago, Senate leadership reached a deal to provide Flint with $100 million in emergency aid  to fix the lead-contaminated water pipers. The plan would also provide Flint a 70 million "loan" to improve its water infrastructure.

The plan also provides up to $700 million in loan guarantees and direct financing for water infrastructure projects around the country.

If I where cynical about Congress (and I am) I would think that the lead water problem in Flint is being used to expand federal support for local water projects.

Senator Mike Lee shares my cynicism and has a put a hold on the bill, from The Hill:

In a Friday statement, he said the bill isn’t so much a Flint aid measure as a way to federalize water infrastructure.

“The state of Michigan has an enormous budget surplus this year and a large rainy-day fund, totaling hundreds of millions of dollars. Gov. Snyder has requested $200 million of that from the state legislature for Flint this year. Relief and repair efforts are already in the works,” Lee said in his statement.

“The people and policymakers of Michigan right now have all the government resources they need to fix the problem. And those public resources are being augmented every day by the generosity of individuals, businesses, labor unions, and civic organizations of every stripe from across the country. The only thing Congress is contributing to the Flint recovery is political grandstanding.”

Read the whole story here.

Reason magazine has an interesting piece explaining that, contrary to the narrative pushed by those seeking to use this crisis to expand federal power, Flint's crisis is actually an example of government stimulus gone bad, not the result of neglect of infrastructure by small government "ideologues":

The whole mess occurred because Flint decided against renewing its 30-year contract with the Detroit Water and Sewage Department (DWSD) and switched instead to Karengondi Karegnondi Water Authority (KWA). KWA was planning to build its own hugely expensive pipeline, parallel to DWSD's, to harness water from Lake Huron and service the Genesee County area where Flint is located. This left the city in the lurch for a few years when its contract with DWSD ended but the new facility had not yet gone online, prompting it to reopen a local mothballed facility that relied on the toxic Flint River as its source (more on the rank stupidity of this decision later).

Documents that have just resurfaced show that the then DWSD Director Susan McCormick presented two alternatives to Emergency Manager Ed Kurtz that slashed rates for Flint by nearly 50 percent, something that made Detroit far more competitive compared to the KWA deal. "The cliff notes version," she said in an internal e-mail to her staff, is that the "proposal offers a today rate of water for Flint/Genesee of $10.46 as compared to $20.00 paid currently per Mcf—48% less that could be realized nearly immediately and even more when compared to the increases coming with KWA." In fact, when compared over the 30-year horizon, the DWSD proposal saves $800 million or 20% over the KWA proposal, she pointed out.

That works out to over $26 million in annual savings for a city in precarious financial shape.

So why didn't Flint jump at the offer?

The Genesee County Drain commissioner at the time went on a jihad to impugn the study, accusing it of relying on inaccurate data, but the question is, why did Snyder — aka one-tough-nerd who prides himself on his business acumen and wonkery — fall for it?

Snyder's office did not return my call, but sources close to the situation at the time tell me that it was essentially because Genesee County and Flint authorities saw the new water treatment as a public infrastructure project to create jobs in an area that has never recovered after Michigan's auto industry fled to sunnier business climes elsewhere. And neither Snyder nor his Emergency Manager Ed Kurtz nor the state treasurer Andy Dillon had the heart to say "no," especially since to hand Flint to DWSD would have made the whole project less viable.  What's more, they felt that just as Detroit was receiving an infrastructure boost post-bankruptcy (with the state-backed $650 million ice-hockey-arena-cum-entertainment center that I wrote about here) it was only fair that Flint get one too.

All of this shows two things:

One, the Flint water crisis is the result of a Keynesian stimulus project gone wrong.

Read the whole thing here, and a follow-up here.


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