FreedomWorks Opposes Largest Government Loan to Private Company

Dick Armey

FreedomWorks
Jan 30, 2007

FreedomWorks Opposes Largest Government Loan to Private Company

Sends letter opposing federal loan to the Dakota Minnesota and Eastern (DM&E) Railroad.

January 30, 2007

The Hon. Mary E. Peters
Secretary
United States Department of Transportation
400 7th Street, S.W.
Washington, D.C. 20590

Dear Madam Secretary,

On behalf of the more than 800,000 members of FreedomWorks, I would like to express our opposition to efforts to provide a federal loan to the Dakota Minnesota and Eastern (DM&E) Railroad. Currently the Federal Railroad Administration (FRA) is considering a $2.3 billion loan to DM&E through the Railroad Rehabilitation and Improvement Financing Program.

This would represent the largest federal loan in history and put federal funds into competition with private capital. Furthermore, sweetheart provisions of the loan such as delayed repayment are suspect. The proposed loan is indicative of the significant expansion of the federal government’s role in the rail industry that was highlighted by an earmark in the 2005 Transportation Bill that expanded the FRA’s loan authority to $35 billion under this program—a tenfold increase.

Earmarks, sweetheart financial deals and hard to follow procedures of administrative law should not substitute for good sense and good stewardship of taxpayer dollars. The DM&E Railroad has already received substantial loan guarantees from the FRA and the proposed loan would significantly expand the railroad’s indebtedness, with the federal government exposed for a significant portion of the debt.

The railroad seeks to serve the Powder River Basin, an energy-rich portion of the country that is also served by two major railroad lines. Given the current demand for energy, there are significant private sector incentives to develop rail access to the area, raising important concerns about the need for federal funding in the area. Indeed, the administration has proposed terminating the program to minimize taxpayer liabilities for any loan defaults under the program.

FreedomWorks opposes the FRA’s $2.3 billion loan to the DM&E Railroad. Taxpayers across the nation have expressed the vocal opposition to earmarks and excessive federal spending. This loan typifies unnecessary federal spending. Consequently I request that you reconsider the loan’s potential impact on taxpayers.

Sincerely,