In February 2000, the Army Corps of Engineers got busted cooking its books to try to justify a $1 billion lock-expansion project on the Mississippi River. It became a juicy scandal—not because make-work disguised as public works was so shocking, but because corps officials had left an amusing paper trail of their efforts to "get creative" with their economic studies in order to "grow the program" with porky boondoggles. The corps was humiliated, and the Mississippi study, the largest in corps history, was sent back to the drawing board.
Now it's back from the drawing board, and the corps is no longer pushing a $1 billion project to improve navigation on the upper Mississippi. Instead, it's pushing projects that could cost more than $10 billion to improve navigation and the environment on the upper Mississippi. It's as if Arthur Andersen had stayed in the auditing business—and decided that Enron was doing even better than it had thought.
For decades, the corps has built ecologically harmful and fiscally wasteful water projects based on outlandish economic studies, channelizing rivers and deepening ports for barges and ships that never materialize, defacing the American landscape with levees, jetties, and dams that never produce their promised benefits. The corps gets away with it because members of Congress and powerful interest groups love water projects, and because few others care about water projects, and because water project studies can be somewhat complex. But the upper Mississippi fiasco may be the ultimate test of a bureaucracy's ability to spin the unspinnable.
The Mississippi is one of the few waterways that barges do use in large numbers, and Midwestern barge operators have complained for years that they waste too much time lining up for undersized locks on its upper reaches. So in 1993, a corps economist named Don Sweeney was assigned to lead an economics team to study lock expansions. Sweeney knew his agency had a long history of overestimating the demand for big navigation projects; for example, it had forecast 27 million tons of barge traffic for the first year of the Tennessee-Tombigbee Waterway, which was 25.3 million tons too high. The "tow-cost" economic model the corps had used to justify its boondoggles was laughably primitive; it assumed that shippers would use barges regardless of their price. So Sweeney developed a more sophisticated but less rosy analytical model that was hailed by transportation economists as a great leap forward.
In 1998, Sweeney concluded that the cost of lock expansions to taxpayers would far outweigh the benefits to farm and barge interests and suggested that delays on the river could be eased with modest low-cost measures like scheduling changes, congestion fees, and new moorings. But that was not what his construction-minded bosses wanted to hear. So Sweeney was yanked off the study.
That's when corps officials started sending e-mails demanding "reasonably plausible" rationales for construction and ordering study team members to consider themselves navigation advocates rather than objective analysts. There's no need to rehash them here ... except that it's fun! "The team should determine an alternative ... that appears to be most likely to justify large-scale improvements in the near future," one memo reported. "If the [economics] ... do not capture the need for navigation improvements, then we have to figure out some other way to do it," Sweeney's replacement declared. Corps generals actually devised a secret "Program Growth Initiative" designed to boost the entire agency's budget. "We have been encouraged to have our study managers not take 'no' for an answer," one memo announced. "The push to grow the program is coming from the top down."
The corps brass had violated the first rule of politics: Don't write down anything you don't want to see on the front page of the Washington Post—which is where all those e-mails ended up. Scandal ensued. A Pentagon investigation concluded that corps studies were systematically biased in favor of massive construction projects. The National Academy of Sciences, General Accounting Office, and Office for Special Counsel all savaged the corps, too. The new corps commander promised reforms and vowed that the agency's days of trying to grow its program were over.
But when the corps restarted the upper Mississippi study, its initial strategy was to reinstate the discredited tow-cost model and blame the scandal on Sweeney. This didn't fly. President Bush's budget office publicly trashed the tow-cost model, and the corps had to go back to the drawing board yet again. So now the corps has adopted a new strategy: It plans to recommend politically correct environmental as well as navigation improvements. It also plans to base its recommendations on "scenarios" rather than forecasts, which would insulate the corps from criticism when additional barges don't materialize. In recent public meetings, the corps has floated a Chinese menu of possible project combinations: six navigation options, ranging from nothing to $2.3 billion for six new locks and five lock extensions, along with five environmental options, ranging from nothing to $8.4 billion worth of habitat restoration. The corps will recommend one option from both columns to Congress next year, and it clearly hopes that the prospect of billions of dollars for restoration will persuade enviros to soften their opposition to billions of dollars for navigation.
I can't say much about the various environmental options; they're still vague, although the corps, with typically ludicrous precision, has announced that the most expensive would restore 83 percent of the river's ecological functions. But it's worth noting that the corps is already spending $8 billion to restore the Florida Everglades and wants to spend $14 billion to restore Louisiana's coastal wetlands, plus billions more on other ecosystems, and that none of these efforts are uncontroversial, even among enviros. Let's just say that environmental restoration has become an excellent Program Growth Initiative for the corps.
But take a closer look at the navigation side, the crux of the scandal in 2000. Back then, the case for lock expansions was based on a study by a corps economic consultant, the Sparks Cos., predicting huge increases in corn and other grain shipments on the river. But over the last 20 years, grain shipments on the Mississippi have been consistently flat, and the original Sparks forecasts have already turned out to be wildly overoptimistic, as these graphs illustrate. The National Academy also pointed out that even if the Sparks fairy tales of booming traffic had come true, there would have been no economic justification for expanding the locks for at least a decade, until the traffic was actually booming. In fact, corps officials admit that unless grain traffic increases dramatically on the Mississippi, there is no need for major navigation improvements. "You'd need significant growth to justify a project," says Denny Lundberg, the new study leader. "If it's just a flatline, you wouldn't want to recommend doing anything."
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