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Susan Pendergrass and Dominic Pino, the Thomas L. Rhodes Fellow at the National Review Institute, discuss the current state of U.S. tariffs and trade policy, tariffs as a hidden form of taxation, common misconceptions about trade deficits, provide historical context for America’s protectionist tendencies, and more.

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Timestamps:

00:00 Understanding Tariffs and Economic Perspectives
02:51 The Impact of Trade Deficits
06:05 The Role of Government in Trade Policies
08:59 The Consequences of Protectionism
12:02 Future Economic Predictions
15:05 Historical Context of Tariffs
18:03 The Confusion Surrounding Current Policies

Episode Transcript 

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Susan Pendergrass (00:00) Well, this is going to be interesting. Dominic Pino, thank you for joining us from National Review. Every day feels like a month now, but it was a couple of weeks ago that this all started, and since then so much has happened in our economy. This is a great opportunity for me as a non-economist. I have seen, as many people have, Thomas Sowell out talking about what’s happening in the economy right now and our current economic approach. And it doesn’t seem like he thinks it’s great. What’s your opinion? And can you explain what the potential upside is of how we are approaching tariffs right now?

Dominic Pino (00:34) Yeah, thanks so much for having me on. First thing — I’m not really an economist. I do have a master’s degree in economics from George Mason, but I’m a journalist. I write about economics. Thomas Sowell most certainly is an economist and he is someone we should be taking seriously. His book, Basic Economics, lays out some of the best arguments for free trade that anyone has ever put to paper. He was recently talking, as you mentioned, with the Hoover Institution at Stanford, where he is still located. He was talking about how these tariffs from Trump are not an exception to the rule — they are not a good idea. What the U.S. has been doing is unilaterally, through just the president acting alone under supposed national emergencies that quite frankly don’t exist, imposing tariff rates that are higher than any country in the developed world on basically every other country in the world, for the mere existence of a trade deficit. That is what they think is the problem. The formula they use to calculate those tariff rates is not based at all on other countries’ tariff rates. They try to say it’s a reciprocal thing based on other countries’ tariffs, but that’s not at all what they did. All they did was look at other countries’ trade deficits and say, based on that, there’s a national emergency that we need to solve with unilateral action from the president to raise taxes on Americans. And it’s probably the largest peacetime tax hike in U.S. history.

Susan Pendergrass (02:00) Yeah, so the Show-Me Institute — we’re firmly on the books as being a free market policy think tank. That’s what we do. We talk about free market state policy for the most part, and we are pretty anti-tax and limited government. The idea that tariffs are taxes — why is it such a leap these days? Why are tariffs now seen as not taxes but as a skilled negotiating tool? How did that come to be, do you think?

Dominic Pino (02:22) Mostly because Donald Trump just believes it to be true. And he’s believed it to be true since the 1980s. You can look back — this is a pre-political thing for him. He just thinks that tariffs are a good idea. And he thinks that foreign countries pay them. It sort of sounds that way when you describe it as, say, a United States tariff on Japan — that makes it sound like Japan is the one paying it. But it’s really a tariff on Japanese goods, and that tariff is paid by Americans who buy Japanese goods. The fact that these are a tax increase is not in dispute. And you know it’s not in dispute because even the White House says it’s going to raise a ton of new revenue from these taxes. Where’s that revenue coming from if it’s not a tax? And why are American businesses upset about having to pay this tax if the tax is actually paid by foreigners? It doesn’t make a lot of sense.

Susan Pendergrass (03:13) So then why the trade deficit as the boogeyman? The way I see it — and again, we’re free trade, free market — trade deficits exist because we have a comparative advantage in some industries and other countries have a comparative advantage in others. I want to be able to buy all of it. I want to buy my vanilla from Madagascar. What is the problem with a trade deficit, or how did it become such a boogeyman?

Dominic Pino (03:37) Donald Trump seems to believe that a trade deficit means you’re getting poorer. And I just don’t know how you can get there. The United States is the richest country in the world. We have the world’s largest economy. We have that despite increased competition from China, and China has been slowing down while the United States has continued to plug along. We’ve seen countries that adopted free trade after being protectionist become very rich in a very short amount of time — places like Hong Kong, Singapore, or even those supposedly socialist Nordic countries like Sweden and Denmark. They have very liberal trade regimes, and they do that because they know it makes them richer. For the United States, we should absolutely be embracing free trade. We have actually embraced free trade less than a lot of other countries have, if you look at the proportion of our economy that is due to international trade. We’re in the low 20s as a percentage of GDP when you add up imports and exports. The world average is 63%. Most other countries are much more exposed to trade than the United States is. And we could be even better off if we reduced a lot of our own trade barriers, which there doesn’t seem to be any appetite for the president to do.

Susan Pendergrass (04:54) So walk me through what would be, from what you can understand of whatever the plan is — let’s say this is a plan — what would be the optimum outcome that the administration gets out of the approach they’ve taken?

Dominic Pino (05:07) Well, from my perspective, the optimum outcome would be that other countries remove their tariffs and we remove ours and we all get along. I think that would be great. There is a case to be made that you can use the threat or imposition of tariffs in this way to do that. That is a thing that we have in law and it makes sense in theory. It’s just not what the administration is actually doing. For example, Israel, in anticipation of these tariffs, removed all of their tariffs on U.S. goods. Now, they basically didn’t have any to begin with because we’ve had a free trade deal with Israel since 1985, but the few that were left — a couple of stragglers on some agricultural products — they got rid of them before Trump made his announcement. Trump comes out and puts 17% tariffs on goods from Israel. So why are we doing 17% if they’re doing zero? That’s not reciprocal at all. And it’s not being used to get a new free trade deal because we already have a free trade deal with Israel. If the administration had exempted the 12 countries with which the United States already has bilateral free trade deals, and the other countries that are part of multilateral trade deals, and said that’s what we want, then you could bring other countries to the negotiating table and say, hey, we want a free trade deal with you too. But if countries are learning the lesson that even having a free trade deal with the United States doesn’t protect you from U.S. tariffs, then what incentive do they have to come to the table in the first place?

Susan Pendergrass (06:38) You may have seen the news today about a potential extra 50% tariff on China, which seems a little impulsive. I’m just going to read what Thomas Sowell said in the last couple of days. He said, “It’s not a bad idea if you’re doing this within a system of rules. If you are the one who’s making the rules, then all the other people have no idea what you’re going to do next. And that’s a formula for having people hang on to their money until they figure out what you’re going to do. And when a whole lot of people hang on to their money, you get the results you got during the Great Depression of the 1930s.” I would say more than anything, we don’t know what’s going to happen next. Wednesday, supposedly the tariffs go into effect unless there’s a pause or some minds get changed. Don’t you think that’s what’s really driving the chaos right now — how unpredictable it is? You open the news and it’s like, maybe 50% more on China. What do you think?

Dominic Pino (07:33) For sure, I think that’s a big part of it, absolutely. This is why the founding fathers put the tariff power in Congress. They didn’t want one president, one guy by himself, to be able to do this kind of thing. They wanted tariffs to have a democratic legitimacy coming from the legislature that’s elected by the people. They wanted it to involve other voices from around the country so that certain regions aren’t left out. And they wanted it to go through two branches of government so that it’s more difficult to change. Congress over the past several decades has given away large portions of its power over trade. There were some good reasons to do that because it was done under the assumption that the president was going to use that power to liberalize trade — there were lots of public choice problems when Congress had control over the trade agenda by itself. And so for several decades, presidents of both parties did use that power to reduce U.S. barriers to trade and to negotiate lower barriers for other countries. That process played out and worked very nicely. Now we’ve had the last two presidents — both Trump and Biden — use a lot of those powers to increase trade barriers. And they’re doing so at a time when polling shows that trade is actually more popular than ever. The Gallup survey has been asking this question for many years: do you believe that international trade is more of an opportunity for the United States, or more of a threat? The number of people saying opportunity is at an all-time high right now, at about 80%. And yet politicians have convinced themselves that Americans are demanding protectionism. Really, it’s good for politicians because when they have the power to determine which exemptions get made, which tariffs apply to which industries, that creates lots of opportunities for lobbyists to come in and say, hey, you should give me that exemption. We’re already seeing that happening. Tim Carney at the Washington Examiner wrote a piece today saying there are about 160 new lobbying organizations that have spawned so far this year to lobby about international trade, and that’s only the tip of the iceberg.

Susan Pendergrass (09:44) So they’re coming in and saying, we want you to exempt our industry, our country, our region. They’re being paid millions of dollars to get the carve-outs. Have any carve-outs happened?

Dominic Pino (09:58) For the Canada tariffs, they put a lower rate on energy and on fertilizer than on other things. For some of the auto parts stuff, it’s not entirely clear exactly what’s going on at the moment, but there does seem to be some exemptions made there. But yeah, the exemptions are going to get made, and they’re going to get made not based on what’s best for the country in general — they’re going to get made based on who’s the most politically connected, because that’s how politicians work. That’s their job. That’s what they do. It’s in the name: politics. And so when there’s all this high talk of the national interest and national security — we’re going to bring back defense industry and things like that — it’s all cover for what they’re really doing, which is redistributing profits from companies they don’t like to companies they do like, and destroying a lot of wealth along the way from all the inefficiency that comes about.

Susan Pendergrass (10:48) So where do you see this headed? If you could fast forward to summer, where do you see this going? A lot of experts — Jamie Dimon and others — are talking about what they’re seeing in the tea leaves right now around the economy. What do you think?

Dominic Pino (11:01) I don’t think the stock market is done going down yet. I think traders are still holding out hope that the president is going to see the mistake here and reverse course. I’m not really optimistic that’s going to happen because during the first term there were a lot of voices saying contrary things, a lot of discussion and debate going on. And you also had a vice president in Mike Pence who was much more free market and much more traditionally conservative, and his team did a lot to run the policy decisions that were being made. This time around, JD Vance is an unabashed protectionist — he’s not making any secrets about that. And the people who are close to the president on this are people like Peter Navarro, who just really believes in protectionism. He finally has a chance to achieve his lifelong dream of raising taxes on Americans for having the nerve to buy stuff from other countries. Trump has other advisors who do know better, but they’re not going to be super likely to speak up because quite frankly, a lot of Republicans are just afraid of Trump and afraid of the consequences of speaking out against him. They would really be helping Trump to speak out. Republicans in Congress hopefully will realize this eventually, because these policies are going to be damaging for the American worker and the American consumer, and Trump shouldn’t want his name associated with that. Republicans shouldn’t want their party’s name associated with that. So Republican members of Congress should man up and be willing to override a presidential veto if they need to, to get rid of these damaging policies.

Susan Pendergrass (12:32) They tried somewhat, right? They tried with the Canadian tariffs. Rand Paul did, but it didn’t really make a difference.

Dominic Pino (12:39) Yep, they tried. Four Republicans voted with the Democrats to overturn the national emergency declaration on Canada. That’s a real thing that our federal government has right now. And it’s still in place because the president says so.

Susan Pendergrass (12:53) Yeah, I don’t know why I’m laughing because it’s not funny — a national emergency with Canada. What about this idea that we’re going to quickly move all production of autos back to the United States? During COVID, we were able to quickly ramp up production of masks and PPE. Can we do the same with cars?

Dominic Pino (13:20) It’s a whole lot easier to make a fabric mask than it is to make an automobile. That’s the first difference. The second is, you can look at the investment decisions that car companies make — they always take many years. That’s true of foreign automakers that build plants in the United States, which lots of them have done, and it’s supposed to be the point of this tariff policy. But they’ve done it without the tariff policy, so that should lead you to ask, well, if they were already doing that, why are we trying to make it harder? Those decisions take a long time. They’re reliant on the existence of a skilled workforce, and those skilled workers absolutely exist in the United States, but a lot of them are already employed doing other things. You have to pull them off of those other things to move them into car factories, which in many cases are going to be less productive than the jobs they were doing before, because the jobs they were doing before existed without the government taxing people in order to make them possible. It’s not that the United States doesn’t have a skilled labor force — we have an amazing labor force. They’re just already doing stuff. The unemployment rate continues to be very low, and that’s something we should be happy about. But we’re acting as though we’re in the middle of a depression and need the economy to rebound, when really we just need to build on some successes we already have.

Susan Pendergrass (14:35) Yeah, it’s so perplexing to me because at the Show-Me Institute, we talk a lot about governments trying to use levers to induce people to behave in certain ways — tax increment financing and things like that. If the government just pulled back and stayed out of the way, these things would happen organically. Baseball stadiums would go where the owners think they’re going to make the most money. These things will happen on their own rather than having the government step in and try to make them happen the way it wants. We talk about that all the time. And then this policy to me seems so counterintuitive — the idea that you hurt something so badly that giving a little relief becomes leverage. As a human being that just doesn’t make intuitive sense to me. We’re going to beat this dog, and when we give it a little water it’s going to be so grateful — it won’t be. That dog will hate me if that’s how I treat it. And I feel like that’s what we’re doing. We’re not bringing Canada around to our side.

Dominic Pino (15:38) No, not at all. And Canada was already on our side. They’re a NATO ally, they are our number one trading partner, and we basically have the world’s largest unguarded border with them. And it works fine — it’s great. There’s really no issue. The trade deficit issue there is also crazy. Even if you think trade deficits are bad — which, to be clear, they aren’t — but even if you do, the only reason the United States has a trade deficit with Canada is because of cheap imported Canadian energy. Canada has the thick tar sand oil out in Alberta, and it’s very difficult to refine because of its chemical makeup. The United States — the richest country in the world — has the best petroleum engineers and the best refineries in the world. We have some of the only refineries on the planet that can refine that type of oil. Canada is willing to sell it to American refiners at a discounted rate below the global price because that’s the only way they can get it out of the country. Then the United States refines that oil and turns it into a valuable product, because crude oil by itself is not very useful — you can’t run a car with it, you can’t make plastic with it. You have to refine it. And then we export the refined products out of the Gulf of Mexico, out of Louisiana, and it creates all sorts of economic value for the United States the entire way. And for some reason, that’s the reason for our trade deficit with Canada. How is the United States losing there? How is Canada losing there, for that matter? Both countries are better off. Canada can sell their oil, we can sell the refined products, everybody’s better off.

Susan Pendergrass (17:06) Yeah. I know there are some smart people around the president, and I think I must be missing something. I must have a blind spot. To me, this mostly seems crazy and damaging. So when I read Thomas Sowell and I listen to you and others, maybe I’m not crazy. I just assume there’s some big master plan that I’m not privy to. And all of this is starting to make sense of why I had to give up 15% of my retirement savings when I’m really close to retirement age. Maybe there’s some big plan, but I feel like I hear you saying there may not be a plan.

Dominic Pino (17:50) I’m not seeing one, unfortunately. And it’s not an encouraging sign when you can’t even get the administration to be on the same page with itself when talking about these things.

Susan Pendergrass (17:59) Yeah. What is the base rate? They’re all over the map. I think there was a leak today that there was going to be a pause, and then the White House said there’s not going to be a pause. They don’t even seem to know what page they’re on. Do you think we are heading towards a recession?

Dominic Pino (18:18) I don’t know that, but it’s certainly not going to help our GDP growth. We still have decently strong GDP growth — we have since COVID, and we had before COVID too. COVID was sort of an aberration. We’ve been growing at around two and a half percent a year since about 2018, give or take, which is pretty solid for a developed country as advanced as the United States is. So we still have some room before we get into recession territory. But it’s not going to make GDP growth do better, that’s for sure. And once people start to lose jobs from this, once people start paying more at the store, you’re going to see a lot more backlash. Quite frankly, if you have a recession that you can pretty clearly attribute to one person — which is Donald Trump, because again, he’s doing this unilaterally — it’s going to be hard to argue to voters that it wasn’t his fault.

Susan Pendergrass (19:11) Yeah, and I think it’s interesting that people used to use gas prices as a gauge because you just drive by them and see them every day. But now we all have our bank accounts and our 401ks on our phones, and we’re not waiting for a quarterly statement to find out. We see it going up and down like gas prices. And I believe that’s causing more of the backlash, the anxiety, the angst — we can just see it in real time.

Dominic Pino (19:35) Yeah, for sure. The guys from Americans for Tax Reform talk about how market research shows that people who are actively engaged in the stock market are much more likely to be Republicans. And that’s not just true of rich people — that’s true across the board. Even casual retail investors are more likely to be Republicans than Democrats. So in more ways than one, this is hurting Trump’s own voters.

Susan Pendergrass (20:01) Yeah, that’s perplexing. I know you’re probably in high demand now because people want information about what’s going on. Tariffs — it’s just not a word I ever thought I’d be saying so much. I think of them as very much a thing of the past. Anyone who knows about Smoot-Hawley knows that’s a long time ago. Just give us a little refresher course on what happened in the 30s.

Dominic Pino (20:24) Sure. In the 1930s, there was a big stock market sell-off that spurred a recession that then became the Great Depression over time. In large part it became that way because of government policies — including the Federal Reserve making some terrible decisions on monetary policy that guys like Milton Friedman and Anna Schwartz have written entire books about. The federal government made some bad decisions, including New Deal programs that were basically make-work jobs that were drags on productivity. But also the Smoot-Hawley Tariff Act didn’t help things either. The theory at the time was: we need high tariffs to protect America from unfair foreign competition, and once we rebuild our domestic economy we can go out and engage with the world again. It was completely wrong. Not only was it completely wrong for the United States, but it spurred a global wave of retaliatory tariffs that really helped to wreck free trade that had been growing as a global norm. This happened right between World War I and World War II — obviously not a happy time in world history and not a time we should look back on fondly. It was really bad.

Susan Pendergrass (21:35) It was 100 years ago too. We should have learned from it.

Dominic Pino (21:40) Yeah. But the average tariff rate under Trump’s plan is now higher than the average tariff rate under Smoot-Hawley. So if the tariffs stay in place for any extended period of time, you can expect — and I’m not promising another Great Depression — but it’s certainly not going to be good.

Susan Pendergrass (21:54) Yeah. I think one thing I can say confidently is that people’s impatience is escalating. The “don’t worry, we have a plan” response is wearing very thin. This idea that it’s going to work and you just have to take your medicine — when you haven’t really asked people to step up and sacrifice for a policy that most people don’t even really understand or want to get behind, that’s starting to really wear down. Republicans and — well, Democrats clearly don’t like it — but even some Republicans are coming around. If we were in a war and we all had to get blackout curtains, that’s one thing. But asking everyone to sacrifice their savings for something that no one has explained very well is not going to last. I think there’s going to be backlash.

Dominic Pino (22:50) And that style of argumentation is one that Democrats use all the time. They use it when they talk about clean energy and the transition to green energy. They say, yeah, there’ll be higher energy prices for now as we transition, but it’ll be better in the long term because we’ll have zero emissions and it’ll all be domestically made. They say it’ll help us get off foreign oil, and so on. Now, when Democrats make that argument, Republican voters recoil — and they vote for Republicans. But now Republicans are in office making the same kind of argument. It’s not about the environment, it’s about the global trade system, but the structure is identical: sure, in the short term there’ll be some higher costs, but don’t worry, the government has a plan. That’s just a Democrat style of argument. This is a situation where I actually wish there were a little bit more partisanship — Republicans just having the instinct to say, wait a minute, that sounds like what Democrats say when they’re talking about green energy.

Susan Pendergrass (23:48) Yeah, and another thing I wonder: people I know who are defending this approach — at what point is somebody going to say the emperor has no clothes? I’m a little bit dialed in, but I think most people are seeing it and wondering why people are going on the news every night and defending this approach. It’s confusing. It’s just confusing.

Dominic Pino (24:11) Yeah, absolutely. It’s confusing to all of us. And it’s confusing too because the justifications that get trotted out by different supporters can’t be true at the same time — and this is really the giveaway that it’s nonsense. For example, if the point of the tariffs is to bring back manufacturing jobs, to benefit domestic producers by allowing them to charge higher prices because they don’t face foreign competition, then the tariffs need to stay in place permanently. They can’t go away after negotiation. Similarly, if the purpose of the tariffs is to raise revenue to pay for other tax cuts — which is something the president has been talking about — that means the tariffs have to stay in place not just for now, but for 10 years, because that’s the budget window. So that would mean it’s not a negotiating tool. Now, if it is a negotiating tool, then you need to be willing to remove them. But if we’ve already made a commitment based on projected revenue over 10 years, we can’t remove them now because that would blow up that part of the plan. And if it’s a negotiating tool, it can’t protect domestic industry either, because if we remove the tariffs and foreign goods keep coming in, domestic industry will be right back where it started. The fact that these justifications can’t all be true at the same time should help you understand that there’s actually not a plan here. What’s unfortunate is that I think the administration is taking the keep-them-in-place-for-a-long-time strategy, because they’ve been talking much more recently about how it’s not a negotiation, how it’s going to raise revenue, and how the purpose is to restructure global trade. Those are their words.

Susan Pendergrass (25:47) Yeah, so it’s going to raise $6 trillion over 10 years — the amount they need to extend the Tax Cuts and Jobs Act, basically.

Dominic Pino (25:55) Yeah, $6 trillion. So we’re going to do the largest tax increase in American history to pay for keeping the tax rates the same. Because again, extending the TCJA just means keeping the rates what they are right now.

Susan Pendergrass (26:09) So to do that, we have to raise taxes. That’s incredible. Well, Dominic, thank you so much for coming on and talking to us. I do understand it better now. I’m still perplexed, but I wake up every morning, look at the headlines, and think, now what’s happened? The chaos factor is getting on my nerves, but I appreciate you coming and explaining it in such a concise and clear way.

Dominic Pino (26:32) Good, I hope it helped. And if it makes you feel any better, I’m probably just as confused as you are.

Produced by Show-Me Opportunity

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Elections and inaugurations are a time for reflection and a recommitment to principles. As Missouri prepares for the new administration of Mike Kehoe, it’s worthwhile to consider the performance of his predecessors—especially on issues relating to fiscal management of taxpayer resources.

The Cato Institute, a libertarian-minded think tank based in Washington, DC, rates the fiscal performance of governors. The good news is that Governor Mike Parson is not the worst governor in the United States, but he’s the worst one who claims to care about limited government.

Cato has issued its report every two years since 1992. The report methodology, available online here, issues a letter grade based on each governor’s success at restraining spending and tax increases. Parson earned a D grade in 2024. Author Chris Edwards wrote, “Parson has been a tax reformer, but he has dropped the ball on spending control. The general fund budget has jumped from $10.5 billion in 2022 to an expected $15.6 billion in 2025, a 49 percent increase in just three years.”

The D grade placed Parson 40th of the 48 governors rated. Florida governor Ron DeSantis was ranked 19th and Virginia Governor Glenn Youngkin came in 15th. Parson was closer to Minnesota governor and recent vice-presidential caudate Tim Walz, who came in last. Of Missouri’s neighbors, governors of Iowa, Nebraska, and Arkansas each earned an A grade, ranking 1st, 2nd and 4th respectively. Even Illinois governor J.B. Pritzker and California’s Gavin Newsom outperformed Parson, placing 32nd and 35th respectively.

If one uses Republican party identification to denote a preference for small government and low taxes—and that is arguable these days—Parson’s 40th-place ranking stands out even more. It made him the worst-scoring Republican in the nation. And 2024’s score is not a fluke; Parson scored a D in 2022 and a C in 2020.

Parson doesn’t just compare poorly to other current governors; he scored poorly compared to past Missouri governors. Parson’s letter grades surpass only those of Mel Carnahan (scoring D, D and F) and Robert Holden (F). Parson even seems to score worse than Jay Nixon, whose scores were B, C, D, and D. (If you’re wondering, Matt Blunt was the best scoring governor since 1992, earning Missouri’s only A in 2006 and a B in 2008.)

Note that the report’s methodology changed for the 2008 report but has remained the same since. Previous iterations relied on many more variables, but the outcomes are unlikely to have been much different.

Missouri’s total spending has practically doubled in the last five years, including not just the general fund, but other dedicated state funds and federal money. That total spending jumped from $27 billion in 2019 after Parson’s first year in office to a little more than $50 billion for 2025. It now costs three times as much to run Missouri as it did in the Carnahan and Holden administrations!

Parson’s profligacy stems from the decisions he’s made since the federal government’s COVID relief funds flooded Missouri’s budget with billions of dollars in one-time cash. States were given considerable discretion on how to use much of the relief funding, not to mention the state tax dollars the federal cash freed up for other uses. Unfortunately, Parson, with the help of Missouri’s General Assembly, fell victim to the allure of so-called free money.

Today, Missouri’s budget is littered with what were once temporary initiatives that never ended and now receive permanent funding. Or, perhaps worse, formerly federal obligations that are now borne by state taxpayers.

Key among these includes Parson’s decision to use state funds to maintain the higher childcare subsidies the federal government subsidized during the COVID pandemic, now costing state taxpayers at least $70 million annually. Parson also failed to meaningfully manage Medicaid spending. Missouri’s lackadaisical approach to checking program recipient eligibility, after the federal government lifted its COVID-era ban on the practice, has likely cost taxpayers hundreds of millions of dollars thus far.

In addition, Parson increased state employee pay by 7.5% plus an additional 3.2% cost of living increase last year. These raises were paid for with a temporary influx of state funds, but because the increased pay was not made commensurate with employee reductions, the higher salaries will require new permanent funding sources and will increase the obligations of the already underfunded state pension system.

Governor-elect Kehoe has a difficult job ahead of him administering government and working to attract more families and employers to the Show-Me State. Unfortunately, his predecessor has done him—and the people of Missouri—a great disservice by failing to properly manage taxpayer funds.

The post Missouri Must Do Better at Controlling Spending appeared first on Show-Me Institute.

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Why Is This Proposition Being Brought to Voters?

This proposition is intended to address concerns about STRs affecting housing affordability. In fact, a St. Louis City alderman had this to say about Proposition S:

As we’ve seen a proliferation of short-term rentals, we’ve also seen rents and mortgage rates also climb as a result of that. . . . This [Prop S] is kind of a drop in the bucket to try and offset some of that.

Concerns about the effect of STRs on the housing market are not unreasonable, as some studies have indicated that STRs drive up housing costs by decreasing the supply of owner-occupied housing stock and long-term rental units. However, other studies have found that STRs bring increased tax revenue, supplemental income, residential renovation, business growth, and tourism to underdeveloped areas.

The City’s Previous Efforts on Short-Term Rentals

Last year, concerns with STRs arose following numerous horror stories of out-of-control parties. A slew of regulations (some reasonable and some harmful) were enacted through Board Bills 33 and 34, on which my colleague David Stokes and I testified.

Here is a list of the regulations added to STRs in the City of St. Louis last year:

• Annually, STR Agents must acquire an STR permit, with a $150 fee.
• Minimum stay of 2 nights.
• No STRs in a place benefited by tax-increment financing or tax abatements.
• In structures between 5 and 23 units, no more than 25% of units can be STRs.
• In structures with 24+ units, no more than 12.5% of units can be STRs.
• No single owner can receive a permit for more than 4 units.
• The owner must be a natural person.
• An STR Agent must be physically present at the address within one hour if required.
• Three-strikes rule for bad conduct within 24 months (suspension can last for one year).

Adding a new tax on top of the numerous regulations from Board Bills 33 and 34 is likely to make things more difficult for the STR industry, which could in turn make it harder for the city to bring in substantial tax revenue from STRs. Alleviating rising housing costs is a worthy goal, but is this approach the right solution? It also raises the question of whether STRs should be taxed more than hotels in the City of St. Louis. These are issues for voters to consider as they decide on Proposition S.

The post Short-Term Rental Regulation May Again Be Changing in The City of St. Louis appeared first on Show-Me Institute.

Last year, Jackson County passed the senior property tax freeze. I have testified against these plans across the state. In many of these comments, I have pointed out that it is extremely troubling to create a system where people (i.e. seniors) will vote on property tax increases they won’t have to pay. As I said in one of my testimonies:

Similarly, this bill will lead to the troubling issue of people voting on property tax increases that they themselves are not subject to. The single best aspect of property taxation is that it focuses the costs of local services on the people who pay for those services. . . . Instituting a system where people vote on property taxes they won’t pay breaks that beneficial connection. It dramatically alters the voter calculation if seniors are voting on property tax increases they are immune to.

Now, Jackson County has placed a property tax increase on the November ballot. So, as I stated, senior citizens in Jackson County will be able to vote on a property tax increase they won’t have to pay. But it gets even better. It isn’t just any property tax increase—it’s a property tax increase to create a new fund for senior services in Jackson County. You can’t make this up. The county has proposed a new tax to fund benefits for senior citizens that senior citizens get to vote for but won’t have to pay for. What rational senior citizen won’t vote for this tax? All the potential benefits, none of the potential costs. It’s simply ludicrous.

I said before that:

“This bill is every bit as much of a tax increase on non-senior citizens as it is tax relief for some senior citizens,” Stokes said.

I had no idea of just how right I was going to be, unfortunately.

The post Senior Citizens Get to Have Their Cake and Eat It Too in Jackson County appeared first on Show-Me Institute.

Among the many things that Missourians will vote on in November is Amendment 6, which if passed would reinstitute a fee on court filings in Missouri to fund a larger pension for sheriffs and prosecutors in Missouri. (The fee was previously $3 before it was overturned by Missouri courts.) There are many troubling aspects of Amendment 6 that I hope Missourians consider before they vote, because the proposed amendment would have effects that go beyond the understandable desire to support law enforcement.

Locally, this amendment is especially bad public policy for St. Louis County residents. St. Louis County has by far the largest number of court filings due to its status as the largest county by population in Missouri and the presence of CT Corporation Systems in Clayton, which is the largest registered agent company in Missouri. What’s more, the St. Louis County sheriff is not a law enforcement agent and is therefore the only sheriff in Missouri who does not participate in the Missouri Sheriff’s Retirement System in the first place. So, to be clear, St. Louis County residents would pay the largest amount of fees into the fund—probably several hundred thousand dollars a year—while at the same time receiving the least benefit of any county. Coincidence? Perhaps. Fair? Definitely not.

Every person in St. Louis County who seeks redress in court, who files for a domestic order of protection, who has to pay a traffic fine, or is in court for any other reason, would have to pay this reinstituted fee to increase the pensions of primarily rural sheriffs and prosecutors. (The St. Louis County prosecutor might be included in this plan, so that’s one person in a million, for a position that is already well-compensated with a generous pension.)

The ballot language for Amendment 6, as is so often the case, is highly misleading. A typical voter will read the language proposing to “levy costs and fees to support salaries and benefits for current and former sheriffs, prosecuting attorneys . . .” and understand that to include the many dedicated deputy sheriffs and assistant prosecutors around the state. It doesn’t. This new fee will only benefit the elected sheriff and prosecutor in each county (and not even the sheriff in St. Louis County). That’s two people per county. Deputy sheriffs and assistant prosecutors have their pensions funded separately and are not affected by this proposal.

As if the misleading language and targeting of one county wasn’t enough to object to, the fact is that funding pensions by court fees is a bad policy. That is why previous attempts to fund a sheriff’s pension in this manner were thrown out as unconstitutional by the Missouri Supreme Court. Imposing court fees that make it harder to seek justice in court, or harder to pay fines ordered by court—especially when those fees financially benefit the law enforcement officials who impose some of them—creates a perverse incentive. Funding for the salaries and benefits of sheriffs and prosecutors should come from general local taxation, and there should be no financial incentive for increased fines, arrests, and so on. But instead of trying change their proposals to address these constitutional objections by judges and others, supporters of Amendment 6 are attempting to do an end-run around the law by changing the constitution. Supporting law enforcement by going around the law is an ironic way to accomplish their goals.

Furthermore, any increase in the retirement benefits of elected sheriffs and prosecutors should be accomplished by an expansion of defined-contribution plans available to them rather than an increase in their defined-benefit pensions. Expanding the opportunities for these well-compensated elected officials to participate in 457 retirement plans [which are like 401(k) accounts but for public employees] or similar alternatives is a better way to allow them to save for retirement without further burdening taxpayers.

Missouri sheriffs and prosecutors deserve our support, but Amendment 6 is not the way to show it. There are several good reasons for all Missourians to reconsider their typical support for law enforcement in this case, and for the people of St. Louis County, this choice should be easier than rooting against Stan Kroenke’s Rams in the Super Bowl.

The post Court Fee Increase Would Negatively Impact St. Louis County appeared first on Show-Me Institute.

Columbia is currently considering raising its municipal water rates. The proposed increase would be set at four percent, with higher increases for some water services during the summer. I have no criticism of the proposed increase if it is truly necessary and the revenue is properly used, but there is an even better option that Columbia citizens and leaders should consider: privatization.

There is no standard method for providing utility services in Missouri cities. Springfield, for instance, has a city-owned public utility that provides every utility service. Alternatively, almost all of the 1 million residents of Saint Louis County are customers of private utilities for water, gas, and electricity. The private sector also provides utility services in Jefferson City.

Despite the structural differences between public and private provision, there is little difference between what customers pay in Columbia and Jefferson City. Both cities are below the national averages for utility costs. According to data from payscale.com, a residential customer of Columbia’s municipal electric utility has an average monthly charge for usage of $169.75, which is four percent below the national average. In Jefferson City, that average monthly electrical bill is $162.50, or five percent below the average. That’s obviously a small difference in favor of customers of Jefferson City’s private utility compared to Columbia’s city-owned utility.

Studies have demonstrated that private utilities are generally more efficient than municipal utilities. In 2000, economist B. Delworth Gardner of Brigham Young University determined that private water utilities in Utah charged lower rates for water than comparable public utilities, even after accounting for the large advantages in taxation and regulation that public companies have. Economists Daniel Hollas and Stanley Stansell found in a 1994 study that private gas utilities were more economically efficient than public gas utilities.

It is reasonable to suppose that private utilities would be more efficient in their costs and operations than Columbia’s current municipal utilities. Privatizing the utilities could benefit the city in a number of ways. Most importantly, the city would experience an immediate cash infusion from the sale. Eureka, in Saint Louis County, sold its municipal water and sewer utility to Missouri-American Water for $28 million in 2020.

Columbia would also see other fiscal benefits from privatizing the city utilities. The assets of the newly private utilities would become taxable, expanding the Columbia and Boone County tax bases. Finally, reducing the number of municipal employees entails scaling back the long-run taxpayer costs associated with government pensions and health care.

Currently, there is a question about how Columbia has been calculating the payments-in-lieu-of-taxes (PILOTs) from the water department (and likely the electric department, too). The Columbia city charter states that the public utilities shall pay to the city the amount that would be due in taxes to the city if the utilities were private. However, the city has long been transferring into the city’s general fund the total taxes that would have been due to all of the local governments, such as the county and school district, which is a much higher amount. While it may seem like a harmless transfer from one city fund to another, it also looks like a questionable use of water department revenues to increase Columbia city revenues while going around the requirements of the Hancock Amendment. Heavy users of water, such as swimming-pool owners, should pay high water bills to account for their greater use of water. They should not have to pay more for water because Columbia wants to transfer more money from the water division to the general fund as a subsidy to other city services. Privatizing the water and electric utilities would stop that appearance of impropriety for good.

Private utilities are just as capable of providing quality services at a low price to the residents of Columbia, and likely more efficient, than city departments. Privatization of the Columbia Water and Light Division would bring a needed cash infusion to the city, add substantial assets to the tax rolls, and reduce long-term public employee costs. Cities around Missouri have seen positive results from such privatization efforts, and there is good reason to believe that Columbia taxpayers and residents would also benefit.

The post Columbia Should Privatize Its Water and Electric Utilities appeared first on Show-Me Institute.

Everyone is for this, right? I mean, who can be against supporting kids?

I’m all for supporting kids. I have three of them. What I don’t support is abusing the political process to turn voluntary charitable giving into mandated taxation and taking the wonderful aims of philanthropy and politicizing them.

The two charitable agencies that gathered these petition signatures and are supporting this tax do great work for kids. Those two agencies, Synergy Services and Beacon Mental Health, are also going to benefit from this tax, and will almost certainly seek grants from it. (Both agencies have received funding from the Jackson or Clay county children’s services funds.) There is nothing wrong with that, but let’s not pretend that these charities have no self-interest in this process.

The county board that will be created to distribute the funds to the various non-profits will likely have very little oversight, and that has been a real issue on boards like this before, especially in Lafayette County. The last thing Platte County—or any county—needs is another minor taxing body with limited oversight.

While I am not a doctor or counselor, I also think it is worth questioning the new assumption that more mental-health therapy is always good. Undoubtedly, many kids need mental-health services and some kids in Platte County would benefit from these expanded programs. But Abigail Shrier’s bestselling book, Bad Therapy, details some of the pitfalls of this approach. From a Commentary review of the book:

“With unprecedented help from mental health experts, we have raised the loneliest, most anxious, depressed, pessimistic, helpless, and fearful generation on record,” Shrier writes. Moreover, “as treatments for anxiety and depression have become more sophisticated and more readily available, adolescent anxiety and depression have ballooned.”

This tax vote may seem like an easy “yes” vote in Platte County. I hope the voters think long and hard about it first.

The post Politicizing Charity Is Dangerous appeared first on Show-Me Institute.

Everyone wants to help kids thrive, right? Who could be against a new tax in Platte County to help kids get more mental health services? Well, we are. Politicizing charity and mandating it through law is a dangerous path to take. Platte County citizens would be well served to think twice before going down this road.

There is an ongoing petition drive in Platte County to create the Platte County Children’s Services Fund. If approved by voters, the plan would institute a new sales tax to fund mental health services for children in Platte County. It would create a new board in charge of overseeing the collection and distribution of the funds as grants to eligible children’s charities.

Charity should not be politized, yet that is exactly what this proposal will do in Platte County. Several years ago, the children’s service fund in St. Louis County became a flashpoint in the county executive’s race. The fund was slow to distribute money and had grown to a balance of $78 million. That large balance became a point of contention in the campaign, made worse when questionable activities with the funds led to the firing of the children’s service fund director and an FBI investigation. Even without that level of controversy, charities will still be forced to play politics. Board members of various Platte County charities that might receive funds will have to start taking that into consideration when they decide whom to support in various county political races. One can’t risk backing the wrong horse and putting the charity’s funding in jeopardy. It’s machine politics at its most insidious.

Any future Platte County Children’s Service Fund would be a special taxing district, and the last thing Platte County needs is another obscure taxing entity with little accountability and even less oversight. The children’s service fund in Lafayette County, on the eastern edge of the Kansas City region, provides a useful case study for those problems. The fund had operated for years with almost no oversight. Those operating it routinely engaged in improper activities, including funding charities that were affiliated with board members, funding charitable activities that were not eligible for funds in the first place, and funding a private business that wasn’t a nonprofit. After a whistleblower brought this to light, the state auditor investigated and referred the fund to authorities for possible Medicaid fraud. If you think the future Platte County children’s fund will be immune from these incidents, you should disabuse yourself of that notion.

If Platte County voters pass the new tax and create a children’s service fund, will some kids benefit? Of course some will. But citizens need to consider all the possible effects of this endeavor. Creating a new taxing agency with no oversight, entangling philanthropy with politics, and making charities dependent on government largesse is not a recipe for making life better in Platte County. Let’s allow these charities do what they were intended to do—help kids—without the heavy hand of government involvement.

The post Think Twice before Supporting a New Tax appeared first on Show-Me Institute.

– The stadium tax debate in Kansas City
– The MetroLink expansion plan advances in St. Louis
– How to make it easier to access virtual health care in Missouri, and more

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The post KC Stadium Debate, MetroLink Expansion, and MO Loses the Top Spot appeared first on Show-Me Institute.

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There are two key ways of doing this reporting. The first way is by embracing something along the lines of House Bill 2242 from 2019, which included mandatory municipal transparency language. The second way is by tweaking Missouri Revised Statutes §§37.1090 to 37.1098 by replacing the voluntary “may” language with mandatory “shall” statements.

Making local government transparency mandatory in Missouri would be an enormous leap forward in government accountability in the Show-Me State. Transparency can empower people, build trust in government, and ensure public resources are used in the best way possible.

The post Transparency in Municipal Government Should Be Mandatory appeared first on Show-Me Institute.

Opportunity cost. The concept is so simple that a first-grader could understand it. I know, because I used to teach it to first-graders. Had you walked past my classroom at just the right time, you might have heard 20-something first graders chanting, “Opportunity cost is the opportunity lost.” The students understood that our decisions have consequences. It was a lesson they learned every time they went out to recess. If they chose to play kickball, they couldn’t play basketball. This basic life lesson bears some repeating for the adults who set policy in our state.

Though the term opportunity cost was not coined until 1914, French economist and writer Frédéric Bastiat provided one of the most salient examples of the concept in his 1850 work, “What Is Seen and What Is Not Seen.” Using the parable of the broken window, Bastiat explained how money being spent on one activity is money that cannot be put to more productive use elsewhere. Imagine that a pane of glass is broken at a baker’s shop. Obviously, the money that the baker must pay to have it repaired becomes revenue for the window repair man. Anyone walking by can see the repair man doing work and recognize that he’ll be paid for his labor. But it makes no sense to look at the repair man’s good fortune in isolation. Doing so would lead to the harebrained conclusion that breaking windows leads to economic growth! Instead we need to remember that, had the window stayed intact, the baker could have done something else productive with the money. The problem is that we can’t see what the baker could have done with the money—only what he actually did with it.

Unfortunately, our board of aldermen and other policymakers regularly make decisions based on what they see without accounting for what they can’t see. Take for example the earnings tax in Saint Louis. Policymakers can see the revenue generated by the tax, but they can’t see the economic activity that has been lost. They can’t see the jobs that might have been created had those dollars been reinvested by the businesses. Nor can they see the economic activity that might have been generated if those dollars had remained in workers’ pockets.

Think about opportunity cost the next time you see a ribbon-cutting at some new development that has received tax breaks or some other form of support from the government. Whether it is a property that has been blighted and given property tax abatements for development in the Central West End or a big box store that receives tax-increment financing, we can see the product of those government actions. We cannot see the harm they do to other businesses through unfair economic competition.

I was reminded of these ideas when I read Lindenwood economist Howard Wall’s most recent paper for the Show-Me Institute, “Is Growth in Outstate Missouri Tied to Growth in the Saint Louis and Kansas City Metro Areas?” Wall uses an econometric model known as Granger-causality to estimate the impact of employment growth in Saint Louis and Kansas City on the rest of the state. He finds a statistically significant downstream relationship between Saint Louis and the rest of Missouri. That is, employment growth in Saint Louis leads to employment growth in the state. He estimates that a 1 percentage point increase in growth in Saint Louis would lead to an increase of 0.35 percentage points in outstate Missouri within two or three years. Why this connection exists (he doesn’t find a similar relationship in Kansas City) is a matter for some hypothesizing or future research. Nevertheless, the point is clear—Saint Louis is an economic driver for the state.

While Wall’s paper does not deal directly with the idea of opportunity cost, his findings make it all the more important for policymakers to understand the importance of their actions. When they support an earnings tax or other policies that harm the city’s economic growth, they are hurting the economic growth of the entire state.

Missourians, not just those who live in the city, benefit from a thriving Saint Louis economy. That’s why we need policymakers to put in place pro-growth policies that create the economic conditions for the market to thrive.

The post Opportunities Squandered in St. Louis Affect All of Missouri appeared first on Show-Me Institute.

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Missouri’s economy has lagged much of country over the past decade. And for more than twenty years, Missouri has been a national leader in awarding tax credits for private gain in the name of “economic development.” If issuing tax credits were a good way to spur growth, our state would have one of the fastest-growing economies in the country. But it’s not, so we don’t.

Unfortunately, despite years of evidence that economic development tax credits don’t work, state policymakers appear to be doubling down on this wrongheaded approach. After more than a decade dormant, Missouri’s film tax credit is on the path to returning. The Senate approved a bill rebooting the program, and a House committee recently voted out a separate measure including the credit. All of this for a program that was so bad our elected officials got rid of it in 2013.

Countless reports, studies, and audits reached the same conclusion: the program is a horrible investment. It serves too narrow of an industry to help grow a state’s economy. Much of the credit’s benefit goes to out-of-state companies and workers. And further, the tax credits do not generate sufficient tax revenues to justify the subsidy. While it is true that many other states currently offer some form of film subsidy, that is not an excuse for Missouri to rejoin this race to the bottom.

As we enter the second half of this year’s legislative session, there’s still time for our elected officials to reverse course. It’s understandable that policymakers would be interested in finding policies that would help get Missouri’s economy back on the right track, but government picking winners and losers isn’t the way to do that.

In fact, turning around Missouri’s economy doesn’t have to be as difficult as our elected officials are making it seem. If taxes are too high for the film industry to consider Missouri, instead of subsidizing Hollywood, policymakers should focus on lowering the tax burden for all Missourians. At the very least, our elected officials need to stop advancing policies that we already know don’t work. Bringing back the film tax credit is not just a bad idea—it’s an insane one.

The post Tax Credit Insanity appeared first on Show-Me Institute.

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The biggest problem with the Loop Trolley is that nobody wants to ride it. During its 13 months of operation, ridership was under 10 percent of expectations, which led to equally depressing revenue shortfalls. Time and again, trolley management turned to taxpayers to fill its budget gaps, ultimately pouring $51 million of other people’s money into the project. One of those funders, the Federal Transit Administration, issued an ultimatum to the Loop Trolley Transportation Development District (LTTDD): either restart the trolley or pay back $37 million in federal grants.

Show-Me Institute analysts have been issuing warnings about a taxpayer-funded trolley with minimal demand for more than a decade, so this is not your average “I told you so.” But now that Bi-State has decided to clean up the Loop Trolley’s mess, let’s hope it has a good plan.

Bi-State should do what it can to reduce the overall taxpayer burden. As of now, trolley funding will come solely from the LTTDD’s sales tax on loop shoppers, which will not be enough to run the trolley for long. One way to potentially reduce taxpayers’ burden is to sell advertisement spots on the trolley. (Yes, even park bench personal injury lawyers—somebody needs to represent the owners of the cars the trolley kept managing to hit last time).

Bi-State can also lessen taxpayer burden by charging passengers to ride the trolley. Currently, Bi-State is considering letting passengers ride for free. If the thinking is that this revenue would be too small to make a difference, Bi-State should remember that people voluntarily paying to ride the trolley is better than reaching into the pockets of people who don’t ride the trolley. Charging fares from the start would be better, but if Bi-State decides not to do that, it should at least try to boost ridership to the point of charging fares. Whether that’s seasonally themed rides, reaching out to business and marketing students at Wash U for consulting, or any other novel idea, boosting ridership to the point of charging for fares should be the goal.

The trolley is coming back whether we like it or not. Let’s hope Bi-State finds a way to get taxpayers off the hook.

The post What I Would Like to See from the Resurrected Trolley appeared first on Show-Me Institute.

The state pays unemployment benefits from this fund, and the COVID-19-induced recession meant that the state was dipping into this fund more than normal. When the balance of the UI Trust Fund is too low, an increase in tax contribution rates on business owners is triggered.

As stated in the spending guide:

States can replenish their UI Trust Funds up to the difference between the balance on January 27, 2020 ($1.054 billion) and May 17, 2021 ($637 million). Thus, Missouri lawmakers should make a one-time contribution to the state UI Trust Fund of $417 million to prevent small businesses from facing hikes in their UI taxes and to keep the fund balance healthy in case of heavy future use.

A tax increase for businesses is the last thing anyone needs right now. Businesses pass on higher taxes to customers, which in turn means higher prices and costs for everyone.

With the finalization of the rules governing State and Local Fiscal Recovery Funds, there is now a tighter timeline for spending stimulus funds on replenishing the UI Trust Fund. If states use funds to replenish their UI trust funds after April 1, 2022, they will be subject to a maintenance of effort requirement for UI benefits through 2024. This means that if states use stimulus funds to supplement UI funds after April 1, they would not be allowed to take any action to reduce weekly unemployment benefits or the number of weeks of benefits available until after 2024.

As Jared Walczak of the Tax Foundation wrote in a great summation piece:

Many states may have no desire to do this. Others may anticipate the need for an adjustment. Regardless, state lawmakers may be wary of having their hands tied by the federal government. But there is a grace period, which could be a motivation for states to act fast.

The bottom line is that if Missouri lawmakers want to replenish the UI Trust Fund without strings attached, they need to act quickly.

The post Lawmakers Should Replenish Unemployment Insurance by April 1st appeared first on Show-Me Institute.

Between 2014 and 2019, ridership on St. Louis Metro buses and light-rail trains dropped by nearly 25 percent. Thanks to the pandemic, ridership in recent months has only been half what it was in 2019, and thanks to increased numbers of people working at home it may not ever return to 2019 levels.

This suggests that St. Louis doesn’t need to spend hundreds of millions—or billions—of dollars building new light-rail lines. Yet that is exactly what St. Louis Mayor Tishaura Jones wants to do, not because St. Louis needs it, but because federal funding might become available for it. That federal funding would depend on local matching funds, meaning St. Louis taxpayers would have to pay higher taxes for train rides few of them will take.

St. Louis’s light-rail record is unimpressive. In 2001, Metro opened the 17-mile MetroLink College extension, doubling the total number of miles in the system. Metro carried fewer bus and light-rail riders the year after opening this line than it had carried the year before. The same thing happened when it opened the 3.5-mile Shiloh-Scott extension in 2003. The 8-mile Shrewsbury-Lansdowne MetroLink extension gained some new riders, but all of those riders were lost after the 2008 financial crisis, and most never came back.

Overall, light rail has failed to boost the region’s transit ridership. In 1993, before the region’s first light-rail line opened, buses carried 40.3 million riders. Since then, Metro has spent around $2.5 billion building 45 miles of light-rail lines. In 2019, buses and light rail together carried 36.1 million riders, 11 percent fewer than before light rail.

Part of the problem is that light rail is functionally obsolete: just about anything light rail can do, buses can do better for far less money. Counting capital costs, Metro spent $12.80 per light-rail rider but only $8.30 per bus rider in 2019.

The current proposal to expand MetroLink with a new north–south corridor line through downtown fails on two key fronts. First, while transit advocates say spending more money on transit helps low-income people, the fact is that most low-income people do not take transit to work. Census Bureau survey data show that only 4.4 percent of St. Louis–area workers who earned less than $25,000 a year took transit to work in 2019. Meanwhile, the sales taxes used to support Metro buses and light rail are highly regressive, meaning the 95.6 percent of low-income people who aren’t dependent on transit are disproportionately paying taxes to support rides they aren’t taking.

Second, cities that have successful rail transit have a high concentration of jobs in a central business district, and St. Louis is not one of those cities. The percentage of regional jobs in downtown St. Louis has been declining for years. It is currently down to about 60,000 employees downtown, very few of whom take light rail to work. Expanding MetroLink on the proposed north–south route will be a very expensive attempt to take people who don’t use light rail for work to jobs in an area where they don’t work.

The places in downtown St. Louis that benefit from MetroLink (the stadiums, convention center, etc.) already have it. The money Metro wisely spent adding and improving stations at Cortex and Barnes Hospital cost a fraction of the amount of a new line and served an area where people of all incomes actually use MetroLink to go to work. (The Barnes/Central West End stop is the busiest stop in the system.)

Meanwhile, while we debate MetroLink’s further expansion, Metro’s bus system is “disintegrating,” says engineer Richard Bose at the pro-transit NextSTL website, because the agency can’t find enough drivers to keep it operating. Jones and other city and regional officials should devote their efforts toward helping Metro run the system it already has rather than trying to expand it. Federal and local funds spent on an effective bus system offer a better solution to address the needs of the people who live in North St. Louis County. Otherwise, people might get the idea that the real purpose of light-rail transit is not to move people, but to move dollars from taxpayers’ pockets into the hands of light-rail contractors.

The post MetroLink Light Rail is MetroWaste appeared first on Show-Me Institute.