Thoughts and Opinions On Today's Important Issues

Monday, May 03, 2010

$550M DRIC Free Lunch Thoughts

Some Democrats in Michigan ought to feel ashamed at how they were used and fooled. And a well-known Republican too.

I have some sympathy for them. As elected officials, they should expect that when a report is presented to them by the Bureaucracy that it should be fair and impartial with full disclosure so that they can make an informed decision.

Seriously though, shouldn't the alarm bells have gone off when the first P3 project is not a small one so they can learn but one for $5B in a controversial matter like the DRIC Bridge?

If they had read the legislation, they would have known that they were being led by the same people who wanted no legislative oversight at all over their activities.

In this and the next two BLOGs, learn how Michiganders, instead of being taken to the promised land will be giving away their key infrastructure. Instead of riskless, financial freedom, they will be enslaved for the next 50 years, or longer, paying gigantic fees and payments to Wall Street bankers and foreign investors.

Talk about overpaying for an asset. Our Windsor Mayor Edgar (aka Eddie) Francis was prepared to pay US$75M to get the right to operate the US half of the Detroit/Windsor Tunnel. Heck for only $550M, Canadian Transport Minister John Baird is able to buy all of Michigan!

I guess there must be free lunches in Michigan. According to Governor Granholm, Canada’s $550M bribe errrr payment offer means:
  • "It removes the risk from the state of Michigan for all of this."

She is completely wrong. It puts Michigan totally at risk as you shall read in my next BLOGs but she does not get it yet. But first I have to set it up for you in this BLOG and put everything in a context.

Perhaps the Governor got a free meal but I sure did not. As I completed my income tax return the other night, I mentally divided $550M by the population of Canada and I figured about $18 of my taxes were going to Michigan. That just covers the Petite Certified Angus Ribeye Steak Sandwich lunch at Detroit's Opus One restaurant. My wife's contribution would probably cover dessert, coffee, taxes and tip

Amazing, we have an infrastructure deficit in Canada and we are using all of this money to fix up some areas in Michigan when there is a nice Ambassador Gateway project already almost finished there that cost the Americans a quarter of a billion dollars. Seems strange to duplicate that a mile down the road at twice the cost and to have to move out several hundred families and businesses who will have difficulty relocating.

I gather the money is coming from Canada’s Economic Action Plan. I must admit what I read in this Plan said this.

  • "Building Infrastructure to Create Jobs: Providing new infrastructure and housing funding to create jobs across Canada and ensure Canada emerges from the economic downturn with a more modern and greener infrastructure, as well as an expanded capacity to provide affordable housing to lower-income Canadians. These projects are moving forward and benefiting workers and the economy across the country."

Last I heard Michigan was NOT part of Canada. If I had my choice, if we are going to amalgamate with a US State, I would prefer Florida! The winters are so much better there.

Here’s something interesting that Minister Baird said. We in Canada have been waiting for a generation or two "to make this happen." Hmmm a generation is about 25 years so 2 generations would be 50 years. And you thought I was kidding when I said that Canada has been after the Ambassador Bridge for almost 50 years! And as I said, as confirmed by the Minister, Transport Canada has been working hard on the takeover for the last decade.

I wonder how they will divide up the jobs. I remember the US Representatives assuming that Michigan workers would get most of them. I think I heard one of them talking about "protectionism" respecting jobs.

However, if you listen again to the Baird interview I posted the other day, he just talked about jobs in Windsor/Essex when he was telling us about Canada's generous gift. Thousands of jobs in SW Ontario he talked about since we have one of the highest unemployment rates in Canada. Nothing about SE Michigan. No jobs mentioned for that State that I heard. The purpose he said was to create and protect Canadian jobs. After all, if you provide the gold, you make the rules,

Ooooops, does that mean I am looking at the Michigan gift-horse in the mouth?

I told you before that the MDOT bureaucrats did not have enough brains to figure out how to do this. This was all Canada and MDOT just went along for the ride. Now if this falls apart and Michigan gets screwed, as they will, guess who can be blamed: Michigan's high priced consultant, ex-Governor Jim Blanchard:

  • "Former Michigan governor James Blanchard -- also a former U.S. Ambassador to Canada -- was said to be instrumental in helping barter the deal. He recently took on the role as a paid consultant for DRIC's Michigan team.

    "This is a big day for the economic future of both countries," Blanchard told The Star. "We are thrilled."

    Blanchard was among high-level political leaders and bureaucrats on both sides of the border who met secretly for months, culminating with Thursday's letter from Baird, he said.

    "It had to be kept quiet or you can't have serious negotiations," he said.

    "Transport Canada did a heck of a job in figuring out how to craft this. They really threaded a needle with this."

I guess old loyalties die hard. I wonder if the Democrats are helping out their former Governor rather than thinking about their taxpayers.

I loved too how Minister Baird insulted Americans and why Matty Moroun had to be vilified and demonized. Perhaps Matty has finally figured that out and is hitting back now. Baird made it clear that if you want to beat the Ambassador Bridge, the only way it could be done was by bribing Michigan "to put it over the top:"

Darn, why does everyone including the Minister conveniently forget about the Presidential Permit required by the DRIC bridge and the negative comment made by the Secretary of State before about the central crossing and the lawsuits.

As was quoted in the Windsor Star, this action is strictly political opportunism as the way to get around the American security issues over land crossings never mind pride so Canada can own the crossing in the end:

  • "It was a year ago this week that Transport Minister John Baird came to Windsor to assure an international conference at Caesars that a new government-owned bridge would be built downriver from the Ambassador Bridge, come hell or high water.

    Money wasn't an issue for Canada, he told about 300 transportation and trade executives. Later, I asked him privately if money could hold up the project on the Michigan side. He nodded.

    Then why can't Canada just build it and pay for the whole thing ourselves, I asked him.

    "Can't," Baird said tersely, muttering something that included the word "sovereignty."

    "They have to own their half, it's that simple" he finished, as if that were the end of the subject.

    Fortunately, it wasn't. As we learned this week, Baird's staff and that of Michigan Gov. Jennifer Granholm have been in deep negotiations for the last half year, trying to find a way to tap Canada's financial might to fund the U.S. side without upsetting American pride."

It was nothing more than bribing the Michigan Governor and House members with a free lunch with supposedly no consequences.

Don't blame it on what Dan Stamper said. He was only calling it the way the Minister told it to us. He was given the mandate by the Prime Minister to make it happen. If he wanted it done

  • "This was the only way we could do it....This is what was required to put it over the top...We needed this Bill through the Michigan House and Senate."
I wonder if Governor Granholm will get a bad case of indigestion with this free lunch. In my next BLOG, I will tell you why she will get sick. Actually, she will be gone in a few months so her distress will be short-lived. It will be Michigan taxpayers who really will be stuck with the bill. It's like a credit card: eat today even though you do not have the money and get sick later when the bill comes in month after month with all of the interest charges added on!

Now everyone knows what the price is to get a piece of legislation through Michigan. They know now how many millions it costs. While it may seem pricey, it is not. The P3 profits will more than pay for the cost of lunch as I have demonstrated before respecting the billions of extra money to be made over traditional financing.

Governor Granholm whose legacy the P3 tax will be should have to take responsibility for it....except she is term limited and won't be around when the diarrhea hits either.