The MacNeil/Lehrer Report; Tenn-Tom Waterway

[Tease]

ROBERT MacNEIL {voice-over /: While President Reagan looks for more ways to cut federal spending, the government is spending $20 million a month on the largest waterway project in U.S. history. Is it a boondoggle or a vital economic resource?

{Titles}

MacNEIL: Good evening. For weeks, the Reagan administration and the Congress have been coming closer to the crunch -- more budget cuts or higher taxes or both to keep future deficits in check. The political pain more program cuts and new taxes will cause has thrown an unusual spotlight on one particular project costing $189 million this year. It is the Tennessee-Tombigbee Waterway, a project to give Tennessee River barge traffic direct access to the gulf of Mexico. Tomorrow or Wednesday the U.S. Senate will decide whether to kill the project or let it continue. The political interests aroused and political turf being defended take the issue to the highest levels of the same Republican leadership that is trying to grapple with President Reagan`s call for more budget cuts. It also pits some northern senators against southerners, as we`ll hear from Senators Charles Percy of Illinois and Bennett Johnson of Louisiana. So, tonight, the Tennessee-Tombigbee Waterway: do they throw away millions of taxpayer dollars to drop it, or spend millions more to finish it? Jim?

JIM LEHRER: Robin, the Tennessee-Tombigbee Waterway project is called the Tenn-Tom for short, "a vital link to the waterways of mid-America" for praise by its supporters, "the grand-daddy of outrageous pork-barrel projects" for scorn by its critics. It`s the grand-daddy because it`s based on an idea first floated by the French governor of Louisiana in the 1700s. He and many, many others since have wanted to connect the Tennessee River with the Tombigbee River in Alabama to form a fast water route from the mid-South down to the Port of Mobile, bypassing the longer way to the Gulf, via the Mississippi River. Throughout the 1800s, after it all became a part of the United States, there were petitions and surveys and recommendations supporting the French governor`s idea, but nothing really happened until 1946, when Congress authorized the project be built. It was then restudied for 16 more years before funding was voted in 1967, and construction finally began in 1971. Ten years and $1 billion later, it`s just over half- finished. Half of the 232 miles of canals and locks down from east Tennessee down to Demopolis, Alabama. Another five years and more than $600 million are needed to finish it; $189 million of that is in the legislation the House has passed, and will be voted on this week in the Senate. The project is being built under the auspices and supervision of the U.S. Army Corps of Engineers. Bory Steinberg is chief of the Corp`s programs division, and its civil works directorate. That "vital link to the waterways of mid-America" phrase is a Corps of Engineers phrase. Vital to whom, Mr. Steinberg?

BORY STEINBERG: Vital to all the residents, I would say. At the present lime, as the project is being constructed, vital to the local people. Many jobs have been created by the Tenn-Tom construction in Alabama, in Mississippi, in Tennessee -- areas that generally have had underuse of the valuable manpower resources. There were many jobs created here, including many minorities who are getting jobs that perhaps would otherwise not be em-ployed. Looking past the actual construction and at the actual use of the waterway, it`s a valuable savings in time required to get coal, pulp, manufactured chemicals and other products -- metallic ores -- to the ports. For example, it would be a tremendous savings going from Pittsburgh to Mobile, a 400-mile savings versus taking the Mississippi River.

LEHRER: Do those benefits that you just mentioned, the immediate ones and the long-term ones, justify the cost?

Mr. STEINBERG: In my view they certainly do. And as each year goes by, I`m more and more convinced that the benefits far exceed the cost

LEHRER: Was I correct to figure -- I looked, now, there are several figures that I read today about how much money it was going to actually cost to finish this thing. What is the cost that you all estimate to finish it?

Mr. STEINBERG: We`re talking about $1.8 billion. And if we look --

LEHRER: In total, right?

Mr. STEINBERG: In total, yes, sir. That`s a federal appropriation by Congress. If we look at the amount committed to date, it`s in excess of $1.4 billion. All of the major contracts have been awarded; that is, all of the navigation structures are underway. The interesting thing -- coming back to the benefits just for a moment -- is that nowhere is the potential for exporting steam coal even calculated in the benefit-cost ratio. Furthermore, just this past weekend I spent on the Mississippi. And let me tell you -- and this is below the locks, below Lock and Dam 27 -- the traffic is building up. If it continues in the future, we will have bottlenecks on the Mississippi. We really need another waterway.

LEHRER: Okay. Back to my question, though, in terms of how much money is actually needed to finish it. Is it around $600 million?

Mr. STEINBERG: If you`re talking about appropriations, it`s in that ballpark. However, work committed gets us close to the $1.5 billion figure, so it`s about $343 million remaining uncommitted.

LEHRER: You mentioned the Mississippi. As you know, critics call it a clone of the Mississippi, an unnecessary clone of the Mississippi. What, in effect, and briefly, would it do that the Mississippi cannot do.

Mr. STEINBERG: As I indicated, it`s like a two-lane highway that can no longer take the traffic. Another artery is necessary. That`s one thing. Another thing, the Port of Mobile is much more accessible from various parts of the country from the Tennessee Basin, from the Ohio Basin, coming down the Tenn-Tom than is -- than coming down the Mississippi River.

LEHRER: So in a word, the Corps of Engineers position is, "Finish it, by all means."

Mr. STEINBERG: Yes, sir.

LEHRER: Thank you. Robin?

MacNEIL: Now a critic of the Tenn-Tom project who has studied the economic effects of its probable usage and economic impact on the region. He is Robert Haveman, professor of economics at the University of Wisconsin, who has been a witness in congressional hearings and in a lawsuit brought against the waterway by conservation groups and railroads. First of all, do you accept the Corps of Engineers figures on costs and benefits and the ratio between them?

ROBERT HAVEMAN: No, I don`t, Robin. The Corps of Engineers has enacted a study, has put it forth as representing the benefits and the costs of this project. In my view, those benefits are sorely overstated. The costs as were stated by Mr. Steinberg a moment ago are understated and, in fact, to move traffic down the Tenn-Tom along the lines that the Corps is suggesting is going to cost $3 billion at a minimum, and not the $2 billion that has been expended. The traffic that Mr. Steinberg is referring to -- the coal traffic, largely -- that will move down the Tenn-Tom is, in my view, non- existent traffic, by and large. Indeed, of the tonnage that is in the basic Corps report justifying this project -- the General Accounting Office attempted to locate the traffic which is mentioned there, and literally was unable to find 80% of the movements that are referred to in the Corps report.

MacNEIL: What about the point Mr. Steinberg has just made, that there is such traffic buildup in the Mississippi that another lane in the highway, so to speak, is needed?

Prof. HAVEMAN: The lower Mississippi is the nation`s largest free-flowing, unlocked, open waterway.

MacNEIL: "Unlocked" meaning you don`t have to go through locks to go up and down?

Prof. HAVEMAN: That`s correct. As opposed to that, the Tenn-Tom. for example, is going to have 10 locks in it. It`s free-flowing; it is handling an enormous amount of barge traffic. It is handling barge tows composed of 35 to 45 barges. The kind of congestion that Mr. Steinberg is talking about there is peanuts compared to other points of congestion that might exist on either highways or other waterways in this country. To my knowledge, the con-gestion argument for the lower Mississippi is. like the barge traffic asserted by the Corps for the Tenn-Tom, made up out of whole cloth.

MacNEIL: How many barges could the tows take on the Tenn-Tom?

Prof. HAVEMAN: Well, this is, I think, Robin, a crucial point. You referred to it as the clone of the Mississippi. In some sense it is anything but the clone of the Mississippi. The Tenn-Tom, if it were to be completed, would take barge tows composed of six barges at a time, and the tow boat. That`s the most that can be put together that can navigate the twisty-turny can of snakes that the Tenn-Tom is. On the other hand, the lower Mississippi, as I said, is putting together 35 and 40 barges in a single tow and moving them rapidly down the Mississippi. What we have, in a very real sense, is the construction by the Corps of Engineers of an obsolete facility -- a Model A -- that is obsolete before it is completed.

MacNEIL: Briefly, what do you think should be done with it?

Prof. HAVEMAN: I think that the project should be terminated, and $2 -- more than $2 billion worth of taxpayer money should be saved and devoted either to tax cuts or other worthwhile projects in this country.

MacNEIL: Thank you. Jim?

LEHRER: Members of the United States Senate are going to be asked this week in effect to choose between the views of Mr. Steinberg and Professor Haveman. It will come on a vote on an appropriations bill amendment that would delete the $189 million for Tenn-Tom. One of the co-sponsors of the amendment, and the most vigorous of the anti-Tenn-Tom senators is Senator Charles Percy, Republican of Illinois. He will be vigorously opposed in his effort by, among other pro-Tenn-Tom senators. Senator Bennett Johnston, Democrat of Louisiana, the ranking minority member of the Appropriations Subcommittee which oversees funding for water projects like Tenn-Tom. Senator Percy, you want to stop Tenn-Tom forever, or just for now?

Sen. CHARLES PERCY: No, just kill it dead as a doornail, I think, do the same thing to that the Ford Motor Company did to the Edsel. When they have an Edsel. and it was a lemon, they dropped it. They`d be bankrupt now if they were continuing to build Edsels, and we cannot continue water projects of this kind that have as low a return on investment as this project has.

LEHRER: Senator Johnston, why should it go ahead?

Sen. J. BENNETT JOHNSTON: Well, it --

LEHRER: Is it not an Edsel?

Sen. JOHNSTON: Well, first of all, let me tell you, my state doesn`t benefit from this project, and I wasn`t in the Congress when this was started. The thing that is so clear, though --

LEHRER: And you didn`t know the French governor of Louisiana, right?

Sen. JOHNSTON: I didn`t know him personally. We`re 81% into this project in terms of money completed. Mr. Haveman said we`d save $2 billion. That is flat, totally wrong. If we stop this project now, we save $343 million. That`s 19% of the rest of the project. With that $343 million we get about $ 140 million a year in benefits -- a cost-benefit ratio of 6.7 to 1 if you take the cost of termination. "Cause you can`t just stop one of these projects and not fill in the hole and not pay off the contractor. Eighty- one percent complete, about $140 million a year in benefits. Mr. Haveman says you`ve got to spend another $2 billion. There`s no -- there`s no basis for that. That is just totally factually wrong.

LEHRER: Senator Percy? Eighty-one percent complete, why not go ahead and finish it?

Sen. PERCY: Well, first of all, the comptroller general fortunately has taken a look at this. I`ve asked the comptroller general to study it. He`s an objective, authoritative source. And they maintain -- here is the detailed study that they made; it`s available for anyone to look at. But this project is not "a billion-dollar ditch," as the Miami Herald called it; it`s a $3-billion ditch. It`s going to cost $3 billion, because the comptroller general points out that a bottle-neck will be created between Demopolis and Mobile that will be so great that requests would be coming in for another billion dollars to finish that off.

LEHRER: To straighten out the crooks and the crannies?

Sen. PERCY: This is less than 1% return on an investment. Now the figures given by my distinguished and great friend, Senator Bennett Johnston, were based on figures that the Corps of Engineers had developed. The Corps has a deep, vested interest in continuing this project. They started designing and building the Edsel, and now they`re going to try to finish it at our expense. Their figures showed that the estimated savings to be achieved by 1981 was $77 million. The comptroller general of the United States looked at those figures. They could only find $16 million. So, in other words, you were off by 80% in that original estimate --

Sen. JOHNSTON: May I reply?

Sen. PERCY: If you were in the private sector, we would fire anyone that was off 80% in their estimates.

Sen. JOHNSTON: First of all, the comptroller general`s report was done for me as chairman of the subcommittee, not for --

Sen. PERCY: There have been several, I think.

Sen. JOHNSTON: -- not for -- well, this is the one, and if you look on page --

LEHRER: Are you all looking at the same report?

Sen. JOHNSTON: Same report. Same report. If you look on page 4, it says -- talking about this 70% or 80% of the traffic that can`t be found -- here`s what they say. "The evidence is not strong enough to conclude that these movements were not properly included in 1976 when the Koenig navigation benefit estimate was made." They also point out that GAO did not identify several companies, primarily coal shippers -- they point out that coal shipments have gone way up. So, read the whole report. If you do, they support these things.

LEHRER: What about -- what about Senator Percy`s point, though, that just to Demopolis isn`t going to get it? I mean, there`s going to be a bottleneck below there because the crooks and crannies in the river, and there`s going to be another billion or two dollars spent.

Sen. JOHNSTON: See, the opponents want to have it both ways. On the one hand they want to say that there`s going to be so much traffic that you`re going to have to go in and spend -- by the way, it`s not $2 billion, it`s $340 million in 1981 dollars, to improve below Demopolis. But 29 million tons a year was the amount of coal used -- which can be accommodated on that, and that`s what was used in the cost-benefit ratio. So the only way you will need more than that is if it exceeds the cost-benefit ratio. So on the one hand they say it`s not going to live up to its expectations. On the other hand, it`s going to so far exceed expectations that the Congress is going to have to spend $340 million more to straighten out the bottleneck.

Sen. PERCY: Well, I would just like to read directly from the comptroller general`s report on the cost of eliminating the bottlenecks. The comptroller general said eliminating the bottlenecks would cost about $960 million -- $322 million for construction, and then -- that`s in `79 dollars -- and $637 million for inflation to the end of the estimated construction period in 1997. That adds up to $960 million -- almost $1 billion.

LEHRER: Now, this is money that isn`t even appropriated now. This is not coming up through the Senate. This is a whole new --

Sen. JOHNSTON: Oh, no. Well, understand, that`s not authorized. I don`t think the Congress would authorize it. The only reason that the Congress would authorize it would be because this project so far exceeds its expectations, it`s so successful, that they would want to build a bigger and better project. But for the purpose of the cost-benefit ratio, which is now, as I say, 6.7 to 1, for the purpose of that, all you`ve got to have is 29 million tons, which can be handled below Demopolis on the existing waterway.

LEHRER: Senator, what about the debate, the argument, that all this money has already been spent. If you don`t go ahead and finish it, we`ve wasted all the money that has been spent up to now?

Sen. PERCY: Well, we have spent a billion dollars, and we have wasted that. The problem is, according to the comptroller general`s figures, we`ll be asked to spend $2 billion more to really finish it. And that`s the comptroller general`s figure.

Sen. JOHNSTON: The comptroller general does not say that.

Sen. PERCY: The question is, if you`ve wasted a billion, are you saving money to spend $2 billion more, particularly considering we don`t have the money. We`re going to have to borrow every penny of it, and pay, you know, 15, 16, 17% interest, compound, adding to the trillion-dollar deficit we now have. To get what kind of a return on investment? No business would ever be set up on the low return on investment. Not a single coal company has asked for this project. Not a single one. Not a single study has ever been made that has justified the figures. And Dr. Haveman`s figures are absolutely correct.

Sen. JOHNSTON: First of all, let me say the comptroller general flatly does not say that it takes $2 billion. I challenge you to find that; I know you can`t find it in this time, but I`ll show you after the program that it doesn`t exist. What this is really about is a conflict between the railroads who now enjoy a monopoly -- and they want to keep their monopoly -- and those who want to open up this section of the country to a competing barge traffic. The Corps of Engineers has been very conservative in estimating their benefits. As a matter of fact, the benefits have exceeded estimates by 2 1/2 to 1, on the average, in Corps projects. There has been not one single major Corps construction and navigation project which has ever been under its estimates- -- I mean, which has ever failed to be over those estimates. It`s a good deal, considering that we`re 81% into the project.

LEHRER: Robin?

MacNEIL: Mr. Steinberg, first of all. Senator Percy says the Corps was way off -- 80% off -- in its cost estimates.

Mr. STEINBERG: Well, I don`t know how far back he`s talking, but the number that Senator Percy mentioned in the GAO report was referring to the work below Demopolis. Now, that work, Senator Johnston indicated $300+ million, and Senator Percy cited a figure of $960 million, nearly a billion dollars. The difference, basically, is in the inflation.

MacNEIL: It would be $300 and something if you paid for it now. and $900 if you paid for it by 19 -- into the `90s?

Mr. STEINBERG: Yes, sir.

MacNEIL: I see.

Mr. STEINBERG: It`s interesting to note, however, that as Senator Johnston indicated, there are no benefits for enlarging it in the present benefit- cost ratio. Furthermore, the cost would also see an increase in benefits at 1990 price levels. At the present time we`re talking about a savings of, say, $1.50 a ton on coal, and up to $2 and change on some of the other products that would be using the waterway.

MacNEIL: Now, there seems to be the biggest controversy this evening is over whether enough traffic would want to use this to make it -- at least, one of the biggest controversies -- to make it -- to justify building it. Let me come back to you, Mr. Haveman. Senator Johnston said you`re just completely wrong in saying that there wouldn`t be any traffic to use it.

Prof. HAVEMAN: Okay. Let me address a couple of Senator Johnston`s figures head on. I`m going to give you budgetary figures as of 30 days ago. There has been $ 1.99 billion spent on this project, leaving nearly $1 billion to complete the segment north of Demopolis. And Senator Percy is right. Another $1 billion will be required to complete the segment below Demopolis. As a result, we`re facing today a situation in which one-third of the expenditures have been made. Two-thirds remain to be made. Now, with respect to the traffic. The question that has to be asked is, can a researcher discover what products exist in the drawing basin of this proposed, and indeed, under construction channel, which will move down that channel as opposed to moving on other modes, or on the Mississippi River? My contention: it`s a contention which is verified in the comptroller general`s report -- the blue-covered document shown by Senator Percy -- is that 80% of the traffic that the Corps said was going to be there in 1980 could not be located by the comptroller general.

MacNEIL: Senator Johnston, what`s your answer to that?

Sen. JOHNSTON: Well, first of all, the comptroller general -- I have just read from that part of the report which pointed out that this is -- what you do is take a snapshot in time in .that they`ve stated that the evidence is not strong enough to conclude that these movements were not properly concluded in the 1976 report. Let me say this, that the railroads testifying in court said that they would lose some 30 to 50 million tons per year of traffic. Now, the estimates of the court, on which the cost- benefit ratios were based, were 29 million tons of traffic. So the railroads, of which Mr. Haveman has been testifying against this project for some years, have already stated in court that the traffic they would lose exceeds that which it would take to justify fully the cost-benefit ratio.

MacNEIL: Mr. Haveman?

Prof. HAVEMAN: The railroad figure that was mentioned by Senator Johnston -- the $31 million of traffic per year -- was an estimate based on a hypothesized, truthful projection by the Corps. The question was, if the Corps` numbers are right, then how much traffic will the railroads lose? And the answer was, indeed, $31 million worth of traffic a year. Now, be clear. That`s a loss to an industry in this country that employs people, that uses resources. Jobs will be lost there if, in fact, the Corps` projections are correct.

MacNEIL: Well, thank you. Jim?

LEHRER: Senator Percy, you heard what Senator Johnston said a moment ago, that this is really an attempt of the railroads to hold onto a monopoly. The only way to get that coal down there now is on the railroads, and they want to hold onto it. Is that right?

Sen. PERCY: We have a trucking industry and we have barges on the Mississippi that go up and down. This is not -- certainly the railroads object to anything like this being proposed, where there is not a single cent of users` fee involved. It`s a free ride all the way through. There`s no maintenance, no money raised by users` fee for construction, for operation, and for maintenance. And I refused absolutely for years to fund Locksen Dam 26 at Alton, Illinois until we adopted a user fee. The free lunch ought to be over. The taxpayer ought not to pay for that transportation because the trucker and the railroads pay taxes. And what -- if I could just add one other thing, Jim.

LEHRER: Sure.

Sen. PERCY: The Wall Street Journal came up with a scathing editorial against this project, and said, finally, have we really run out of ideas on how to reduce the budget. And this was a prize one. But it`s not a regional issue. I am fighting today to stop appropriations of $1.2 billion for projects in Illinois of this same character, only they`re not quite as bad, but they`re pretty bad. And now we`ve got a deep tunnel -- up around $11 billion. I`m ask ing we appraise that again, and take a look at it. That`s the biggest public works project in the history of the world.

Sen. JOHNSTON: Well, first of all, there is a user fee on Tennessee-Tom. If: of recent vintage. I mean, when it comes in, it`s the law of the land now, and I think you voted for it, as I did. The central point, which you cannot get away from, is that we`re 81% committed on this project. We`re 81% committed. That`s only $300-something million left.

LEHRER: Well, that brings me to the politics of this, gentlemen. Let me ask you each, here. Politically, and not for the two of you, necessarily, but for the average United States senator who has been listening to the two of you argue as you have tonight over this, which is worse for them politically: stopping a project after so much money has already been spent, or spending even more money at a time when everything else is being cut? Senator Percy?

Sen. PERCY: I think if they vote for this money they`re going to be held responsible as long as they`re in the Congress, because we will -- I will never let them forget that this is costing $20 million a month, and it`s going to cost that for a decade. And that simply is money that ought to be going to reduce the debt, and we shouldn`t be borrowing that kind of money for a project that`s as dubious as this one.

LEHRER: Senator?

Sen. JOHNSTON: Well, this will be my third year on this subject. We won it each year because we brought out the facts. The facts are different from what we`ve heard here about these reports, because it simply doesn`t cost that much. Politically, for a United States senator really to stop a project 81% into it, when it would yield almost nothing except a scar in the earth, would be preposterous. It would be asinine, and the Senate, I don`t believe, is going to do that. They didn`t do it the last two years.

Sen. PERCY: Why did the authorizing committee for the first time this year vote 9 to 5 to stop the project?

Sen. JOHNSTON: Well, I can`t account for that. I can tell you what happened on the floor of the United States Senate.

LEHRER: What is going to happen on the floor of the United States Senate? How close is it?

Sen. PERCY: As close as AWACS.

LEHRER: Is that right? You mean it`s right at 50-50?

Sen. PERCY: Every senator`s vote will count on this one.

LEHRER: Do you agree, Senator Johnston?

Sen. JOHNSTON: I would think we`d win it by a little bit more than that. After all, we`ve got not only the facts on our side, but Howard Baker, from Tennessee.

LEHRER: You think you`re going to win?

Sen. PERCY: I never underestimate Howard Baker, but he is from Tennessee. And this is not a regional thing. I was -- after all, my father was born in Mobile, lived most of his life there. I was born across the Bay in Pensacola. And I`m stopping projects in Illinois that I think are just as bad as this one. I`ve got to fight this one.

LEHRER: We have to go. Robin?

MacNEIL: Yes, Senator Percy, Senator Johnston, Mr. Steinberg, thank you for joining us; Professor Haveman, thank you. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: That`s all for tonight. We will be back tomorrow night. I`m Robert MacNeil. Good night.