United Streetcar: The Solyndra of Transportation

From Marc Scribner of CEI.

"Over the weekend, The Washington Post published a fascinating article about the rise and fall of United Streetcar, an Oregon-based manufacturer that owes its very existence to the worst kind of Washington politics.

Back in 2005, Rep. Peter DeFazio (D-Ore.) managed to secure an earmark requiring that a Portland rail transit project funded in part with federal funds procure U.S.-manufactured streetcars. This was the brainchild of another Oregon transit booster, Rep. Earl Blumenauer (D), who was a champion of the imploding “Portland model” of urban redevelopment and transportation planning when he sat on the city council. When former pork-barrel Rep. Ray LaHood (R-Ill.) was tapped to be President Obama’s first secretary of transportation as the token Cabinet Republican, the Oregon delegation knew it had found the perfect accomplice in the most unqualified DOT chief in history.

What happened was the same mix of cronyism and incompetence that has followed the Obama administration’s efforts to promote fuzzy-sounding objectives such as “alternative energy” in the case of Solyndra, and “livability” in the case of United Streetcar. From the Post:

A day or two after the new president nominated LaHood as secretary of the Department of Transportation in late 2008, the former Republican congressman from Illinois got a call from Blumenauer inviting him to his office.

“Portland was more than just automobiles. It was cycling, it was streetcars, it was walking paths,” LaHood said. “Earl really convinced me DOT really needed to do more than build roads and bridges. We, in a sense, followed Earl’s lead.”

Then Washington started taking actions that looked promising for streetcar backers broadly — and United Streetcar in particular.

LaHood’s department changed internal rules that had been thwarting streetcar projects during the George W. Bush administration. Those rules used travel time as a key criteria for certain federal dollars.

[…]

But with $48 billion in transportation projects as part of the economic stimulus, “we didn’t have to pick and choose,” LaHood said.

The Obama administration seized on United Streetcar’s story. In April 2011, administration officials promoted the firm on the White House Web site with a glowing Department of Transportation-produced marketing video.

“President Obama has challenged Americans to dream big and build big. United Streetcar has risen to that challenge, and they’re doing it all with American parts, labor, and ingenuity,” LaHood wrote in the accompanying blog post.

The administration was in the midst of ratcheting up the pressure on local officials to adhere to “Buy America” rules for federally funded projects. Those rules meant that more than 60 percent of the value of a streetcar’s components had to be from the United States, and they had to be assembled in the country.

Despite all the special privileges it received from its backers in government, United Streetcar built only 16 vehicles for three customers and it currently has no new orders. Traditional supporters of high-cost/low-value rail transit have even become skeptical of streetcar hucksterism. The progressive Washington Post editorial board recently called on the District of Columbia to halt the expansion of its planned streetcar network while neighboring Democratic Party stronghold Arlington County, Va., just canceled its streetcar projects.

This clear reality has not deterred True Believers, such as Rep. Blumenauer, who still can't get it:

“We would have two or three American light-rail manufacturers in the United States, rather than just Siemens and Bombardier,” [Blumenauer] said, referring to the German and Canadian transportation behemoths.

Now the U.S. government should order 500 or 1,000 streetcars and give a few companies the chance to produce 50 or 100 each, Blumenauer said. That would get production humming. Cities would only get to choose the “color and carpet.”

This latest embarrassing failure of the Obama administration’s transportation policy agenda will boost Republican efforts to realign federal transportation policy priorities. Such demonstrated political dysfunction makes a strong case for winding down discretionary grants programs such as TIGER and New Starts, which enable most of the worst utopian transit boondoggles.

Rep. DeFazio will soon take over as ranking member of the House Transportation and Infrastructure Committee. With any luck, he will have learned some lessons from his involvement in the United Streetcar disaster and push back against some of the kookier ideas that often originate in his home state."