Policy: Economy

Big ideas: On Texas oil, Detroit water and the TSA

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Mark Perry for AEIdeas: 1. The dollar value of Texas oil has more than quadrupled from less than $2 billion per month in early 2009 to a record high of $9.27 billion in March 2014.

2. On an annual basis, the dollar value of Texas oil last year was $91.5 billion and will likely reach $125 billion this year. Over the last 12 months from April 2013 to March 2014, the dollar value of Texas oil was nearly $100 billion ($97.6 billion).

3. To put those annual dollar amounts in perspective, the dollar value of Texas oil output last year ($91.5 billion) would be roughly equivalent to Ecuador’s entire GDP of $94 billion in 2013 and the expected dollar value this year ($125 billion) would be equivalent to Hungary’s entire GDP of $132 billion last year.

4. Compared to U.S. state GDPs in 2012 (most recent year available), the dollar value of Texas oil last year of $91.5 billion would fall between the entire state GDP of New Mexico ($80 billion) and Nebraska ($99.5 billion). The dollar value of Texas oil output this year ($125 billion) would be almost equivalent to the GDP of the District of Columbia ($130.4 billion) in 2012. Think about it — Texas oil contributes almost as much to the U.S. economy as the entire District of Columbia.

DETROIT'S WATERLOO

Wallace Turbeville for Demos' Policyshop: In recent days the Detroit Water and Sewerage Department, often working through independent contractors, has started cutting off service to up to 120,000 delinquent citizens, while giving a pass to major corporate laggards. The Great Recession has crushed the people of Detroit, with unemployment rates soaring as high as 35 percent in this period. At the end of 2013, 47 percent of the mortgages were still under water. They simply cannot pay. How could such draconian measures be justified?

The state-local governmental factors in the Detroit bankruptcy have been a troubling aspect of this sad episode, especially since it has further burdened the 700,000 citizens of a city that suffered almost 100,000 foreclosures in the Great Recession. The governor and legislative majority are conservatives, swept in with the 2010 election, while progressive African-American and union-friendly political leaders have traditionally controlled the city government. The state government moved to adopt laws to take over financially troubled cities with governor-appointed “Emergency Financial Managers” wielding extraordinary powers, and Detroit fell victim to this in early 2014. It does not require even mild cynicism to suspect that Detroit was the target of the new law from the outset. ...

[T]he Detroit Water and Sewerage system serves a huge population, about 4 million, more than 40 percent of Michigan’s population. A city department runs it, but its reach is very broad. It is a large and solvent enterprise with about $5.8 billion of debt outstanding and funded by user charges from all of its constituents.

From the beginning, the Emergency Manager misconstrued the nature of the system and sought to pull it into the bankruptcy proceedings. When he listed the city’s debt, he included the entire $5.8 billion of system debt. This inflated the headline number for city indebtedness—$18 billion in total. He did this even though the city government was not obligated to pay the Water and Sewerage debt and city residents represented only a small fraction of the total rate base.

GET RID OF THE TSA

Chris Edwards for the Cato Institute's Downsizing Government: Despite all of [the Transportation Security Administration's] spending on technology and its huge workforce, the agency's performance has been underwhelming. In 2005, the Inspector General of the Department of Homeland Security concluded: “The ability of TSA screeners to stop prohibited items from being carried through the sterile areas of the airports fared no better than the performance of [private] screeners prior to September 11, 2001.”

Over the years, auditors have been able to do head-to-head comparisons of federal vs. private airport screening because 16 U.S. airports have been allowed to use private contractors. Here are some of the comparison results ...:

— A 2007 USA Today investigation found that the private screeners at San Francisco International Airport had better detection abilities than the federal screeners at Los Angeles International Airport.

— A 2008 TSA study compared screening at six private-screening airports with six federal-screening airports and found the performance to be similar.

— A 2012 study by GAO compared 16 private-screening airports with federal-screening airports on four performance measures. It found that the private screeners performed better on some measures, while federal screeners performed better on others.

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