The economic numbers coming in give us reason to be optimistic. We see growth in personal earnings and a drop in unemployment. Even accounting for the Obama Administration’s disappointments, we are making steps in the right direction. Unfortunately, our economic recovery and future growth may only be a series of very small steps instead of the strides we once made.
Many of us understand the largest obstacle to our progress has been the federal government, and their overreach has been felt in every sector of the economy. While policy after policy has proven to be a failure, the bigger problem may be the perspective from which many of these policies originate. Perhaps none is worse than the mantra of “too big to fail.” The idea is arguably the most dangerous aspect of current federal programs. It places government at the center of every solution and establishes government bureaucracy as the necessary savior to protect the status quo instead of allowing market failures to keep things in check. More often than not, this “too big to fail” mentality filters down to us from Washington, DC, but lately Governor Nixon is attempting to apply it here in Missouri as well.
Nixon’s current effort to build a new NFL stadium in St. Louis is infuriating to anyone who respects a form of government with checks and balances. Over the long term his plan is to gamble on a “too big to fail” project that will place a financial liability of several hundred million dollars on the shoulders of Missouri taxpayers. However, those that think I am being overly critical need to keep the following in mind: It was the St. Louis Regional Convention and Sports Complex Authority (RSA) who first thrust the stadium issue upon us when they failed to uphold their end of the current stadium contract.
The Rams owner sued them over breach of contract, the case went to arbitration, and the owner won. The RSA is the entity that owns the stadium and is responsible for paying the bonds, not the State. Missouri contributes $10 million annually to help them make payments and an additional $2 million towards maintenance on the facility. Worse yet, there are still nine years left on the original agreement.
Think about it. The RSA broke the initial contract and couldn’t maintain the facility to the level required even while the State was paying the bill.
The new stadium proposal puts the very same entity that failed to uphold their current contract back in the driver’s seat and would be responsible for the new stadium. This is fiscal madness. It would be like a mortgage lender approaching someone who has defaulted on their home and offering them the opportunity to build a new, larger home and write the terms of the new contract.
Even more ridiculous is that in order to fulfill the terms of the original contract, the RSA would need to spend $700 million. They rejected that proposal and instead asked the State to bail them out and build a new $1 billion stadium. The RSA made a conscious decision that they couldn’t afford $700 million to uphold the original deal, and they had the audacity to come ask the State of Missouri to build a $1 billion project instead.
All this gives me reason to believe what Governor Nixon and the RSA are attempting to do is create another “too big to fail” policy with a new stadium in St. Louis. They have gone out of their way to avoid accountability, allow transparency, or even allow the people to have a vote on any of their actions. Further, they are putting the same bad actors at the wheel who have a record of forcing the financial obligation onto Missouri taxpayers instead of the billionaire team owner who will profit from the Governor’s crony capitalism.
Finally, I believe their intent is to threaten Missouri legislators and voters into a dangerous game of financial chicken over damaging the State’s AAA bond rating. They intend to force us into offering a bailout because the stadium project will simply be “too big to fail.” We understand that it is the RSA that will hold the bonds are issued and not the State. To date, 21 Senators and 120 Representatives have informed the Governor in writing that we will not appropriate the funds to bail out the RSA’s boondoggle without a vote of the legislature or the people.
Ultimately, unless the Governor changes his tactic and places the proposal before Missouri voters or the legislature, he and the RSA will be responsible for one of the biggest market failures in our history. Luckily for Missouri taxpayers, my colleagues and I understand the RSA is not “too big to fail.”