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Still Draining the Nation: New Deal-spawned TVA an old, unaccountable "bureaucratic kingdom"

Just in time for the Tennessee Valley Authority’s latest scandal – this one fortunately involving merely breached employee credit-card oversight, not sudden, accidental breaches of dikes and damsReason magazine offers up a much dimmer view of the agency than that no doubt favored by the federally-owned corporation’s 50-member public relations staff.

 
In “How Big Government Infrastructure Projects Go Wrong,” the libertarian Cato Institute’s Jim Powell casts “America’s biggest monopoly” in a light that by no means reveals it to be Economic Savior & Cultural Redeemer of the Big Bend State & Beyond.
 
It was heralded as a program to build dams that would control floods, facilitate navigation, lift people out of poverty, and help America recover from the Great Depression. Yet the reality is that the TVA probably flooded more land than it protected; much of the navigation it has facilitated involves barges of coal for coal-fired power plants; people receiving TVA-subsidized electricity have increasingly lagged behind neighbors who did not; and the TVA's impact on the Great Depression was negligible. The TVA morphed into America's biggest monopoly, dominating an 80,000 square mile region with 8.8 million people—for all practical purposes, it is a bureaucratic kingdom subject to neither public nor private controls.
 
Today, TVA, although no longer a beneficiary of direct congressional funding, “pays none of the federal, state, and local taxes that private businesses pay.” Powell cites a 15-year-old study that estimated annual indirect subsidies benefiting TVA, including dodged taxes, exceeded $1.2 billion.
 
“As a government-backed entity similar to Fannie Mae and Freddie Mac, the TVA can borrow money cheaper than private businesses,” says Powell. “Currently, the TVA has about $26 billion of debt.”
 
In a January 8 op-ed for a local newspaper, Tennessee Center for Policy Research vice president Shaka Mitchell observed that the friendly, good-ol’-boy, Ain’t-Nobody-Here-But-Us-Chickens way in which TVA and its leadership is being handled by state and federal authorities (citizen lawsuits are applying the real heat) is typically symptomatic of government ownership or operation of just about anything.
 
When a private company screws up, someone is held accountable.  People stop buying its products. Shareholders fire the CEO. The company goes bankrupt. But when a government-run company has a similar problem, no one takes the blame. 
Officials at TVA don’t have to answer to shareholders or voters. Government run companies, like the TVA, are interested in one thing; maintaining their own existence. As long as they keep their jobs, they couldn’t care less about the quality – or dangers – of their product.
 
We are learning an important lesson about the differences between what happens when a private company and a public one impact the community negatively.  Exxon had to pay over half a billion dollars to fix the mess it caused, and rightfully so.  Troublingly, taxpayers will be forced to pay to clean up the TVA’s debacle.
 
A 2001 paper (highlighted in Powell’s Reason article) from the Northeast Midwest Institute, a “non-partisan research organization dedicated to economic vitality, environmental quality, and regional equity,” assessed TVA in terms just as damning as Mitchell’s.
 
“Sixty-five years after it was created, this giant federal agency can no longer justify its existence,” wrote Richard Munson, now the senior vice president of Recycled Energy Development, in “Restructure TVA: Why the Tennessee Valley Authority Must Be Reformed."
 

Why should 242 million Americans be forced to subsidize the electricity rates of the 3 percent of Americans who happen to live in the Tennessee Valley?

There's little doubt that TVA has become a burden to the nation's taxpayers. What's becoming increasingly apparent is that the status quo also harms the very Tennessee Valley residents that TVA is supposed to serve.
 

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