NCPA - National Center for Policy Analysis

Subsides For Ole' Man River

March 23, 1998

Barges are the most subsidized form of transport in the United States. And the U.S. Army Corps of Engineers has just spent the past six years on a $49 million study on how much will need to be spent just on the barge traffic needs of the upper Mississippi and Illinois rivers.

  • Fuel taxes on barges only cover about 10 percent of the $674 million the Corps spends annually on building, operating and maintaining locks, dams and navigation channels.
  • The cost for large locks range from $250 million to $1 billion each.
  • Lobbyists for waterway users contend that seven lock replacements on the upper Mississippi and Illinois rivers will be needed in the next 25 years.
  • While railroads maintain their own right-of-ways and trucks contribute to maintaining interstate highways through fuel taxes, the barge industry looks to the American public for funding, critics point out.

Critics propose privatizing the nation's lock system by auctioning them off to the highest bidder. The winner could then charge whatever tolls the traffic would bear.

But a study by a University of Illinois graduate student concluded the purchase price based on toll revenue would be less than what the Army spends annually to maintain them.

Source: Bruce Upbin, "A River of Subsidies," Forbes, March 23, 1998.


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