Flint Water Crisis

Critics Don't Want To Admit Flint's Water Crisis Is Due to Stimulus Plan Rather Than Austerity

Job growth in a depressed city was a key motivation behind new pipeline.

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Kristi Culpepper, a Kentucky government official who blogs about municipal bond issues and used the colorful twitter handle "Bond Girl" until a reporter exposed her identity, has written a five-page rebuttal of my recent coverage of Flint, Michigan's water crisis. 

Polluted River
David A. Villa via Foter.com / CC BY

I reported that Flint's lead poisoning is the result not of an austerity program pushed on the fiscally strapped city by an emergency manager appointed by Michigan Gov. Rick Snyder but of a stimulus program gone wrong. Various internal documents and an independent study commissioned by the state treasurer Andy Dillon had found that switching from the Detroit Water and Sewage Department (DWSD) to the new water system being developed by Karegnondi Water Authority (KWA) would likely cost Flint more not less.

Culpepper quotes a lengthy excerpt from my piece and concludes: "Maybe one sentence of all that is factually correct." After such a serious accusation, one would expect Culpepper to actually point to the alleged factually inaccuracies. But she doesn't. She simply knits a different narrative from the long and arduous history of the project that doesn't have much to do with the immediate events preceding the decision to switch from DWSD. What's more, she ignores that I'm not the only one using these documents to raise questions about why Flint made the decision to split. After my piece came out, The Detroit News also did a story using the same sources to raise questions about the cost effectiveness of the switch.

Setting that aside, Culpepper finds my "version of events…startling in its naïveté" because she claims:

1) I ignore that DWSD and Detroit "did not play well" with its municipal customers and suburbs. "The local governments involved in the pipeline had been trying for years to negotiate lower rates with Detroit Water and Sewerage and Detroit had flatly refused. Detroit only began to discuss a modified rate structure in earnest once it became a done deal that they were going to lose their wholesale customer base and under pressure from the state.

2) Flint had every reason to be suspicious of DWSD because Detroit, which was itself in bankruptcy and under the supervision of a state-appointed emergency manager, was looking for ways to palm off the operational costs of the system to its suburban customers.

3) I was insisting on the "stimulus" narrative because: "The players in charge at the state level in this story were so criminally indifferent to their duty to ensure public safety that there is no way to defend them at this point. So it is easier to cast them as wanting to create a 'stimulus project' for Flint, because then the governor isn't worth defending as a conservative leader."

I honestly don't get what is being alleged here. The governor is not worth defending if he engaged in stimulus spending but is worth defending if he jeopardized public health? I can't unpack the thought process here so I'm just not going to try.

4) Moving on, Culpepper takes pot shots at Reason's infrastructure coverage in general, noting that instead of pretending that America's infrastructure was in better shape than it is, we should make a "good libertarian argument regarding infrastructure" by arguing for "increased private investment rather than denying that much of America's infrastructure is past its useful life."

Talk about spinning a bizarre narrative! But to take her last point first, Reason has a history of calling for Public Private Partnerships in transportation and public infrastructure, so it doesn't need any lectures about making "good libertarian arguments" about that. In fact, both Reason Foundation Vice President Adrian Moore and I, in the wake of Flint's lead poisoning debacle, have made the case for privatizing water utilities to enhance not just efficiency but also accountability. That's especially important given that victims of government abuse and neglect usually can't actually sue public officials as they can private companies. (I have even called this a "crime"—so much for not criticizing public players who endanger public health!)

Her observation that Flint had every reason to be suspicious about DWSD's offer because of DWSD's previous bad behavior is true but irrelevant. I was on the editorial board of The Detroit News for nearly 10 years, from 1995 to 2005, and observed and wrote about the constant pissing match between DWSD and its suburban customers. As I acknowledged in my piece, DWSD has historically been a dysfunctional and corrupt entity whose difficulty in complying with federal water quality standards had landed it under federal court oversight for 35 years.

However, Sue McCormick, the director of DWSD when Flint's contract renewal negotiations began, was appointed by the court as part of a consent agreement to cleanup DWSD's management and return it to solvency. She was a technocrat, not a politician, and was not part of the corrupt Detroit establishment. She assumed office with the express purpose of mending fences with Detroit's municipal customers. To that end, she wanted to leave no stone unturned to persuade Flint to renew its 30-year contract with DWSD instead of going with KWA. Her bid to Flint included not just cutting water rates in half but also giving Flint a seat on the board to safeguard against unwarranted future hikes. Indeed, she offered not only Flint such representation. She offered a seat on the board to the Great Lakes Water Authority, a consortium of many of DWSD's South East Michigan suburban customers so that they could insulate themselves from future rate hikes.

However, according to DWSD's then-spokesman Bill Johnson (full disclosure: he was my colleague on The Detroit News editorial board), she encountered a complete brick wall with Snyder-appointed Flint Emergency Manager Ed Kurtz and Genesee County Drain Commissioner Jeff Wright. Both made it abundantly clear that they had no desire to negotiate with her. They had their heart set on the new KWA pipeline servicing Flint and rejected her proposal within 24 hours of receiving it, declaring that the decision to break away from Detroit had already been made and "there would be no looking back."

There is no doubt that part of the reason is that they simply couldn't get past the bad blood with DWSD and trust that it wouldn't pull some trick from its hat after McCormick left and jack its rates, as Culpepper suggests. But Culpepper is herself naïve if she thinks that that was all that was driving their decision. Local political leaders love expensive infrastructure projects because that gives them more authority to play kingmakers, hand out contracts, and consolidate their power base.

It also allows them to take credit for boosting jobs and growth—that is, to administer an economic stimulus.

Don't believe me? Here's a 2010 Michigan Live story about what Drain Commissioner Wright, the man who did more than anyone else to sell everyone from the governor on down on the KWA-Flint pipeline, was saying years ago to promote the project:

County officials may have uncovered the most effective selling point yet for building a new water pipeline to Lake Huron at a time of high unemployment: The promise of 1,000 good-paying jobs that will last more than three years.

County Drain Commissioner Jeff Wright has told the Board of Commissioners that building the pipeline won't just save hundreds of millions of dollars water costs during the next three decades but has the potential to jumpstart what's been a gloomy local economy with some of the highest unemployment rates in the state.

Wright said he expects 1,000 jobs to be created for more than three years as a result of the pipeline, including work for pipefitters, plumbers, surveyors and engineers, and he's recommending that a new water authority require local workers get at least 75 percent of those new jobs.

"The bottom line is any contracts should require 75 percent of the workforce comes from here," Wright told the county Board of Commissioners Tuesday. "If we build it, the majority are going to come from here."

I have not been able to verify whether the contracts actually stipulated that the developers use local workforce, something that unions were ecstatic about as Michigan Live noted later in the same story. Either way, it is hard to argue that stimulus and jobs were no part of the political motivation driving this project.

One last thing: Culpepper claims that DWSD terminated its agreement with Flint after the city refused to renew its contract, leaving Flint no choice but to reopen the mothballed local water plant that relied on toxic Flint River water for two years before the new KWA pipeline became operational. But Johnson notes that this is not accurate. He maintains that Flint's old contract had already expired at the time of the negotiations and Flint was obtaining water from DWSD without a contract. He claims McCormick actually sent Flint a letter asking if it wanted to discuss a short-term contract, just as she had done with other Genesee County communities that were also going to eventually switch to KWA. Those communities accepted. But Flint officials rejected the suggestion because they felt that they could reopen the Flint River plant and save money.

That turned out to be only one among many mistakes by government officials at every level, as I argued here.

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  1. Have no fear, Elijah Cummings is on the case.

    A paragon of virtue, he is.

    1. He’s not protecting anybody, but he spends half his time accusing Snyder of sidestepping the Flint city council and forcing the water deal on them.

  2. The governor is not worth defending if he engaged in stimulus spending but is worth defending if he jeopardized public health?

    I guess her thought process is that stimulus = liberal, therefore reason can in good conscience oppose Gov. Snyder. but jeopardizing public health is totally libertarian, so we’d have to defend him.

    No, it doesn’t make sense.

    Either way, it is hard to argue that stimulus and jobs were no part of the political motivation driving this project.

    No it’s not. Totally easy to do if you ignore facts/reality.

  3. Kristi has besmirched the good name of the Culpepper Family. I shall not rest until she is struck from its rolls in perpetuity!

  4. It was just an excuse to import a bunch of furriners to dig the ditch.

  5. Not spending n+1 is austerity.

  6. I am confused. Arguing that Detroit was impossible to work with might downplay the stimulus angle, but it most directly argues against the austerity angle.

    So, to conclude, it wasn’t a stimulus project, it was a response to Detroit bilking them?

    Isn’t that just a different type of “government sucks” argument?

  7. If there is ONE think state, county and local govts MUST do, is provide the basics for human existence: WATER. And they failed. This is an outrage! These “leaders” should all be strung up.

  8. The Water Next Time: Professor Who Helped Expose Crisis in Flint Says Public Science Is Broken

    1. “But being right in these cases has not made Mr. Edwards happy. Vindicated or not, the professor says his trials over the last decade and a half have cost him friends, professional networks, and thousands of dollars of his own money.

      The infrastructural problems go beyond the public utilities of certain American cities, he says. In an interview with The Chronicle, Mr. Edwards said that the systems built to support scientists do not reward moral courage and that the university pipeline contains toxins of its own ? which, if ignored, will corrode public faith in science.”

      But government funded science removes the profit motive!

  9. Hey where did this article disappear to?

  10. An article from Shikha without open borderz ranting.

    Who knew she could make a coherent argument?

    Good for Shikha.

  11. “Austerity” is another one of those prog catchphrases that we can never get a coherent definition of, much like “fair share”.

    1. they both mean whatever the person using the terms want them to mean.

  12. both Reason Foundation Vice President Adrian Moore and I, in the wake of Flint’s lead poisoning debacle, have made the case for privatizing water utilities to enhance not just efficiency but also accountability.

    I’d like to see more details from her wrt private investment.

  13. You ignorant knuckledraggers. The only solution to this government failure by multiple agencies is to increase funding to those same agencies whose incompetence/corruption/sheer idiocy caused the problem in the first place. Why can’t you people see that?

    1. I’ve been saying this for a long time: what really should have done after the BP oil spill is given BP a boat load of bunny, then turned our backs and not bothered to see if they spend it on cleaning up the oil spill.

      Chearly, the BP oil spill is evidence that BP is underfunded and overworked. Unless we want another oil spill, subsidize BP! And please don’t notice how much like a protection racket that sounds.

  14. Being a municipal bond expert automatically makes one a corrupt, economic idiot by definition. Your entire job is to pretend that only 5-10% of government borrowing isn’t a giant fucking waste of money and trampling of property rights..

    1. pretend that only 5-10% of government borrowing IS a giant fucking waste of money and trampling of property rights..

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  18. kristi got shikhaed

  19. First, let me say that it was I who sent a link to Ms. Dalmia concerning Ms. Culpepper’s five page response to Ms. Dalmia’s Flint stimulus article.

    Second, I find many of the responses here to be disappointing and/or embarrassing. Ms. Dalmia took the time to read the Culpepper article and I wonder if most here read it or any of the three articles in this give and take? Just because someone works for a government agency (like Ms. Culpepper) it doesn’t follow they are necessarily incompetent or corrupt, though I can understand why one would think so, especially if one were a libertarian. But if you are going to operate from dogma or ignorance, then you should keep it to yourself otherwise you look the fool.

    I began following Ms. Culpepper’s Twitter feed due to it’s recommendation by Mish Shedlock (an explicit libertarian), who thinks highly of her analytical work in the munibond market. I would suggest anyone wishing to inform themselves on this market to follow her as well. I think you’ll be surprised by what you read and you’ll only add to the depth of knowledge (or lack of) you already have. Her analysis will give you a proper perspective on this market, along with various degrees of insight and information.

  20. Now that’s out of the way…

    Number three on my list for this post, is Ms. Culpepper’s response to the second article. Today on her Twitter account she gave the link to her initial response to the original Dalmia article on Reason. I thought she (Culpepper) should have the opportunity to read what Ms. Dalmia had to say in return and offered a link to the above article, in response to Ms. Culpepper’s tweet. What followed on the @munilass Twitter feed was every bit as juvenile and ill-mannered as many of the comments here in Reason’s comment section. Needless-to-say I expected better from a financial professional, espcially one who no longer tweets anonymously and out in the open.

    Let’s look at a few of her tweeted retorts:

    “This is hilarious – the crazy fraud at Reason tried to respond to my piece on Flint ” – @munilass

    Crazy fraud? An ad hominem? Why? I see nowhere in Ms. Dalmia’s response where she was insulting or disrespectful. When one comments this way right out of the gate, more often than not it conveys an inability to respond rationally to the data or analysis being offered. Or maybe she’s indignant that Ms. Dalmia would challenge her?

  21. Then:

    “Like I said, how Flint came to switch water sources was incredibly well documented in articles and video at the time.” – @munilass

    This does not discredit the documentation, facts or analysis Ms. Dalimia offered. It merely puts them in conflict and one then sorts these conflicts out through adult discussion. At least in my non-crazy mature world, it does.

    “Anyone who was actively following Detroit’s bankruptcy at the time was watching every Flint water development because it impacted outcomes.” – @munilass

    Yes, and Ms. Dalmia makes it clear as a reporter for The Detroit News that she covered these events during her time at the paper and has firsthand information from a colleague (Bill Johnson) who went on to work for the DWSD. How close does a source need to be? And if we are to be suspect of Mr. Johnson because he works for a city agency that’s at the heart of the matter, then Ms. Culpepper is merely accepting the criticism many in the comment section have about her, her munibond analysis and for much the same reason. SO why not address what Mr. Johnson had to say?

  22. “It is sad and depressing that Flint is in the middle of a public health crisis, and a crowd sees it an opportunity to blather about Keynes.” – @munilass

    Was Keynes mentioned in either of Ms. Dalmia’s articles? And if not, is the concept of stimulus spending his alone? Do politicians and pundits -who promote current stimulus spending- do so because of Keynes’ writings on the concept? Any competent student of history knows that stimulus spending is as old as civilization itself.

    “All this crazy nonsense about whether it was driven by austerity or stimulus is people trying to fit Flint into their superficial narratives” – @munilass

    The irony and illogic here is as thick as cement. Irony in the fact that Ms. Culpepper’s Twitter feed is every bit as much about the same thing, why does she think so many follow her munibond analysis? And if she’s critical of those who do not see things as does she, then it clear that she’s merely “looking for a mirror” when it comes to municipal financial analysis. I remember someone recently being critical of such an approach, especially on if one is using Twitter.

  23. Illogical in that one of the prime purposes of publications like Reason (which has a clear philosophical perspective) is to be critical of governmental folly from the local municipality on up. That’s what their readership wants, for them to collect those stories and news reports which demonstrate the incompetence and corruption that exist in the state and it’s bad actors. If I am not mistaken, that’s why the US has a first amendment? So the “Fourth Estate” can keep political abuse in check through the “disinfectant of sunlight”, no? To dismiss Reason reporting as ‘bias confirmation’ (primarily through ad hominem attacks and snarky comments while not addressing the facts and data), demonstrates one’s own biases in the process. Time to time on Twitter, Ms. Culpepper receives the same sort of criticism, for she in effect does the same thing: reports on incompetence and corruption by political institutions and their actors. She does this for a public service and in the process steps on toes. At times those toes came back and attempt to place themselves in a very dark and concealed place on her. Her response to this criticism is rather interesting. Seems she’s above it because in her mind, she’s never wrong.

  24. Finally,

    “Alas, it is not worth engaging troll publications like Reason. They exist because those folks are totally unhinged from reality.” – @munilass

    I lament the evolution of the word “troll” on the internet. Originally it meant something different, now it just means “those who disagree with me and have the never to say so.”

    http://www.flamewarriorsguide……roller.htm

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