No One Wants The Government's $200M Ship

W A S H I N G T O N, July 30 -- There was great fanfare last year when plans were announced to build two cruise ships at a Pascagoula, Mississippi shipyards. After all, no cruise ship had been built in the United States for four decades. It was supposed to revitalize the ship-building industry and create jobs. Best of all, it wouldn't cost the government a cent.

But the grand project has come skidding to a halt with only one partially-constructed hull. And it is costing taxpayers nearly $200-million.

American Classic Voyages, Inc. contracted to build the ships. With the support of Mississippi Republican Senator Trent Lott and Democratic Congressman Gene Taylor, the company convinced the government to guarantee loans for the project — loans that American Classic Voyages itself was supposed to pay back. But the private company went bankrupt and taxpayers are left footing the bill.

It's a project that critics call a "white elephant," "corporate pork." Tom Schatz of Citizens Against Government Waste says, "this shows what can happen when the company goes under and the taxpayers are left holding the bag."

The government would like to recover at least some of its money, but there is not much of a market for unfinished cruise ship hulls. Senator Lott and other Mississippians suggested the Navy turn it into a floating barracks. The Navy declined.

Two government agencies — The General Accounting Office and the Inspector's General Office of the Department of Transportation — are now investigating losses racked-up by the loan guarantee program. But the pursuit of tax dollars goes on. Another company now says it also wants to build cruise ships in the U.S. and has applied for whopping loan guarantees of more than $1.6-billion.