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OpenMarket: Rail and Mass Transit

  • STB Reauthorization Bill Threatens Rail Investment

    September 16, 2014 3:31 PM

    The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a markup for tomorrow afternoon of the Surface Transportation Board (STB) Reauthorization Act (S.2777). If enacted, the bill (specifically, Section 14) would threaten much needed investment in railroad infrastructure and reverse three decades of progress on railroad regulation.


    Senate Commerce chair Sen. Jay Rockefeller (D-W.V.), irresponsibly joined by Sen. John Thune (R-S.D.), has for years sought to reverse the partial deregulation enacted by Congress over 30 years ago. Since 1980, when the Staggers Act was enacted, average real freight rates have fallen by nearly 50 percent, railroad employee productivity and safety have dramatically improved, and the industry is now healthy and reinvesting more than $20 billion of its own funds every year.


    But hydraulic fracturing revolution has led crude oil shipments to skyrocket in recent years—since 2005, originated carloads of crude oil on major railroads have increased by more than 6,500%. With continued steady growth in intermodal movements, new capacity investments are needed to ensure America’s freight rail system remains the envy of the world. Unlike road and air carriers, the railroad industry owns and manages its own networks and uses its own funds for infrastructure investment.


    While singling out the private railroad industry for its alleged sins, Sen. Rockefeller has often championed subsidies for other modes of transportation. West Virginia’s highway system has long been one of the most federally subsidized in the nation, and Sen. Rockefeller never misses an opportunity to protect wasteful taxpayer subsidies of government-owned Amtrak and the completely misnamed and unessential Essential Air Service.


  • Michael Grunwald's High-Speed Rail Fantasies

    August 13, 2014 1:55 PM

    Perhaps the one thing Time magazine's Michael Grunwald loves more than drone assassinations of American citizens and dissident journalists is heavily subsidized passenger rail. This is not the first time I’ve criticized Grunwald’s sloppy high-speed rail reporting, and it probably won’t be the last.


    Over at Time, Grunwald takes issue with a recent New York Times story on President Obama's high-speed rail initiative. In particular, Grunwald attacks the Times article for referring to the over $10.5 billion in high-speed rail obligations as "$11 billion." Grunwald also argues that the Times' use of "spending" is an inaccurate way to describe the total obligations since actual outlays so far are only around $2.5 billion.


    First, rounding up from $10.5 billion to $11 billion does not work against the main thrust of the Times article. And note that if Grunwald wanted to be really accurate, he would have noted, as the federal government has, that “approximately $10.6 billion” has been made available for high-speed rail projects.


    Second, Grunwald doesn't seem to fully grasp budget lingo, yet spends much of his piece attacking the Times for supposedly misusing it. Now, "spending" is an imprecise term that could mean either apportionments, obligations, or outlays—or it could simply refer to the spending process, which involves apportionments, obligations, and outlays.


    Grunwald is equating “spending” to mean “outlays,” i.e., funds disbursed by the Treasury. But it is unclear that the Times was referring to anything beyond the apportionments and obligations. Indeed, these appear to be the two offending sentences in the Times article:


    High-speed rail was supposed to be President Obama’s signature transportation project, but despite the administration spending nearly $11 billion since 2009 to develop faster passenger trains, the projects have gone mostly nowhere and the United States still lags far behind Europe and China.


    And the second:


    Instead of putting the $11 billion directly into those projects, critics say, the administration made the mistake of parceling out the money to upgrade existing Amtrak service, which will allow trains to go no faster than 110 miles per hour.


    The second sentence implies the projects funded by the federal government have yet to be completed—“which will allow trains…” Anyone familiar with the budget process knows reimbursements are generally how the federal government involves itself in infrastructure investment. It works a little like this: a state applies for a grant, the federal agency approves a grant, the state builds whatever project is supported by the grant, the state is reimbursed by the federal government when the project is completed. This is why the Federal Railroad Administration wrote in its 2011 announcement regarding the availability of funds rejected by Florida for the Tampa-Orlando I-4 rail corridor that “[t]he funding provided under these cooperative agreements will be made available to grantees on a reimbursable basis.”


    While it is possible some readers of the Times believed, despite language to the contrary, that $11 billion is gone and all work funded by that money is completed, I am skeptical. The main point of the Times article is to compare President Obama’s lofty claims a few years ago to the reality today. Objectively, very little has happened and very little is likely to happen in terms of huge future high-speed rail investments necessary to support the president’s plan to give 80 percent of Americans access to high-speed rail by 2025, a project that would likely cost between $600 billion and $1 trillion to deliver. This simply isn’t going to happen and that's why the president's plan has been a complete failure.


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