Opening High-Speed Rail to the Market — Before the Market’s Even There

» The good old money-making American tradition continues, but in whose interest?

Matthew Lewis’ brilliant story published today by the Center for Public Integrity and partially in Politico provides material evidence for the direct involvement of corporate lobbyists in the push for high-speed rail in the United States. The article is sobering in the details it uncovers on the degree to which public and private lobbying groups have attempted to influence decision-making in Congress and at the Department of Transportation. All this despite — or even because — the federal government has yet to announce even the first of the $8 billion in stimulus money it plans to award over the next few years to states and other agencies embarking on fast train system construction.

If Mr. Lewis’ report doesn’t provide specific evidence of government officials altering their planned allocations because of the influence of lobbying groups, it certainly warns that there are plenty of people spending millions of dollars to do just that. Should we be afraid?

In many cases, those lobbying are the allies of the livable communities and smart transportation movements; Mr. Lewis’ map includes, for instance, the City of Portland and the Commonwealth of Pennsylvania, each of which have acted proactively in favor of positive transportation investments. Everyone lobbying for high-speed rail funds wants more of them, just like you and I. So what’s the problem?

For those excited about the possibility of a U.S. high-speed rail network, coordination and advanced planning are key. Without those elements, the American fast train system could resemble something more like a series of disconnected segments, some fully built-out, others incomplete. The danger of this possibility is lost money: underinvestments in some areas and overspending in others others. If lobbyists are able to successfully push for earmarks to be spent to their preferred projects, rather than those most likely to succeed or those most necessary for the nation’s good as a whole, everyone’s mobility will suffer.

One fundamental problem is the lack of obvious contenders in the high-speed game. Though California citizens, for instance, have demonstrated their own interest in the program by authorizing $10 billion in investments, it is not clear that the federal government believes that the state is best qualified to receive the money. It would be easy enough to argue that Florida’s competing plan — despite the lack of local funding — is closer to construction and therefore a better match for the jobs-creating aspect of the stimulus. For Democrats hoping to keep Florida a Blue State, it could be a better choice for funds; if lobbyists happen to be more powerful from the Sunshine State, too, it could mean more inside deals. This is just a hypothetical comparison, but the point remains true.

This situation results most directly from Washington’s repeatedly demonstrated reluctance to clarify its grant-making process. Instead of establishing a set of objective, reliable guidelines for awarding funds, the DOT has simply given itself full reign over making well-informed decisions — i.e. political and subjective — from inside of the organization. Though President Obama’s Administration is far less biased towards corruption than its predecessor, and though its high-level officials have the least private-sector involvement of any in decades, we cannot discount the possibility that Secretary Ray LaHood’s DOT can be influenced by outside sources.

The DOT could take a major step to combat the problem of corporate lobbyists in the construction of our high-speed system by instituting more specific rules about who gets funding and by demonstrating greater transparency in the allocations process. Without changes in that direction, it will be difficult to examine why projects are being chosen for funding and the internal motivations of administrators at the DOT.

19 Comments | Leave a Reply »
  • Yonah, your lede says there’s a push to open HSR to the market, but the main article says no such thing. What you’re complaining about is that the government will make decisions based on politics rather than sound engineering – which is exactly the argument neo-liberals use to argue for more market involvement. Presumably, they say, a private sector funding distributor would not care about keeping Florida blue.

  • A private sector funding source might not care about who wins elections in Florida, but they might not care about the quality of what they are building either.

  • Helen, this is true, and one of the problems with proposals for privately funded intercity rail is that they do everything on the cheap. For example, Desert Xpress wants to terminate trains in Victorville; the only reason this project isn’t a joke is that the publicly-funded California HSR project would do the hard work of crossing the mountains, and would have an easy connection to Victorville via Palmdale.

  • Alon –
    I think you make a very important point in your first comment, in writing that public sector involvement is too often affected directly by political considerations — I don’t disagree with that fact but would argue that this doesn’t mean, in contrast, that market involvement is necessary. Better public management, in which the objective standards I referenced in the article are actually defined and followed, of course, is a possibility.

    I suppose you could consider my lead misleading — I was simply arguing that the private sphere was becoming intimately involved in this process.

  • “I was simply arguing that the private sphere was becoming intimately involved in this process.”

    So the City of Portland, the Commonwealth of Pennsylvania, the state of Florida, the state of California etc. are part of the “private sphere” now? At this early stage, the most intense lobbying is coming from public officials at the state and local levels. Private contractors like SNCF and various train manufacturers have begun to put down markers, but corporate wining and dining hasn’t even started yet in earnest.

    In this context, it’s perhaps worth pointing out that the $14.5 billion the US federal government has committed to spending on HSR is chump change relative to both the size of the task and to what other countries (China, Spain etc.) are investing. Even if you add in the $10 billion bond California voters approved last November, the US is still no more than the chance, perhaps, of a minor market in HSR goods and services at this point. Unless Congress and states get serious about funding, don’t be surprised if HSR specialist contractors treat the US as just one market among many. It won’t be the center of their universe.

  • The Chicago Way

    “Though President Obama’s Administration is far less biased towards corruption than its predecessor”

    LOL at the unintended accuracy of this believer in unicorns. Indeed, the admin is far less biased towards corruption, being experts and lifelong participants in it! The Chicago political machine from which they came is the undisputed longstanding US capital of corruption. “You’re corrupt? No problem, we aren’t biased against you, welcome to the club!”

    Throw in sophomoric false political statements, get called out on them.

  • EngineerScotty

    …must not feed the trolls…

  • Russell Warshay

    If Mr. Lewis’ report doesn’t provide specific evidence of government officials altering their planned allocations because of the influence of lobbying groups, it certainly warns that there are plenty of people spending millions of dollars to do just that. Should we be afraid?

    Should we be afraid that groups are trying to influence a government? I’d be more afraid if they weren’t. I believe that transparency in the lobbying process is far more important than concerns that lobbying exists.

    Though President Obama’s Administration is far less biased towards corruption than its predecessor,

    Would you care to provide empirical data to back up this statement?

    and though its high-level officials have the least private-sector involvement of any in decades,

    How is this a positive attribute in all cases?

    we cannot discount the possibility that Secretary Ray LaHood’s DOT can be influenced by outside sources.

    Can a government truly be democratic if it is immune to external influence?

    The DOT could take a major step to combat the problem of corporate lobbyists in the construction of our high-speed system by instituting more specific rules about who gets funding and by demonstrating greater transparency in the allocations process. Without changes in that direction, it will be difficult to examine why projects are being chosen for funding and the internal motivations of administrators at the DOT.

    Yonah, if you remove the word “corporate,” I completely agree with this statement. All lobbyists – not just corporate – act in the interests of their constituencies, and all have the potential to exert a malicious influence.

    A private sector funding source might not care …about the quality of what they are building either.

    While this is true, it is also true for public sector funding. Boston’s Big Dig anyone?

    …one of the problems with proposals for privately funded intercity rail is that they do everything on the cheap.

    Alon, I see this as more of a regulatory problem than one of a funding source. Where are the national standards? Without these, there will be problems regardless of who provides the funding.

    As I see it, there is an important role for government with high speed rail, but that role is not to obstruct the private sector simply because it is corporate.

  • Andrew S

    Yonah,

    I love the blog, but some of the political statements in recent posts are cringe-worhty. “Though President Obama’s Administration is far less biased towards corruption than its predecessor”. I think the Bush administration was one of the most disastrous in living memory, but I don’t know that corruption was one of its major flaws. For that matter, I see no great proof that the Obama administration is any more or less corrupt than the average. It also seems a bit premature to judge either way.

  • EngineerScotty

    There are different types of corruption, some legal and some not.

    Chicago politics is well-known for the illegal variety (bribery, kickbacks, electoral fraud, other sorts of machine politics)–and while Obama and his administration have not been implicated in any of this sort of stuff, as the troll above demonstrates, Obama’s Chicago background provides lots of fodder for political opponents to take cheap shots.

    The Bush Administration didn’t have any significant issues with the sort of illegal graft described above. What it DID do, in spades, was engage in things like blatant cronyism (appointing obviously incompetent people to important posts); turn nonpolitical administrative posts into de-facto political ones, making all sorts of decisions based on ideological concerns rather than on the proverbial facts on the ground. And I’m not even getting to the attempts to exercise executive power in ways that are extremely questionable. Whether this constitutes “corruption” or merely incompetence or excess, is an interesting debate–but the result was disasterous nonetheless.

    And the fact remains that the Bush Administration was beholden to petrochemical interests, and ideologically opposed to anything resembling a transfer of wealth to the impoverished–both of which combined to make the administration highly hostile to public transit, especially rail.

  • I’ve looked for Matthew Lewis’ brilliant article, but could only find the one linked to.

    It went:

    zOMG! People are trying to influence how the Federal Government spends billions of dollars!
    … which is a silly place to begin. All it actually is evidence of is something we already know – that we have a political system where interests that want to get Federal funding have to fight for it. It tells us absolutely nothing about whether a particular lobbying effort is spending money to promote or frustrate the public interest.

    A short introductory section about the change in the environment facing capital investment in intercity rail placed after having framed the issue as “quite possibly special interest dollars trying to hoodwink the public”

    Then a section of quote salad on planning, that threatens to actually be useful in terms of pointing out the need to establish a coherent framework of standard to allow inter-operation of sets of corridors as they expand and interconnection – but then getting diverted into the foolish notion of a top-down national network design.

    Then comes the section on the troubled past, which lapses into all of the classic blunders in reporting on economic issues that Dean Baker so incisively dissects when they happen in the WaPo and NYT – eg, “A sobering Government Accountability Office report this past spring has served as the conscience of the debate. It identified more than $1 billion already spent by governments at various levels on just 11 high speed rail proposals currently in the environmental review phase.”. Another “zOMG!” Dr. Evil moment – One BEEEEELLYON DOLLARS!!!

    $1b over the course of 16 years is, after all over $60m PER YEAR! $62.5m/year is nearly 0.2% of federal highway spending in 2006! Somewhere around $0.20~$0.25 per person per year!

    Then back to the lobbying after not having done any coherent analysis of the public benefit of what is being lobbied FOR, finishing with inside the beltway he said / she said dueling quotes.

  • MadPark

    @5 Rafael – Thanks for the cold water in the face reminder that we are literally writing about chump change here in 2009. Any kind of a 50,000 KM Higher Speed Rail (200 KPH+) system in the US will be a trillion dollar project, and 300 KPH+ will cost in the multiples of trillions of 2010 dollars and take 40-60 years to complete. Oil and it allies simply will not surrender the political, economic or social stranglehold they have in this country as easily as so many starry-eyed “rail enthusiasts” believe.

  • Woody

    Tell me again why we should be upset about this?

    The possibility of greater funding of passenger rail, especially HSR, has attracted great interest from corporate suppliers on the one hand and cities and states with potential routes on the other hand.

    Their lobbying efforts could help convince Congress to keep increasing the appropriations in coming years. This could help solve the main problem of HSR in this country, which is, as Yonah was quoted as saying, “They can’t get anything off the ground.”

    As for corruption, Deep Throat in Watergate had advice that applies here: “Follow the money.”

    If we follow the money, we find it flowing by the hundreds of billions to the military industrial complex, and I suspect there is corruption, with Halliburton no-bid contracts and many others.

    We also see tens of billions flowing to support highway construction, and I suspect there could be some on-going corruption involved.

    Lots of money goes to the War on Drugs and the prison industry, and I promise you there’s plenty of corruption there.

    Recently about a trillion dollars was loaned or given to banks, brokerage houses, insurance companies and the like, and as Al Capone said, “Those guys are all crooks.”

    So if you have ‘only one life to give’ to the study of CORRUPTION, don’t waste it looking at a lousy $8 billion trying to get people to do something about high speed rail projects for the first time in our lifetimes.

  • DBX

    There’s nothing here that’s really outside of the American political tradition. My main concern is that they start off with successful projects.

    Look at it in historical terms. There was nothing that specifically said that the federal government should begin its involvement with high-speed divided intercity highways by spotting close to $70 million for the Pennsylvania Turnpike in 1938, other than that the stars aligned. Unlike its equally congested northeastern neighbors, Pennsylvania had a plan and a readily available and very good right-of-way. And it was a plan that aligned with Washington priorities. President Roosevelt wanted a national tollway system, and the Bureau of Public Roads Chief, ardent tollway opponent Thomas McDonald, nonetheless liked other aspects of this particular project and was not going to spend political capital on stopping it purely over tolling.

    The PA turnpike was just one of many examples of places that desperately needed new roads at the time, but they were far ahead of other places in their planning and engineering. Likewise, as far as choosing rail projects today, there’s a lot to be said for the money to go to schemes that are surveyed and ready to go because those are more likely to be the projects that are delivered successfully. In political terms, getting a quick and acceptable result is the key at this stage of the game. The PA Turnpike was a shovel-ready project that went from federal subsidy to opening in two years because PennDOT had already taken control of the right-of-way and done the planning (and of course Cornelius Vanderbilt had already basically cleared and graded the right of way 60 years earlier). That kind of availability and convenience and timeliness is important, and the only additional rail-specific consideration we need to deal with now is making sure it connects to existing public transport networks rather than standing alone.

  • Spokker

    The high speed rail effort is going to need a little highway-style lobbying if we’re going to get anywhere on the HSR front. I propose that the Fed sponsor an essay contest for students entitled, “How Good HSR Corridors Help the Religious Life of My Community.” The prize should be a scholarship funded by SNCF.

  • Chris Stefan

    On purely a parochial basis I’m hoping the Cascades line gets a fair chunk of the Federal HSR funding. A lot of upgrades to the ROW have been done already. There is a plan in place to upgrade the service to 110 MPH operation. In many cases the needed projects have not only completed environmental review, but are fully “shovel ready” and just waiting for funding. One problem is there isn’t much chance for state matching money beyond what has already been invested any time soon as the state is suffering a budget crisis and intercity passenger rail has no dedicated funding source. Still Cascades is a successful service with full trains that will only get more popular as speed, reliability, and frequency is increased.

  • cph

    I think this is a two-edged sword.

    On the surface, at least, it wouldn’t be bad to redirect some of the highway lobby efforts into high speed rail. That assumes we can get them interested enough (e.g. big construction projects, with lots of concrete and steel, etc.)

    On the other hand, this might be akin to kids in “boom cars” giving up on blasting out rap and heavy metal music for a few days in exchange for classical. To some ears the music is arguably “better”, but at the end of the day, your eardrums are still being assaulted with unwanted sound.

    Look, if we in the US ever get serious about building HSR (and $8 Billion dangled in front of the states is not what I call serious) then there will be a lot of money floating around, a lot of pies, and a lot of fingers in each pie. There’ll be consultants, construction companies, neighborhood groups, NIMBYs, YIMBY’s and assorted cranks all jockeying for a chance to influence the process.

    Will they all be looking out for their own interests? Yes. Will these interests coincide with the public good? Sometimes yes, and sometimes no.

    I do know that there’s no returning to the 1950’s, where planners rammed projects (highways) through with little or no regard for the consequences of population displacement, land use, decisions, etc. Saying “ah, but this is for HSR” won’t fly. Like it or not, the rules of participatory planning, formed during the “Freeway Revolts” of the 1960’s and 70’s, will apply to HSR development in the US.

  • Spokker: I propose that in similar vein, federal subsidies should only go to long-distance cross-country rail, or to secondary rural lines – definitely not to intra-urban projects. And sparsely populated states should get higher subsidies than other states, because of their lack of tax base.

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