Finance President

After a Compromise, Where Does the Public Sector Head?

» President Obama’s stand on his vision for the U.S. budget, in opposition to that of the House Republicans, suggests he will argue for a public role in the civic discourse. But his efforts may not be solid enough.

The transportation industry — and specifically mass transit — has over the past few decades been one of the primary domains of public sector intervention, both in the United States and abroad. With the demands of a modern citizenry requiring investments in improved mobility, governments have made ensuring the well-being of their roads, railways, and airports one of their primary raisons d’être after measures designed to guarantee social welfare and national defense.

For that reason, transportation is an intensely political issue: Choosing where and how to invest in getting people from one place to another requires agreement from politicians. Any move forward on funding new infrastructure requires leadership.

In some ways, the United States stands at a crossroads. The right is making increasingly firm its conviction that the government’s role in society must be limited — even if that means reducing spending on things people like a lot, such as highways. And the left, whatever remains of it at the edge of a Democratic Party humbled in last year’s elections, has been largely marginalized. Where does that put political leadership?

After the President’s agreement with House Republicans last week, Mr. Obama’s speech may have appeared as a ringing defense of the importance of the public sector. He argued to the American people that the country could not abandon itself. “I will not sacrifice the core investments we need to grow and create jobs. We’ll invest in medical research and clean energy technology. We’ll invest in new roads and airports and broadband access. We will invest in education and job training. We will do what we need to compete and we will win the future.”

And indeed, in comparison to House Budget Chairman Paul Ryan’s (R-WI) vision for the nation’s budget, the President’s own ideas come across as downright radical. On discretionary spending — which, if anyone needs reminding — includes transportation, Mr. Ryan would cut $1 trillion more than would Mr. Obama over the next ten years. Mr Obama is right to label Mr. Ryan’s “vision” as one “that says if our roads crumble and bridges collapse, we can’t afford to fix them.” Because that is what a 55.6% drop in transportation spending would do.

In fact, President Obama positioned himself to the center-right last week, suggesting just as President Clinton did fifteen years before that the government’s constrained role is to “do together what we cannot do as well for ourselves… [and provide] some basic measure of security.” Out of date were two years of promises of public sector innovation and an effort to reverse thirty years of rising inequality. In were modesty and fiscal restraint.

Mr. Obama recommends cutting $600 billion in all on discretionary funding. That is not progressive in a country whose population continues to grow quickly and whose infrastructure cannot keep up with its current, let alone future, needs.

Which brings us back to the question of leadership. In a democracy like that of the United States, the future of the country is determined by the will of its political actors. If an individual or a group or a movement can convince the populace populous or the voters of the importance of their goal, they can make a change, or at least promote it. Those who do not will be irrelevant when it comes to making decisions about public policy.

America doesn’t need bipartisan agreement in favor of some policy objective: Compromises like those are either so weak as to be meaningless or simply further solidifications of the status quo. Rather, America needs politicians who push.

Mr. Obama campaigned on reforming the health care system, and — in spite of the insane machinations required to make it happen — managed to pass a law that advanced many of his initial goals. Based on his recent statements, the President understands of the importance of investing in the nation’s mobility systems. He knows that if we want to maintain access to mobility to a wide range of the population, the public sector must continue to play the defining role. But he has not yet made a strong enough case to the public, which is one of the reasons Republicans have been so willing to campaign against his proposals in favor of high-speed rail and livable communities. He has not done a good enough job explaining why these things must be funded.

Perhaps he will do so throughout the 2012 campaign. Or perhaps the country will have to wait for someone else.

89 replies on “After a Compromise, Where Does the Public Sector Head?”

HSR’s prospects have been severely damaged by (1) Obama’s overreaching, wanting to go from spending basically nothing on HSR to all of a sudden $53B, and (2) a poorly-structured HSR program that failed to get funds out to projects quickly enough, and open to being shot down by local politicians.

Lesson learned: HSR should be built incrementally, just as successful corridors around the US so far have grown incrementally, but if and when another window of opportunity for large-scale spending HSR arises, funds need to be delivered immediately and should not permit local interference.

To show how much HSR and rail in general has been damaged, I recall seeing poll after poll even in the 2000s showing support for Amtrak spending by all groups of voters- even Republicans. Now a majority of the public thinks that it should be sold to private investors. (That voters don’t seem to realize that Amtrak was created because private railroads couldn’t make a penny on passenger trains shows just how much education is needed.)

High Speed Rail is being sold as something that can make a profit. That means one of two things.

1) High Speed Rail can successfully be privatized without subsidy, because here is something fundamentally different about our society that didn’t exist when the railroads were clamoring to rid themselves of the burden of passenger rail operations (like maybe gas prices or congestion problems?).

or 2) High Speed Rail proponents are liars.

Danny, I would say that this is not necessarily true. The issue with the private operators is that being forced to provide passenger service creates an opportunity cost when the track they own could make them more money by moving freight rather than passengers. By building new tracks for HSR-only (like CAHSR wants to do) we fix that issue.

The FHA really needs to go. We could speed up Acela by a half hour between both Boston/NY and DC/NY by following international best practices for medium speed tilting trains.

Likewise, i wonder what could be achieved on other existing lines (such as East Bay -> Sacramento) with modern tilting DMUs and lower staffing, without changing the tracks at all.

Yeah the FHA is awful. Makes you take on a mortgage you can afford on a house that is rationally priced. Much better to let private industry do it, they can create new and exciting “products” like ARMs that the mortgagee won’t be able to afford unless housing prices continue to inflate irrationally or no money down loans or even better no money down ARMs….

And then the stupid banks end up losing a lot of money at the end of this, but if we didn’t have any bailouts, they would had went completely under. And the rational banks would laugh and give out rational loans…

The survival of the big, reckless banks was a political decision ~ a bail out could have been structured on the basis of bailing out a good bank, with the accounts we ought to protect backed by good assets, and leaving the balance in the hands of the original owners to take through bankruptcy courts.

Then we would not presently have so many giant zombie banks bogging down recovery of economic activity.

Actually, it means 3) HSR can be privatized but only with an overhaul of regulations; the private sector alone can’t hope to achieve anything under current rules. And, on most lines, 4) HSR can be profitable, but only at the low cost of borrowing available to the federal government, and even then not all lines will pay back construction costs.

The claim when not misrepresented is that HSR operations can make an operating surplus ~ something no other intercity transport does in this country except for rail freight.

And, yes, of course that means that the operations can be franchised out to independent private operators, who bid for the right to operate the services.

HSR is not going to make a profit overall, operating and capital costs included, but then neither road nor air transport makes a profit overall, nor can run without operating subsidies from the government.

Where HSR has a lower capital cost than providing the same intercity transport capacity by spending on road and/or air capacity, given the fact that the HSR can also generate an operating surplus, it would be the height of fiscal irresponsibility to fail to invest in HSR, forcing by default an investment in the more expensive status quo transport systems.

“High Speed Rail is being sold as something that can make a profit.”

Which it is.

” That means one of two things. ”

No, it means something totally different.

“High Speed Rail can successfully be privatized without subsidy,”

Nope. Those two things do not go together. Like it or not, the private sector in America today is not this abstract thing you learn about from economics class. It’s a class of people, primarily MBA holders, who have specific views on things. And the American private sector today is run by people who learned about Just-In-Time management in business school and who do not want to take ownership of huge amounts of physical capital, even if it is profitable.

Railroads, Airlines, Electrical Utilities, Telecoms, and Cable Companies all must be suffering simultaneously then.

Could you possibly have made a more eye-roll worthy statement?

Amtrak might have been better of if Obama hadn’t of done all those things with the circus known as his 10 billion dollar high speed rail program in that before all this crap happened Amtrak would get it’s one to two billion dollars of funding from congress and it knew that as long as it kept running the trains it wouldn’t get thrown in the spotlight of poltics. Now what has happened is that it’s been pulled out of it’s catfish den and is now the center of all the poiltical crazies who are now wacking peices of it and soon they might even go after ripping part it’s go funding that it has been getting for the last 40 years.

Obama should have sold the high speed rail program as a Amtrak service upgrade and should have given it drectily to Amtrak and could have used a lot of those funds to buy up former abondoned railroad beds that follow existing Amtrak freight lines so that Amtrak could have it’s own privet rail system free of freight trains.

Calling it “High Speed Rail” is a lot more sexy than saying that you’re going to “Improve Amtrak”… sigh

You always talk about cost/benefits of HSR as a mode of transportation, but ignore the externalities of Highways and Airport expansion as the alternative to deal with population growth. Aren’t cleaner air and lower greenhouse gases valuable too?

My suggestions for getting more conservatives on board with public transportation infrastructure investment:

1) Abandon the notion that public transportation has to be run by the government. +1 if you can make exclusive operator laws illegal. Regardless of what public transportation employees might think, our cities are made better when we have options like BoltBus and Commuter Vans.

2) Hold public transportation agencies accountable for their out-of-control cost structures. There is no reason why public transportation construction costs should be 2-10x what they are in the rest of the world. That goes for operations too. You can defend the principle of collective bargaining all you want, but there is a point where the existence of public funding becomes nothing more than a giveaway to the unions. That point is where conservatives, no matter how reasonable they may be, refuse to support transportation. That is the entire reason why a conservative like me was willing to fight for new taxes in Salt Lake City, but willing to fight against them in the SF Bay Area.

3) You can deregulate some of the more backward laws governing rail operations. Commuter rail could instantaneously be twice as fast and half as expensive if we could somehow eliminate the FRA.

Do all of these and I can guarantee you that you will get enough of a move from conservatives to make a difference in funding outcomes. You will never get the extreme populists and rural conservatives, but anyone who knows anything about political science will already know that the fringe only matters when the middle is against you. Guess what guys…the middle is against you.

And in the end, what kind of argument is more convincing than “We’ll charge you less and give you more”?

Danny, I agree with you.

HSR projects should also be required to meet strict financial cost/financial benefit criteria, like transit projects (at least when I was involved with one in the mid-2000s) do. Obama was pouring money into projects that didn’t seem to do that.

HSR programs should also be sure to get some prominent Republicans on board, leading the charge. Plus, a right-of-center think tank should be sending out articles and press releases in favor of HSR to counter the propaganda sold by Wendell Cox and his ilk, who for now are pretty much the only voices on the right.

Why is the cost/benefit standards demanded of transit projects the relevant comparison for intercity transport? Shouldn’t the relevant comparison be alternative means of providing the same intercity transport capacity?

Alon, you are again just quibbling for the love of quibbling ~ in the context of this discussion, it is absurd to suggest that intercity transport between the LA Basin and the Bay, Seattle and Portland, Chicago and St. Louis, Chicago, Milwaukee and Madison, Cleveland and Columbus, Orlando/Tampa and Miami, Raleigh and DC, are going to be allowed to just not exist.

I’m not quibbling for the love of quibbling. I’m saying that No Build should be a serious option on any of those corridors. If all infrastructure expansions on e.g. Seattle-Portland were unaffordable (which I do not think they are, but that’s another discussion), the appropriate government response should be “Toll I-5 and deal with it.”

Just to quibble for quibbling’s sake, when former Gov Ed Rendell tried to toll I-80 and deal with it, er, to use the funds for transportation improvements all across the state, the federal government response was, “You can’t do that.”

Oops. Speaking of Pennsylvania, for those who don’t recognize Ed Rendell’s name.

Any environmental study that did not examine no-build would be subject to lawsuits if passed muster with the other agencies that have to sign off on it…

If you had wished to say that, why did you instead elect to say “Infrastructure Does Not Have To Exist”.

That is not a No Build Option, that is a No Modern Economy Option.

We need for them to cut the transporation bill and for some major highway overpasses to come crashing down and for oil to go up to $150 and $200 a barel. Such as if we have several highway overpass and other major tarnsporation things that come crashing down under the new Republican transporation bill that has been cut in half it will lay ruin to his ideas of cutting transporation funding. It would also raise public fustrain when transporation in general.

Or most likely with a lot of flat tries and pot holes and loss of stardard of living that our grandparents had.

You know I thought the Minneapolis bridge collapse might move us to caring more about our infrastructure. Most people are just totally indifferent to it. I was driving someone’s care last weekend and hit a pothole causing a need for a new tire costing $250. The funny thing though is I immediately though it was because we cut funding on transportation but everyone else was saying that it was just because of the winter. It’s just not something people care about much sadly unless it frustrates them in some way. It’s like government no one care if it’s working or if the economy is going good only if things aren’t good though I guess it applies to customer service and relationships, etc too.

If say a even larger bridge gives way and kills people in the hunderds in one sitting then they could possibly care or we could have several major bridge collapses across the county in a peroid of several weeks that might do something. And this could happen in that there are several bridges in the northern states that look liked they have had their guts chewed out and could give way any week now. Then there is the King of them all the Tapzee Bridge over the Huddson River in New York if that thing goes it could be the king off all falling bridges.

“Selling” infrastructure investment, at least at a national level, is basically a futile exercise. People have accepted the macroeconomics=household budgeting economic framework and will you’ll only see broad-based popular support for infrastructure investment when the economy gets better. Even then, it’s important to remember that the US government is an insurance company with an army, and most voters are far more concerned with entitlements, taxes and security. National politicians aren’t going to talk infrastructure investment, because it’s not something enough people pay attention to.

That said, the picture’s somewhat brighter at state and local levels, where infrastructure can be tied more directly to concrete improvements in peoples’ lives (look at the 30/10 proposal’s popularity, or the stymying of GOP attempts to kill off passenger rail improvements in North Carolina). Local demand for infrastructure funding should eventually filter upwards—although I think Obama initially spread HSR funds too broadly and on a lot of poorly-performing corridors, his approach did whet a lot of states’ appetites. Congress has pledged to restrain itself in the past, and it’s usually failed. Given Lindsay Graham’s recent freak-out over a port funding earmark and Michelle Bachmann’s assertion that highway funding isn’t pork, I wouldn’t be surprised if the current trend of cutting and curtailing discretionary spending growth falls by the wayside fairly soon.

For more on on why the President making a case to the public isn’t likely to have much sway, I’d recommend Adam Serwer’s The “Bully Pulpit” Fallacy (and its follow-up on Obama’s Libya speech). These posts aren’t at all focused on infrastructure, but they’re a nice little examples of the bully pulpit’s limits.

Which “poorly preforming” corridors are you referring to? The biggest allocations were to Florida and California, both of which had solid cost/benefit arguments, due to the relatively lower cost for the Florida project with an alignment already owned by the FDOT and the substantial benefits of the Bay and LA Basin about 500 miles apart, with 1m in population in population centers along the way for California.

The Illinois, Ohio, Wisconsin, Washington and North Carolina corridors were the next tier, and they were all solid projects, irrespective of politically inspired mudslinging as Republican gubernatorial candidates elected to seek radical right wing oil money and lie to state level road contractors about shifting the funds from rail to roadworks.

And as noted by Woody below, all the rest of the funding was small bore projects, totaling a fairly small share of the total, and many of them with quite strong cost/benefit arguments behind them as well.

And for those who argued that the money was spread too thinly, the experience of weathering the counterattack proved the wisdom of spreading it around, since that distribution ensured that there were too many projects for the radical right wing counterattack to be able to take out a majority.

I really only had 3C in mind (a quick look through the archives shows that that discussion of 3C’s merits has already been had, so there’s no need to beat a dead horse).

The attack on the 3C always focused on the service after the construction of 110mph track but with 79mph speed limits still in place, precisely because if the finished 110mph system is looked at, the strength of the benefit/cost becomes too obvious.

There is no actual benefit/cost flaw in the Quickstart strategy of laying the 110mph track, starting a conventional rail service, and then incrementally upgrading signalling and level crossing to bring the service up QoS that allows a surplus.

The flaw of the 3C was entirely political. The initial Quickstart system that could be started in phase one was not exciting enough to attract strong support, while the opponents were quite happy to lie and mislead about the project in order to claim the partisan advantage of preventing Strickland from being able to claim the laurels on actually landing a $400m Federal downpayment on the corridor.

So to be ready for the next time around, whenever it comes, its important to find an approach that is as sound in terms of transport benefit and benefit/cost, but is also more exciting.

Some misunderstandings. First, Obama has been talking about HSR, true. After all, it’s more sexy than regular Amtrak-speed trains. But with the ARRA stimulus money — the current projects we’ve been discussing since about Feb. 2009 — Congress directed that the funds should be spent in *every* category, from regular to HSR. Of course, the press and most politicians refer to all the rail grants as HSR.

Second, not much money has been wasted on poorly performing corridors. If you really think so, please share your little list. Now, a huge amount of time and energy was wasted on high-profile projects that got flushed down the toilet. But little or no federal funds had been spent on the Milwaukee-Madison H(er)SR line, or the 3Cs regular line, or even Repub Gov Chris’s Orlando-Tampa HSR line. Remember Obama’s lament that there were so few “shovel-ready” projects when he needed them.

In fact, so little stimulus money has actually been spent on rail so far, that even if ALL of it had been wasted: peanuts. Real spending is getting underway in Illinois on the key Chicago-St Louis H(er)SR line. This is the demonstration project of the whole Mid-West Regional plan for 110-mph passenger trains using upgraded freight tracks. And the planning for this stretch was well advanced.

But only in the last month have the ‘host’ freight roads signed agreements to let their ROW be upgraded and shared by passenger trains in North Carolina and Washington state. Those three states, plus California, are the only big projects. The others, like double-tracking a stretch Albany-Schenectady and adding signals to the Texas half of the route of the Heartland Flyer, all looked worthy to me, but altogether they don’t amount to a bag of peanuts, worthy or wasted.

Not much money being spent on Albany-Schenectady but it will cut a half hour of padding out of the schedules. Probably one of the best value projects…

If North Carolina gets 600 million in funding to reopen the abnondened S Line between Petersburg VA and North and North Carolina that would in away be a monster steep towards a system of passanger only rails on the east coast.

I agree. Buying the S Line between Petersburg VA and Raleigh NC would be an excellent use of funds for a portion of the Florida money. Not bad idea to upgrade more of the Hiawatha Line too. But overall, California should bet the lion’s share of the Florida money.

It’s tough to say which projects are “worthy” or “wasted” since none of them seemed to be required to meet strict financial cost/financial benefit criteria.

I’d say from my Manhattan-centric viewpoint that Amtrak’s request to spend $450MM on upgrades to infrastructure in New Jersey to allow 160mph Acela Express speeds there would probably be a better use of funds than North Carolina’s spending (since so many more passengers use the Acela than NC trains, and since fares on the Acela are so much higher, the economic impact would probably be greater), and definitely moreso than upgrades to the Heartland Flyer’s route or some work in Missouri, but since no figures on any of these seem to be available, it’s tough to say.

Spending money on rail projects that don’t meet strict financial benefit requirements is just giving ammo to Wendell Cox. Why do that?

It kind of like which projects are going smoothy or will be built and which ones will not be built or will go down kicking and screaming.

If they meet strict financial cost/benefit criteria, let Wall Street provide the finance. The focus for public investment in infrastructure should be economic cost and economic benefit, not financial cost and financial benefit.

For financial cost/financial benefit requirements: I don’t see that any HSR project, including construction, maintenance and operations, is profitable in the traditional commercial sense. If a private company is willing to step in and cover some or all of any portion of the costs, great, but I do not see that HSR anywhere would be done solely with private money.

I now recall that I think Siemens had agreed to cover some of the costs of the Florida HSR project, and there were ridership estimates and financial estimates that were made. Too bad the Obama HSR program was structured to allow Rick Scott to block that project.

But then, neither is any other intercity transport profitable except for freight rail ~ the operations that are profitable gain their profit due to public capital subsidy, and for road and air due to public operating subsidy.

Criticizing HSR in isolation ignores the fact that we are not going to simply abandon intercity transport, so HSR must be compared to other means of providing intercity transport. Given over sixty years of preferential capital subsidy for rail and air, while rail has been a net taxpayer, it is not surprising that there are a number of intercity transport tasks where HSR is both more capital efficient than road and/or air, and of course generates an operating surplus when neither road nor air does.

Some argue that if the system is generating an operating surplus fares are too high. Not me – if the system is generating profits it can improve and expand.

It depends on the balance between external benefit and direct benefit. The external benefits are bigger with local dedicated transport corridors, an in my personal view, substantial capital subsidies for HSR ~ eg, the SNCF epression of interest was based on 70% public, 30% private investment ~ represent the external benefits sufficiently well, so I would prefer the (artificially scarce) transport subsidies go to the local transit rather than the intercity transport.

Absolutely, BruceMcF, I agree with you. what I don’t agree with is the idea- promoted by Wendell Cox’s ilk- that Amtrak loses money because it’s government-run and that private investors are jumping to build and operate passenger rail systems on a free-market basis. That’s just not the case and that idea should be squashed and not allowed to see the pages of a newspaper.

Cox’s ilk do not say that private investors are jumping to build rail. They’re trying to spin every rail service as a socialist money loser, and superhighways as the ultimate expression of the free market. If privatizing Amtrak made it more successful, they’d do their best to spin it the other way.

The Federal goverment didn’t really show it’s power and it had very crapy rules when it tried to build the high speed rail program in Florida in that they should have done more to say we give you the money you build high speed rail.

First, remember that even when the projects are worthy, the highway shills lie in order to try to get them canceled. Cox used kindergarten-level estimates of cost overruns to argue against CAHSR (and lies about energy efficiency); Poole outright lied that Florida would have to be responsible for cost overruns and operating losses even though the contract it was going to offer private consortia said it wouldn’t. At the end it came down to a tiny margin, and if the election had gone differently, Governor Alex Sink would have ridden the Florida line to success.

The best course for the administration would have been to reform (read: gut) the FRA in conjunction with distributing intercity rail grant money. But given that it didn’t – already a major blot on its record – its decisions were the standard political decisions in a federal country with distributed power. The US isn’t France or Japan, which could build HSR between the two largest cities and expand from there; it’s more like Germany, which incrementally upgraded lines all over and even now has less intercity rail ridership than France.

Chris, It gets very complicated very fast. Maybe the Heartland Flyer is not as good a project as speeding up the Acelas. Or maybe it’s better.

The $4 million to install signaling on that stretch of track in Texas is peanuts, and it will cut half an hour off the Flyer’s 4-hour + timetable. That’s not worth much to us in Manhattan, but it’s huge for Oklahoma City-Fort Worth passengers. In addition, the freight trains running on this same line will probably also benefit from the signalling.

Meanwhile Missouri got $31 million for improved grade crossings and bridges on the state’s two-trains-each-way River Runner line, St. Louis-state capital-Kansas City. In this case, UP is putting its own money into the new set of upgrades, along with the state and federal funds helping make them happen sooner on a busy freight line.

These Stimulus funds follow an earlier investment by the state and the feds of $8.1 million, mostly to build a new siding almost two miles long. The payoff from that work was immediate: On time performance improved from a disgraceful 70% to a very respectable 95%. In turn, ridership increased 14.4% and revenue went up from $3,275,00 to $4,075,000. Let’s see, $8 million divided by $800,000, that’s 10 years return on investment — or less.

Missouri also asked for Stimulus funds to buy a second trainset, from Talgo,hoping to add one or more frequencies. But it didn’t get that money. I don’t know if Missouri has asked again for another trainset out of Florida’s money, but I hope so. The payoff could be huge.

This past June, North Carolina added a third frequency to its Raleigh-Greensboro-Charlotte line, the Carolinian/Piedmont route. In the first 6 months, total ridership nearly doubled. Let’s go over the math: A 50% increase in frequencies, from twice a day to three times each way, resulted in ridership increasing by a reported 91%.

(We know that after Illinois added extra frequencies Chicago-St-Louis, Chicago-Carbondale, and one or two other routes, their ridership soared by 90% or so the first year and then continued to increase every year since. So ridership in Carolina should continue to rise.)

Not sure how you’d figure the cost of the added Piedmont service, but it must have been a good deal. Marginal costs for fuel, staffing, etc. did go up, but fixed costs like stations, administrative overhead, etc. remained fixed.

Again under the Stimulus, North Carolina got over $500 million for upgrading the route significantly. Last month Norfolk Southern, the state, and Amtrak agreed on how to invest $461 million: doubletracking 28 miles, eliminating numerous grade crossings, more passing sidings, straightening a few curves, etc. The upgrades will shave 13 minutes off the run, and bring it below the psychologically significant 3-hour trip time.

With the next phase of investment, if Congress will allow it, the trains should run up to 90 mph and take another 12 or 15 minutes out of the schedule. You don’t hear NC whining about a possible subsidy for the next few years; it has been paying a subsidy for the Carolinian and Piedmont, and investing about $300 million in this right of way over roughly 15 years. Not to forget: NS is very happy that the upgrades will benefit its freight trains on their important Crescent Corridor. And NC was ready.

OTOH, upgrading the NEC in Jersey for $450 million will not help freight traffic in any way. Of course, cutting travel time for the millions of riders on the Acelas, Regionals, Keystones (and I presume even on the 8 or 10 long distance trains using the route) does seem like a pretty good investment. However, you won’t add many more passengers. And you won’t get the full return you want without investing many Billions more.

Amtrak says it can’t add more frequencies through the Hudson tunnel, so the number of thru trains on this NYC-Philly route will remain the same — until a new tunnel is built, probably with a new South Penn Station, and surely with a new Portal Bridge, estimated cost well over $10 Billion. Until then, you can raise the speed of Amtrak’s trains in Jersey, and raise the ticket price accordingly. And for the 20 Acela trainsets, Amtrak is working to add two more cars to each six-car trainset, for a 33% increase in available seats, if it can get the funding. But otherwise capacity will remain severely limited thru Jersey.

Still, I’m ready to spend recklessly on the Jersey upgrades, without waiting for a more rigorous cost-benefit comparative analysis. Meanwhile, by the time Amtrak finishes the Tier 1 EIS for Jersey, North Carolina will be running 8 trains daily Charlotte-Raleigh at an average speed of 86 mph. Seems to me like that’s gonna be a good deal for sure.

But otherwise capacity will remain severely limited thru Jersey.

Amtrak could increase capacity. NJTransit normally runs 12 car trains on that line. The platforms at the major stations can handle 16 car trains. If Amtrak had the cars they could make them longer, just like they are doing with the Acelas.

Of course. ALL of Amtrak’s problems are made worse by the lack of traincars, and of locomotives to a lesser extent.

Nationwide, on almost all routes, Amtrak’s ridership is increasing at a handsome rate. But some trains are far ahead of the others, e.g. the Michigan services. You have to wonder how much of the recent ahead-of-the-pack growth is accounted for by simply adding another car here and there to trains that had often sold out.

The “new” passenger cars in the fleet, of course, would be coming from the repairs to damaged cars kept in storage for lack of funds to restore them. This was the one rail-related Stimulus project that was “shovel-ready” and started producing results almost immediately. And it’s success illustrates again the need to invest more in Amtrak to solve its problems, perhaps most immediately with a major order for new equipment asap.

Three hours is sometimes more than a psychological threshold. Businesses have to set the threshold between same day trips and overnight travel somewhere, and for those that set the threshold at three hours, getting under that threshold can open the door to business travel as companies elect to save the hotel expense.

The same effect on leisure and family travel may not be written into place, but its still the case that fifteen minutes each way in same day travel is an extra half hour enroute.

I have taken the Piedmont (and Carolinian), as I live in that area part-time. I appreciate that all of the projects have benefits, but what is missing are detailed financial numbers of the costs and benefits from each investment. Investments should have been made based on that.

Yes, NC trains will have significantly more ridership with $500MM in spending, but how much additional revenue will be generated? (Tickets on the Piedmont are cheap- I got one for $5 for about a 20+ minute trip between Charlotte and Kannapolis, so the impact may be small.)

The Acela already brings in a sizeable share of Amtrak’s revenue, and spending money on the Northeast Corridor would have a positive impact on a large number of passengers, so I’m guessing that the financial return of a dollar spent there are higher than a dollar spent in NC.

If ridership builds on the NC trains and tickets become difficult to get for your desired train, they will become much more expensive. Building a train riding culture in areas outside New England, Illinois and California will help improve Amtrak’s cost recovery and make it easier to justify the capital expenditures.

Some investments in the NEC, like their FY2012 request for additional Acela cars can be paid for pretty easily with the revenue they generate. Other investments are going to be so costly it will take a long time (if ever) to recover the cost. But they will benefit a large number of riders.

As with most transport projects the revenue generation comes from the economic development generated from making Charlotte and Greensboro within commuting distance and providing an alternative means of traveling up to Raleigh (and ultimately Richmond).

Believe it or not there is actually similar research capacity in the CLT-GBOR-WS area as is found in the RTP region. Tying these three metros together via a more robust network than I-85 can move the western Piedmont of NC beyond furniture, textiles and banking.

I would hope that NC trains would be used by commuters at some point…where are the numbers on that which were calculated when NC applied for its HSR funds?

FYI Charlotte will need to have a new station built uptown (which is in the works, but it’ll have to happen) before commuting to Charlotte by train becomes feasible for many people. The current train station is in a terrible area that precludes most commuters. (I know as I own property in uptown Charlotte and have taken NC trains many times.)

I completely agree about the Charlotte station problems. Hopefully this can be rectified in the near (five year) term as funding for Charlotte gateway station was in the request for the Florida reallocation money.

Funding for the gateway station storage yard and wye was also included in the first round of HSR funding to NC.

You’re totally right. I was involved with transit in the area in the mid-2000s, and even then there were all sorts of detailed proposals to build the new Gateway Station uptown, in part to serve the Lake Norman commuter rail line (which would have significant land-use and development benefits) and in part for NC intercity trains. Yet years later, no visible progress has been made. A new station uptown would significantly help ridership- that should have been a higher priority for NC than it has been. I know that there are track separation issues between NS and CSX and other obstacles, but it should not take so long to build a train station.

“but it should not take so long to build a train station.”

Agreed! It will take longer to complete the NS / CSX grade separation downtown than it took to build the entire Central Pacific. Its truly ridiculous.

Bob, I’m all for encouraging traffic on shorter segments of longer lines. Famously, that is how the Empire Builder gets its passengers, with very very few traveling all the way from Chicago to Portland or Seattle. But interestingly, at the present time, according to a NCDOT page I was reading today, the majority of passengers on the Piedmont services travel between Raleigh and Charlotte.

The recent report, HSR in America 2050, tried to rank all the possible city-pairs that might support HSR. (They didn’t do detailed cost-benefit, to Chris’ keen disappointment.) In describing their methodology, they gave enormous weight to the effect of the big cities on potential HSR routes, and little to the intermediate small cities.

So, for example, Chicago-Detroit got a great score from two populous metro areas — and just nevermind Kalamazoo, Battle Creek, Jackson, and Ann Arbor. Or on another route, Chicago has real weight, Cleveland has some weight, forget about South Bend, Fort Wayne, and Toledo. The intermediate cities don’t hurt any line, but the Piedmont route will stand or fall on the Raleigh-Charlotte numbers.

Chris, You keep saying that “what is missing [from the Obama rail projects] are detailed financial numbers of the costs and benefits from each investment.”

Do you mean that you want publicly available figures for each major rail expenditure — just like the ones for new highway and bridge projects?

And where can we find those detailed cost-benefit comparisons for the highway and bridge projects funded thru the Stimulus, or financed thru the Highway Trust Fund for that matter? I’d be very interested to see how the various projects compare.

Of course the analysis of impact on farebox revenue is included in the big corridor applications, but a blinkered focus on financial rather than economic returns falls prey to the often arbitrary details of what costs can be shifted to other parties, which benefits are easier to capture as financial revenue, and which benefits are difficult to capture as financial revenue.

Obviously a system where its easy to shift costs onto other parties and easy to capture benefits as revenue is the one that is most attractive to private investment, and all other things equal, what government ought to be focusing on are the investments were it is harder to shuft costs to other parties and harder to capture benefits as revenue.

In terms of economic rather than financial benefit, we are talking about substantial net benefits all around, and the greatest total return comes from an approach that avoids putting all of our eggs in one basket where the investment is easy to kill for partisan political reasons.

“Do you mean that you want publicly available figures for each major rail expenditure — just like the ones for new highway and bridge projects?”

No, I mean that HSR grants should have to meet financial cost/financial benefit criteria like transit grants did at least in the mid-2000s when I was heavily involved with one transit project. There were all sorts of formulae that a transit project had to meet to get Federal funding. As a result, only relatively viable projects get funded, and funded projects are generally well-used.

That deprives Wendell Cox of another line of attack (of empty rail cars and excessively high costs per passenger).

“But interestingly, at the present time, according to a NCDOT page I was reading today, the majority of passengers on the Piedmont services travel between Raleigh and Charlotte.”

Sorry, I don’t follow this. The Piedmont trains travel only between Raleigh and Charlotte. Another train, the Carolinian, goes past Raleigh, on to DC and NY.

Since you ride Amtrak Piedmont, what in your estimation would be the patronage potential of 185 mph top speed, 140 mph average speed, 18 daily trains running on a line only at these HSR Express stops:


Assume there is also Regional service with more stops, like the NEC Regional, and assume service begins in 2020, with higher population forecast by the U.S. Census Bureau.

What do you think would be a fair HSR Express ticket price from Charlotte-Atlanta and Charlotte-DC?

But they speed to 110 mph top speed service. My point is that 185mph and above attract dramatically more people to significantly cut smog, GHG, foreign oil and permit airlines to focus on 500+ mile routes that are more profitable to them. And yes, at the end of the day (as proven around the world), well-planned high-traffic routes run a higher operating profit.

It is these 185+ mph routes that become even more attractive to private operators.

The Piedmont trains run Charlotte-Kannapolis-Salisbury-High Point-Greensboro-Burlington-Durham-Cary-Raleigh. But less than half the passengers ride Kannapolis-Greensboro, or any of the other city-pair trips that are possible. The majority rides Charlotte-Raleigh.

Just trying to say, Keep your eye on the ball, in this case the big cities. Actually the point supports the concern about Charlotte bringing up the rear in the parade of new and revamped stations along this route.

So what you are saying is that cutting out the intervening stops would lose something around 40% of riders for only small increases in Charlotte / Raleigh ridership. I agree with your argument here: a blinkered focus only on the big cities will mean a sacrifice of substantial opportunities to provide transport service that is relatively small for each individual trip pair but when accumulated can provide an important addition to the ridership between the big cities.

This net benefit is even strong with wheelchair roll-on, roll-off high platforms, which ensure that even less time is sacrificed in stopping at the intervening stations.

The big cities are called big cities because they have lots of people. Spread the ridership evenly across the population of the corridor and the big cities are going to have more riders than tiny hamlets along the line.

That’s good to see and now I understand. Interesting, as even on the Northeast Corridor, so many passengers seem to be going for just part of the way between NY and DC. (And the northbound Crescent is pretty empty by the time it arrives in NY on the times I’ve taken it).

Amtrak doesn’t sell tickets for travel within the NEC. And unless they made them reallllly cheap no one would buy them. The long distance trains are slower than the Regionals.

I like the nerdy discussion of details here, but I think you are all a little off from Yonah’s point in this article. He’s talking about the political argument, the persuasive imperative to win support for infrastructure spending. I think we can make this argument in a few ways.
#1) Use fear. Like it or not, we are living in an era and led by a generation that is reactionary not visionary. The things people react to most strongly are physical threats to thier well-being. We have to make people believe that the next time a bridge collapses, an airplane rips open, a highway is jammed with traffic, they WILL be on it and it WILL be scary. They also have to believe something can be done to prevent it. Then it’s an easy nudge for people to start saying something SHOULD be done.
#2) Appeal to men. This is the demographic that the left/democrats have lost with the decline of unions. Men are now a swing group that can hold sway if fixed on an issue. Evidence is mounting that men face increasing challenges starting in grade school, and manifest now in higher drop-out rates than women, lower college attendance and graduation, lower numbers of traditionally male dominated jobs (mfg. & CONSTRUCTION!!!) etc. This can’t be an attack on the gains made by women, but a frank articulation of the fact that infrastructure jobs provide solid middle class wages, mainly to men, for work that spans the full range of educational backgrounds. This is a classic win-win opportunity, millions of men with construction experience from the housing boom are now out of work with little prospect of jobs coming back; meanwhile the nation has a huge unmet need to maintain and improve it’s infrastructure and bids on projects are coming in low. Obama should hammer the opposition with this common sense matchup of labor supply and mobility demand.
#3) Find some spine. Someone must say how we will pay for it all in a fair and sustainable way. We need revenue. I’m pretty sure the Republican proposal doesn’t foresee overall transport spending in decline by 50%, just that more will be done at a state and local level. We can calmly discuss the merits of that or an idea like the infrastructure bank that leverages private funds, but there needs to be clarity here so people understand what they are supporting. Voters know these things have a cost and they have shown repeatedly at the local level that they are willing to fund a value-adding proposition if costs are addressed up front and plans are reasonable.
#4) Create a national vision (or just adopt one of the many put forward in the last few years). Despite my point in #1, we also need to attempt an interjection of some kind of vision. Maybe the younger generation staffers can do this part… We need a frank discussion of where challenges and opportunities are so the public understands the topic. Our present culture likes technology and is averse to regulation, so it is probably a good time to look at ditching rules that drive up costs unecessarily and also to invest more heavily in simple gizmos that create big benefits to transport system users at low cost. We can focus on infrastructure investment’s role in overall economic efficiency, because that’s where the bigger bang is for the total economy. Part of the problem with HSR politically is that when it was roled out the “vision” was poorly constructed, and vulnerable to a variety of attacks, even on this blog as I recall. We need to make sure the feds are leading with a coherent set of guiding principles, not just a grab bag list of shiny projects. Finally, decisions can’t all be made on strictly financial grounds, some experimentation is necessary to make progress. New ideas deserve to be tested too. (Here may lay a big distinction between conservatives – who think our auto-dominated system is just fine, and progressives who should be putting forth an ideal that encommpasses desireable improvements at a modest price.)

The Tea Party vision for America is a bleak one. It is a vision that says America can’t be the best in anything other than military spending and number of billionaires.

It is a vision that says the elderly, sick, and disabled will be left to fend for themselves and most likely die.

It is a vision that precludes innovation and leading the world in new scientific breakthroughs, educational achievement, and infrastructure investment,

It is a vision that leads to misery, suffering, despair, and national decline.

The The Tea Party vision for America, if fulfilled, could also lead to a revolution. Fortunately, I don’t see enough Indie and traditional Repub voters falling for that nonsense.

Any sort of revolution will be hijacked/co-opted by the establishment and make it not serve the original intentions of the movement. We’ve already seen the Tea Party suffer this, where it went from a group inspired by politicians like Ron Paul to being co-opted and made into another neo-con front group.

Misery, suffering, despair and national decline – That’s what people say about Liberals and their “evil socialist agenda”.
But hey, I guess you’re listening to G-man’s first point. ;)

Where could I read more about the nationalization of the transportation industry and why that has happened?

Wrong question, that is, contrary to the facts, because no transportation system in the U.S. has been nationalized.

(Except for Amtrak, if that is much of a transportation system at all, and which ‘nationalized’ the passenger rail operations of the freight railroads to relieve them of the money-losing services that were difficult to get rid of otherwise under the existing regulations.)

What you probably mean to ask about is the history of public subsidies to private operators of transportation.

Maybe go to Wikipedia? Look up: The National Road, the Erie Canal, the early history of railroads with massive land grants to reward private owners for building new lines, the early history of airlines when private operators were subsidized thru lucrative contracts to carry U.S. mail, the Intercoastal Canal, the Port Authority of New York and New Jersey, the Interstate Highway system, and the Army Corps of Engineers. That will get you started.

In almost every important transportation system in this country, the government supplies the infrastructure and private operators grab the profits. Canals are built and maintained by the federal government, and the constantly on-going dredging is a major yearly expense. But the barges you will see moving along the Gulf Coast or the Mississippi River are all privately operated. Harbors to receive manufactured products from abroad and export coal, chemicals, and grain are also dredged at public expense.

The major highways are built and rebuilt with massive amounts of federal money. But the 18-wheelers carrying freight are all run by for-profit companies like WalMart, Fedex and United Parcel, household movers, and the many carriers of container loads of crappola imported from China.

All airports were built with government money and government agencies operate them. Of course, the private airlines that use them also enjoy free services from the Federal Aviation Administration such as the air traffic control system and even from the National Weather Bureau. Despite the massive subsidies over the years, the airlines generally do not make a profit. (I suspect that the baggage-cart monopolies in our airports are extremely profitable. In Socialistic Europe, baggage carts are provided free for citizens and visitors to use within the government-owned airports.)

Only railroads must build and maintain their own infrastructure, and then pay taxes on it as well. (Back to Amtrak, it pays the freights for the use of their lines, and Amtrak’s payment includes some portion of the local property taxes along the lines. So Amtrak pays local taxes on its interstate infrastructure, while truckers like WalMart and UPS do not.)

Now, as for why the U.S. government supplies billions in subsidies to profit-making truckers, barge operators, and airlines, ask your local Congressman. When he lies to you, look up his campaign contributors. You’ll begin to figure it out all on your own.

All those highways US-somenumber or I-somenumber are all privately owned? No coordination at all? The air traffic control system is a loose federation of independent control towers? Who did Ronald Reagan fire?
The railroads were nationalized during World War I. Took the Pennsylvania Railroad until 1926 to get the B&O out of Penn Station in New York and were never able to get the Lehigh Valley out.

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