Monday, July 11, 2011

The future of High-Speed Rail is in the current debate in Washington

The first thing to understand is that the future of high-speed rail in the United States does not rest with the states. Most of them are either broke or close to it.  The future rests with the Congress of the United States.  And that's where the debate is.

Although I'm stating the obvious, high-speed rail costs money, lots of it.  And, lots of money, we recently discovered, is not available. That means, there has to be a revenue source for any funding embedded in the Transportation Budget. Since the Highway Trust Fund which is the major source of transportation revenue, based on gasoline taxes, is declining, that challenge is that much greater. 

So, now the Democratic Senate and the Republican House; that is, Boxer and Mica, are promoting two separate Transportation Re-authorization Budget Bills, with Boxer's Bill for only two years instead of six, and it will cost more than Mica's version which is for six years.

It's already fairly clear that the Republicans pretty much oppose high-speed rail and are seeing to it that there is no funding in this legislation for it.  Mica does say he wants HSR, but only on a privatized, or public/private partnership basis. For that, he wants the Northeast corridor, which is Amtrak owned and operated, to be sold on the open market to be competed for by private investors.  Amtrak is also free to bid on what it already owns. 

Boxer sees this entire Transportation Budget as a Jobs Bill, sort of like the ARRA Stimulus package, but under another name. The Democrats are making their case for funding based on jobs numbers, how many dollars lost will result in how many jobs lost, and so forth.  

The decision process for both sides is highly politicized since the Democrats, in order to be re-elected in 2012, need to improve the unemployment situation dramatically, or they will possibly lose the Senate, if not the Presidency.  

At the same time, the Republicans are determined to, 

1. become the Party in power in both Congress and the White House, 
2. reduce the size of government by cutting taxes which pay for government, 
3. reducing the deficit (which is a good thing to do), 
4. and transfer as much government activity into the private sector as possible, including high-speed rail. 

The next few months will finally reveal the future of high-speed rail; whether there is further federal funding for it or not.

That's the ball to keep your eye on.

Dueling Transport Bills Loom
Boxer and Mica Not on Same Page
Thursday, July 7, 2011
By Dennis Moore and Patrick Temple-West

WASHINGTON — Leaders of the House and Senate transportation committees are preparing two significantly different bills to reauthorize highway and transit programs after the current law expires on Sept. 30.

Sen. Barbara Boxer, D-Calif., chairwoman of the Senate Environment and Public Works Committee, and Rep. John Mica, R-Fla., chairman of the House Transportation Committee, are nowhere near each other on the amount of money they want the federal government to spend on transportation or on how many years to provide funding.

At a press conference on Wednesday, Boxer told reporters her committee would finish writing a two-year, $109 billion bill in "a couple of weeks." She is positioning her plan as a jobs bill.

"Congress must decide in the coming days which path to choose: protect jobs and put people to work, or throw hundreds of thousands of people out of work in a sector that has suffered enormously during the recession," Boxer said. Half a million construction jobs would be lost if Congress passes the transportation spending cuts proposed by lawmakers in the House, she added.

Boxer says her $109 billion bill will maintain current funding but will fall short of the $12 billion of revenue needed to pay for it over the two years. The gap would occurs, in part, because of insufficient revenues in the Highway Trust Fund.

Boxer said she is negotiating with the Senate Finance Committee, chaired by Sen. Max Baucus, D-Mont., on where to find the extra money. She told reporters that the wind-down of the wars in Afghanistan and Iraq, which cost $12 billion a month, could fill the gap.

Meanwhile, Mica met with reporters the same day to preview the six-year bill he plans to roll out Thursday, which he says "goes in the opposite direction" from Boxer. Mica said his bill would propose spending backed mostly with $35 billion of annual revenue from the Highway Trust Fund. The $35 billion would be almost $2 billion less than the projected revenue of the fund, according to the Congressional Budget Office.

Mica said that while Boxer favors a national infrastructure bank, he plans to propose funding for state infrastructure banks, so states "don't have to come on bended knee to Washington for approval." The state banks would be allowed to join together for cross-border projects.

He said he will submit recommendations for other revenue-raising measures to the House Ways and Means Committee, but declined to be specific or say if they will include a proposal for Build America Bonds that would be issued solely to finance transportation projects.

"I have to deal with the cards that are dealt to me," Mica told reporters. But his political hand may not be strong. He was set to meet with House Republican leaders later in the afternoon. The transportation bill has already been left off the list of things that Majority Leader Eric Cantor wants to do before September. GOP leaders may want further changes in Mica's proposals.

"Everything hinges on the House leadership and how they handle it in face of all their other priorities and not add to the deficit," according to Ken Orski, who publishes Innovation NewsBriefs on transportation.

The one area of agreement between Boxer and Mica is that the Transportation Infrastructure Finance and Innovation Act program should be expanded. They each propose providing $1 billion per year to TIFIA, which Mica said could be leveraged to provide up to $120 billion for construction projects over six years.

The Boxer and Mica proposals fall far short of President Obama's fiscal 2012 budget proposal for a six-year, $500 billion transportation program.

Money is the problem in putting together a transportation bill. It just isn't there.

"I don't think there's any consensus on the revenue provisions and how to fund it," said Melissa Loesburg of ISI Group's Washington watchers.

Gasoline tax receipts are falling and won't provide the Highway Trust Fund with enough to finance the current level of transportation spending. And it's politically impossible to raise the gas tax.

Actual transportation spending for 2011 has been authorized at $52 billion. Using just the trust fund revenues, annual spending would fall to $36.9 billion. But some money has come from general revenues, especially from the stimulus law.
Orski questions the focus on current spending. "The last two years have been way out of scale with what occurred earlier," he said. Returning to pre-stimulus spending levels, "while not insignificant, would not be catastrophic."

The whole political calculus of transportation spending has changed, according to Deron Lovass, transportation policy director at the Natural Resources Defense Council. "The way this bill traditionally moves, it's a big investment bill," he said. "There's money in it that provides for additional capacity and there's enough money in it to make all 50 states or at least most of them happy."

Now, the math doesn't add up. There's not enough money to keep everybody happy.

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