House Republicans Propose Privatization of NEC

May 26th, 2011 | Posted by

The 2012 election can’t come quickly enough. The House Transportation Committee, headed by Florida Republican John Mica, has proposed privatizing the Amtrak Northeast Corridor:

“We plan introduce legislation to separate the Northeast Corridor from Amtrak, transfer it to a separate entity, and begin a competitive bidding process that would allow for a public-private partnership to design, build, operate, maintain, and finance high-speed service. Our plan would do so in a dramatically shorter time, in closer to 10 rather than 30 years, and at a fraction of the $117 billion cost proposed by Amtrak, while creating new jobs,” Mica said.

Mica’s plan slams Amtrak ridership on the NEC, claiming it’s been stagnant since 1977. But what he doesn’t mention is that trains are at capacity, and the track capacity is itself being maxed out. Nor does he mention that the Acela is profitable. In other words, Amtrak is doing great on the NEC with what it has – but without further investments, it can’t improve on that and carry more passengers, which it ought to.

The House Republican concept is to have the private sector fund the expansion. How exactly they’re going to do that is another question entirely. Selling off the NEC tracks isn’t going to be cheap – assuming it is valued properly, and public infrastructure is usually sold off below market value in order to provide a sweetheart deal for corporate allies.

Nor will the construction costs come cheap. $117 billion would be an enormous lift for the private sector. The chances of it succeeding are slim. Not because HSR is a flawed concept – the Acela proved it can be profitable. But the construction costs aren’t recouped immediately, and nor should they be. When attempts to recover those costs are rushed, you get the Taiwan problem where the system displayed healthy ridership growth, generating an operating surplus in 2010 but having to be bailed out by the Taiwan government in 2008 because the construction debt could not be repaid quickly enough.

In April 2010, Yonah Freemark at the Transport Politic laid out some of the problems with too much private involvement.

John Mica will follow his ideological doctrines even if it’s not a smart financial move. While we need to invest in the NEC, this doesn’t seem like the right way to do it. Democrats and President Barack Obama would be better off waiting until 2013, when a Democratic House would be presumably more interested in finding long-term funding solutions.

  1. ant6n
    May 26th, 2011 at 21:58
    #1

    This is ridiculous. What we need is private operators on public infrastructure, not public operators on private infrastructure.

    VBobier Reply:

    Agreed, Mica and His Party are bound and determined to crush Amtrak. This should not be allowed to pass.

    Nathanael Reply:

    Republicans believe in “Lemon Socialism”. They think the government should only be involved in loss-making activities.

    Therefore, the moment the government makes something profitable — like Acela — they rush to transfer it to private investors so that individual rich people can make all the profits, instead of the democratically-elected government.

    D. P. Lubic Reply:

    “Therefore, the moment the government makes something profitable — like Acela — they rush to transfer it to private investors so that individual rich people can make all the profits, instead of the democratically-elected government.”–Nathanael

    That sounds like the Conrail experience to me.

    VBobier Reply:

    Well if that were true, Why did Repugs in Congress try and divide seniors over 55 from those under 55? Over Medicare, Medicaid(Medi-Cal in CA) & SSI(Supplemental Security Income)…

    Alon Levy Reply:

    The Wall Street Journal says,

    [Amtrak’s next-gen HSR proposal is] not good enough, said Mica, a longtime Amtrak critic. He wants to take away the rail company’s 363 miles of track and infrastructure, place it under the control of the Transportation Department or a new government-created corporation, and solicit bids from private investors for the development, operation and maintenance of high speed service.

    ant6n Reply:

    Mmmh.
    But if they did it, they’d probably fuck it up – for example by privatizing profits, and socializing debts.
    Plus, as you say, the FRA regulations are the real problem.

    On the other hand, a bit of competition for Amtrak might not be so bad, as long as the infrastructure stays in public hands. And somebody makes sure that fares do not get out of control.

    BruceMcF Reply:

    Thing is, if they push to have all profit build and operate, the private operator must seek a faster return on investment than a public owner would rationally seek, given the private operators higher cost of funds, and one way that plays out is excessively high ticket prices which interfere with patronage growth.

    One place to slice things is at the Express HSR tier, since the only operator eager to run the regional HSR services seems to be Amtrak. A funding of strategic capacity improvements for Amtrak, in return for allowing whatever operator is running the NortheastHSR access to the RegionalHSR NEC corridor, in return for allowing Amtrak to charge positive rate of return access fees to that operator, could well allow an earlier private NYC/Boston Express HSR corridor where the operators bid for how much of the construction they cover …
    … but first we’d still need an infrastructure bank, since there will still be a need for a public capital subsidy, when competing against the other publicly subsidized intercity transport.

    adirondacker12800 Reply:

    It’s another way to screw over the Northeast. Make the return on Federal taxes paid even lower. Leaving more money to be spent in places where people complain about spending money in the Northeast while consuming great big drafts of Federal subsidies themselves. A warmup for screwing over the Midwest’s plans for HSR.
    Where’s the plan for privatizing I-80 through Wyoming and I-90 through Idaho? Or I-10 through Alabama?

    ant6n Reply:

    It might be ok to put the publicly owned rail into some loose public organization, which invests into the lines and then offers track space in exchange for track fees. The track fees could cover the construction cost over time, and would allow private companies to not have to worry too much about long-term investments.

    It works for some countries in Europe, but with the current political climate in the US, with all that talk of PPP, and shoveling money into private enterprise just for the sake of it, I’m afraid it might end up being bad here.

  2. Jack
    May 26th, 2011 at 22:03
    #2

    I agree, ant6n, “private operators on public infrastructure” is called our highway system. Never understand why the same people that wants to privatize our rail system never calls for the same for our interstate highway. double standards.

    Jack Reply:

    I didn’t write this???

    Spokker Reply:

    Your Internet is broken!

    Jack Reply:

    You can tell it’s not me, he knows how to use proper punctuation.

  3. political_incorrectness
    May 26th, 2011 at 22:25
    #3

    I do believe the project management should be in other hands to get the project fast tracked for completion sooner versus later. Public infrastructure and private operations can work well. I am not sure if this would achieve more investment in the mainline and branches of the NEC, however, I think it will create a negative impact on operations for commuter rail, the primary user of the NEC. Mica should be cautious on his ideas since this could have an irreversible negative impact on the NEC.

  4. joe
    May 26th, 2011 at 22:28
    #4

    Arhund, our x-Governor, told Mica to put NEC on eBay.

  5. Dan S.
    May 26th, 2011 at 23:16
    #5

    I love that they are utterly convinced of the superiority of private enterprise but the only part of the NEC they feel safe enough to entrust to it is HSR. Hmm, the one part of the NEC that covers its operating expenses, and they want to spawn that off to private enterprise! The result of which will only make Amtrak’s bottom line look so much worse, making it so much easier to slander it! It’s a win-win! Whatever the government can do well and make money at, slide it on out and give it away to your fat-cat friends, and then spotlight the worsening fiscal conditions of the public organizations! Then your corporate sponsors just siphon part of their printed money straight back into your re-election fund. There’s your win-win.

    If PPPs and private enterprise are really so amazing, why not give them a shot at upgrading the performance of the parts of the NEC that currently have the *least* return on investment? Hmm? I don’t suppose those that champion the private sector are afraid of taking on a more challenging sector than HSR? Hello?

    Nathanael Reply:

    “Lemon socialism” at work. If it’s profitable, the profit MUST be steered to their fatcat friends! If it costs money, that’s for the government to pay for!

    And of course, when they say “government”, they mean “taxes on poor people”. Because rich people get tax cuts, but poor people get tax increases. This is standard Republican policy and has been since at least 1980 (I’m not old enough to speak about earlier periods, but Eisenhower didn’t pull this shit).

    D. P. Lubic Reply:

    This has been up before, but it’s worth looking at again, courtesy of Bruce McF:

    http://midnight-populist.blogspot.com/2011/01/sunday-train-going-on-attack-for-amtrak.html

  6. Reality Check
    May 27th, 2011 at 00:01
    #6

    Rod Diridon: It’s time to invest fully in high-speed rail

    Almost all international high-speed rail systems create a profit after operating costs. California’s system is projected to do so too. Proposition 1A, approved by California voters in 2008, provides $9 billion for high-speed rail and requires a public-private partnership investment. If private bidders don’t see profits, then there will be no bids, no project, and no debt. California taxpayers are protected.

    Or, then there’s this: California Rail Program In Deep Doo-Doo

    Joey Reply:

    Apparently Mr. Diridon has never heard of Taiwan…

    snogglethorpe Reply:

    Hmm… http://www.cahsrblog.com/2010/06/taiwan-hsr-generates-operating-profit/

    Joey Reply:

    That’s the point. They generated profit, but not enough to pay back their capital costs.

    political_incorrectness Reply:

    Our point still stands, operating costs still generate net revenue unlike roadways.

    Joey Reply:

    Yes, but expecting to pay for HSR with 100% private investment is nothing short of delusional.

    VBobier Reply:

    And History in the US has shown that We’ve had more than 1 Taiwan already.

    political_incorrectness Reply:

    Which I agree with

    wu ming Reply:

    that’s not the point at all, you’re moving the goalposts. “Almost all international high-speed rail systems create a profit after operating costs” refers to operating the trains once the infrastructure is built, not the insane requirement (only for rail!) that it make so much operating profit that it c an also pay back the cost of laying the rail as well.

    Joey Reply:

    That was exactly the point. The original post was about Diridon calling for HSR to be built largely with private investment. My response was noting the fact that that that approach failed in Taiwan because they didn’t generate enough revenue to repay debt. Snogglethorpe presumably thought that I thought Taiwan didn’t generate any profits at all (incorrect, btw), and the post you responded to was clarifying that point.

  7. Caleb
    May 27th, 2011 at 00:22
    #7

    One needs only to look to Britain to see the failure of selling off otherwise efficient public infrastructure to private interests. British rail is the joke of Europe now and absolutely struggling to make improvements.

    neville snark Reply:

    I second that point!
    And third!

  8. JJJ
    May 27th, 2011 at 01:13
    #8

    It’s hilarious.

    You know all the calls of “We shouldn’t build HSR unless it’s profitable?”

    But you know what happens the very second something the government does becomes profitable? It’s gets sold off at rock bottom prices to corporations with connection. Billions in public investment so we can turn around and watch a private company enjoys years of private profits. And the day that investment goes sour? It’s bailout time baby.

    You know why the Bush tax cuts were enacted? The US government was making a profit. And Bush said that we can’t allow that, because it meant we had a revenue problem. Bush claimed a profit meant the government was overcharging the people.

    Someone explain to me how the same people complaining that the government doesnt make a profit can turn around and complain that the government is making a profit and that shouldnt happen.

    The US loves to talk about how we have no corruption, when compared to places like India, Russia and Mexico, where driving down the street involves paying out some low level bribe money. We have corruption, it’s just on a level so big it’s hard to see. Our corruption involves politicians taking billions of dollars and handing it out to their friends….and then who finish their term and get hired by said corporation. And supposedly, we sign off on it.

    Makes me wonder if adding up all the weekly $10 to make a traffic ticket go away is actually less than the amount stolen by corporate interests. Me thinks that folks in India are getting a good deal.

    Owen Evans Reply:

    I agree with your commentary on “lemon socialism.” However, I vehemently disagree with using the term “profit” to describe the budget surpluses at the end of Clinton’s term in the White House.

    Calling it “Profit” when the revenue is legally mandated on threat of imprisonment is disingenuous.

    I was not a fan of the tax cuts; I think the money should have been invested in infrastructure, used to pay down the national debt, and/or stored away as a “rainy day fund” for use if a balanced budget constitutional ammendment was implemented. But calling the surplus a distortion of the reality of what taxation is.

    JJJ Reply:

    The taxpayers were paying x amount for safety, education etc etc.
    The government was providing these services to the taxpayers satisfaction, and doing it below cost.

    Thats a profit.

    Alon Levy Reply:

    I’m with you about the corruption bit, but let’s not start comparing the US to developing countries. In Russia, for example, an oligarch got control of 2% of the world’s oil production for $350 million back in the 1990s. Even at the low oil prices then, the payback time was measured in weeks. There’s nothing in the US that matches that, not even at the Pentagon, by whose standards transportation patronage is a rounding error.

    JJJ Reply:

    I agree, nothing matches that, but that was also a very unique situation, going from communism to cronyism.

    joe Reply:

    “but let’s not start comparing the US to developing countries.”

    Let’s also be careful about equating the US system to social democracies. We’re not doing that well.

    Alon Levy Reply:

    It’s not all that unique. It was unusually large, but similar episodes occurred in Korea’s corporate-state merger until 1997, modern India and China, and other transition economies.

    BruceMcF Reply:

    The difference primarily being in how broadly distributed the yellow bellied surplus sucker sector, or in other words the sector focused on extracting income from what Jamie Galbraith’s terms the “Predatory State”, where in a lower income corrupt country, there are far fewer opportunities to convert political patronage into income, chiefly focused on resource extraction.

    D. P. Lubic Reply:

    Check this out:

    http://howtosavetheworld.ca/2006/01/26/blog-why-republicans-want-a-huge-national-debt/

  9. Brandon from San Diego
    May 27th, 2011 at 05:55
    #9

    When public services become profitable, with emphasis on “services”, then yes, it is time to look at converting those services to the private sector. It would seem preferable to make such a conversion when multiple services of the same type are ready for privationization… And in the same market. This would be to avoid monopolies. Not certain rail is conducive to this approach.

    joe Reply:

    “When public services become profitable, with emphasis on “services”, then yes, it is time to look at converting those services to the private sector.”

    Our Constitution is about inalienable rights, personal freedoms and common good. It is not a document to secure profiteering or incorporation.

    There needs to be a compelling argument that privatization of a public service would be in the public’s interest.

    VBobier Reply:

    agreed Joe.

    JJJ Reply:

    Isn’t it in the public’s best interest to have the government make money in a 2nd venture? That means less need for tax dollars. Think about how conservatives hold up Alaska as “paradise” because the state sends residents a cheque. Well, thats because the state is making money on the side, off oil.

    If California bought Apple, made zero changes to the company but merely used the profit to run colleges instead of fatten rich investors, doesn’t the taxpayer win? Why is that evil socialism? Isn’t capitalism all about investing and making a return? Why should the state be excluded from the marketplace?

    Andy M. Reply:

    That’s not a good comparison. back in the 1970s and 1980s the Bristish government made cars. The problem was that Leyland was competing with private companies doing the same, just as a state owned Apple would be competing with myriad private competitors. The state thus tries to protects its own in competition, and seeing the state makes the rules, its unfair.

    Transportation doesn’t work like that. There is only one NEC. Gone are the days that the Pennsylvania RR could compete against the NYC head-on and race trains on lines of their own but between the same cities. The question is thus, do you want the NEC operated in the public interest, which may mean lower profits but with the economy and people overall getting a better deal, or do you want NEC’s profits to be optimized in isolation of any bigger picture, which could mean fewer but more costly services in order to increase income while slashing costs.

  10. Donk
    May 27th, 2011 at 07:29
    #10

    Everyone is missing the point here. The reason they want to sell off the NEC is to accelerate the $117B in construction needed to fix the system. If private industry is willing to foot the bill for these fixes, then I would be more than happy to give the NEC away. As long as there is a contract in place that fixes fares at a certain formula and ensures that the local intercity and commuter rail operators will have access to the line, I don’t see a problem in handing the $117B bill to somebody else to figure out.

    I would think that the company(ies) would also of course be required to comply with some sort of infrastructure spending plan, or else the NEC would revert back to Amtrak. Lets let them dangle the NEC out there with certain constraints put in place and see if anyone bites.

    They are not dumb enough just to give away the profitable NEC for nothing.

    Jack Reply:

    The problem becomes which company in America has the expertise to develop the NEC into true HSR, are they going to end up selling it to Japan/European interests?

    Risenmessiah Reply:

    That’s exactly the point.

    Federal law makes it impossible for an airline to be majority-foreign owned. Mica is a big air travel guy, and he was trying to get the FAA Reauthorization passed. So how does relate to this position on rail?

    Because airlines are a natural fit for franchises of high speed rail. And with the stranglehold that United-Continental is building on the Eastern Seaboard, a contract to that gives them exclusive use of the NEC is a blockbuster move. It allows them to raise the capital from foreign countries, but also use it allows them to effectively use other government subsidies to drive other competitors out of business between NYC and DC.

    A company that is similarly positioned to do this with CAHSR is Alaska Airlines and would actually be a clever strategy for the Authority.

    That notwithstanding, however, it would be a near death blow to American and Delta, who would oppose it because their lives depend on it. But it makes sense, unless you live in Dallas, Atlanta, or Miami.

    adirondacker12800 Reply:

    Why should any airline get a monopoly? So they can suck profits out of the NEC to undercut the upstart carriers in the Chicago-Denver market? (Or the San Antonio-Orlando market or the …. )
    I see it as just another way to suck money out of the Northeast.

    Risenmessiah Reply:

    Remember, CHSRA is already going to award a “monopoly” franchise agreement to their operator. That’s why Richard Branson’s Virgin Trains has been so eager to see HSR become a reality… it would be a way to get around the airline ownership rules and expand their presence.

    As for the NEC, it’s not that any airline deserves a monopoly (although I think the way we are headed with fuel costs, it may end up there) it’s that United and Continental already control the most highly trafficked air route in the US: Chicago to New York because of their merger. It’s not hard to connect the dots with hubs in Chicago, Newark, and Dulles, what sort of value the NEC franchise would bring them. Oh yeah, did I mention that Continental and United would have been Mica largest donor in 2010 if they were the same company…

    BruceMcF Reply:

    Ah, so the CHSRA announced their business model, as requested by the peer review group? How did I miss that.

    Risenmessiah Reply:

    The CHSRA has said they will not be the operator.

    BruceMcF Reply:

    That still leaves a variety of business models.

    adirondacker12800 Reply:

    I’ve flown three different low cost airlines between New York and Chicago. Fares creep up because there’s duopoly or monopoly. A bunch of entrepreneurs finds enough money to start low cost service between two of the airports. Which drops fares. The conventional carriers eventually cause the low cost carrier to go bankrupt. Fares go up. Another bunch of entrepreneurs finds another batch of investors to grift and starts up a low cost carrier… which then goes bankrupt. If they work it right it causes the conventional carriers to go bankrupt. Rinse repeat.

    Risenmessiah Reply:

    That’s not actually true: Usually what happens is that legacy carriers own gates at major hubs because until 1991, there was no federal funding to expand airport capacity. To get around this natural advantage, Southwest and Jet Blue (and other non-union airlines) kept exploiting the weaknesses, but could not eliminate them entirely because of the requirement of serving many (much smaller) airports.

    Southwest has employed many strategies, including using old planes, old airports (Midway), and extortion (telling LAX it would leave if it raised its landing fees) and fuel hedging.

    adirondacker12800 Reply:

    http://en.wikipedia.org/wiki/List_of_defunct_airlines_of_the_United_States

    An airplane ride is a commodity. There’s always going to be someone out there that thinks they can undercut the competition. They do well until the majors start to undercut them. Then there’s usually a round of bankruptcies and fares go up for a while encouraging another round of people who think they can undercut the competition. Rinse Repeat.

    Risenmessiah Reply:

    Cute, but you just made my point.

    Most of those airlines that truly went out of business, instead of just being acquired or merged happened after deregulation but before the 1991 Act that enabled Passenger Facility Charges. Since then, Southwest and others are hanging around but the overall trend is toward monopoly.

    VBobier Reply:

    Umm, Well I think the Repubs in power in Congress are that dumb, They would rather have a Confederate States of America, Which was too weak to defend Itself and so It lost the war and died, But then the current Republicans(ex-Dixiecrats) don’t like our form of Government.

    Donk Reply:

    So you don’t want to even hear if there are any reasonable proposals from industry groups?

    VBobier Reply:

    I just said Repubs in power, I did Not mention anyone else. So I stand by what I said, If their reasonable, sure no problem, ideas are welcome, As long as they don’t hurt people.

    wu ming Reply:

    given how well other “reasonable proposals from industry groups” have gone of late, when discussing the privatization of public services, i think i’ll pass.

    adirondacker12800 Reply:

    Conrail

    VBobier Reply:

    Poor Conrail, It should have been kept intact, I would have just given other RR’s trackage rights and had them help with track maintenance.

    ant6n Reply:

    Well, probably would’ve made sense to sell all the trains, and just keep the infrastructure. The government owning a rail operator competing against other railroads operating on gov’t rail operator’s tracks via trackage rights is the sort of conflict of interest/muddling the market that privatization attempted to avoid. Turning the company into a infrastructure-only company could’ve given many railroads access to tracks, and created a more viable rr market.

    D. P. Lubic Reply:

    I still think the sale of Conrail was stupid. We, the taxpayers, put something like $7 billion dollars into it over a number of years (and gee, that sounds like a bargain nowadays!), rebuilding a railroad that suffered from all manner of deferred maintenance, and in the process creating a railroad that was profitable and had a good employee spirit, too.

    We should have at least waited for the railroad to earn its $7 billion back. JJJ suggested above that it wasn’t (and isn’t) a bad idea to have a profitable government enterprise that reduced the need for tax dollars.

    Instead, the free-market ideologists (or maybe it should be idiots) insist on selling the road. In the process, this sale burns up all kinds of energy and money from the two roads that get it (neither of which wanted it originally, but neither could either let it fall into the hands of the other), it disrupts service patterns at least partially on all three roads involved, it breaks up the operating team of those employees (who lost a lot of spirit), and resulted in a lot of commotion and confusion overall.

    I guess it’s another example of broken government.

    Would somebody explain to me how anybody can still support either political party, in particular the Repugnant Ones, after seeing this sort of nonsense over and over?

    Heck, you feel like a chump even for supporting the country!

    adirondacker12800 Reply:

    And left us with two railroads that won’t share their tracks with passenger service…. If it was still Conrail it would have been much easier for the government to lean on them to allow it in a reasonable fashion.

    Tony D. Reply:

    I…I…I actually (gulp!) agree with Donk. Seriously, if privatizing the rail line means construction/improvements happen sooner rather than later on the NEC, then what the heck? Are we really concerned that private operators would raise train fares to levels equal to or greater than air fares? The current model works on the NEC and would probably continue even if the line was privatized. Maybe something to consider for our HSR project, especially if the Fed’s remain tight with funding.

    joe Reply:

    “if privatizing the rail line means construction/improvements happen sooner rather than later on the NEC,”

    So if the magic ponies dance on marshmallow clouds while the lollipop guild and sparkly fairies joint hands and sing, our Wall Street Overlords will lend hundreds of billions for improving rail so they can make a modest profit.

  11. Andre Peretti
    May 27th, 2011 at 09:04
    #11

    Future high-speed lines in France are planned as PPPs. The consortium demanding the smallest amount of public funds wins the bid. It gets temporary concession to collect tolls from rail operators. A consortium usually is a partnership of a giant construction company and several banks.
    This system has proved very successful for highways and has allowed France to catch up with Germany in two decades. Quality is high and potholes are unknown, which always surprises Americans driving in France.
    The earlier highways were financed the traditional way and were plagued with delays and cost overruns leading to inquiries and heated debates in Parliament, with work often suspended for months until addional funds were voted.
    With PPP, there are no cost overruns and work is often completed earlier than mandatory because the consortium’s interest is to start operating as soon as possible.
    Privately-run highways are making profits earlier than anticipated, and some people think concessions should have been shorter than the 40 years awarded in contracts.

    Successful PPP implies big mutinationals aggressively bidding against each other. The Buy-American system won’t allow that and you can expect costs to be 2 or 3 times higher than they would be in Europe.

    adirondacker12800 Reply:

    Quality is high and potholes are unknown, which always surprises Americans driving in France.

    Surprises Real Americans(tm) driving in France. It doesn’t surprise the unreal Americans from the Northeast and Midwest who drive on toll roads.

    Andre Peretti Reply:

    In France, the difference between public and private highways is mostly noticeable in how maintenance is done. On private ones, it’s done quickly and efficiently to reduce traffic disturbance to a minimum.
    On public ones, they will close one or two lanes, then place signposts explaining that work by the region’s technical services is under way but you might not see any actual work being done for days. Meanwhile, traffic flow from three lanes is threaded into a single one, with the results you can imagine.
    For a private highway, the driver is a customer whose opinion counts. For a public one, he is just a user.
    When you let functionaries and politicians run things you always get inefficiency and cost overruns. Private companies are always better at it, provided real competition exists and bid rigging is severely punished (Siemens had a taste of that when it was fined €1 billion).
    Even state-owned companies now work like private corporations and the change in mentalities is obvious on the signs you can see at stations or in post offices. In the old days it was “Avis aux usagers” (warning to users). Now, what you see everywhere is “Cher client” (dear customer).

    Alon Levy Reply:

    And yet the proposed PPP for the LGV Sud Europe Atlantique has about twice the per-km cost of the non-PPP for the second phase of the LGV Est…

    Andre Peretti Reply:

    This is due to the fact that a lot of it will have to be elevated, either because of geography or the impossibility to cross sensitive zones, including super-expensive Bordeaux vineyards, at ground level. The ecologists’ intention was to kill the project altogether. They failed, but succeeded in making it costly.
    French ecologists are pro-rail but many are anti-TGV for various reasons. According to them:
    – it is partly responsible for France’s addiction to nuclear electricity (80% of it is nuclear).
    – it encourages people to travel long distances for futile reasons, needlessly wasting energy.
    – it disrupts the natural relationship between cities and their regions. They give the example of Tours, a city 135 miles from Paris. It used to be a “real” city. The TGV has put it at less than an hour from Paris, absorbing it in the commuting belt and transforming it into a dormitory town.
    These people are a tiny minority and 99% of the French want more TGV, not less.

    Miles Bader Reply:

    A “dormitory town”… ?

    I don’t know about French ticket prices, but it seems pretty likely they’re too high for the average Joe to use the TGV for daily commuting, even if it’s technically possible… (maybe the rich can, but they don’t really matter in the grand scheme of things)

    Alon Levy Reply:

    Tours-Paris is €24 one-way if you reserve far in advance. It’s closer to long-distance commuter rail fares on the NEC than to Amtrak fares.

    Andre Peretti Reply:

    They generally have monthly passes partly paid by their employer. And fares are tax deductible.
    Many of them are people who left Paris and its sky-high rents to live in a nice house or apartment in Tours for half the cost.
    Tours is just an example. When people marry and have chidren they tend to leave downtown Paris but they don’t move to suburbia where they would feel foreign. They want their chidren to grow up “in France”, so they leapfrog greater Paris.
    The TGV is expensive if you buy your ticket at the station just before boarding the train.

    Andy M. Reply:

    The rich do matter. You can observe the same in Britain. Now that house prices in London have risen beyond anything that is humane, even the rich are feeling the pinch and moving out. Places like Bath, which are about an hour outside London by train (but much much more by car) are seeing rich London bankers gobbling up all the nice properties downtown with the result that locals can no longer afford them and the locals are having to move out of town and so we see secondary commuting patters emerge, poorer people commuting to the places where richer people live and those richer people commuting to places where the ultra rich live.

    What Britain and France have in common is an assymetric and totally capital-centric development, leading to one mega city and the rest of the country being much smaller cities, and hence the transportation system (and especially trains) being star shaped out of that mega city. This is a result of that.

  12. Useless
    May 27th, 2011 at 09:20
    #12

    I am actually for the privatization of Northeast Corridor, because foreign railway operators could provide better service for both local and high speed trains, and this would help to further reduce traffic from the road and air.

    And if the Northeast Corridor is sealed off from outside traffic, then FRA regulations doesn’t apply and lighter UIC trainsets could be used in their places.

    adirondacker12800 Reply:

    And if the Northeast Corridor is sealed off from outside traffic,

    Telling the commuters on VRE, MARC, SEPTA, NJTransit, LIRR, MetroNorth and MBTA that they can’t go to the station in their respective downtowns isn’t a viable option. SLE would disappear altogether since it runs only on the NEC.

    Alon Levy Reply:

    And if the Northeast Corridor is sealed off from outside traffic

    You really have no clue, do you?

    Paulus Magnus Reply:

    Now now, just because commuter rail runs five or six times many trains per day as Amtrak and it is a vital fright corridor, that is no reason we couldn’t seal it off from traffic other than high speed intercity.

    Alon Levy Reply:

    It’s not really a vital freight corridor. There’s some freight running at night, but not a lot, and if I’m not mistaken it’s all on segments that are four-tracked or will be soon. (The reason I’m insisting on this is that part of an NEC upgrade program must be high superelevation, and the real limit to cant excess is freight, since passenger trains can run at just as high a cant excess as they can a cant deficiency.)

    adirondacker12800 Reply:

    What are the people on Long Island supposed to do with their garbage? Most of it leaves via the Hell’s Gate Bridge. It’s one of the reasons they are pushing for the freight tunnel. makes the trip to Ohio and back much shorter.

    Alon Levy Reply:

    Hell’s Gate Bridge has separate passenger and freight tracks. Always had.

    political_incorrectness Reply:

    There is no point in doing that considering all the curves and slowdown section there are on the corridor. I would post a link to a trackmap but it went offline last month.

    Alon Levy Reply:

    http://pedestrianobservations.wordpress.com/2011/05/23/new-york-area-track-maps/

    Alas, I haven’t been able to find the maps east of New London.

    political_incorrectness Reply:

    I did have the RI track map but my hard drive failed two weeks ago.

  13. Emma
    May 27th, 2011 at 11:32
    #13

    As I said a few times before. $117 billion must be a joke. It’s as simple as that. Amtrak did the worst job putting this projection together. I’m sure if you gave CHSRA the job to calculate the cost of an all-new high speed rail line in the NEC, you’d probably calculate about $50 billion. Not more.

    Amtrak must begin to live in reality. There probably more than a thousand ways to reduce costs. You don’t need a brand-new multi-billion dollar station in every city. Every heard of renovation? You also don’t need tracks capable of running trains at 190mph everywhere.

    I say, give $50 billion to Deutsche Bahn or SNCF and let them design the best HSR system that the money can buy in the NEC. I’m sure it would still be better than the $117 billion plan.

    BruceMcF Reply:

    Its year of expenditure for 2030 to 2040 ~ discount it to current dollars, and its somewhere about $50b in 2011 dollars.

    Alon Levy Reply:

    According to you.

    Joey Reply:

    The details of the plan are consistent with major overbuilding.

    BruceMcF Reply:

    It does seem to be a channeled design, in that its built on top of the NEC buildout plan, and then they assume their buildout hits capacity at 2030 and then ask where to go from 2030 to 2040, and what should have been done from 2020 to 2030 to be in a position to get there.

    And then the NextGen collects all sort of wishlist projects for faster transits though the urban areas along the way, mostly tunneling, and the cost of that tunneling and the YoE inflation to the time when that tunneling is projected to occur, a generation from now, makes for a massive sticker shock program.

    If you look at the current system, an earlier buildout NYC to Boston would leapfrog some of the problems that they are spending money on in the NEC buildout to fix, and then the NEC buildout NYC to Boston is likely to be cheaper because it is an intervening populations to either side corridor and the corridor aiming to connect NYC to Boston is the new corridor.

    On that design approach, you’d look to getting the effective connecting into Manhattan and downtown Boston and the most cost effective corridor for getting the express HSR corridor between those two ends. Perversely, doing it sooner makes the YoE cost lower, though the present value cost is higher ~ but fortuitously, many of the wishlist projects drop out. Including a connection between Penn and Grand Central in a HSR corridor budget, for example, seems to me to be a clear example of wishlist bundling.

    adirondacker12800 Reply:

    a connection between Penn and Grand Central in a HSR corridor budget

    NJTransit to Grand Central solves the Grand Central to DC problem neatly. They solved the Grand Central to Boston problem in 1889 and the Boston to DC problem in 1917. Though a tunnel from New Rochelle to Linden would probably speed things up greatly.

    Alon Levy Reply:

    And then the NextGen collects all sort of wishlist projects for faster transits though the urban areas along the way

    Yeah, that’s exactly overbuilding. All trains are proposed to stop in Philadelphia; the Market East tunnel would save fractions of a minute, and would be 10% of the project budget. Similar, Charles Center is an alignment so expensive that in the EIR for the B & P Tunnel replacement it was rejected on cost grounds.

    The various commuter-oriented inclusions tell me that Amtrak is still engaging in rent-seeking and agency turf, trying to subsume various commuter projects that would be under the purview of local agencies. The worst thing about it is that such useful projects as straightening the Metuchen curve get the shaft, while useless ones that Amtrak mistakenly thought the local cities cared about such as Market East hog a huge fraction of the budget. This is concrete before organization, the opposite of the way it works in countries that care about cost control.

  14. Paulus Magnus
    May 27th, 2011 at 12:37
    #14

    Leasing the track rights or selling a concession on the track itself, with the revenue so garnered being ploughed into upgrading the lines, is quite frankly a far better solution than letting Amtrak continue with it’s half-baked proposals along the NEC.

    BruceMcF Reply:

    Is that what is likely to emerge from a “privatize the NEC” push? Normally what comes from a privatization is public subsidy of private profits, since the public subsidy of private profits was the core objective of those pushing for the privatization and all the other argument was added after as a means to achieving that objective.

  15. Ken
    May 27th, 2011 at 15:21
    #15

    I’d only be for privatizing rail if it were allowed to be own by foreign rail companies like Deutsche Bahn, SNCF, or JR East.

    Anything else would clearly be the Great American Railcar Scandal all over again. Will not trust any American corporation to head any passenger rail system in the US.

    Ken Reply:

    Adding addendum, this can actually work as now due to a Republican sponsored law, foreign companies can now lobby directly in Congress. This USSC ruling can be used to backfire against these conservative Republicans by letting the NEC run by foreign passenger rail companies.

    I’d like to see how they feel when they find that how they planned to prove that it doesn’t make money backfire against them when capital from Germany, France, and Japan rolls into make huge improvements to the NEC experience. LOL

    joe Reply:

    I fear the foreign corporation, freed from their foreign government regulations at home, will run our unregulated infrastructure like we run Chiquita banana farms in Central America.

    Alon Levy Reply:

    Yep, pretty much. Read up on Skanka’s bribery in Argentina.

    Andre Peretti Reply:

    As a Frenchman, I’m not convinced SNCF would do any better than an American company in the same environment.
    Rail is politically charged in the US while it’s neutral in France. A project started under a socialist government will continue unchanged under a conservative one.
    Remember the French had invested money in the 90s and secured concessions for the “Texas TGV” and “Florida TGV” only to see the governors cancel them even though no public funds were asked for.
    I can imagine SNCF being consultants as in Taiwan or Korea, but not running a network. Too many landmines. Only American managers know where to tread.

  16. joe
    May 27th, 2011 at 15:28
    #16

    “ith the revenue so garnered being ploughed into upgrading the lines,”

    That’s not privatization.

    Privatized railroads extract profit for shareholders, let the track fall into disrepair and then file for bankruptcy to break all contract agreements. Then more profit.

    Paulus Magnus Reply:

    I was referring to the revenue paid by the private partner to the government for the concession or lease. Although an alternate way to do the concession, and perhaps more reasonable, would be to give the infrastructure for free, but require certain upgrades to be made (for instance, give the NEC, but require regularly scheduled service by at least two daily trains with travel times of 2 hours between NYC and DC by 2030 with potential loss of concession and penalties of 1 billion per minute above that time should it not be met).

    Alon Levy Reply:

    Some do, some don’t. JR East is actually doing good work.

    Miles Bader Reply:

    Exactly; JNR seems to be an example of privatization done properly (unlike, for instance, the UK).

    [and Japan in general, with its many private rail companies, shows how well purely private rail can work — high-quality infrastructure, excellent maintenance, and aggressive pursuit of expansion and improvements.]

    Of course there are lots of variables, and it’s obviously very possible to screw things up if sufficient care isn’t taken. Privatization done as it was in the UK, for ideological reasons, in pursuit of a bullet-point on campaign literature and a knowing wink from one’s friends in the roads lobby, by people who would actually be rather pleased if the result simply fails, doesn’t inspire confidence. Unfortunately the Republicans’ plans probably fall into this latter category…

    Andre Peretti Reply:

    Chopping British Rail into tiny unmanageable bits was really insane. I wonder if they really intended rail to survive.

    adirondacker12800 Reply:

    Dagny Taggart was going to come out of retirement from her villa in Galtland to make it all work.

  17. D. P. Lubic
    May 27th, 2011 at 18:40
    #17

    It seems appropriate to bring this in here:

    http://www.mccombs.utexas.edu/faculty/michael.brandl/main%20page%20items/Kennedy%20on%20GNP.htm

    The above is but a quote from a larger address. The complete address is included below for reference. Keep in mind it was delivered in March of 1968, at the height of the Viet Nam conflict, hence the references to it.

    http://www.jfklibrary.org/Research/Ready-Reference/RFK-Speeches/Remarks-of-Robert-F-Kennedy-at-the-University-of-Kansas-March-18-1968.aspx

  18. Chris
    May 27th, 2011 at 18:44
    #18

    I think the lesson of Taiwan is somewhat missed. Taiwan saved itself a great deal of money in rail construction through the large-scale private investment (vs. full public funding for the same investment).

    What cost a lot of money was the (effectively unrelated and entirely separate) decision to save the investors, particularly the banks, in that operation from losing money when the initial business structure spectacularly failed. But the bailout was not needed to maintain HSR service or ensure the completion of key elements of the line that remained unfinished. There’s reason to expect that the same type of bailout would occur in the US, of course (cf. GM or Goldman Sachs or Bank of America), but it’s not per se a consequence of using public financing for HSR.

  19. Walter Sobchak
    May 28th, 2011 at 09:58
    #19

    I guess Mica’s definition of the NEC is New York to Washington, because north of New York the tracks are owned by the MTA and state of Connecticut, and there’s no way they would sell their trackage so a private company could run more trains to Boston. The towns of Fairfield, Darien, Westport, Greenwich, and Stamford are too dependent on Metro-North, and actually make money off parking permits at their stations, to allow less Metro-North service to give private trains more space. It just won’t happen, and if it is a Republican Congressman from Florida that suggests it, then there will be even more resentment and push-back.

    Amtrak is the only agency that actually knows how to deal with CT or NY, and has a very good relationship (it already runs Shore Line East and the Empire trains to ALbany and Buffalo) that a private entity just wouldn’t have. I could only imagine how a private company would deal with building a new line in the I-84 corridor while dealing with NIMBYs and the hilly terrain. It would be a debacle that would probably leave the line unfinished and the landscape scarred, and the government would have to step in anyway to bail them out. We may as well skip that step and give Amtrak a shot.

    VBobier Reply:

    I agree, A privatized Amtrak sounds just like Taiwan all over again, A Big mistake, The Repugs are more interested in dissolving all Government functions, Regardless If their popular, Lincoln would have called It Acts of Sedition. Public anything must not be sold, What’s next? Privatize our Military…

    Alon Levy Reply:

    Amtrak’s relationship with Metro-North gave it 3″ cant deficiency and a 75 mph top speed. If that’s a good relationship, I don’t want to think what you’d define as a bad relationship.

    adirondacker12800 Reply:

    What incentive does CDOT have for making the track any faster?

    Alon Levy Reply:

    “We tilt on your tracks, or else you can forget about Shore Line East service, and once we have a chat about Penn Station with the MTA you can also forget about Metro-North trains ever crossing the state line.”

    I’m sure there’s a more consensual solution, but in the tradition of American business and railroad wars, this is what an Amtrak that cared at all about train performance would do.

    adirondacker12800 Reply:

    Amtrak doesn’t control Woodlawn Junction or Grand Central.

    Alon Levy Reply:

    Metro-North wants to go to Penn Station, and the LIRR is flat out incapable of moving all operations to Grand Central. Amtrak still has some power.

    Mind you, this is the third worst option, after keeping the status quo and constructing a nose-bleeding expensive inland alignment. The best option is to have Amtrak pay for track upgrades on the segments it wouldn’t bypass. The slowest segment is Bridgeport, which must be bypassed, but the second slowest is from Greenwich to Stamford, where the ROW geometry is fine. There Amtrak can and should pay for 200+ km/h track upgrades, minor curve surgery, and raising the Cos Cob Bridge. Another segment where this could benefit both intercity and commuter trains is Milford-New Haven.

    adirondacker12800 Reply:

    It’s difficult to get an Acela from New Rochelle to New Haven without the MetroNorth’s cooperation. But MetroNorth can get riders to Manhattan without Amtrak’s cooperation. Who has the upper hand here? 90 minutes from New Haven to Grand Central is good enough for CDOT. What incentive do they have to improve the track?
    The LIRR has rights to enter Manhattan, not the PRR. I’m sure Amtrak doesn’t want to have the state of New York pull out documents from the 19th Century that will hold up in court.

    Alon Levy Reply:

    The MTA wants Penn Station access for Metro-North (and CDOT wants to keep using the Shore Line east of New Haven!). And CDOT isn’t willing to spend money on better service; reforming the dispatching is another matter, one that deficit hysterics don’t have as much of a sway on.

    adirondacker12800 Reply:

    Amtrak need MetroNorth more than MetroNorth needs Amtrak. And Amtrak needs the LIRR more than the LIRR needs Amtrak. Especially since the railroad with the charter to serve Manhattan is the LIRR.

  20. Useless
    May 28th, 2011 at 17:20
    #20

    The preview of CAHSR construction bidding from Brazil HSR project.

    http://economia.estadao.com.br/noticias/economia+brasil,coreanos-franceses-e-japoneses-sao-os-mais-envolvidos-no-tav-diz-antt,68954,0.htm

    According to latest updates on Brazil HSR project bidding, Japanese consortium offered a $10 billion loan to match $11.8 billion Brazil government loan to construct the project. Koreans too offered a similar matching government loan. Brazilian government is talking to French government about providing a similar loan scheme.

    Chinese bidders are a no show. Seems that the bribery scandal that produced 10,000 km of sub-standard HSR tracks put a chill to China’s overseas HSR expansion ambitions, because Chinese are a no show in Brazil and Chinese railway ministry suspended the construction of two Chinese HSR corridors for a review.

    Even with just French, Japanese, and Koreans bidding on CAHSR project, at least 40% of matching funding could be sourced from a foreign government.

    Useless Reply:

    The same foreign government funding maybe true of the Northeast Corridor, where a foreign government maybe willing to fund the cost of modernization if the corridor valuation is 50~60% of the total modernization cost.

    Alon Levy Reply:

    Please, please understand what the issues are for the NEC. They’re by and large not technical. There are problems with the catenary, some curves, and some bridges, but those are not expensive to fix, especially south of New York. The line is by and large straight south of New York, and the tracks are built to high standards. The problem is entirely regulatory, and a private consortium isn’t going to fix that.

    Useless Reply:

    @ Alon Levy

    Mica wants to privatize Northeast Corridor to avoid having federal government pay for $100 billion in upgrade cost. And only a foreign government could come up with tens of billions of dollars in loan to make this happen.

    Paulus Magnus Reply:

    Nonsense. Apple Computers could do it on their lonesome (65.8 billion dollars in reserve). A consortium of banks spreading risk amongst themselves could easily do it as well.

    Useless Reply:

    @ Paulus Magnus

    > A consortium of banks spreading risk amongst themselves could easily do it as well.

    http://www.boston.com/business/articles/2011/05/27/rail_plan_would_oust_amtrak/

    “Senator Frank Lautenberg, Democrat of New Jersey, said investors would want a profit, so tickets would cost more.”

    Yup, wall street banks investment means higher ticket prices.

    Andre Peretti Reply:

    The only foreign country that could come up with such amounts is China. Other countries can only guarantee bank loans, which gives the loans the same rating as that of the country guaranteeing them.
    Foreign companies, even big ones like DB or SNCF, don’t have enough reserves. The SNCF, for instance, currently has less than $3 billion in reserve, not even enough to upgrade its own fleet.

    Alon Levy Reply:

    Did you even read the $100 billion proposal? It’s full of chaff, bad attempts at providing sops to the local urban boosters (Charles Center, Market East), and full separation of tracks from other traffic to appease the FRA. Under rational regulations, the NEC upgrade would be a $10 billion project.

    Useless Reply:

    @ Alon Levy

    > the NEC upgrade would be a $10 billion project.

    I do think it will cost more than that, because of the need to bypass bottleneck segments.

    Never the less, a 2 hour travel from New York to DC with minimal investment is possible, a 2 hour trip from Boston to NY not so much and this will cost tens of billions.

    Miles Bader Reply:

    Hmm, I notice that the Tokyo-Nagoya section of the Chuo Shinkansen project (recently given the final go-ahead, apparently) — full-on maglev HSR, 286km of completely new line which will be largely in deep-bored tunnels through mountain ranges — will apparently cost about the same…

    Something doesn’t seem quite right here… :O

    Andre Peretti Reply:

    In what concerns France the funds would be loans from banks with government guarantee. The French were said to be favored bidders until president Sarkozy took a hard line on Iranian nukes and refused to support Brazil’s mediation offers.
    As for the Chinese, although they offer far better financial conditions than the others, they lose on technical credibility. There is a rumor that their trying to bribe everybody as they do in Africa was highly resented in Saudi Arabia and caused their bid to be discarded.

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