New President, Different Congress, Same Old Politics with the Media still long on spin and short on facts   March 1st, 2009

Editorial by Noel T. Braymer

After the customary political fun and games, President Obama got an Economic Stimulus Bill which will pump 787 Billion dollars into the sinking economy.

Despite the pre-inaugural emphasis on infrastructure construction, the final total for infrastructure was around 100 billion dollars. This pales against the estimated 2.2 Trillion dollar back log of deferred maintenance according to the American Society of Civil Engineers. There is about 48 Billion of this for transportation. Of this Mass Transit is budgeted to get 8.4 billion, Amtrak gets 1.3 billion and at the last minute High Speed Rail construction got 8 billion. Rail did very well in this bill.

Now comes the hard part. The Mass Transit money can only be used for capital projects. Most transit agencies are now short on funds for operations and being forced to raise fares and reduce service. In California transit funds are being raided to try to balance the state budget. On the Amtrak bill, 450 million dollars are for capital security grants. That leaves 850 million dollars for other capital projects. The bill requires that the NEC is limited to 60% of the funding. In theory that leaves 340 million dollars to be used outside the NEC for capital projects. This can include passenger cars and locomotives. Compare the Amtrak budget to that of Belgium which recently announced an order of 7 billion dollars for new locomotives and passenger cars for delivery by 2011. This is enough for an order of over 2,000 Superliner cars for a country about the size and population of Los Angeles and Riverside Countries combined.

The surprise was the funding for High Speed Rail. The House version of the bill had zero for High Speed Rail, the Senate version had 2 billion. Usually when a bill is in conference committee there is a compromise of the two versions. The final bill had 8 billion! A rumor soon spread that Senate Majority Leader Harry Reid of Nevada put the extra money in to fund the Anaheim-Las Vegas Maglev project. Senator Reid makes no secret of his support of Maglev. The Stimulus Law however gives the Federal Railroad Administration (FRA) the job of distributing this money not Congress. It has since come out that the White House had asked for 10 billion for High Speed Rail and 8 billion was agreed amount in this bill.

There are 11 corridors competing for High Speed Rail funding.
The California High Speed Rail Authority was hoping for 2 billion dollars from the stimulus bill. They plan to use this to electrify Caltrain, grade-separate the railroad between Anaheim and Los Angeles and build storage and maintenance yards in the Bay Area, San Joaquin Valley and Los Angeles. Caltrain Electrification and grade separation of the tracks between Los Angeles and Anaheim have been in the works for years and are “shovel ready”. The California HSR project is considered the closest to start up of the 11 competing High Speed Rail projects and in the best position to qualify for Federal funding. However California now has the worse bond rating of all the states and the recently approved budget is hardly “balanced”. It may be some time before the state can issue any of the voter approved bonds for High Speed Rail.

More passenger equipment is a priority for expanded rail service. Amtrak now only has 1645 rail cars and only 1345 of those available for service. This is down from 2896 just in 2002. Even an order of 200 cars would seem like a huge order by today’s standard which would cost at least 600 million. It would take at least 10 years building 200 cars a year to build 2,000 cars which would still be a fairly basic level of service in this country. But we have to start somewhere. There are no American manufacturers of passenger rail cars. Siemens of Germany has a factory for Light Rail vehicles in Sacramento. Rotem a subsidiary of Hyundai of South Korea has a factory in Philadelphia and is building the 107 new cars for Metrolink. Bombardier of Canada is the only North American Passenger Car Builder. They often use American suppliers for American projects. We are going to need experienced car builders to make the number of rail cars we will need for future growth.

This current stimulus bill is only the first step. The bigger problem for the economy will be the banking system which is basically insolvent. One spending bill which will be spread out over the next 2 years will not solve the current problems. In 1936 after three years of President Franklin Roosevelt’s Administration the US economy’s Gross Domestic Product was back to the level it was in 1929. Spending was cut in the belief that the economic problems were solved in 1937. The result was a recession, a drop in the Gross Domestic Product and increase in unemployment. After 1937 domestic spending has not cut again until America’s entry into World War II.

This entry was posted on Sunday, March 1st, 2009 at 11:05 AM and is filed under Editorials.