Strickland Admits High-Speed Rail Won't be High-Speed Anytime Soon

Strickland Admits High-Speed Rail Won't be High-Speed Anytime Soon

GOA Says FRA High-Speed Rail Initiative a "Vision...not a strategic plan."

Chicago-St. Louis Rail Corridor Gains Speed as 1st Route for Midwest Corridor

An Opeditude by John Michael Spinelli

June 25, 2009

COLUMBUS, OHIO: Calling into a rough and tumble, shock-jock radio show broadcasting from Cincinnati Wednesday, Ohio Gov. Ted Strickland said Ohio needs to be included in the passenger rail system known as the Midwest Corridor, but admitted that Ohio's system would only run at slow, conventional speeds "in the near term" and that if ridership was poor, real "high-speed trains would not run in Ohio."

Strickland, a first-term Democratic Governor readying to mount a second-term campaign in 2010, spoke for a few minutes on the powerful station, answering a couple questions on his most recent proposal to plug a $3.2 billion hole in the next state budget, which by law is to start July 1. As Strickland and the Ohio House and Senate wrestle to find accommodation with each other on hundreds of differences between versions of the state budget each chamber passed in the preceding month, the political drama of who will win the day, and at what cost, is only starting to unfold. If this state budget were a weather event, high tides and fierce winds can be seen approaching on the horizon.

Eddie and Tracy, the hosts of the radio show heard on WLW700am, set the stage prior to Strickland calling in by stating their hostility for the Governor's passenger rail proposal. Jibberjabbering to kill time until they could throw questions at Strickland, the duo demonstrated their anti-rail plan bias, saying everyone they had talked to thought his idea to resuscitate long-dead passenger rail service between Cincinnati and Cleveland via Columbus or the 3-C Corridor was "a horrible idea." Others have said that if a billion dollars is going to be spent on it, it ought to at least be fast. But speed, the one essential ingredient that will attract riders, will be absent. Based on speed calculations from the Ohio Department of Transportation, the passenger train will only average 57-mph, a truly turtle pace.

Buoyant and optimistic despite the sour, declining economic health of the state and its next budget, Strickland again repeated his warning that if Ohio didn't take advantage of federal stimulus dollars being handed out by President Barack Obama's administration for the development of high-speed rail (HSR), Ohio will "be an island...because we won't be hooked into a system that involves entire Midwest."

Talking in general terms, Strickland said that if people had real choices of other modes of transportation, "they wouldn't need a car." But Ohio has cut its funding for mass transit by 60 percent over the last decade and intra-city/regional bus service is only poor at best, if it exists at all. Responding to the simple question of what's the economic upside to the state for a first-phase, conventional speed passenger train system that will cost a minimum of $1 billion to build, all the upbeat Governor could say is that all Ohio's "sports teams are urging him to proceed." One can only wonder how enthusiastic those sports team would be if they had to reach into their wallets to pay for it. Such user-fee revenues are fast becoming a tool of choice Washington is looking to more and more, as its spending comes into question by many who say huge deficits will break us all over time.

But even given what he called "modest" yearly public subsidies the system would need to cover its costs, Strickland said investing in passenger rail is less costly that investing in highways. But roads and bridges are what tie us together now, and as cars become more fuel efficient and cooler in terms of technology, drivers will opt for the privacy and convenience of their cars instead of trains that, after a six hour or more slow ride to the past, will dump them in urban cores where other transportation modes are slim to none, affectively marooning them at their destination.

"We won't establish high-speed rail in the near term," said Strickland, adding that spending upwards of $400 million was a "fairly modest first-step that would establish regular-speed [@ 79-mph] rail service." But putting the caboose before the engine, Strickland, whose job approval numbers have been ebbing as Ohio continues to lose hundreds of thousands of jobs on his watch, said, "if people didn't support it to justify further investment, then we wouldn't have to go to high speed." But for Strickland and his railroad advisers at ODOT, top high-speed means reaching 110-mph, a far cry in reality and cost from the HSR speeds Euro-style trains reach, which top out at 220-mph or more. But even with slick trains that fly along specially built, exorbitantly priced tracks that by design minimize cross traffic or signaling, even France's famous TGV trains have average speeds of 120-mph or less for their trips, according to reputable rail sources.

Strickland likely had not read through the seven-page testimony given Tuesday by Susan A. Fleming, Director of Physical Infrastructure Issues for the US Government Accountability Office (GAO) to the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safey, and Security, Committee on Commerce, Science and Transportation of the US Senate.

If Strickland or his Director of Transportation have read it, then they know the GAO has concluded that, while the potential benefits of HSR projects are many, "these projects--both here and abroad-- are costly, take years to develop and build, and require substantial up-front public investment, as well as potentially long-term operating subsidies."

Furthermore, Fleming said President Obama's allocation of a paltry $8 billion for HSR is more a "vision...than a strageic plan," and that the Federal Railroad Administration (FRA), the agency his Director of Transportation headed during the Clinton Administration, has "not established clear goals for the federal government in high-speed rail--other than establishing a 'longer term goal of developing a national high-speed intercity passenger rail network of corridors'--and does not define a clear federal role for involvement in high-speed rail projects other than providing Recovery Act funds."

Fleming said the $8 billion allocated to HSR development is "only a small fraction of the estimated costs for starting or enhancing service on the 11 federally authorized high-speed rail corridors." Sustained funding for HSR will come at the cost of taking federal funds away from other national priorities like health care, national defense, and support for ailing industries, which Ohio has a lot of these days, as Detroit's Big Three automakers try to reinvent themselves or face extinction in the marketplace.

Even though the 3-C Corridor is on the periphery of the federal Midwest corridor, the heart of this system is Chicago, which all train watchers expect to benefit from handsomely, given President Obama's long ties to Illinois and the Windy City, his home prior to the White House.

Making the point that Ohio, where passenger trains stopped running nearly 42 years ago and whose rail plans are so ill formed when compared to plans of states around it, likely won't fair well in snagging any meaningful Obama dollars, the governors of Illinois and Missouri, Quinn and Nixon respectively, have teamed up to lobby for an important share of Midwest Corridor funds to complete a high-speed train route connecting Chicago to St. Louis. For Michigan Governor Jennifer Grandholm, Chicago is at the other end of a HSR route from Detroit. And for Ohio, Toledo should be more energized to connect to this route, because it will be a long, long time [if ever] until it is connected to an intra-state line that would link it to Columbus, the middle C on the 3-C route.

The fanfare of returning passenger rail service to Ohio has caused state and local officials to day dream about their village or burg being a stop on the HSR network. With the absence of state dollars in the near- or long-term to properly fund the astronomical amount needed to build a system that will still need public subsidies for as far as the eye can see into the future and that will never have the ridership capacity to make it eve break even because it will be so slow and time consuming, Strickland and his Transportation Director will need more than pom-poms and smiles to convince hard working Ohioans [those who still have jobs] that they should build and subsidize a system that only a handful of riders will ride.

The Buckeye Institute, a fiscally conservative research outfit based in Columbus, entered the fray over HSR yesterday, when it said the vision of licky-split passenger trains is just too costly to all of us and that few people would ride even fewer miles each year. Much of what the BI said appears to be sourced to Randal O'Toole, of the Libertarian think tank The Cato Institute, who makes a strong case against HSR but fails to identify viable alternatives.

But if Ohio is so desperate for cash that it is ready to shutter many of its libraries, eliminate basic health care coverage to many of its poor including children by cutting Medicaid payments and taking away food from food banks, is it really a smart move to venture down a costly path to subsidize freight rail companies who own tracks passenger trains must run on when so many other human safety nets have such gaping holes in them?

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. Spinelli on Assignment is syndicated by Newstex.com, can be followed on Twitter @OhioNewsBureau and available for subscription to Kindle owners. To send a news tip or make comment, email ohionewsbureau@gmail.com

Ho Ho Ho Help

Ho Ho Ho Help

Detroit Big Three, UAW Prepare for Bad Tidings

OhioNewsBureau

with John Michael Spinelli

Columbus, Ohio: Detroit's Big Three automakers and the United Auto Workers union may wake up Christmas morning to find nothing under their tree, if congressional Republicans and their lame duck president stand tough and not throw good money after bad by letting General Motors, Ford and Chrysler fall into bankruptcy, a scenario expert witnesses who also testified Friday said was not in the best interest of the nation.

The leaders of the Big Three car-makers, who this week drove to Washington in their most fuel efficient vehicles instead of flying there by fossil-fueled corporate jets as they did last week, did double duty by repeating their talking points, with hat in hand and a big tin cup, to the Senate and House. The three car stewards from Detroit asked lawmakers for about $34 billion. This amount, nine billion more than the troika said they needed last week, would be enough cash to get them past Christmas and maybe to March, when a new Democratic president and a stronger Democratic congress will do for them what President Bush and many of his party's fiscal conservatives won't do now, namely, keep about three million workers from joining the 1.9 million workers who have already lost their jobs this year.

But by Friday evening Democratic leaders, including Senate Majority Leader Harry Reid of Nevada, House Speaker Nancy Pelosi of San Francisco, Sen. Chris Dodd of Connecticut and Rep. Barney Frank of Massachusetts, agreed that a "rescue loan" to the nation's struggling domestic automakers was essential. Their decision came as The US Bureau of Labor Statistics greeted the nation with employment statistics that assured about 533 thousand workers will not have the same Christmas those with a job will have. The job loss number was powerful. It cast the recession economists now say started nearly a year ago in December as the longest one since the Great Depression. Today's BLS numbers are equivalent to tossing the entire state of Wyoming or the City of Seattle out of work. In November alone, the manufacturing industry lost 85,000 jobs, 82,000 thousand in construction and 91,000 thousand in retail. BLS officials said it was the worst report in three decades.

President Bush said he didn't want to redirect any of the $700 billion congress approved to bail out a sluggish, over-leveraged Wall Street to help the domestic automakers stay out of bankruptcy reorganization known as Chapter 11. The sentiment offered by Mr. Bush and fellow Republicans -- that throwing money at companies that may not survive -- were echoed by Mark Sanford, the governor of South Carolina. He said bankruptcy was the only way to "break certain relationships...like labor contracts" and believes Washington has provided enough stimulus already. He said $ 7 trillion in stimulus already is enough and Washington printing more money can't continue. He defined Detroit's situation as a problem of too much debt, the declining value of the dollar and not working hard enough in a market based economy to get rewarded. But foreign car companies, some in Republican districts, were hurting, too, as seen by a 50 percent downturn in Toyota stock. A fall off in car sales is no doubt linked to Americans who don't have cash or cannot get credit to buy one, or who don't have a job anymore.

One Ohio senator, Sherrod Brown, who sits on the Senate Banking Committee chaired by Chris Dodd, said constituents in his state, where total auto-related employment is about 250,000, are worried they won['t have a job next year. "It's all about manufacturing, making things," she said, adding, "America has a middle class because we make things and export them." Brown, elected senator in 2006, said US trade policies need to be changed, a hope that may come true when his party's new president-elect, Barack Obama, comes to power in January along with a more powerful Democratic caucus in both legislative chambers. Putting people to work is as paramount for Brown, who said no one wants to "play a game of chicken" and political posturing at this time is unnecessary, as it is for Obama, who used his Saturday video to outline a massive infrastructure spending program he'll launch upon being sworn in president.

"I didn't want to vote for money for Wall Street or car makers, but I have to," Brown said, noting that no questions were asked of Wall Street bankers as they are now for Detroit carmakers and workers. "There's a class difference here; people working with their hands...AIG workers make multiples of what autoworkers make," he said in his signature gravely voice. "It's not a pretty sight," Brown said to Rachel Maddow of MSNBC.

House Banking Committee chairman Barney Frank, a Democratic leader who has called on president-elect Obama to get involved now in advance of his January 20 swearing in ceremonies, said the new deal is to loan Detroit's Big Three $25 billion in already approved energy funds, but reserve the right next year to use Wall Street money. Frank said no questions were asked of the big insurance giant AIG, whose leaders and workers make far more than their peers in Detroit. Frank also said the situation calls even more attention to solving America's health care problem, which places a financial burden on the automakers that in turn makes them less competitive than their foreign car rivals, whose government have universal health care. Lack of universal health coverage underscores the "stupidity of America's health policy" he said, noting that Detroit and other business would be better off in two years, after President Obama and Congress work toward a "rational health care plan." Frank, like other Democrats, said there is a distinct bias between blue collar and white collar jobs. One industry observer said people who "shower before work" are given carte blanch while people who "shower after work" are given the third degree.

News came a day later that the size of the bailout may be half what automakers had asked for.

After the car CEOs left he hearing room, a panel of other economic experts chimed in, saying Detroit could not be allowed to go bankrupt or out of business. Felix Rohatyn, a legendary financier who helped bring New York back from the edge during the 1970s, said lawmakers need to hurry up before it's too late. "From a popular point of view, it's difficult, but from a practical point, its' very doable," he said of the rescue loan.

David Friedman of the Union of Concerned Scientists Clean Vehicles Research Center said the rescue package should be structured as investment, not bailout. He said Detroit's survival depends on it, that taxpayers should get a return on their investment, that carmakers should drop their lawsuits to keep increased mileage standards imposed by California should be dropped and new cars should be made to produce cleaner cars and trucks.

Jeffrey Sachs of the Earth Institute at Columbia University said Detroit should not reorganize in Chapter 11. Sachs told lawmakers that Federal Reserve Chairman Ben Bernanke and Treasury Chairman Henry Paulson should both be more involved than they are. He called on Detroit to be pragmatic, restructure their balance sheets and models. "The double standard with Wall Street is painful and palpable and difficult to understand," he said. Sachs said if Detroit gets no help soon, they could meltdown by Christmas. "Unless they are driven to bankruptcy, ,they will survive and prosper," Sachs said.

But a witness like Edward Altman, a professor of finance at Columbia University, said just the opposite. He said the only hope Detroit has is to go bankrupt, where they can restructure and change their management.

One committee member, Al Green, a Democrat, took a pop quiz of the witnesses. He first asked them if the bailout of Wall Street was in America's best interest. All hands went up. He then asked if it was in America's best interest to help Detroit. Again, all hands went up. Pennsylvania Senator Bob Casey took on critics of auto union workers. He debunked the so-called “mythology” that auto workers make $70-an-hour as “scapegoating” and “garbage." According to the New York Times, the average U.A.W. member costs GM about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions. By contrast Toyota spends the equivalent of about $45 an hour for each of its employees in the United States. Base wages between the Big Three and the foreign companies are roughly comparable, with a veteran U.A.W. member earning $28 an hour at the Big Three compared to about $25 an hour at Toyota’s plant in Georgetown, Ky. (Toyota pays less at its other American factories.)

Senator Dodd is echoing the notion expressed here that Detroit should also manufacture mass transit vehicles, an idea one commenter said others dealt with "respectfully."

Michigan Governor Jennifer Grandholm, whose state unemployment figure is within spitting distance of double digits, said access to credit is what's stopping people from buying cars. She said 1 in ever 10 jobs in the nation are tied in one way or another to car makers, and that for reasons of energy independence and economic security, Detroit must not allowed to fail. Meeting with the nation's governors in Philadelphia, where they asked president-elect Obama to ride to their rescue next year, Grandholm, who said her state was the poster child of the sagging economy, said no one wants people living on a "safety net system." She implored that people be given a chance at dignity, retrained in innovative ways instead of the slash and burn philosophy of Mr. Bush and others, like Alabama Senator Shelby who told the car makers he doesn't want to fund them. She said not giving people a second chance "is not American."

John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. To send a tip of comment, email ohionewsbureau@gmail.com