Steel Interstates and Using the Defense Budget to Improve National Security

This is the year that the funding authorization for the Federal Rail Authority expires, and the Obama administration is answering with a bold new plan to invest in this critical piece of any long term sustainable transport system, as described earlier this month at the Transport Polititic:

Total funding for rail activity, both for operating funds and capital projects, would increase from about $1.8 billion in 2013 to more than $6.5 billion in fiscal year 2014. Over the course of five years, about $40 billion would be devoted to rail improvement across the country, a massive expansion paid for with funds “saved” from ending military operations overseas. This would be headlined by a $5 billion “jump-start” stimulus for rail, part of a $50 billion infrastructure package the Administration is hoping Congress will pay attention to.

Of course, nothing was done in 2011, the last time an ambitious infrastructure investment package was proposed ... but there was no authorization bill expiring in 2011. These authorization bills run for five year periods, and in 2011 there was no necessity to do anything ... and so nothing major was really done, with all of the ambitious Infrastructure Bank plans shelved and the actual action involving haggling over how much to appropriate for various already authorized programs.

But ... the authorization is expiring, and so surely something must be done!

Well ... yeah ... but there is absolutely no requirement that anything good be done. And the negotiating range is quite broad, because the House Republicans have strong preferences of their own, as the Star Tribune of Minneapolis-St Paul reports on their current budget appropriation proposal:

WASHINGTON — House Republicans are pushing to eliminate money for high-speed rail and a popular grant program for transportation projects.
The measure is $4.4 billion below current levels required under automatic spending cuts known as sequestration.
Targets include "zeroing out" President Barack Obama's $3 billion-plus request for high-speed rail programs. A Transportation Department grant program first established under Obama's 2009 economic stimulus bill also would be eliminated, and $237 million in previously appropriated grant money would be rescinded.
Community Development Block Grants, a flexible source of money popular with local governments, would fall dramatically. Obama's $2.8 billion request would drop to $1.6 billion.
Amtrak's operating subsidy would decline by 21 percent, said Rep. Ed Pastor, D-Ariz., while the railroad's capital budget would drop by $352 million from levels approved in March and more than $1.5 billion below Obama's budget request. That would delay improvements along Amtrak's busy Northeast Corridor. 

It stands to reason that with the House Republicans wanting to zero out the High Speed Rail appropriation, their version of the transport authorization for the coming five years will simply not authorize High Speed Rail spending. The Senate version likely will authorize it, and it will end up being a bargaining chip on the table in reconciliation, with no way to predict what will happen to it.

Shifting the Terms of the Debate

Long distance sustainable transport is an intrinsically federal responsibility. So if any progress is going to be made over the next five years, it is necessary to shift the terms of the debate.

We presently have national defense and "homeland security" being used to justify massive amounts of pork for a wide range of welfare for the rich programs, with "border security" just one more massive windfall of government spending directed to divisions of firms providing "border security" systems and services that can only be more profitable if the government tosses more slops in the feeding trough.

At the same time, our current long distance transportation system is dependent on imports of roughly 60% of our petroleum. That dependency extends to the military, that is heavily dependent upon diesel fueled highway freight and jet kerosene fueled air freight transport. Even the long distance rail freight that the military relies upon for a substantial share of its freight transport requirements is dependent upon diesel fuel.

Meanwhile, the nation has sustainable renewable energy resources in excess of our total electricity consumption. Adoption of a national grid of electrified rail corridors, with 60mph heavy rail freight and 90mph express rail freight would allow a substantial portion of our long distance freight transport to be freed of reliance on the Strategic Petroleum Reserve in event of an extended supply disruption.

If the overhead electrical supply system is designed to also support Ultra High Voltage Direct Current (UHVDC) transmission corridors, they can also serve to connect renewable energy resource areas to consuming grids five hundred to a thousand miles distant, substantially reducing back-up power requirements.

As opposed to the crony "national" and "homeland" "security" projects, a Steel Interstate and Electricity Superhighway Network would provide actual national security and actual homeland security from the twin actual risks of losing access to overseas fossil fuel reserves and of the climate catastrophe implications if we retain that access and continue to put a catastrophic volume of greenhouse gases into the atmosphere.

So my proposal is to select the biggest bang for the buck long haul sustainable transport program, and place funding of the program in the Defense budget.

Mining Gross Inefficiencies to get Bank for the Buck

The inefficiencies of our current land-based long distance freight transport system are obscene. Even diesel fueled rail freight is about three times more energy efficient than equivalent road transport. Add the energy efficiency advantages of electric rail transport, and it is possible to achieve 10-20 times the energy efficiency ... that is, haul the same freight over the same distance at the same speed with 5%-10% of the energy.

Since the transport relies on electricity, and since the total energy requirement is reduced so dramatically, 10% of our current petroleum consumption can be replaced by a currently feasible increase in renewable electricity production.

However, we massively subsidize freight transport on Interstate Highways, with charges on road trucks falling far below the damage they impose upon the system. Meanwhile, we tax interstate rail corridors, which as private property are subject to property tax assessments in numerous municipalities large and small across the nation. Therefore, our nation's railroads have specialized in hauling the bulk freight where the ability to offer the rock bottom rate per ton-mile is a dominant advantage.

Aiming for rock bottom rates per ton-mile implies systems designed to haul loads at low cost. If that means that there is a several hundred mile stretch of single track with a train passing through in one direction at 30mph to 40mph, then a train heading the opposite direction is just held in a marshaling yard or on a siding until the track is clear for a train going the other direction.

So while the United States has the most effective bulk freight rail transport system in the world, the railroads have simply surrendered in a large number of time and speed sensitive freight transport markets where they cannot compete against semi trucks making heavily subsidized trips on the Interstate Highway System.

This is where the Steel Interstate system comes in. Under my proposal, the government would build and own the infrastructure that provides electrical power to the Steel Interstate corridor. The government would finance the interest cost for this construction. Electric powered trains would pay a user fee for use the electricity, and the user fees would refund the original investment.

The government would also build and own improvements to the rail corridor to allow higher speed rail traffic to run on the system without substantial interference from slower bulk rail. This would range from adding 10 miles of passing track for every 50 miles of single bi-directional track, through 10 miles of passing track for every 20 miles of single track, through converting single track corridors to double track corridors through triple tracked corridors with dedicated each way express track. Private freight trains using the government owned infrastructure would pay an access fee that would refund the original investment.

The dedicated express track would be "superelevated" (that is, banked) for balanced operation at 60mph, with the class of track to allow "unbalanced" operation of express freight at 90mph.

The planning would be performed and the program operated by STRACNET, the existing department of the Pentagon that overseas military use of strategic rail corridors. However, the ownership would be vested in special "Strategic Transport Development Banks", organized along the same lines as existing Regional Development Banks.

Leveraging Crony Finance for Useful Investment

Under depressed economic conditions, a government that is a monopoly issuer of its own currency can create money by spending it, without substantial risk of a runaway inflationary spiral.

Therefore our government could be responding to the current depressed economic conditions with substantial deficit spending on direct employment of the unemployed and substantial investment in infrastructure in support of freeing our economy from fossil fuel addiction.

However, instead, it is responding to the current depressed economic conditions with grossly wasteful spending on "national defense" programs that decrease our national security and "homeland defense" programs that propose to spend billions to choke off what is presently zero net migration over the border with Mexico. And via "Quantitative Easing", it is propping up Wall Street with cheap finance, essentially single-handedly creating a depression bull market.

This program takes advantage of this crony capitalism by dedicating a long term Department of Defense spending stream on the interest finance for dedicated Strategic Transport Development Bank construction bonds. At a 4% interest rate, a $1b stream of finance funding can finance $25b in construction. And with an open-ended financing commitment, as individual corridors are placed into service and access and user fees begin to be paid, those revenues can flow directly into new construction. When the system is completed, the flow of access and user fees will then begin to retire the outstanding bonds.

So $2b annually for the electrification / Electricity Superhighway program can fund $50b+ in electrification and UHVDC transmission corridors, and $2b for the strategic express rail corridor program can fund the same amount of construction of express rail improvements.

The original proposal by David Drake involved $450b for over 300,000 miles of corridor, so this proposal is looking at around 1/5 of that, or 60,000 miles of corridor. Over this summer, I would be taking another look at a system of 60,000 miles of corridor. The end result will have slightly different alignments than laid out in the above map, but will generally involve two East-West transational corridors and some cross-connecting corridors to cover the primary long distance road freight demands as mapped above.

I support the current proposals of the Obama administration. However, they are obviously highly unlikely to go anywhere. Sunday Train will therefore be keeping an eye on the horse trading to see what can be gained following the 1980's style thinking of the administration, while at the same time continuing to elaborate this 21st century approach.

Considerations and Contemplations

The Sunday Train essay is never presented as the final word on the subject, but rather as an ongoing work in progress. Any discussion of issues involving sustainable transport and sustainable energy is on topic, whether or not it is directly connected to this week's topic. I look forward to the coming discussion.





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It has reached the point that the more sensible the discussion

geomoo's picture

the more I'm certain it is that it will have no bearing on ultimate decisions.  I hope that is too cynical to be accurate.  It is just that seeing public policy reflecting actual clear thinking, even self-servingly so, is very rare these days.

Good for Obama for putting it out there.  In the past, he has shown little stomach for fighting for anything I care about, but perhaps this will be different.  It is discouraging to think how many irrational, ideological, and even pettily vindictive considerations regularly trump straightforward problem solving.  One of the constant obstacles these days is that money goes to entrenched interests, with their strong lobbies, irrespective of wise policy:  we build more prisons because the prison industry is fat off government spending, we build more weapons because the weapons industry has money for lobbying, etc.  If I understood this proposal, it would work to create interests groups pressuring for money to be spent on steeel rail out of their own self-interest.  Critical as are climate change and fossil fuel independence, I'm afraid the ultimate decision will rest on whether and how much entrenched interests stand to gain.  This proposal is vague to me, but it seems to have the wisdom of appealing to entrenched interests.

Sorry to be so negative.  This is my response these days to anything sounding even vaguely liberal and looking like a no-brainer.

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Yes ...

BruceMcF's picture

... the present administration proposal is, "this would be good for the economy in the short term and for the long haul". I don't see any indication that any such argument has any traction with the House Majority.

My proposal is a Plan B: "if you don't support this you are weak on national defense and want the terrorists to win". Have some generals testifying in the Senate about force projection and logistics and one reason that Hitler lost is he never conquered the Soviet Union oil fields, and Democrats ask them to speculate why the House of Representatives refuses to investigate the issue and the generals demur from speculating but reiterate that its a vital step.

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