Copyright 2000 Federal News Service, Inc.
Federal News Service
July 25, 2000, Tuesday
SECTION: PREPARED TESTIMONY
LENGTH: 2952 words
HEADLINE:
PREPARED STATEMENT OF THE HONORABLE TOMMY THOMPSON GOVERNOR OF WISCONSIN
CHAIRMAN, AMTRAK REFORM BOARD NATIONAL RAILROAD PASSENGER CORPORATION
BEFORE THE HOUSE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE
ON OVERSIGHT
SUBJECT - TAX TREATMENT FOR INFRASTRUCTURE
BODY:
Mr. Chairman:
As both Chairman
of the Amtrak Reform Board and as a Governor of one of the 36 States currently
pursuing high-speed rail, I am honored to appear before your Subcommittee to
discuss innovative ways through which the federal government can help finance
high-speed rail. I'll be focusing on the High Speed Rail Investment Act - H.R.
3700 - which I believe is a truly creative and historic piece of legislation.
But I'd like to preface my remarks with a few words about the role of the
federal government in promoting the general welfare.
As you know, I'm a
Republican - and proud of it! I believe that the government's role in our
nation's life should be limited. That was clearly what our Founders intended,
and that's what we Republicans have fought for over the years.
But
believing in limited government is very different from not believing in any
government at all. Where the public interest is served by federal action,
Republicans recognize that such action is warranted. As the father of our party,
Abraham Lincoln, put it 146 years ago, "The legitimate object of government is
to do for a community of people whatever they need to have done, but cannot do
at all, or cannot so well do for themselves - in their separate and individual
capacities." There, Mr. Chairman, is the rationale for an innovative federal
role in developing high-speed rail: to help Amtrak and the states do what needs
to be done - what we are, in fact, already attempting to do - but what we cannot
do nearly so well without the federal government's involvement and assistance.
Like most Republicans, I look to the example of Abraham Lincoln for
inspiration and guidance. In 1862, Congress passed a measure that President
Lincoln had long championed - the Homestead Bill. Giving enterprising Western
farmers 160 acres of public land for a nominal sum, the Homestead Bill, in
historian Paul Johnson's words, was "one of the most important laws in American
history" - a law that caused a tremendous burst of economic growth and led to
the rapid settlement of the West.
The Homestead Bill was a remarkable -
and highly original - piece of legislation. As Johnson puts it, after the
Homestead Bill, "it may be said (that) the United States no longer just allowed
farming to 'happen' - it had a policy for it." That policy can be summarized as
expanding economic opportunity for all Americans by providing incentives that
promoted greater choice.
Unfortunately, in the area of transportation
policy, Americans have lost sight of Lincoln's vision. As with farming in the
pre-Lincoln era, we have just allowed transportation to "happen" - and the
results have been appalling: massive gridlock on our highways, growing
congestion at our airports, and a dangerous and growing dependence on a handful
of OPEC tyrants.
Most alarmingly, we have permitted matters to reach the
point where Americans are increasingly forced to use automobiles whether they
want to or not. If I may say so, Mr. Chairman, this is a form of "transportation
slavery" that violates everything America stands for.
It's time to
reverse these dangerous trends - and that's what H.R. 3700 proposes to do. It
will emulate Lincoln's Homestead Bill by offering economic incentives to promote
economic growth and restore freedom of choice. The purpose of this landmark
legislation is to promote the modernization of our passenger rail infrastructure
and the creation of new high-speed rail corridors. H.R. 3700 will increase
America's productivity, protect our environment, enhance our safety, create more
jobs, and promote "smart growth" through the economic development of our
downtown urban centers. It will reduce congestion on our roads and in our skies.
The simple truth is that our nation's passenger transportation system is
in serious trouble. One of the clearest statements of the nature of the trouble
appeared last December in a Los Angeles Times editorial. With your permission,
Mr. Chairman, I'd like to read a brief excerpt from that editorial:
"California faces the millennium with its transportation stuck in the
freeway-mad, jet-age 1960s. The state that pioneered the instantaneous
connections of e-mail and e-commerce stands on the verge of a broadband
revolution that promises to pipe feature movies into homes in seconds. But
residents still pack themselves into automobiles that travel at Eisenhower-era
speeds for most intercity journeys. Or into shuttle jets that spend more time
waiting for takeoff and circling their destinations than en route."
What's true of California is true of the rest of the nation, as well.
Indeed, a study issued by the Texas Transportation Institute last year points to
the fastest and most pervasive growth in highway congestion that we've ever
experienced. Meanwhile, our nation's aviation system is likewise becoming
increasingly congested - especially in our larger cities. In 1991, for example,
23 airports experienced annual flight delays in excess of 20,000 hours. Today
there are 27 airports with at least that amount, and that number is expected to
grow to 31 before the end of the decade.
No wonder governors, public
policymakers, business and labor leaders are all coming to appreciate the
benefits that passenger rail can provide. Even before the recent rise in oil
prices, the National Governors' Association unanimously voiced its strong
collective support for Amtrak and high-speed rail corridor development. Amtrak
also enjoys strong support from the National Conference of State Legislatures,
the U.S. Conference of Mayors, the National League of Cities, and many other
influential organizations. Most recently, a new grassroots organization - States
for Passenger Rail - has been formed to support high-speed rail funding.
What are the benefits that high-speed rail offers? A study conducted for
the Coalition of Northeastern Governors listed five distinct gains: Improved
mobility, due to the diversion of passengers from highways to high-speed rail;
Greater dependability, as rail operations are least affected by inclement
weather relative to road or air travel; Increased safety - the study estimated a
reduction of nearly 1,000 accidents in the Boston to New York Corridor alone; --
Lower travel costs, since the existence of a strong new competitor in the travel
marketplace will serve to keep all travel prices down; And a reduced need for
expensive and politically difficult construction of new airports by freeing up
gate and arrival/departure slots for long-distance flights.
The
Governors' study also dealt with the environmental benefits of high-speed rail.
For example, it estimated that the introduction of high-speed rail in the Boston
to New York Corridor will save 20 million gallons of jet fuel alone each year,
resulting in a reduction of 511 tons of carbon monoxide, 123 tons of
hydrocarbons, and 270 tons of nitrogen oxide. Savings from fewer automobile
trips were placed at 4.5 million gallons of gasoline annually.
Additionally, investment in high-speed rail has an unusually powerful
impact on the entire economy. An analysis prepared by the Center for Urban
Transportation Research at the University of South Florida demonstrated that the
economic benefits of an investment in high-speed rail are greater than an
equivalent investment in the manufacturing, communications or service
industries, in all categories but job creation, where high-speed rail is roughly
equivalent. High-speed rail yielded, on average, $3.2 in output
for each dollar invested, compared to manufacturing, communications and
services, which generate $1.8, $1.9, and
$2.1 of output per dollar of investment, respectively.
Finally, I should point out that although I have been talking about the
benefits of investment in passenger rail, the upgrading of our underutilized
passenger railroad network will simultaneously bring with it a radical
improvement in the capacity of freight railroads to transport their cargo.
That's because in most areas of the United States today, passenger and
freight trains share the same track. But because high-speed passenger
rail infrastructure is used most extensively during the day and evening, an
additional benefit of investment in high-speed rail is an improved
infrastructure useable for carrying freight at night, or
sometimes concurrently with passenger operations. In other
words, when you invest in high-speed rail, not only do you help passengers by
relieving gridlock and "winglock" - you're also helping business by unclogging
the arteries of our nation's commerce.
Mr. Chairman, so far I have
talked about the economic, environmental, safety and mobility benefits of
high-speed rail mainly in absolute terms. But to fully understand the critical
importance of high-speed rail to our nation's future, it is necessary to examine
the benefits of investing in high-speed rail in relative terms, as well - that
is, as compared to making investments in new highways and airports. And once you
do that, one fact is glaringly obvious: the costs of building new highways and
airports are going way up; the costs of adding to our rail capacity are coming
way down. You don't need to be a rocket- scientist to figure out that as the
marginal cost of highway and airport construction rises, while the marginal cost
of increasing our passenger rail capacity falls, rail becomes cost-effective
relative to other transportation modes. To put it plainly, you get more "bang
for your buck" by investing your transportation dollar in passenger rail, than
by investing that same dollar in new highway or airport construction.
There are many ways I could illustrate this point, but let me provide
just one telling comparison. A supply of highway salt that would cover this
country's needs for 12 winter months costs $1.2 billion, which
is about what it costs to build the entire high-speed rail infrastructure from
New York to Boston. Think about it: 115 miles of continuous welded rail, 6.5
miles of additional track to accommodate commuter traffic, 487,000 tons of
ballast, 455,000 concrete ties, 115 bridge locations, a new signal system, 25
electric power stations, 14,000 foundations, 12,000 poles, 1,500 miles of wire
for the overhead catenary system, 21 miles of new fencing, and a new Route 128
Station, all for about the price of three winters' worth of highway salt. And
when the rail infrastructure is complete, you've got a high-speed rail service
that will spark extraordinary economic growth throughout the Northeast. It seems
to me that's worth a heck of a lot more than a big puddle of salt water.
As I said, Mr. Chairman, you don't need to be a rocket -scientist to
figure all this out. Even politicians like myself get it. That's why 36 states
are working with Amtrak on passenger rail projects. California, for example,
plans to invest $700 million out of a $5
billion infrastructure bill expected to be earmarked for intercity passenger
rail investment next year. Also, as part of the $5 billion
Midwest Regional Rail Initiative, Illinois plans to spend $140
million; Michigan spent $25 million; and my own state,
Wisconsin, plans to spend $60 million. The state of Washington
has invested $125 million, New York will invest
$100 million and both North Carolina and Pennsylvania are
investing $75 million in high-speed rail projects. Virginia
recently approved $75 million in new spending for the
Richmond-Washington high-speed rail corridor, and Georgia recently approved
$200 million out of $2 billion planned for
investment in high-speed rail and commuter rail in that state.
What's so
significant about these investments is not simply that they are happening, but
that they are taking place without a federal guarantee of funding. That
indicates a real commitment to high-speed rail on the part of the states. But
states will be limited in how much they can do because of the regional nature of
passenger rail systems. Like with the genesis of the interstate highway system,
the federal government must lead the way with vision and financial assistance.
For our part, Amtrak is working closely with the states to help meet the
growing demand for high-speed rail. We would like to do a lot more, and if H.R.
3700 is adopted and long-term capital funding becomes available for high-speed
rail - the way it now is for highways, airports and mass transit - believe me,
Mr. Chairman, we will do a lot more. In the 21st century, we envision a national
passenger railroad system consisting of regional high-speed rail networks linked
by market-responsive long-distance service. This national system will empower
Americans to choose the fastest, safest, most efficient, and most convenient way
to reach their destinations. It will give travelers more options - including the
option not to travel by car if they choose not to. Fundamental to the success of
our vision will be the fostering of mutually-beneficial partnerships with
states, with the freight railroads, with other commercial enterprises, and yes -
with the federal government.
Mr. Chairman, the truth of the matter is
that a modern national railroad doesn't come cheap. Germany, for example, spent
more than $7.5 billion to develop the 215-mile
Hanover-Frankfurt corridor, and is planning to spend about $70
billion on its railroad system over the next decade. France spent over
$12 billion on its TGV (Train a' Grande Vitesse) system and
plans to spend even more. The European Community is planning to link key cities
by a 12,000-mile high-speed rail network to cost, when completed,
$100 billion. If we want a national railroad system that we can
be proud of and that is economically competitive, we have to muster the will and
national commitment to pay for it.
That is precisely what H.R. 3700
does. It authorizes Amtrak to issue $1 billion in bonds
annually for ten years, the proceeds of which would primarily support the
development of high-speed rail corridors. Twenty percent of these funds would be
set aside in escrow to guarantee repayment of the bonds. States would then be
required to match the Amtrak investment in a particular project at 20 percent
thus making the $1 billion whole. Amtrak would not be allowed
to invest bond receipts without state partnerships - thereby ensuring that these
funds will take into account both the more easily measured financial benefits as
well as the more difficult to measure public benefits so critical to states. The
federal government would provide tax credits to bondholders in lieu of interest
payments. The cost to the federal government would be minimal - the Joint
Committee on Taxation places it at $762 million over 5 years,
and $3.2 billion over 10 years - but as I have already
explained, the benefits to the country would be phenomenal and the private
market guarantees these bonds, so there is no risk to the Federal Government.
Mr. Chairman, as you and your colleagues well know, Congress gave Amtrak
a mandate to achieve operational self-sufficiency by 2003. I think the
record-breaking ridership and revenue numbers we've achieved demonstrate the
considerable progress we've already made in turning this company around. There
is no doubt in my mind, however, that having a stable source of capital funding
would help Amtrak do the long-term planning necessary to reach, maintain and
surpass our goal of operational self-sufficiency.
Mr. Chairman, for the
past half-century or so I think it's fair to say that passenger railroads have
been virtually relegated to the dustbin of history. The passage of the 1956
Interstate Highway Act brought America's love affair with great passenger trains
like the "Empire Builder" and the "Twentieth Century Limited" to an abrupt end.
Once it became possible to "see the USA in your Chevrolet" Americans did
precisely that, and railroad ridership plummeted. It has gotten to the point
where, last year - in one year -- the federal government spent more than
$33 billion on highways, more than $11 billion
on aviation, more than $6 billion on mass transit, while we at
Amtrak have had to fight for $500 million in federal funds like
dogs for table scraps.
But the tide is beginning to turn. Americans are
growing increasingly tired of spending billions to build more highways and
airports - and still getting stuck in gridlock and winglock. They're beginning
to realize that our national railroad system is a precious treasure that we've
unwisely neglected for decades. They've started to understand that better
utilization of our railroads could free our highways and airports to better
fulfill their potential roles. They've also begun to recognize what the cost of
not investing in high-speed rail comes to: More gridlock on our interstates,
more air pollution in our cities, and a highway construction bill that dwarfs
the cost of upgrading the rails.
Americans have also become aware of
something else: Amtrak is here to stay. Our high-speed rail projects make us
competitive with other modes of intercity transportation. We are
widely-recognized as a powerful engine for economic growth in cities and states
across the nation - a way to get cars off of our gridlocked highways and to open
up badly-needed slots at our congested airports. In short, we have a crucial
role to play in the transportation industry of the 21st century - and we
respectfully ask the distinguished Members of this Subcommittee to help us play
that role by giving us the innovative funding mechanism we urgently and
desperately need to do the job: H.R. 3700.
Thank you, Mr. Chairman, and
thank you for your leadership on this issue.
END
LOAD-DATE: July 27, 2000