[Nameplate] Fog/Mist ~ 60°F  
High: 80°F ~ Low: 64°F
Thursday, July 31, 2014

Your view: Railroad friends

Wednesday, May 10, 2006

I know some people are concerned that opposing Union Pacific's plan to route additional trains through Sikeston might appear to be unfriendly or even "anti-railroad." See if you don't think the American people have been "friendly" enough already.

In 1998, the Transportation Authorization Bill passed by Congress created a federal line of credit for the railroad industry to help them rebuild their infrastructure. It was capped at $3.5 billion.

Last August, the new Transportation Authorization Bill raised that credit line to $35 billion. The term for these loans is 25 years, and the interest rate is 5 percent. Beyond that, Congress sweetened the deal by allowing the railroads up to six years to begin payments. To top it all off, they allowed the railroads to refinance their existing debt with this federally backed cheap money. Shouldn't that about cover "friendly"?

I asked my banker if I could refinance my mortgage at 5 percent for 25 years with no payments for the first six years. He managed a smile but said "no." I still think of him as friendly.

To put that figure in perspective, at the $1 million a mile rate cited by the Union Pacific spokesman as the cost of building new rail lines, $35 billion (35,000 million) would be enough to replace the entire Union Pacific system. With 34,946 miles of track they are the largest rail company in the country.

For years railroad executives have testified before Congress, and complained to the Surface Transportation Board, that they couldn't charge shippers enough to replace their infrastructure. Congress has now answered, not by cutting them loose to charge what they want, but with a very generous loan package.

Not yet satisfied though the rail companies, according to the Wall Street Journal, are asking Congress for a 25 percent investment tax credit on the expenditures they make to improve their rail lines. So, I guess that would be a tax credit for spending the low interest money we loan them. These guys are not short of brass.

Either way, it's not a bad deal for the last "natural monopoly" in the American economy. All the other monopolies have been broken up to allow for competition.

In Washington, the railroads have been lobbying for further deregulation (beyond what was granted in 1980). They want to keep their monopoly of course, but be rid of the pesky government oversight on the rates they charge. In short, they want to bring the full power of their monopoly position to bear on the shippers and consumers.

Does this mean we're going to have to fight the "Granger Wars" of the 1870's (farmers vs. the railroad monopolies) all over again? This time, of course, electric utilities are a target as well.

It is perhaps instructive to note that since 1998, and after all that complaining, Union Pacific has never applied for one of these loans. If I were a stockholder, I think I'd question them about that. You'd think the Surface Transportation Board might be curious as well. They've been on the receiving end of much of the complaining.

Of course, it may be part of a larger game plan. Union Pacific may have decided that if they accept this money they'd lose their whining rights.

In any case, both our senators and our congresswoman voted for this $35 billion low interest loan program. They, and through them we, didn't give the railroads what they wanted. They gave them what they said they needed. Our representatives have helped the railroads while protecting the ratepayers. Works for me. (What the heck, the Chinese will be buying the paper anyway).

Doesn't that give us standing, though, when we ask simply to be left alone? If they come south, they'll be using our money. If they go north, they can tap into our $35 billion cheap loan package that sits largely unused on the table. Of course, if they do go north they won't destroy our community and they won't be killing us. Shouldn't "friendly" go both ways?

Union Pacific, if you want a friend; be a friend. If you want our representatives to pay attention to the votes you care about, pay more attention to the votes they care about. And oh yeah, please don't kill us.

Josh Bill