Trouble in Closed Access paradise?

[MP173]

Dave:

I think that is a reasonable quid pro quo 25% investment tax credit for "addressing concerns."

However, the discussion of who the beneficiaries are (domestic vs foreign) is opening up a very large can of worms.  We are already sending strong signals regarding investment in our country...the Chinese were not allowed to invest in oil ( I think Unical) and the ports on the east coast were addressed recently.

The US has always invested heavily in outside countries.  This attempt by corporations to have it both ways (the ability to invest overseas while restricting investment or marketing of products here) sends very mixed signals and is extremely short sighted.

The reason the containers are streaming in from Asia is not the low rail prices, it is the inability of the United States corporations to produce at market prices.  As long as labor rates overseas are what they are (India will probably be the next China) we will have this problem.

ed

[Anonymous]

Some interesting comments by rail users at a federale hearing on current problems with the US private integrated rail system:

http://www.house.gov/transportation/rail/04-26-06/martland.pdf

Quote of note -

"An Interstate Rail System would provide several strategic advantages over the current system.

• Average freight train speeds would be doubled, from the current 20-25mph to 40-50 mph.

• The system would be able to handle substantial additional volumes of coal and grain without compromising the ability to handle general merchandise traffic.

• Reliable 6-8 day freight service would be available for essentially all carload freight moving within the lower 48 states and Canada.

• More industrial development opportunities would be available on lines that are well-maintained, safe, and served on a more frequent basis, whether by Class I or by short line railroads."

http://www.house.gov/transportation/rail/04-26-06/wallace.pdf

Quote of note -

"I would ask the Committee to consider the following:  The nation’s highway system has a Highway Trust Fund to support and maintain a safe and efficient federal highway system; the nation’s airports have an Aviation Trust Fund to support, maintain and enhance airport infrastructure and provide necessary capacity. If the existence of these two transportation trust funds are deemed to be in the public interest, why not a Railroad Trust Fund, or a similar user-funded mechanism?"

http://www.house.gov/transportation/rail/04-26-06/english.pdf

Quote of note -

"Finally, Mr. Chairman, we understand that legislation may be introduced to provide a 25% investment tax credit for investments in railroad infrastructure.  We may very well support such a federal incentive, so long as it was part of a package of legislation that also addressed the concerns of rail customers that find themselves subject to railroad monopoly power, and so long as the tax credit is also available to rail customers when they make similar investments in infrastructure to improve overall rail capacity.

Moreover, there should be certain conditions imposed on the investments eligible for the tax credit.  For example, the investments that qualify for this tax credit should be limited to first improving the infrastructure that currently provides insufficient service to captive or single-served rail customers.  Investments eligible for the tax credit should be focused first on infrastructure that benefits the movements of domestic products and commodities as opposed to infrastructure that benefits imported container traffic.  Finally, any infrastructure that benefits from the tax credit should be deployed in a pro-competitive manner as suggested in H.R. 2047, as opposed to further expanding the monopoly power of the railroads."