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Rail News Home High-Speed Rail

8/5/2011



Rail News: High-Speed Rail

The debt deal: How it could impact HSR


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On Aug. 1, Congress reached a deal to raise the government’s debt ceiling and cut federal spending by about $2.4 trillion. The agreement helped the government avoid defaulting on its loans, but raised questions about how the spending cuts would affect federal programs.

For the High-Speed Intercity Passenger Rail program, it means the already-uphill battle just got steeper.

The debt deal cuts spending compared with the current baseline by $917 billion during the next 10 years. Of that, about $550 billion will come from non-defense, domestic discretionary spending, which includes transportation.

“This just makes official the new reality that we already knew about — that these kind of discretionary appropriations accounts are going to be very limited,” says American High-Speed Rail Alliance advisory board member Chuck Baker, who also is a partner with government affairs firm Chambers, Conlon and Hartwell, L.L.C. and serves as president of the National Railroad Construction & Maintenance Association.

Although the FY2012 transportation appropriations budget has not yet been released, Baker expects the spending level to be about the same compared with FY2011. The good news: The budget likely won’t be quite as bad as people feared; the bad news: High-speed rail didn’t receive any FY11 funding, so it’ll be tough for the program to gain any funds when the current baseline is zero, Baker says.

“This program is new, it’s controversial and it’s a grant program, so it doesn’t fund anybody’s salaries or the operations of anything. In some ways, it’s easier to cut,” he says.

But the cuts won’t end at the $900 billion mark, so more steep hill-climbing is expected. In the coming weeks, the top four members of Congress will each select three members to serve on a “super committee” — comprising six Republicans and six Democrats — that will be charged with cutting $1.5 trillion more from the deficit over 10 years. The committee must make a recommendation to Congress by Nov. 23 that at least seven members would agree on.

“If they can come to an agreement, then obviously we want to make sure that no more of that comes from the domestic discretionary world, because that would make it even harder for us to get high-speed rail money,” says Baker.

But if the committee can’t agree on deficit reductions — and many people already are predicting they won’t because at least one member would have to cross party lines — then $1.2 trillion of cuts will automatically go into effect, including $600 billion from defense and $600 billion from domestic discretionary accounts (including transportation and high-speed rail).

The super committee could consider raising revenue, as well, but it seems unlikely they’ll do so, says Baker.

“A lot of people believe the only way high-speed rail will ever get any real investment is if you implement some new taxes and have new revenue specifically designed for the transportation world,” he says. “[The committee] can look at that in theory, but in practice, it seems extraordinarily unlikely the Republicans will have anyone on this committee that would agree to raise revenue.”

Angela Cotey


Contact Progressive Railroading editorial staff.

More News from 8/5/2011