(The Virginian-Pilot posted the following editorial on its website on August 5.)
NORFOLK, Va. — Oh, pity America’s poor railroads. According to their national trade association, the $40 billion industry is poised to suffer a 67 percent increase in demand for their services over the next 15 years.
It brings a tear to the eye doesn’t it?
Former Senate Majority Leader Trent Lott was overcome by the plight of railroads straining under the weight of so much business.
To help them “assume a greater portion of the freight transportation burden,” the Mississippi Republican is championing a multi billion package of tax breaks.
The sophistry here is just staggering.
Here is a translation: “Assum(ing) a greater share of the freight transportation burden” means gaining market share. In any other industry that would be reason to shout for joy, to sit back and watch stock prices rise.
And “burden” is an artfully evasive way of making too much business sound like a problem. Norfolk Southern and the other railroads profit from every load of stuff they carry – the more “burden” they carry, the more profit they make.
The week before Sen. Lott announced his handout for the railroads, America’s largest railroad, Union Pacific, announced that profits had soared 64 percent on record-setting revenue. America’s second-largest railroad, Burlington Northern, followed up by announcing profits were up a “better-than-expected” 28 percent.
News accounts described the rosy economics driving the financial results. “Like all major U.S. railroads, Burlington Northern has benefited over the past two years from increased demand for imports and soaring demand for coal from the nation’s power plants,” said Reuters. “The spike in demand has enabled railroads to raise rates significantly in 2005 and 2006, with some companies promising fresh hikes next year.”
Norfolk-based Norfolk Southern announced its latest profits at the same time. They were only up 23 percent on record revenues.
Just imagine Honda executives trying to pull this off: “As Honda assumes a greater share of the new car supply burden in the face of a challenging surge in demand for more fuel efficient cars, Congress must give us new tax breaks.” The gall of railroads in asking for this giveaway is even greater if you know a little history. In the 1970s America’s railroads were financially stagnant and heavily regulated. Quite reasonably, they asked for more freedom to run their own affairs. Congress granted their wish with the Staggers Rail Act of 1980. What followed was a wave of efficiency-boosting mergers that slashed excess capacity and returned the industry to profitability.
Oh, but now that the industry needs that abandoned capacity back, they want taxpayers to help foot the bill.
That’s not what they were saying back in January when a group of Democratic congressmen and liberal groups were pushing for new regulation of the industry. The railroad trade group released a report concluding: The U.S. freight railroad industry “leads the world or is near the top in terms of miles of track, freight revenue, traffic volume, productivity and affordability. The U.S. dominance is no accident; it is directly a function of the U.S. market-based regulatory system, which provides incentives for continuous improvement in productivity and service.”
Why on Earth would anyone want to change that?