Response to Biden’s American Jobs Plan Largely Optimistic

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  • April 01, 2021
  • Class I, Commuter/Regional, Freight, Freight Forecasting, High Performance, Intercity, Intermodal, Light Rail, M/W, News, Passenger, Rapid Transit, Regulatory, Safety, Short Lines & Regionals, Switching & Terminal


Written by

William C. Vantuono, Editor-in-Chief

President Joe Biden has proposed a sweeping, eight-year, $2 trillion investment plan—a follow-on from his American Rescue Plan—that designates tens of billions for rail and public transportation, but also raises some taxes substantially to pay for it.

“While the American Rescue Plan is changing the course of the pandemic and delivering relief for working families, this is no time to build back to the way things were,” Biden said. “This is the moment to reimagine and rebuild a new economy. The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China. Public domestic investment as a share of the economy has fallen by more than 40% since the 1960s. The American Jobs Plan will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”

Biden, comparing the Plan to “great projects of the past,” said its goal is to “unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China.”

“The United States of America is the wealthiest country in the world, yet we rank 13th when it comes to the overall quality of our infrastructure,” Biden noted. “After decades of disinvestment, our roads, bridges and water systems are crumbling. Our electric grid is vulnerable to catastrophic outages. Too many lack access to affordable, high-speed Internet and to quality housing. The past year has led to job losses and threatened economic security, eroding more than 30 years of progress in women’s labor force participation. It has unmasked the fragility of our caregiving infrastructure. And, our nation is falling behind its biggest competitors on research and development (R&D), manufacturing and training. It has never been more important for us to invest in strengthening our infrastructure and competitiveness, and in creating the good-paying, union jobs of the future.”

The particulars, as they relate to the broader railway industry:

Fix highways, rebuild bridges, upgrade ports, airports and transit systems: “The President’s plan will modernize 20,000 miles of highways, roads, and main streets. It will fix the ten most economically significant bridges in the country in need of reconstruction. It also will repair the worst 10,000 smaller bridges, providing critical linkages to communities. And, it will replace thousands of buses and railcars, repair hundreds of stations, renew airports, and expand transit and rail into new communities.”

Some $621 billion is designated for “transportation infrastructure and resilience”:

Modernize public transit: “Households that take public transportation to work have twice the commute time, and households of color are twice as likely to take public transportation. Our current transit infrastructure is inadequate—the Department of Transportation estimates a repair backlog of more $105 billion, representing more than 24,000 buses, 5,000 railcars, 200 stations, and thousands of miles of track, signals and power systems in need of replacement. This translates to service delays and disruptions that leave riders stranded and discourage transit use. President Biden is calling on Congress to invest $85 billion to modernize existing transit and help agencies expand their systems to meet rider demand. This investment will double federal funding for public transit, spend down the repair backlog, and bring bus, bus rapid transit, and rail service to communities and neighborhoods across the country. It will ultimately reduce traffic congestion for everyone.”

Invest in reliable passenger and freight rail service: “The nation’s rail networks have the potential to offer safe, reliable, efficient, and climate-friendly alternatives for moving people and freight. However, unlike highways and transit, rail lacks a multi-year funding stream to address deferred maintenance, enhance existing corridors, and build new lines in high-potential locations. There are currently projects just waiting to be funded that will give millions more Americans reliable and fast intercity train service. President Biden is calling on Congress to invest $80 billion to address Amtrak’s repair backlog; modernize the high-traffic Northeast Corridor; improve existing corridors and connect new city pairs; and enhance grant and loan programs that support passenger and freight rail safety, efficiency, and electrification.”

Related to rail are proposed investments in ports, waterways, and airports: “President Biden is calling on Congress to invest an additional $17 billion in inland waterways, coastal ports, land ports of entry, and ferries, which are all essential to our nation’s freight. This includes a Healthy Ports program to mitigate the cumulative impacts of air pollution on neighborhoods near ports, often communities of color. These investments will position the United States as a global leader in clean freight and aviation.”

MADE IN AMERICA TAX PLAN

To help pay for all this, Biden is proposing to “fix the corporate tax code so that it incentivizes job creation and investment here in the United States, stops unfair and wasteful profit shifting to tax havens, and ensures that large corporations are paying their fair share … Together, these corporate tax changes will raise more than $2 trillion over the next 15 years and more than pay for the mostly one-time investments in the American Jobs Plan and then reduce deficits on a permanent basis.”

The Made in America Tax Plan sets the corporate tax rate at 28%, “ensuring that corporations pay their fair share of taxes” and “return corporate tax revenue as a share of the economy to around its 21st century average from before the 2017 tax law, and well below where it stood before the 1980s. This will help fund critical investments in infrastructure, clean energy, R&D and more to maintain the competitiveness of the United States and grow the economy.”

INDUSTRY REACTION

Railway Supply Institute (Nicole Brewin): “The release of President Biden’s infrastructure plan and the Administration’s commitment to investment in passenger and freight rail and to strengthen American manufacturing is a great first step. These proposed investments provide an opportunity to narrow inequities in transportation, improve the resilience of our infrastructure, and lower the nation’s carbon footprint—all while supporting thousands of new jobs in the railway supply industry. We look forward to working with Congress and the Administration in the coming months to develop and pass legislation that provides the investments needed to strengthen our passenger and freight rail networks and the critical supply chains that make their operations possible.”

American Short Line and Regional Railroad Association (Chuck Baker): “ASLRRA and the nation’s 600-plus small business short line freight railroads welcome the President’s infrastructure proposal, the American Jobs Plan. Short lines are a critical part of the nation’s infrastructure, driving economic growth across the country, as we serve thousands of shippers in the critical manufacturing, agriculture, and energy industries, and thousands of communities, particularly in small town and rural America. We look forward to working with the Administration and Congress in a bipartisan way as they develop and consider this proposal. Short lines can help accomplish many of the nation’s most important goals, such as economic development, jobs growth, safety, and environmental sustainability, and we will look to help steer this plan in a way that recognizes and prioritizes those possibilities.”

American Public Transportation Association (Paul Skoutelas): “This forward-thinking investment in public transportation and passenger rail will help our communities meet growing mobility demands, create family-wage jobs, expand U.S. manufacturing and supply chains, and grow the economy. It puts us on the path to increase access to opportunities for all Americans and build more equitable communities. The American Jobs Plan also addresses the environmental and sustainability challenges facing our communities, nation, and the world. This plan will get projects off the ground and immediately create good-paying jobs that will get Americans back to work and ensure our communities keep moving. The American Jobs Plan recognizes the immediate need for public transit agencies to continue to provide essential services during the COVID-19 pandemic and support our nation’s economic recovery. APTA looks forward to continuing to work with Congress and the Biden Administration to achieve our common goal of building stronger and more equitable communities across our nation. The time is now to make a transformational investment in our national infrastructure.”

Amtrak (Bill Flynn): “Amtrak’s vision to grow rail service and connect new city pairs across America rises to the urgent challenges of our time, and will provide new and improved train service to millions of additional passengers. Additionally, the Northeast Corridor (NEC), a critical transportation link for the Northeast’s major metropolitan economies, has dozens of bridges, stations and tunnels that are beyond their design life and in need of immediate replacement or rehabilitation. If Congress provides the funding proposed in the President’s plan, Amtrak would be able to bring the NEC to a state of good repair and improve trip times, and would also expand Amtrak to underserved communities across the nation.  This would create jobs, improve the quality of life, reduce carbon emissions and generate economic growth. President Biden’s infrastructure plan is what this nation has been waiting for. Amtrak must rebuild and improve the Northeast Corridor, our National Network and expand our service to more of America. The NEC’s many major tunnels and bridges—most of which are more than a century old—must be replaced and upgraded to avoid devastating consequences for our transportation network and the country. In addition, Amtrak has a bold vision to bring energy-efficient, world-class intercity rail service to up to 160 new communities across the nation, as we also invest in our fleet and stations across the U.S. With this federal investment, Amtrak will create jobs and improve equity across cities, regions, and the entire country—and we are ready to deliver. America needs a rail network that offers frequent, reliable, sustainable and equitable train service. Now is our time. Let’s make rail the solution.”

AAR: YES, BUT …

“Today, President Biden announced his plan to rebuild the nation’s infrastructure and make our transportation systems more sustainable,” said Association of American Railroads President and CEO Ian Jefferies. “While railroads support sensible infrastructure investment and associated efforts to address climate change, the nation’s privately owned freight railroads raised serious concerns about the administration’s initial proposal to pay for the spending. America’s railroads have long recognized the need for robust, sustainable funding back into the nation’s integrated transportation network. President Biden’s proposal makes clear his Administration’s priority for making these much-needed investments to restore our highways, bridges and roads, and improve our ports. At the same time, mission number one is fueling an economic recovery. Railroads would urge the Administration and Congress to abandon these divisive, unrelated funding sources and instead work toward bipartisan solutions to restore the Highway Trust Fund to a true user-pays system. Sustained by nearly $25 billion in annual capital expenditures and maintenance, the nation’s privately owned freight railroads remain top of class among the nation’s infrastructure sectors. While the freight rail industry does not face the same funding challenges as other sectors, railroads stand as ready partners to craft well-designed, viable solutions that will keep our economy and nation moving forward. The right policies can ensure a healthy, multi-modal infrastructure network and secure the sustained investment necessary to raise the grade for the nation’s infrastructure.”

When asked to clarify what the AAR considers “divisive, unrelated funding sources,” spokesperson Jessica Kahanek noted that “the Administration calls for funding this plan in part through an increase to the corporate tax rate. Freight railroads are encouraging Congress and the Administration to instead pursue a bipartisan funding approach that restores the user-pays system that has long-served as the foundation of the Highway Trust Fund.”

Editor’s Note: In relating the philosophy behind the Made in America Tax Plan, Biden talks extensively about “bringing an end to the race-to-the-bottom on corporate tax rates that allows countries to gain a competitive advantage by becoming tax havens. This is a generational opportunity to fundamentally shift how countries around the world tax corporations so that big corporations can’t escape or eliminate the taxes they owe by offshoring jobs and profits from the United States.” Let’s be clear: U.S. railroads have nothing to do with such practices. They do not export jobs overseas, and pay their fair share of corporate tax. According to an AAR study: “Each year, railroads fuel billions of dollars in activity throughout the U.S. economy and generate more state and local tax revenues each year than most states collect in taxes. In 2017 (the most recent data available), Class I railroads created $219 billion in economic activity and generated nearly $26 billion in total tax revenues while supporting more than 1.1 million jobs across the country.”  — William C. Vantuono

Categories: Class I, Commuter/Regional, Freight, Freight Forecasting, High Performance, Intercity, Intermodal, Light Rail, M/W, News, Passenger, Rapid Transit, Regulatory, Safety, Short Lines & Regionals, Switching & Terminal
Tags: American Jobs Plan, American Rescue Plan Act of 2021, Breaking News, Made in America Tax Plan