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The "Double Dip" Recession, Foreign Oil, and a National Rail Network

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October 06, 2009 – Comments (16) | RELATED TICKERS: TRN , CSX , BNI.DL

By Jake Huneycutt

The Upward Society Blog

 

Economist Nouriel Roubini recently advanced the proposition that higher oil prices, rising government debt, and a lack of job growth will throw us right back into recession once we finally start to escape from the current one.  Roubini labeled this potential phenomenon a “double-dip recession.”  In essence, it’s a giant “Catch-22” --- we can’t have continued prosperity without cheap oil and we can’t have cheap oil without a bum economy.  This unfavorable scenario presents itself to us precisely because American policymakers over the past few decades have ignored our nation’s most pressing concern: the energy crisis.

Undoubtedly, we’re all aware of America’s massive reliance on foreign oil.  Instinctively, we all realize this is most likely a detrimental thing.  Yet, very few people have ever laid out much in the way of a comprehensive plan to deal with the crisis.  There have been some attempts, however. 

In 2009, oil magnate T. Boone Pickens unveiled his “Pickens Plan,” which called for the US to develop its wind power and natural gas capacity and increase the usage of more fuel efficient automobiles. It was a noble package and I do believe that American needs to increase usage of cleaner energy sources such as wind and natural gas, but we also need to address some of the underlying infrastructural problems with the American economy. 

If we want true energy independence, we have to disentangle the American economy from foreign oil.  There is no easy cure that will solve our problems over night.  There is, however, a major way to reduce our reliance our dependency on oil while improving America’s infrastructure by increasing the availability of rail transportation and expanding public transit systems.  What we truly need is an integrated National Rail Network. 

The Eisenhower Interstate System: An American Success Story

Before touching upon a national transit network, however, we should examine one of America’s greatest success stories over the past century:  the Eisenhower Interstate System.  In a piece about lessening our dependence on oil, you might find it odd that I would bring up the Interstate Highway System.  Yet, there’s an important reason to look at the system in order to understand our current dilemma.

The Eisenhower Interstate Highway System was one of the greatest public policy successes in American history and the largest public works project in history.  It stands alongside the Roman aqueducts and the Great Wall of China in the pantheon of public works triumphs.  It is precisely because of America’s well-developed road system that Americans have become so mobile.  The system has also been one of the major factors driving America’s commercial prowess over the past five decades. 

The Interstate Highway System was originally conceived as a defense network.  President Eisenhower remembered travelling over America’s disjointed and confusing road network as a young man and became a great admirer of the German Autobahn.  He wanted the United States to have a similar functioning road system to the Germans.  In the five decades since Eisenhower’s presidency, America has never been invaded by a foreign power, but the Interstate Highway System has become a vital link in promoting commerce. 

The great beauty of the American road network is that if you live in New York, you can hop on the Interstate and be in Virginia within a number of hours.  All you have to do is own a car and gas up.  Gassing up, as it turns out, was an important foundation behind the system.  Instead of funding the Interstate Highway System through general income tax revenues or through a series of tolls, policymakers implemented a gasoline tax that would theoretically pay for the system.  While the link was technically indirect, the heaviest users would, for the most part, pay the most while the lightest users would pay the least. 

Why the Road System Works

The secret behind the success of the Eisenhower Interstate Highway System and indeed, the entire American road system, is that it has become a highly integrated network that can be used to travel nearly anywhere in the nation without incurring heavy expense. 

This might seem like common sense, but the reasons why the road networks work are often taken for granted.  Envision an alternate America where instead of the highly integrated, mostly toll-free road network we have, we instead had to rely on a disjointed, confusing, and not-always-connected series of roads. 

Imagine if on a particular trip, you had to (1) get on a free local highway for 30 miles, (2) transfer to a dirt road for 20 miles, (3) get onto a out-of-the-way toll road for 20 miles, (4) take another out-of-way free highway for another 25 miles, (5) get on a local road for about 10 miles, (6) take a toll highway for 10 miles, (7) travel on another dirt road for 10 miles, (8) etc, (9) etc, (10) etc. 

The reason why Americans travel the Interstate system in droves is because the ease, connectivity, and inexpensive nature of the system.

If Americans had to endure the scenario presented above in order to get to point A to point B, many Americans might not even bother owning a car.  Yet, the alternate reality I presented was more typical of the early American road network.  The only reason the automobile has become a way of life in America is because of policymakers’ dedication to expanding, upgrading, and integrating the road network.

A Distortive Funding System

Rather than the energy crisis being a result of the failure of the American road network, in a sense, it is a product of the system being too successful.  As a result, policymakers have neglected other forms of transportation in favor of constantly expanding the road network.  However, there are several problems with this approach:

(1) The system has become so “overdeveloped” that expansion is more of a hindrance than a benefit

(2) The functioning of the road network is completely dependent upon the availability of cheap oil

(3) The system’s original financing design has been undermined.

Issue #1 is debatable, but it’s difficult to make a case contrary to #2 and #3.  While the Interstate Highway System was originally designed to be fully supported by gasoline taxes and a few tolls, in reality, the system has drifted into a different state as policymakers have refused to increase gasoline taxes to match highway expenditures. 

At this point in time, roughly 70% of the funding for the highway system comes from gas taxes and tolls, while the remaining 30% comes from public debt, property taxes, sales taxes, and general income taxes.  On the Federal level, about 93% of the funding comes from gasoline taxes, but on the state level, things are more skewed, as only 60% of the funding comes from gas taxes.  The reason I bring these statistics up is to make a point:  the road network that Americans use so frequently is now subsidized heavily via general taxes. 

This is an important stat because it displays that the system might very well be distortive, forcing users to favor driving, when they’d much prefer to use alternate means of transportation.  Indeed, public transit usage hit a 5-decade high last year as the market (i.e. the collection of American consumers) seems to be screaming out “WE WANT MORE MASS TRANSIT!”  Meanwhile, despite record ridership, public transit agencies across the country are being forced to cut routes.  The Washington Metro system is one of the best examples, being forced to make nearly $170 million in cuts. 

Rail, Public Transit, and the Missed Opportunity

While statistics show rapidly increasing usage of public transit and road transportation systems becoming increasingly congested, it might make sense that policymakers would consider shifting funding towards public transit and away from road building.  However, not only has this not occurred, it seems to be almost the complete reverse.

Earlier this year, President Obama and the Congressional Democrats led the charge to pass a $788 billion stimulus package.  For months, this package had been premised on the idea that it would both (a) give a boost to the American economy and (b) achieve much needed infrastructure development.  Unfortunately, as it turned out, only about 17% of the package was truly dedicated to infrastructure building activities.  A sizable chunk of the infrastructure portion went to more highway building activities.  A paltry $14.9 billion went to public transit.  While this is better than nothing, we can do a lot better. 

Ironically, the DC Metro system, which utilizes both rail and bus transportation, is one of the most severely underfunded systems in the nation and has been forced to make deep cuts at a time when there is record ridership.  The system barely scraps by every year as lawmakers never dedicate much resources to it, expecting it to “break even” while competing on grossly unequal terms with the auto system.  Yet, very little has been done by the Feds or the Maryland or Virginia state governments to improve the system. 

Congress could have thrown a lot money at various public transit projects around the nation in the stimulus package and I personally believe that this would have been a much more productive infrastructure investment than the one we received; I’d rather see more comprehensive reform in our transportation system.  Just like Eisenhower saw the need for the Interstate Highway system, it’s time for policymakers to realize the need for a National Rail Network   

The Benefits of a National Rail Network

Transportation is one of only a handful of areas that the public sector is better suited to handle than the private sector.  Transportation systems need centralized planning and design to function properly and they also need gobs and gobs of land to work.  It is unlikely that a private actor will ever have the capability of building an efficient transportation system, unfortunately.

All the same, a nation’s transportation system is its livelihood.  Without such a system, commerce would be primitive and practically non-existent. 

Much of America’s prosperity of the past century would not be possible without our strong transportation systems, but we need to prepare for the future.  Oil is becoming increasing expensive to extract.  This trend is not going to reverse any time soon, especially as China and India continue their marches towards becoming world powers. 

What happens to our current system when gas creeps over $5 per gallon permanently?  It will still be there, of course, but it will increase the costs of everything we do and everything we buy.  Moreover, the system has become so overburdened at this point, that it’s safe to say that more and more opportunity costs are being incurred each year due to lost time.  Our goal should be to minimize costs. 

The Eisenhower Interstate System has been a great boon to America, but a National Rail Network would also be a boon to commerce.  It would increase the availability of transportation to all Americans.  It would increase economic efficiency by taking more cars off the roads.  It would also save many families considerable money, as they would need fewer automobiles to sustain their livelihood.  Certainly, the fact that rail transportation is much more environmentally cleaner is a positive, as well, but from a sheer economic perspective, it makes sense.  What’s more --- the entire system can be funded without costing the American taxpayer all that much if it’s implemented properly. 

A Funding Model for a National Rail Network

The initial idea behind the Eisenhower Interstate System is that it would be self-sustaining/self-funding via the gasoline tax.  Unfortunately, that assumption has been undermined as politicians have refused to increase the taxes to match the level of road and highway spending.  This has created an issue where our road system is substantially subsidized by general taxes. 

One benefit that the National Rail Network (NRN) might have over the highway system is that it can be run more like a business.  Indeed, for anyone who frequently rides one of the nation’s many public transit systems that should be obvious.  Unlike the highway system where customers pay their “dues” in an indirect fashion (via gasoline taxes), public transportation largely operates via user fees.  In this sense, public transit system are much more accountable and sustainable systems because there are managers and executives who have to decide what fees are necessary to fund their operations. 

Just like the Eisenhower Interstate System, a National Rail Network could be self-funded via usage fees.  Unlike the Interstate System, there shouldn’t be quite as large issues with the “self-funding” requirement being significantly undermined.  For this very reason, a National Rail Network is not only achievable, but economically feasible.  In the short-run, it will require up-front costs.  In the long-run, a properly-designed NRN should not significantly contribute to national or state debt.  In fact, by creating greater economic efficiencies, it might bring a greater return on capital since greater wealth will raise tax revenues. 

The Formulation of a National Rail Network

The Eisenhower Interstate System, in a sense, didn’t originate in the 1950’s.  It originated much sooner, as road and highway systems were built across America in the decades preceding the Eisenhower Administration.  Eisenhower took the pieces already in place, built some more pieces, and integrated everything into one network.  Once the network was in place, Federal and state legislators became dedicated to it and viewed it as a vital link for the promotion of commerce.

Here in America, we already have many public transit systems, particularly in the larger cities.  The biggest hurdle to creating a National Rail Network is the need to build a high-speed rail network across the United States.  Just as the Interstate System was not built overnight, this high-speed rail system would probably have to be slowly pieced together and integrated with existing public transit systems. 

To a limited extent, we have an integrated rail system, but it does not function very well.  The design of it is flawed, the technology is poor, the resources dedicated to it are meager, and Amtrak simply does not work very well as it is currently modeled.  At the same time, Amtrak is experiencing record ridership even in spite of a terribly flawed model which exposes the need for greater passenger rail in the United States. 

The primary elements that are needed for a true, well-functioning National Rail Network are:

(1) High-speed rail for inter-city travel

High-speed rail is absolutely vital to making a National Rail Network a reality.  Without it, our rail system is effectively a series of isolated entities.  A national high-speed rail network would not only create a new transportation for Americans, but it would also connect our disjointed public transit systems throughout the nation into one grand network, comparable to the Interstate Highway System.  Our rail system would immediately become more competitive with the auto system and air travel and the labor costs of operating the trains would decline on a per mile basis.  

(2) An Integrated design

In order to achieve this goal of a National Rail Network that serves as a viable transportation option, integration is absolutely vital!  The reason many people preferred passenger rail to automobile transportation in the early part of the 20th Century was precisely because the road and highway infrastructure was so thoroughly disjointed, as to make its usefulness limited. 

Automobile travel expanded in the 1920’s, 30’s, and 40’s, but it was only after Eisenhower integrated the system in the 1950’s that automobile transportation became the dominant form of transportation in the United States for both short trips and long trips.  Passenger rail will only succeed when it becomes similarly integrated and convenient for the American consumer. 

(3) Expanded public transportation in major metropolitan areas

Outside of New York City, the public transportation infrastructure in most major American metropolitan areas is relatively bare bones.  This is particularly true with rail transportation.  Even the Metro system, the public transit network in the nation’s capital, does poor job of providing coverage for the metropolitan area it services.  I hope to explore this topic further in future articles.    

(4) A dedicated system

Part of the problem with public transit in America is that the systems were put together almost as an afterthought.  Political support has been weak and the systems function in a half-ass way.  On the other hand, the highway system is a very dedicated system. 

We need to become dedicated to developing (or perhaps I should say “re-developing”) public transit systems in America.  Amtrak, as it is currently modeled has numerous flaws which I hope to explore more in-depth in future articles.  For this article, however, I will mention the two most notable flaws are the lack of high-speed rail and the fact that Amtrak trains are required to share the same rail lines as freight trains.  Both of these flaws make Amtrak a much slower transportation option than it should be and drive up costs (particularly labor-related costs, which is one of the major reasons why air travel is only slightly more expensive than Amtrak. 

Until we begin to view passenger rail as a primary form of transportation, with resources dedicated exclusively to it, the system will suffer.  It’s absolutely paramount that if we want a NRN, we build a rail system that is exclusively dedicated to that purpose, rather than throwing passenger rail on the exact same lines as freight trains. 

(5) Reasonable pricing

Finally, the last hurdle comes in the form of “reasonable pricing.”  Rail transit suffers from the fact that pricing on many systems is too high.  Alternatively, one could argue that rail transit suffers because the pricing on competing systems is too low; that is to say, state subsidies of the highway/road system and air travel cause those forms of transportation to appear less expensive than they truly are to American taxpayers.  Hence, it might be time to reformulate our transportation funding model and find a way to create a system more in tune with market realities.  In such a system, the price of rail transit would be more reasonable than in the current system. 

The National Rail Network and Staying Competitive

An integrated and dedicated National Rail Network (NRN) will expand transportation options for most Americans and provide a net benefit over the long term.  Just like the Eisenhower Interstate System, it will help facilitate commerce.  It will create greater economic efficiencies by helping to de-clog the highways, lowering oil consumption, and decreasing the costs of transportation.  The NRN will also create many infrastructure-related jobs and help lower the amount of pollutants released into the environment.  If designed properly, the system should be predominantly self-funded over time. 

The most important thing the NRN would provide America with is a safety valve.  The American commercial system is largely dependent on highway and road transportation.  This in turn creates a huge dependence on foreign oil, which leaves the American economy highly susceptible to increasing oil prices.  If gasoline prices drift upwards of $4 - $5 per gallon once again, American industry will be hurt and economic growth will be severely limited.  The NRN will allow the United States to limit its exposure to rising gasoline prices and prosper economically in spite of oil prices.  For this reason, building a National Rail Network should be considered a much higher priority amongst policymakers. 

16 Comments – Post Your Own

#1) On October 06, 2009 at 7:26 PM, bigcat1969 (92.32) wrote:

Just a note to say thanks for that well written blog entry.  It was a good read.  Having tried to use both Amtrack and local buses a times, I agree that getting anywhere in America using a means other than an auto or a plane is a nightmare and it would be wonderful if this could change.  The cost of such a rail system might be very high however.  Could you address this in a future blog?

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#2) On October 06, 2009 at 7:58 PM, russiangambit (29.29) wrote:

> Imagine if on a particular trip, you had to (1) get on a free local highway for 30 miles, (2) transfer to a dirt road for 20 miles, (3) get onto a out-of-the-way toll road for 20 miles, (4) take another out-of-way free highway for another 25 miles, (5) get on a local road for about 10 miles, (6) take a toll highway for 10 miles, (7) travel on another dirt road for 10 miles, (8) etc, (9) etc, (10) etc. 

That desribes russian roads pretty accurately. That is why we go everywhere by train.

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#3) On October 06, 2009 at 9:00 PM, Option1307 (29.75) wrote:

Great post as usual Jakila, I always enjoy your thoughts. Even these "non-investing" blogs.

I agree that we need to start veering away from our highway dependence if we are to continue our mobile lifestyles. It is pretty much guaranteed that at some point in the near future gas will be back up above 4-5 dollars, and we all know how that plays out in our economy/lives.

A common point raised against building a national rail system here in the US is the sheer size of the country. High speed rail works great in Europe where the cities/countries are in close proximity. However, how does this translate to much larger distances? Would it really be feasible and worthwhile? I could see a much larger attraction for building regional lines. (I'm sure you invision this happening 1st anyway).

California: San Diego - LA - Bay area

East coast: DC - NY - Boston - Philly

etc.

This would help alleviate traffic in some of the worst areas while reducing the potential logistics problem.

Alternatively, one could argue that rail transit suffers because the pricing on competing systems is too low; that is to say, state subsidies of the highway/road system and air travel cause those forms of transportation to appear less expensive than they truly are to American taxpayers.  Hence, it might be time to reformulate our transportation funding model and find a way to create a system more in tune with market realities

IMO this is one of the largest obstacles. Most people have no idea what it really costs them to travel via air/car currently. Until there is more of a direct connection with the true cost, it would seem very ahrd to make railway competetive. Unless of course it were to be subsidized (Amtrak anyone?) and we know how that'd end up...

 

Again, interesting post. Best of luck on the job hunt if you're still on that...

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#4) On October 06, 2009 at 9:03 PM, 292972826 wrote:

BEST BLOG IN THE FOOL FROM A LONG LONG TIME!!!

THANK YOU, FOR THE GOOD READ...

In a note: You could add some information about foreign Rail Road Infrastructure, Strategy and Benefit. A good example is Japan/ France / China which all developed a very important High Speed Rail Road System. 

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#5) On October 06, 2009 at 11:28 PM, Tastylunch (29.27) wrote:

Really Nice post Jakila.

Rail vs Car (or Rail + Car) argument is one that usually isn't given a fair or accurate debate in America

People do a very abd job of accurately comapring all the costs, extermailities of cars.

I bet the average american has no idea how many huge indirect costs there are associated with them

Not sayin cars are bad, just sayin Rails isn't as expensive and cars aren't as expensive as they appear due to how the costs are relaized.

Frankly I find it embarassing that my city (columbus, Ohio) is the largest in the US without any passenger rail. and even moreso that the Federal gov't will not help us get it.

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#6) On October 06, 2009 at 11:42 PM, angusthermopylae (39.24) wrote:

Great blog, and great insight...

I would, however, put forward a counterpoint:  Noble in purpose or not, there has been significant distortion and abuse of the Interstate System along the way:

--Political pressure.  It has been repeatedly used as a "gun to the head" of state authorities by Federal authorities.  "Pass this law or we withhold federal highway dollar$."  National 55 mph speed limit?  Where do you think the song came from?

--Corruption.   Big contracts for road construction/maintenance have led to bribery, favortism, and a whole slew of political leaders lining their pockets.  And don't even get started on abuse of eminent domain processes.

--Distortion.  Thanks to the way highways are being funded, it's actually illegal (in most states) to create and use your own fuels...no matter how cheap or efficient.  Not because of any crime against the highways, but because it's a crime against the tax code(s).  If you don't pay the fuel tax, you aren't allowed to use that vehicle on the roads.  How many bright ideas for fuel production have been abandoned because of this weird outgrowth of the Interstate System?

Yes, I know:  This is basic human nature.  There will always be a crook to divert funds, a politician to accept bribes, and a zealot (or self-centered bureaucrat) who will punish anyone who threatens their rice bowl.  But it does no good to ignore how it's happening.

Maybe with a rail system, things can be done better...

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#7) On October 07, 2009 at 1:32 AM, starbucks4ever (97.62) wrote:

I agree with russiangambit. We have lousy roads and good railways. 

 

 

http://www.civil.uwaterloo.ca/beg/JohnStraubePhoto/TransSib/Moscow_web/202_Moscow-Subway.JPG 

http://www.pjlighthouse.com/wp-content/uploads/2007/04/moscow-subway-art-dota-seo-08.jpg 

 

http://www.echo.msk.ru/att/element-604496-misc-4.jpg 

http://www.echo.msk.ru/att/element-604496-misc-16.jpg 

 

 

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#8) On October 07, 2009 at 6:46 AM, Chromantix (97.72) wrote:

$2,000,000,000,000 spent on stimulating bankers and and all the other failures could have been more well spent on a coast-to-coast rail system, with plans to eventually connect 20-something states.  Unemployed numbers probably would have looked better methinks.

Power it with one nuclear plant, sell the unused power to the surrounding cities.  Price competetively and you've got a winner.

Good for workers. Good for the environment. Good for investors.  I'm probably wrong, just not sure how at the moment.

 

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#9) On October 07, 2009 at 7:29 AM, JakilaTheHun (99.94) wrote:

bigcat,

I addressed it in this blog to a limited extent.  The issue is building a system that is self-funding, but I believe that a truly dedicated rail system could be self-funding over the long-run.  The main hinderance isn't the prohibitive costs of building a system --- rather, it's American subsidies to the auto system and the air transportation system.  

 

Russiangambit, 

I hadn't realized roads in Russia were that bad, but I guess outside of Western Europe and the US, road systems tend to be fairly poor.  It's good that you all have a decent rail system.

 

Option, 

I actually found a job with a CPA firm over the past month, which is one reason why I've had less time for the Fool and writing.  

 

Tasty, 

I totally agree.  I think that's the biggest obstacle.  People are simply clueless about the externalities and they take them for granted.  Even some of the most diehard Libertarians believe the government has an obligation to subsidize the auto system (even if they won't put it in those terms). 

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#10) On October 07, 2009 at 7:34 AM, JakilaTheHun (99.94) wrote:

Angus,

I totally agree.  The Interstate system was designed to be "self-funded", but I don't think this aspect was thought out well enough, because gasoline taxes are subject to political winds and more important, political cowardice. 

No politician wants to raise a tax, even when it's obvious that expenditures for the system greatly exceed revenues.  Every business in America would realize that this might mean it's time to raise prices, but politicians don't want to touch a tax.  That's one reason why I believe a National Rail System has a better chance at being self-funded; by its nature, it has to be run more like a business than the highway system. 

 

zloj, 

Great pictures.  That truck stuck in the mud is pretty amazing --- amazing in that, the roads must be really terrible for anyone to even *TRY* to drive that thing in those conditions.  

 

Chromantix, 

I'm in 100% agreement.  I didn't like the stimulus bill and I didn't like the bailouts.  I thought something needed to be done to prop up the financial system, but we did it the wrong way.  The Stimulus Bill was about 20% good and 80% stuff of questionable value.  I'd been much happier to have spent $200 billion on a National Rail Network and left it at that rather than $800 billion on who-knows-what. 

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#11) On October 07, 2009 at 10:26 AM, TigerPack1 (97.88) wrote:

Great ideas!!!  That took a while to write and proof I bet.

My stimulus idea (redistribution of wealth if you will) would have been to spend $1 trillion in borrrowed money, by giving it back to taxpayers directly.  A $3000 check sent from Uncle Sam to every man, woman and child would have done wonders for the banks, the stock market, real estate and consumer spending the last 6-9 months.

Plus, the individuals of this country would have likely better allocated the funds around their specific needs and interests. 

Plus, the large banks and lenders that got us into the mess would not be directly rewarded by papering over or bailing out their problematic decisions. 

Plus, large families that need help the most would have hit pay dirt (remember family values made America great!).  Today when you "drive" around the neighborhood imagine each household (with an average of 3+ persons) receiving a $10,000 check next week, and what effect their spending and investing/savings would have on each of us.

[The next week the entire sum would be deposited in the banking system, creating enormous reserves and liquidity overnight.  The banking crisis would be largely resolved without direct bailouts of failed decisions, as individuals put their money into the stronger, surviving banks ready to make new loans.]

It basically would have acted the same as an advance on our own money and income stream, since we would be paying the tab later to Uncle Sam in the form of higher taxes.

Alas, we are REWARDING bad decisions and incredible risk-taking by the banking system under Obama's and Bush's stimulus and rescue plans of late-2008 and 2009, while lining the pockets of friends, political contributors and the like AT THE EXPENSE OF U.S. HARD WORKING, AVERAGE JOES.

Projects like yours, that directly BENEFIT society at large and the economy of the future would be my second choice.  What we ended up with, would be my third choice, but it is better than doing nothing at all under the circumstances.

-TigerPack 

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#12) On October 07, 2009 at 11:04 AM, 292972826 wrote:

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#13) On October 07, 2009 at 2:01 PM, Starfirenv (< 20) wrote:

Excellent piece and comments. This is why I still visit Caps.
+1 rec Thanks
  “Catch-22” --- we can’t have continued prosperity without cheap oil and we can’t have cheap oil without a bum economy.  This unfavorable scenario presents itself to us precisely because American policymakers over the past few decades have ignored our nation’s most pressing concern: the energy crisis."
I have to disagree here. I see them working to maintain this "crisis".

As Angus wrote--

"--Distortion.  Thanks to the way highways are being funded, it's actually illegal (in most states) to create and use your own fuels...no matter how cheap or efficient.  Not because of any crime against the highways, but because it's a crime against the tax code(s).  If you don't pay the fuel tax, you aren't allowed to use that vehicle on the roads.  How many bright ideas for fuel production have been abandoned because of this weird outgrowth of the Interstate System?"
  That's all you really need to know, and would love a link to that info. To answer the "How many bright ideas" question, here's one. TWENTY YEARS AGO, in Reno, Nv, a man named Rudolpf Gunderson started a company called A-51. He developed an emulsifier that would allow gas (or deisel) to blend with water in a 51/49% ratio, and with simple retuning, cars and trucks ran very well on it. To prove  viability, he worked out a deal with RTC (city busses), and it worked with less emissions.
Then one day, A51 disappeared. Moved out of their facility, never to be heard from again. Why? I suspect the inherent threat to Big Oil and because revenue from fuel tax would effectively be halved. Basic economics of tax and spend. We've been referred to as the Mid East of Nat Gas-  I read somewhere that GM produced 16 different nat gas powered vehicles- none of which were available here. Why? PAC money, unions, Cap and Trade$, political winds,- who knows. The point being that as  much sense as a nat' rail network makes makes, on all levels, I just don't see it happeneng- just like Tiger's stimulus idea. I voted for Obama believing in "Hope and Change", sorely needed on many levels and energy "Crisis" would be a good start. We, as a nation have seemingly "painted ourselve's into a corner". Had we, as a nation been more fiscally responsible, we might have the latitude to be more progressive.

  Let us hope that Mr Obama will step up, lest we become Dinosaurs of the Industrial age.

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#14) On October 07, 2009 at 2:27 PM, Tastylunch (29.27) wrote:

TigerPack

gosh dangit, that's about the thirteenth consecutive post you've made in a row that with which I've completely agreed.

extremely well said.

Perhaps I just ought to wait until you comment on a post before saying anything.

Probabbly save me a lot of time . :)

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#15) On October 07, 2009 at 3:00 PM, JakilaTheHun (99.94) wrote:

TigerPack,

Interesting ideas.  

If I had been named dictator of the US, here is what I would've done beginning in September of '08:

 

(1) Instead of TARP, I would've created a series of (regional-based) national banks.  The total endowment of these banks would've been $700 billion.  These banks would have lent out to the private sector directly.  After 5-10 years, these banks could slowly be sold off to the private sector.  The benefits of this plan are that [a] the banks would be able to borrow at the lowest costs possible since they would be US gov't administered and [b] the banks could've taken advantage of the liquidity void and been fairly profitable, thereby reducing the national debt, while helping to solve the financial crisis.

(2) While I believe #1 would solve much of the liquidity problems, it would not solve the "too big to fail" problems that could have potentially overwhelmed the FDIC.  I would not "bail out" the banks --- rather, the ones that could not survive, would've been nationalized, split up into several different companies/banks, then sold off to the private sector after a period of maybe 6 months to 5 years. 

(3) Step #3 would be to eliminate the "too big to fail" problem completely and regulate the size of banks in a way so that the megabanks would be forced to slowly divest many of their assets and become much smaller. 

(4) Next step would've been to create an American investment fund that had authority to buy up to $50 billion in commodities, particularly oil, platinum, palladium, copper, and silver --- back when commodity prices were in the gutter. Hire a great commodities investor to run the thing --- give him a hefty commission; the US profits immensely [China essentially did do this]

(5) Next step would've been the National Rail Network with another $200 billion.  

(6) I would have also authorized $50 billion for improving energy efficiency in various ways.

 

With the spending and creation aspect out of the way, the next steps would be the cost cutting:

(7) Begin phasing out "the Drug War" and begin an experiment with regulated marijuana legalization.  The idea would be that if the government could regulate it, it could more effectively control it.  Moreover, a major tax could have been slapped onto it to raise Federal revenues.

(8) Begin phasing out Social Security.  This would not be easy, cheap, or without a lot of headaches, but it needs to be done.  In the long-term, it would help lower the US's burdens significantly.  Of course, those who have paid in shouldn't be left out to dry --- which is why it would probably have to be phased out over a very long period of time [i.e. 30-50 years!]

(9) Begin decreasing military size and spending.  We spend something like 5 times as much as any other nation on the military.  We need to downsize and move back towards the idea of a "peace time military."  

(10) Aggressively pursue a more diplomatic foreign policy.  Make attempts to ally the US with Russia.  Shore up relations with continental Europe.  

 

So that would've been my plan.  It never would've happened, but I believe it would work much better than what we are pursuing. 

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#16) On February 01, 2010 at 3:36 PM, stan8331 (97.55) wrote:

Excellent post.  Rail is the future - it's vastly more efficient for moving cargo over long distances and the stress of driving on perpetually clogged roads will offer a ready source of passenger rail customers. 

 Also agree with most of your "dictatorial edicts".  I'm not sure we'll ever be able to eliminate Social Security entirely - there has to be some minimal safety net for the unwise and unfortunate, but the size of the program could be drastically reduced over time.  Ending the unwinnable drug war could happen much faster and could offer a huge boost to our economy at a time when it's badly needed.  Companies, schools etc. would still be free to drug test as they see fit.  It's not like anyone would be allowed to take reefer breaks on the job - intoxication would still be grounds for immediate dismissal.  The only folks who lose would be the drug lords. 

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