August 20, 2019

Why Trump Should Stop the Reregulation of Freight Rail

Recently, two major railroad operators, CSX and Union Pacific, reported a significant drop in earnings, in part due to declining rail shipments. This was partially due to the impact of ongoing trade disputes.

Recently, two major railroad operators, CSX and Union Pacific, reported a significant drop in earnings, in part due to declining rail shipments. This was partially due to the impact of ongoing trade disputes. While we generally support a better trade relationship with China (hopefully with fewer tariffs and nontariff barriers), we need to see strong freight rail traffic if the economic expansion is going to roll on.

Legendary investor Warren Buffet once said that if he were stuck on a desert island and could only be given one number to know how the economy was doing, he would pick rail car traffic.

Our manufacturing, mining, merchandising and energy industries are dependent on freight rail and trucking. This is why we can’t think of a worse time for Washington to be imposing new onerous regulations on the rail industry. One policy that could very negatively affect freight rail is the effort among some regulators inside the Trump administration and some in Congress to reregulate the rail industry during the time when it least needs additional red tape.

This is especially important because this is a president who prides himself on rolling back the regulatory surge under President Barack Obama. Remember: Two regulations repealed for every new rule passed.

We do not make a habit of praising Jimmy Carter on the economy, but signing the Staggers Rail Act into law was one of the most positive economic reforms of that era. The Committee to Unleash Prosperity co-founder Steve Forbes has referred to the deregulation of the railroads in the 1980s as an “economic miracle” we ought to learn from.

The Staggers Rail Act gave rail carriers greater flexibility to negotiate their own prices and contracts, and as a result, a recent study by the American Action Forum found that rail shipping costs in 2016 were “45 percent lower than in 1981, the first full year of operation under the partial deregulatory structure.”

Cliff Winston, an economic scholar at the liberal Brookings Institution, has found that rail deregulation both saved the industry from nationalization and led to big savings for the industry and consumers. He found:

“The evidence strongly indicates that rail deregulation accomplished its primary goal of putting the U.S. rail freight industry on a more secure financial footing. Surprisingly, deregulation has also turned out to be a great boon for shippers as rail carriers have passed on some of their cost savings to them in lower rates and significantly improved service times and reliability.

"I conclude that a fully deregulated environment, which would entail elimination of residual regulation by the Surface Transportation Board, will further benefit the industry.”

Lower prices have translated into tens of billions of dollars of savings for consumers on the thousands of goods and products shipped by rail throughout the country on a daily basis.

Unfortunately, this successful regulatory restraint is now being put to the test as Donald Trump’s own agencies flirt with new and highly unfair rules overseeing rail practices. The biggest threat the rail industry faces comes from a Surface Transportation Board proposal known as the “forced switching” rule. The forced switching rule would force rail operators to turn over their freight cars to competitors at potentially below-market prices.

This rule change is an assault on the rail companies’ private property rights. Having them share their freight cars with competitors would be like requiring FedEx to deliver packages for UPS. This is also similar in some ways to the ill-designed net neutrality rules many in Congress are pushing.

This price control scheme would be similar in nature to net neutrality, wherein broadband carriers are prohibited from charging more money to companies that use the most of their bandwidth or “lanes.” Why should someone be forced to carry another person’s goods through their channels without receiving proper compensation?

If enacted, the forced switching rule would severely restrict rail carriers’ freedom to negotiate their own contracts — even though this freedom was what made the industry so successful in building its network and lowering costs for consumers in the first place. Any cost-savings in the short term would be offset by less capital investment in rail as these rules create literal “free riders.”

To add insult to injury, some in Congress want to do the biddings of the unions and require mandatory crew sizes on rail cars. This would come at a time when increasing automation is reducing work crews for rail delivery and lowering transportation costs. Does anyone really believe that locking in a specific rail crew size today will be appropriate two, five or 10 years from now? Locking in a set number of workers on a rail line makes as much sense as locking in a set number of workers at a McDonald’s restaurant.

We hope Trump’s White House will intervene and stop these congressional and agency schemes to reregulate rail. Low freight costs make American exports more competitive in global markets, which keeps jobs in America and lifts economic growth. That was as true 40 years ago as it is today.

COPYRIGHT 2019 CREATORS.COM

Who We Are

The Patriot Post is a highly acclaimed weekday digest of news analysis, policy and opinion written from the heartland — as opposed to the MSM’s ubiquitous Beltway echo chambers — for grassroots leaders nationwide. More

What We Offer

On the Web

We provide solid conservative perspective on the most important issues, including analysis, opinion columns, headline summaries, memes, cartoons and much more.

Via Email

Choose our full-length Digest or our quick-reading Snapshot for a summary of important news. We also offer Cartoons & Memes on Monday and Alexander’s column on Wednesday.

Our Mission

The Patriot Post is steadfast in our mission to extend the endowment of Liberty to the next generation by advocating for individual rights and responsibilities, supporting the restoration of constitutional limits on government and the judiciary, and promoting free enterprise, national defense and traditional American values. We are a rock-solid conservative touchstone for the expanding ranks of grassroots Americans Patriots from all walks of life. Our mission and operation budgets are not financed by any political or special interest groups, and to protect our editorial integrity, we accept no advertising. We are sustained solely by you. Please support The Patriot Fund today!


The Patriot Post and Patriot Foundation Trust, in keeping with our Military Mission of Service to our uniformed service members and veterans, are proud to support and promote the National Medal of Honor Heritage Center, the Congressional Medal of Honor Society, both the Honoring the Sacrifice and Warrior Freedom Service Dogs aiding wounded veterans, the National Veterans Entrepreneurship Program, the Folds of Honor outreach, and Officer Christian Fellowship, the Air University Foundation, and Naval War College Foundation, and the Naval Aviation Museum Foundation. "Greater love has no one than this, to lay down one's life for his friends." (John 15:13)

★ PUBLIUS ★

“Our cause is noble; it is the cause of mankind!” —George Washington

Please join us in prayer for our nation — that righteous leaders would rise and prevail and we would be united as Americans. Pray also for the protection of our Military Patriots, Veterans, First Responders, and their families. Please lift up your Patriot team and our mission to support and defend our Republic's Founding Principle of Liberty, that the fires of freedom would be ignited in the hearts and minds of our countrymen.

The Patriot Post is protected speech, as enumerated in the First Amendment and enforced by the Second Amendment of the Constitution of the United States of America, in accordance with the endowed and unalienable Rights of All Mankind.

Copyright © 2024 The Patriot Post. All Rights Reserved.

The Patriot Post does not support Internet Explorer. We recommend installing the latest version of Microsoft Edge, Mozilla Firefox, or Google Chrome.