The United States federal government should close the United States Department of Transportation

A2 CP Fails – No Investment/Profit Motive

The private sector wants to invest in high speed rail projects.

Public, Private or Both? Assessing the Prospects, Promise and Pitfalls of Public-Private Partnerships,” Public Interest Research Group, Summer 2011 http://uspirg.org/sites/pirg/files/reports/HSR-PPP-USPIRG-July-19-2011.pdf, MMarcus)

Americans are excited about the prospect of a clean, efficient new means of travel; nearly two thirds of Americans support federal or state funding for high-speed rail. 1 But the American people aren’t the only ones enthusiastic about high-speed rail. Businesses from around the globe are eager to compete for the billions of dollars in infrastructure spending that will accompany the nation’s investment in high-speed rail. In 2009, 30 companies from around the world committed to establish a presence or expand their existing presence in the United States if they are chosen to supply components for high-speed rail. 2 Prior to its cancellation, the Florida high-speed rail line attracted interest from seven teams including dozens of firms from around the globe. 3 In California, a request for expressions of interest from private firms drew more than 1,000 responses, while 22 funds have expressed interest in financing part of the system’s construction
Privatizing Amtrak solves the case and creates economic growth -- investors are ready and willing.

Stephens et al 11- Professor of Library and Information science at San Jose State University(Micheal, "Privatizing Government Assets to Reduce US Debt." November 18th 2011. www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CGAQFjAG&url=http%3A%2F%2Fwww.honors.ufl.edu%2Fapps%2FThesis.aspx%2FDownload%2F1449&ei=PAbmT5vHJYW49QSyl_ikAQ&usg=AFQjCNFk9bJ942IDHLMP3SeXEHl0g4VR4w&sig2=lq6BpANqNxybIJvaSnoNDw)//TD

Possible solution The privatization of governmental assets such as Amtrak would serve as the first step on the road to privatizing more aspects of the Department of Transportation and other sectors of the United States government. The first stage for completing Amtrak’s privatization would be to sell the Northeast Corridor portion of the railroad to private investors. This is the route that is most heavily used within the Amtrak system by commuters. This route carries almost 250,000 passengers each day. This will provide private investors with the opportunity to operate high-speed rail service in the route that lies between Washington and Boston. Investors are expected to invest $50 to $60 billion in a period of ten years for this part of the railway and will complete the project of renovating the railway in three to four years as opposed to the ten years that it will take the government (The Washington Post, 2011). Selling off this piece of the route will mean selling off the only rail real estate that the government owns, a fear held by those who oppose this project. But selling off this piece of the track will reduce the annual subsidies that the government allocates to Amtrak and might lead to the construction of a high-speed rail, which will be extremely helpful for large urban areas such as New York and Boston. Another advantage of privatizing Amtrak is that privatization formalizes and establishes property rights which are one of the biggest incentives that entrepreneurs and venture capitalists look into at the time of considering a project (Filipovic, 2005). Amtrak offers a great opportunity to observe the benefits that the private sector can bring to the U.S. economy. It will be the first step for transportation improvement and reduction of governmental deficits. With an outdated, inefficient and unused system, the United States government will benefit greatly from selling portions off Amtrak or looking for a bidder that is willing to buy the entire corporation. But until then, the government will continue to subsidize an inefficient system that has the potential to improve urban transportation and can provide great gains to the U.S. GDP.

1NC – Freight CP

TEXT: The United States federal government should allow private-sector participants to obtain funding from the Transportation Infrastructure Finance and Innovation Act (TIFIA) an comparable railroad programs, and repeal the Railway Labor Act of 1926 and the Railroad Retirement Act of 1934.

The CP solves the case -- removes federal regulations and allows the private sector to function more effectively.

Van Doren, 3--PhD from Yale, editor of the quarterly journal Regulation, has taught at Princeton, Yale and the University of North Carolina at Chapel Hill, former postdoctoral fellow in political economy at Carnegie Mellon University (Peter, “HANDBOOK FOR CONGRESS”, Cato Institute, 2003, http://www.cato.org/pubs/handbook/hb108/hb108-36.pdf)//EM

Although great progress has been made in reducing regulation of transportation, further steps would improve the U.S. system. Currently, the motor carrier industry is subject to no economic controls; consequently there need be no change in policy. The restrictions on Mexican truckers should be lifted, but that is mainly a trade and protectionism issue. Railroads are still subject to some price controls, limits on abandonment, and control over mergers. Rail passenger service, particularly Amtrak, has been a problem ever since it was established in the 1970s. Government limits on air passenger transportation continue through cabotage restrictions, federal administration of air traffic controllers, and government ownership of airports. Finally, as a result of the September 11, 2001, attacks, security considerations have burgeoned, making air travel more expensive, more time-consuming, and perhaps safer. Water transportation regulation and subsidies have not been a part of the regulatory reforms of the last 25 years and remain stubbornly resistant to change. Rail Freight Today, the rail industry remains the most closely supervised mode of transport with limits on abandonment; mergers; labor usage; ownership of other modes; and even, in certain situations, pricing. The Surface Transportation Board oversees the rail industry and administers the Staggers Act, under which the board must ensure that rates charged to ‘‘captive shippers’’ are fair. Under federal law, the STB can exempt railroad traffic from rate regulation whenever it finds such control unnecessary to protect shippers from monopoly power or wherever the service is limited. Congress has legalized individual contracts between shippers and rail carriers, allowing competitive pricing. The Staggers Act authorizes railroads to price their services freely, unless a railroad possesses ‘‘market dominance.’’ Congress continues a prohibition on intermodal ownership and requires the maintenance of labor protection. All rail mergers, for example, require STB approval; once given the green light, however, those mergers are relieved from challenge under the antitrust laws or under state and local legal barriers. Railroads face a stringent review by the STB that, in addition to general antitrust considerations, includes the effect on other carriers, the fixed charges that would arise, and the effect on employees. In particular, the board must provide protection in any consolidation for employees who might be adversely affected. That provision is very popular with rail labor unions; the industry views it as employment protection, which makes achieving significant savings from mergers difficult. Under current law, railroads must seek STB permission to abandon lines, build new track, or sell any service. Because users and other interested parties employ the law to slow or even block change, which adds to costs, those rules should be repealed. Federal law also enjoins the STB to regulate rates charged ‘‘captive shippers’’—those that can ship by only one line and enjoy no satisfactory alternative. Coal and grain companies have exploited this provision to gain lower rates. The markets for coal and grain are highly competitive, so the producers cannot sell their output at more than the market price. Consequently, a railroad that drives shipping costs up to the point where the cost of producing the coal or grain and then moving it exceeds the competitive price will find that it has no traffic. In other words, although the railroad has no direct competition, it, too, is constrained by the market. If a coal company enjoys significantly lower costs because of a favorable location or a rich and easily exploited mine, it could reap higher profits than less favorably sited enterprises. However, if the mine has only one option for shipping its product, that is, a single railroad, the rail carrier will be able to secure much of that above-normal profit. In that case, the stockholders of the railroad will gain at the expense of the stockholders of the mining corporation. There exists no rationale for the government to intervene by favoring one company over another. The captive shipper clause must go. Congress should also repeal the ban on railroads’ owning trucking companies or certain water carriers. Federal regulations proscribe railroad ownership of trucking firms, although the STB and the ICC, in earlier decades, have granted many exceptions. From the time of the building of the Panama Canal, the Interstate Commerce Act has prohibited railroad possession of water carriers that ply that waterway. Early in the 20th century, the public believed that those huge companies needed the competition of water carriers to keep down transcontinental rates. Like the prohibition on ownership of water carriers, the ban on owning trucking firms stems from the unwarranted fear of railroad power. With the plethora of options available to shippers today, such rules are totally unnecessary. The restrictions simply limit the ability of railroads, trucking firms, and water carriers to offer the most efficient multimodal services. The Staggers Act authorized railroads to negotiate contracts with shippers but only with government approval. In addition, all rates must be filed with the STB, and tariffs that are either ‘‘too high’’ or ‘‘too low’’ can be disallowed. Congress should repeal these vestigial regulatory powers. At best, they add to paperwork and to the cost of operation; at worst, they slow innovation and reduce competition.

Exts – CP Solves

The private sector vastly improves rail efficiency.

Gi-hwa, 9 [Jeong, Center for Free Enterprise, http://eng.cfe.org/mboard/bbsDetail.asp?cid=mn2007713123749&pn=8&idx=1903, “Railway workers’ strike and management efficiency”, Accessed Jun 20, //SH]

The government proposed a bill to develop and restructure the railway industry through privatization in a bid to resolve the inefficiency problem at the state-owned company. But it faced so strong opposition from the labor union that it gave up the privatization plan and made a compromise to keep it state-run. An expert found that the move fell far short of a fundamental solution to improve management efficiency and the railway needed to be handed to the private sector. Since the Korean Railway launched as a state-run company in 2005, its management conditions have not improved little but even deteriorated further. Its operating loss snowballed from 537.3 billion won in 2005 to 737.4 billion won in 2008. The accumulated operating loss totaled 2.4 trillion won since then.

Deregulation solves railroads -- competition ensures success.

McQuillan 2000 (Lawrence J, Lawrence J. McQuillan was a research fellow at the Hoover Institution. “An Electrifying Proposal,” Hoover Digest No.1, http://www.hoover.org/publications/hoover-digest/article/7902//Mkoo)

The Staggers Rail Act of 1980 greatly reduced ICC control over pricing, exit, and operations in the rail industry. Mark Burton of the Tennessee Valley Authority looked at the response of rail freight rates to competition in a 1993 study. After controlling for factors such as the availability and pricing of substitute transport modes, shipment and route characteristics, and the cost of capital and labor, Burton reports that rail freight rates for seventeen commodities were lower in 1985, by an average of 11 percent, than they would have been under continued ICC regulation. Shipping rates for high-value manufactured goods fell up to ten times more than rates for low-value bulk commodities, reflecting the ICC’s past use of "value-of-service" rate setting. For example, rates for fabricated metal products were 34 percent lower in 1985, furniture and fixtures were 31 percent lower, and machinery was 17 percent lower. In contrast, coal, chemical, and scrap material rates were only 3 percent lower. The 1980 deregulation of trucking and railroads created a more competitive shipping environment, thereby lowering the price of products on the shelf and giving consumers access to a greater variety of goods.

Deregulation solves trains -- empirics prove.

Hoover Institute 1997 (“Miracle on I-35,” Policy Review No.86, 11/1/97,http://www.hoover.org/publications/policy-review/article/7535//Mkoo)

But the city’s most spectacular transportation success derives from the rebirth of freight rail. "Kansas City is in existence today because of its access to the interstate highway of its time: the Missouri River," says Mayor Emanuel Cleaver. "As railroads were inching their way west, a group of visionary Kansas Citians decided that if they were the first to build a railroad bridge across the Missouri River, the city would prosper. The Hannibal Bridge was opened in 1869, testimony to the city’s grit and determination. Today, nearly 130 years later, Kansas City boasts the nation’s second-largest rail center, next to Chicago." Nine major railroads serve Kansas City. Seven have intermodal terminals there, enabling them to transfer cargo to and from trucks. The railroads, deregulated in the 1980s, are regaining the long-haul pre-eminence they once held in the days before the interstate highway system revolutionized trucking. Now the price for shipping a rail boxcar of auto parts from the Detroit area to Ford’s Claycomo plant is one-third of the cost of shipping it by truck. Recently, however, the trains have teamed up with their erstwhile rivals, flatbed trucks. Railroad operators have built giant intermodal yards in hub cities like Kansas City, where truck and train cargos can be unloaded, sorted, remixed, and reloaded en route to their final destinations. Consider, for instance, the mixing facility that the Norfolk and Southern Railroad is constructing for Ford Motor Co. in Clay County, Missouri, just north of the Missouri River. You could think of the facility as akin to an airline hub--except that the passengers are new cars riding auto racks. Ford has numerous plants in the eastern United States, each producing only a limited range of models. But the dealerships of each region require a mix of all Ford models. So, at the Norfolk and Southern hub, the "passengers" are unloaded and resorted according to their destined markets. Train magazine reports that Kansas City tripled its intermodal business between 1990 and 1994. Soon thereafter, the Burlington Northern Santa Fe Railroad allocated $95 million to triple the capacity of its mammoth intermodal center in Kansas City, Kansas. The revamped facility will have the capacity to regroup and reclassify 2,400 rail cars daily.

Privatization of rails works -- results in faster and better service.

Crozier, 1 [Patrick, CrozierVision, Transport Blog http://www.libertarian.co.uk/sites/default/lanotepdf/econn091.pdf, “Why British Rail Privatisation has Failed”, Accessed Jun 20, //SH]

So what went wrong? Is private enterprise inherently wrong? Should I start dishing out Communist Party membership cards? Well, private enterprise worked on the railways in this country for 125 years or so. The railway — the track, the trains, the embankments, the cuttings, the tunnels, the via-ducts, the stations, the vocabulary, the culture — was a pri-vate sector invention. It transformed the country. It made most of London possible, enforced standard time and was a vital motor of the industrial revolution. I recently came across a statement from the British Railways Board dated 1943. In it they claimed that the British railway was the best in the world. I do not know what the truth is. But what I do know is that no one would make the claim today. The free market still works. And it works on rail. We only have to look at Japan, which has the busiest railway in the world. Parts of the network have never been in state hands and work with military precision. Since 1987 the whole net-work has been in private hands. Although there is subsidy for outlying regions, there is no vertical fragmentation, no fran-chising. And it works like a dream with a third of all the world’s train journeys being taken there. And it still has the fastest scheduled service. TGV eat your heart out.

The CP has immense benefits over the federally funded status quo.

Gómez-Ibáñez, 4 [José A., Professor of Urban Policy and Public Planning, Harvard University, September 8, http://www.hks.harvard.edu.proxy.lib.umich.edu/var/ezp_site/storage/fckeditor/file/pdfs/centers-programs/centers/taubman/working_papers/gomezibanez_04_railway.pdf, “Railroad Reform: An Overview Of The Options”, Accessed Jun 21, //SH]

As Clifford Winston explains in his paper prepared for this conference, deregulation brought about a remarkable revival of the U.S. freight railroad industry.12 The average tariff per ton-mile dropped by roughly half in real terms, stimulating an increase in railroad traffic of all types. And the railroads were able to cut costs faster than they cut tariffs, so that the industry’s profitability was restored. The railroads complain that they still earn less on their investments than other comparable private industries, and some shippers argue that they have not enjoyed much tariff relief because they are still captive to a particular railroad. But the industry is once again able to attract capital, and even the so-called captive shippers are paying less than they had before deregulation.

Privatization of railways is beneficial.

Gómez-Ibáñez, 4 [José A., Professor of Urban Policy and Public Planning, Harvard University, September 8, http://www.hks.harvard.edu.proxy.lib.umich.edu/var/ezp_site/storage/fckeditor/file/pdfs/centers-programs/centers/taubman/working_papers/gomezibanez_04_railway.pdf, “Railroad Reform: An Overview Of The Options”, Accessed Jun 21, //SH]

The privatized railway concessions were generally successful in improving service for shippers and passengers while significantly reducing the level of public subsidy the railroads absorb. A survey by Louis Thompson and his colleagues at the World Bank of freight concessions in five Latin American and one African country found, for example, that tariffs had declined in 15 of the 17 concessions for a savings to shippers of $900 million in 1999 and that traffic was above pre-concession levels in every case.24 Urban commuter railway and subway concessions in Buenos Aires and Rio de Janeiro have substantially reduced the amount of public subsidy required while also increasing ridership.25

Deregulation solves railroads – competition ensures success

McQuillan 2000 (Lawrence J, Lawrence J. McQuillan was a research fellow at the Hoover Institution. “An Electrifying Proposal,” Hoover Digest No.1, http://www.hoover.org/publications/hoover-digest/article/7902//Mkoo)

The Staggers Rail Act of 1980 greatly reduced ICC control over pricing, exit, and operations in the rail industry. Mark Burton of the Tennessee Valley Authority looked at the response of rail freight rates to competition in a 1993 study. After controlling for factors such as the availability and pricing of substitute transport modes, shipment and route characteristics, and the cost of capital and labor, Burton reports that rail freight rates for seventeen commodities were lower in 1985, by an average of 11 percent, than they would have been under continued ICC regulation. Shipping rates for high-value manufactured goods fell up to ten times more than rates for low-value bulk commodities, reflecting the ICC’s past use of "value-of-service" rate setting. For example, rates for fabricated metal products were 34 percent lower in 1985, furniture and fixtures were 31 percent lower, and machinery was 17 percent lower. In contrast, coal, chemical, and scrap material rates were only 3 percent lower. The 1980 deregulation of trucking and railroads created a more competitive shipping environment, thereby lowering the price of products on the shelf and giving consumers access to a greater variety of goods.

Deregulation solves trains -- empirics prove.

Hoover Institute 1997 (“Miracle on I-35,” Policy Review No.86, 11/1/97,http://www.hoover.org/publications/policy-review/article/7535//Mkoo)

But the city’s most spectacular transportation success derives from the rebirth of freight rail. "Kansas City is in existence today because of its access to the interstate highway of its time: the Missouri River," says Mayor Emanuel Cleaver. "As railroads were inching their way west, a group of visionary Kansas Citians decided that if they were the first to build a railroad bridge across the Missouri River, the city would prosper. The Hannibal Bridge was opened in 1869, testimony to the city’s grit and determination. Today, nearly 130 years later, Kansas City boasts the nation’s second-largest rail center, next to Chicago." Nine major railroads serve Kansas City. Seven have intermodal terminals there, enabling them to transfer cargo to and from trucks. The railroads, deregulated in the 1980s, are regaining the long-haul pre-eminence they once held in the days before the interstate highway system revolutionized trucking. Now the price for shipping a rail boxcar of auto parts from the Detroit area to Ford’s Claycomo plant is one-third of the cost of shipping it by truck. Recently, however, the trains have teamed up with their erstwhile rivals, flatbed trucks. Railroad operators have built giant intermodal yards in hub cities like Kansas City, where truck and train cargos can be unloaded, sorted, remixed, and reloaded en route to their final destinations. Consider, for instance, the mixing facility that the Norfolk and Southern Railroad is constructing for Ford Motor Co. in Clay County, Missouri, just north of the Missouri River. You could think of the facility as akin to an airline hub--except that the passengers are new cars riding auto racks. Ford has numerous plants in the eastern United States, each producing only a limited range of models. But the dealerships of each region require a mix of all Ford models. So, at the Norfolk and Southern hub, the "passengers" are unloaded and resorted according to their destined markets. Train magazine reports that Kansas City tripled its intermodal business between 1990 and 1994. Soon thereafter, the Burlington Northern Santa Fe Railroad allocated $95 million to triple the capacity of its mammoth intermodal center in Kansas City, Kansas. The revamped facility will have the capacity to regroup and reclassify 2,400 rail cars daily.

Exts – Federal Control Fails

Federal control over railroads is counterproductive and hurts industry flexibility.

Gómez-Ibáñez, 4 [José A., Professor of Urban Policy and Public Planning, Harvard University, September 8, http://www.hks.harvard.edu.proxy.lib.umich.edu/var/ezp_site/storage/fckeditor/file/pdfs/centers-programs/centers/taubman/working_papers/gomezibanez_04_railway.pdf, “Railroad Reform: An Overview Of The Options”, Accessed Jun 21, //SH]

Within a few decades, many industry observers came to believe that governments’ close involvement in the railroads, either as owner or regulator, was counterproductive in that the involvement made it harder for the industry to adapt to its new environment. Public ownership was usually accompanied by public subsidies, which were helpful. But it also was accompanied by requirements to attend to employment, regional development, and other social goals that competed with the railroads’ basic transportation function. Railroads were typically pressed to employ more staff than they needed, for example, or to maintain branch lines and services that were lightly used and no longer profitable, and the costs of these obligations often exceeded the subsidies they received. In North America, government regulators usually required the privately owned railroads to attend to many of the same social goals. These privately owned railroads were typically not subsidized, however, since public subsidy was less politically acceptable unless accompanied by public ownership.

More evidence -- federal control leads to financial losses.

Kessides, 5 [Ioannis N., Lead Economist, World Bank, http://wbro.oxfordjournals.org.proxy.lib.umich.edu/content/20/1/81.full.pdf+html, “Infrastructure Privatization and Regulation: Promises and Perils”, Accessed Jun 21, //SH]

Infrastructure is crucial for generating growth, alleviating poverty, and increasing international competitiveness. For much of the twentieth century and in most countries, the network utilities that delivered infrastructure services—such as electricity, natural gas, telecommunications, railroads, and water supply—were vertically and horizontally integrated state monopolies. But this approach often resulted in extremely weak services, especially in developing and transition economies and especially for poor people. Common problems included low productivity, high costs, bad quality, insufficient revenue, and shortfalls in investment. Over the past two decades many countries have implemented far-reaching institutional reforms—restructuring, privatizing, and establishing new approaches to regulation. This article identifies the challenges involved in this massive policy redirection within the historical, economic, and institutional context of developing and transition economies. It also reviews the outcomes of these policy changes, including their distributional consequences—especially for poor households and other disadvan-taged groups. Drawing on a range of international experiences and empirical studies, it recommends directions for future reforms and research to improve infrastructure performance.

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