By Noel T. Braymer
The annual World Economic Forum at Davos, Switzerland attracts many of the richest people in the world. Recently at a panel discussion there, billionaire Michael Dell thought he asked a rhetorical question by asking what country ever had a growing economy with a marginal income tax of 70%. In the background a panelist said “the United States.” The person who said that was Erik Brynjolfsson, a Professor at the Massachusetts Institute of Technology, and he was right. A marginal tax rate of say 70% doesn’t mean for example that if you earn a million dollars, you will have to pay $700,000 dollars on that for Income taxes. A crude example would be if the marginal rate of income over a million dollars was 70%, then the tax on $1,100,000 would be $70,000 on the $100,000 over and above the first million. The point is the idea is not so much to take money away from rich people but to create incentives for people to spend money. I remember in the 70’s and eighties “Christmas Bonuses” were still common on even the lower paying jobs. I remember getting such a check from one of the two partners of the small company I was working at in the 80’s at the end of the year. This company’s partner said right out he’d rather give us extra money than pay the taxes on it if they had kept it. The heart of economic growth comes from consumer spending. Today because so many people are in debt because incomes don’t match the cost of living, consumer spending for most people is declining.
During World War 2 the marginal tax rate for the wealthiest Americans hit 91%. It stayed there until the 1960’s. This high tax rate went a long way in quickly paying down much the debt from World War 2. When Dwight D. Eisenhower became President in 1953 he got a angry letter from his older brother who wanted the marginal tax rates lowered. But the moderately conservative Dwight D. Eisenhower thought it best to leave the current tax rates alone. President John F. Kennedy proposed the reduction of the marginal tax rate down to 70%. But it would be income neutral since with it many tax deductions would also be eliminated. The Kennedy Tax plan was signed into law in the 1960’s by President Lyndon B. Johnson. During the 1950’s and 60’s the American middle class had one of the highest standards of living in the world and the country had a booming economy because of strong consumer spending.
So what does all this have to do with rail passenger service? The point is people, often successful people believe things which are wrong. But this doesn’t stop people from making the same mistakes over and over again. With the introduction of the Shinkansen “high speed rail” service (top speed 125 mph) in Japan in 1964, came the call that high speed rail was what is needed in the US on the East Coast. The American answer was the Metroliner which was given to the Pennsylvania Railroad in 1969 to run between Washington and New York. Amtrak took over operation of the service by 1971. The difference between the two services were the Shinkansen was build on a new, fully graded separated alignment. This meant all the trains would run at about the same speed and avoid most traffic conflicts with other trains and with highway traffic. This created a great deal of capacity for trips between major metro areas which Japan needed after recovering from World War 2.
In the case of the Metroliner, it was a train that could go up to about 150 miles per hour. But it was sharing right of way and infrastructure on the then Pennsylvania Railroad which included many commuter train services causing congestion on the railroad. The Pennsylvania Railroad had also deferred maintenance for many years and was on the verge of bankruptcy. So Metroliner trains had many problems just running on time. I remember I think a “60 minutes” television broadcast with them Amtrak President Alan Boyd in the late 70’s or early 80’s lamenting the many problems (including a rough ride) on the Metroliners. Between 1976 to the early 1980’s with the State’s financial support new equipment was put on the “San Diegan” trains and daily frequencies went from 3 to 7 trains daily. Annually ridership during this time went from 300,000 or so to over 1 million passengers. From this Amtrak management thought they found the magic bullet to grow rail ridership by building a “Bullet Train” railroad between San Diego and Los Angeles with a branch line to LAX.
During this time Amtrak executives talked to officials in Japan to get technical advice and their interest in building a “Bullet Train” line in California. There was also lobbying in the legislature in Sacramento for the State to sell bonds to help finance this new service. What these Amtrak employees failed to understand was the high costs, impacts and opposition of constructing a new railroad in the heavily urban areas between Los Angeles and San Diego. The other thing they failed to understand was that to operate a rail passenger service profitably, they would need to generate large numbers of passenger miles to generate enough revenue to be profitable. That would need a route longer than the roughly 127 miles between Los Angeles and San Diego. The best way to do that would be to build a new high speed railroad in the countryside with much lower construction costs than building in an urban area. In other words the better market for High Speed Rail service would be between the Bay Area and Southern California with slower and cheaper rail connections in urban areas. This is commonly done with High Speed Rail in Europe.
A major problem with this project which was split off of Amtrak by 1982 was the planners didn’t have a solid plan and hadn’t learned what the concerns were of the local communities. One thing that local politicians do is network with each other. An example of this was Walt Gilbert, city councilman in Oceanside in the 1980’s who lived at a mobile home park by the railroad tracks near the coast where likely elevated Bullet train tracks would be built. He was already in regular contact with other city council members of cities along the route. Several of these towns were possible stations for this Bullet Train and/or were planning to build new stations for the growing ridership of the existing Amtrak service. When these city council members compared notes with each others they noticed the stories each city was given didn’t match what the Bullet Train planners were telling the other cities. This didn’t go well with the other cities. A major problem was the plan for this California Bullet train kept changing because the people behind it kept running into new problems. By the end of 1984 or so the whole California Bullet Train project went out of business. But for Amtrak the quest for High Speed Rail continues with the Acela phase 2 with new, faster equipment, but limited connections to many parts of the East Coast. The FRA continues to study High Speed Rail projects on the NEC which they estimate in the hundreds of billions of dollars for speed over 160 miles per hour.
One of the things that came out of the Bullet Train project because of the networking of the cities with rail service, was the creation of LOSSAN which began as the Los Angeles to San Diego Joint Powers Agency in the late 1980’s, It now spreads between San Diego, Los Angeles, Santa Barbara and San Luis Obispo. It is also planning for extended rail passenger service as far east as Palm Springs and as far north as San Jose. As for High Speed Rail it will be a few more years in the future. But what we should see is a separate double tracked passenger railroad for speeds between 90 to 110 miles per hour between Anaheim and Burbank next to the freight railroad tracks. This is part of the plan to use these tracks for all passenger trains including future high speed rail service between Anaheim and San Francisco. Additional tracks are also planned in many parts of California for expanded rail passenger service.
This brings up the question: how do you get more people to ride the trains? What is needed to do this is to run service when and to where people want to go and come back. This needs frequent service near places where people live and to places they want to go. Connecting service by bus and rail transit is also needed to serve more markets to draw more passengers. To fill up trains you need to serve as many locations as possible. A major fallacy is people want to travel fast, so what has been tried is skipping stations to reduce running times. But when this is tried ridership went down not up. By skipping stations, the trains bypass passengers who had been using that station. A recent example of this was the new early morning arrival on the San Joaquin trains to Sacramento which began last year. So far so good. But based on equipment availability the trains started in Fresno instead of Bakersfield to Sacramento. Even though the earlier morning arrival into Sacramento was more attractive for a day trip there. Instead of an increase in ridership, it went down. Late last year the San Joaquin schedule was modified to extend these trains during the weekends back to Bakersfield with bus connections to Southern California. This replaces the overnight bus on the weekends from Los Angeles to Fresno which now ends in Bakersfield. This should attract more passengers from Southern California to travel to Sacramento on Amtrak. This will also generate more passenger miles/revenues than passengers between Fresno and Sacramento. What would also help is to extend some buses between Bakersfield and Southern California that now stop in Santa Ana to go all the way to San Diego. This is a travel market of over 3 million people that is not now connected to some San Joaquin trains.