We have met the Obamamobile, and it is a train. Just ask Commerce Secretary Gary Locke. Locke was in Michigan recently, while SecTrans Ray LaHood, VP Joe Biden and MI Governor Jennifer Granholm were discussing a Detroit-Pontiac-Chicago high-speed rail line in Washington, D.C. The HuffPo‘s Susan Demas asked Locke if he saw the rail project as a way to wean Michigan’s manufacturing base off its centuries-long auto addiction. To which Locke replied, “Oh, yeah,” faster than the Kool-Aid man after a post-college Eurorail adventure. “As you see more construction of rail cars, high-speed cars, it’s going to require new engineering, new products and services and that’s the natural fit and extension for automotive dealers and suppliers and manufacturers.” And Demas agrees, arguing that “linking up with rail makes perfect sense for a contracting industry, at a time when environmental and economic factors make expanding public transit a necessity.” Yes, necessity. As in the mother of invention. And political intervention.
Demas does point out that the rail project in question could face political opposition. “It will take a real will on the part of the states and the Congress to get it done,” she quotes former Rep Joe Schwarz (R-MI) as saying. “Members of Congress from non-high-speed rail states will fight it.” Meanwhile, the self-serving dynamic identified by Schwarz illustrates a major problem with the US rail industry, and how (car-to-train transition aside), the US ownership of GM could make it a political pawn at every turn.
Over at The Daily Beast, former GM and Amtrak man James Langenfeld recounts how the publicly-owned rail firm has become a perennial victim of DC’s politics-before-economics. “Amtrak had a government-affairs department rather than a finance department,” he writes. This “proved to be an omen: Train service was provided to states with powerful senators, even if this involved huge losses and few passengers.” A preview of coming factory placements? Meanwhile, at “38 years old and [showing] no sign of moving out of the taxpayer’s house,” Amtrak subsidies are currently $85,000 a year for each employee, or about $35 every time Amtrak sells per ticket sold. In the absence of profitability, Amtrak and now GM merely provide another opportunity to send pork home to the district.
And Langenfeld isn’t the only one who sees parallels between Amtrak and the new Government Motors. “I see no hope whatsoever for the situation,” says Wendell Cox, who served as a policy consultant for the government-appointed Amtrak Reform Council a decade ago. Cox tells Fox News that political considerations have led to poor decisions at Amtrak, “like maintaining costly, long-distance lines and setting up inefficient routes that detour through low-population areas.”
Even among those who support the bailout and improvements to America’s rail system, there should be concern about any mention of the auto and rail industries in the same breath. After all, the government’s open-ended commitment to GM is sure to become a focal point for political opposition to the Obama administration. And for those who are already disposed towards criticism of Obama, Amtrak is a preeminent symbol of government mismanagement. From George Will to the National Review‘s K-Lo to Ron Paul, GM-as-Amtrak is becoming the meme of choice for the emerging anti-auto-bailout mainstream. Anyone who thinks GM won’t be held hostage to political battles clearly has another think coming.
And though Amtrak has the excuse that rail industries are typically subsidized by governments, GM can’t fall back on the “everyone’s doing it” argument. Meanwhile, suggesting that the auto industry should look to yet another government-stimulated sector as a way forward provides further incentives to accept mediocrity in its automotive products. All of which illustrates how slippery the bailout slope really is. Remember, the bailout has been justified since day one with rhetoric about the unique role of the automobile industry in American life. If there’s any possibility for hope in the emerging American Leyland, it comes from the ability to invest huge amounts of money at a time when the auto industry is going through a period of transformative change. Rail business is a distraction at best, and a life sentence of government angency-dom at worst.
Locke’s talk of “transitioning” the auto industry towards rail shows exactly how far politics could go towards affecting the future of the new Government Motors. And without a clear exit strategy, there’s no telling where it could end. There’s nothing inherently wrong with more rail transportation in the US, but painting the rail biz as an alternative for a struggling US auto industry ignores the ugly reality of public Amtrak ownership. As badly as GM has done building cars for several decades, it will either exit Uncle Sam’s nest on the strength of its cars or face a downward spiral into political adventurism to which there is no bottom. In the case of the latter scenario, the last 30 years of GM’s decline will look like the work of true genius.