There is a basic problem with U.S. rail policy: high-speed passenger rail gets the attention, but freight rail is the real success story, on the economic, environmental, and public health fronts. The Economist just published an exceptionally smart, balanced, thoughtful assessment of the rail landscape in the U.S. which explains that there is a tension between existing plans for the expansion of high-speed passenger rail and the success of freight rail. 

But the problem with America’s plans for high-speed rail is not their modesty. It is that even this limited ambition risks messing up the successful freight railways. Their owners worry that the plans will demand expensive train-control technology that freight traffic could do without. They fear a reduction in the capacity available to freight. Most of all they fret that the spending of federal money on upgrading their tracks will lead the Federal Railroad Administration (FRA), the industry watchdog, to impose tough conditions on them and, in effect, to reintroduce regulation of their operations. Attempts at re-regulation have been made in Congress in recent years, in response to rising freight rates. “The freight railroads feel they are under attack,” says Don Phillips, a rail expert in Virginia.

The Economist survey gives a brief history of the revival of freight rail, which really is one of the more impressive turnaround stories in the history of American business. Phil Longman has described the federal government’s role in the turnaround while The Economist emphasizes, correctly in my view, the role of deregulation:

Giving the railroads the freedom to run their business as they saw fit led to dramatic improvements. The first result was a sharp rise in traffic and productivity and fall in freight costs. Since 1981 productivity has risen by 172%, after years of stagnation. Adjusted for inflation, rates are down by 55% since 1981 (see chart 1). Rail’s share of the freight market, measured in ton-miles, has risen steadily to 43%—about the highest in any rich country.

As Longman has explained at great length, the benefits shifting from trucking to freight rail can’t be overstated:

In a study recently presented to the National Academy of Engineering, the Millennium Institute, a nonprofit known for its expertise in energy and environmental modeling, calculated the likely benefits of an expenditure of $250 billion to $500 billion on improved rail infrastructure. It found that such an investment would get 83 percent of all long-haul trucks off the nation’s highways by 2030, while also delivering ample capacity for high-speed passenger rail. If high-traffic rail lines were also electrified and powered in part by renewable energy sources, that investment would reduce the nation’s carbon emission by 39 percent and oil consumption by 15 percent. By moderating the growing cost of logistics, it would also leave the nation’s economy 10 percent larger by 2030 than it would otherwise be.

 Of course, the Millennium Institute is talking about a staggering sum. Realistically, the kind of investments we’re contemplating are far smaller, and involve difficult trade-offs. In most of the country, the high-speed passenger rail that is envisioned will be fairly modest:

Despite the excitement of railway buffs and the enthusiasm of environmentalists, high-speed rail in America is likely to mean a few more diesel-electric intercity trains at 110mph, not swish electric expresses going nearly twice as fast.

After recounting a litany of challenges facing the big freight rail operators, The Economist observes the following:

The emergence of express intercity rail services may cause the freight railways the biggest problem of all. The policy is not only laid down by the president but also often has enthusiastic support at state level. The railways can hardly oppose Mr Obama’s plan to boost high-speed rail, but they are apprehensive about what it will mean for them.

The problem is not the creation of new corridors with trains rattling along at 150mph. Such lines, like those proposed in California or between Tampa and Orlando in Florida, would have their own track, separated from existing lines though on the same strip of land as a freight railway.

Rather, the problem is posed by the fast intercity lines that will share the same track as freight trains:

Their main complaint, however, is that one Amtrak passenger train at 110mph will remove the capacity to run six freight trains in any corridor. Nor do they believe claims that PTC, due to be in use by 2015, will increase capacity by allowing trains to run closer together in safety. So it will cost billions to adapt and upgrade the lines to accommodate both a big rise in freight traffic and an unprecedented burgeoning of intercity passenger services. Indeed, some of the money that the White House has earmarked will go on sidings where freight trains can be parked while intercity expresses speed by.

Ultimately, we need to think about which rail investments will yield the best bang for the public buck. We need to determine the lowest-cost strategy for reducing highway congestion and carbon emissions, and the impression I get is that the lowest-cost strategies involve facilitating the shift from trucking to freight rail and encouraging greater use of telecommuting rather than spending scarce public dollars on high-speed passenger rail in regions where the service will share freight lines. But that’s only an impression.

The best blogger on transportation policy I’ve come across, Yonah Freemark, is also strong advocate of high levels of public investment and taxation. Suffice it to say, he’s not an NR-style fiscal conservative. And he characterized The Economist survey as a “shock article,” which I don’t think is very fair. For example, he cites the fact that true HSR lines in California and Florida will use brand-new track as a reason not to worry, but The Economist made the same point: the real concern is about lines that will use existing freight track.

Yonah offers some sensible suggestions, but they reflect a broader commitment to higher levels of tax-financed transportation services. If you believe, as I do, that we need to pare back overall spending rather than increase it, the question of freight vs. passenger investments becomes more salient. More of everything is a politically attractive position. It is not, however, compatible with a low, sustainable tax burden.