Today’s Policy Update: Why Amtrak Is Like Medicaid

by Andrew Smith

The costs of this year’s new federal regulations are staggering.

Sam Batkins of the American Action Forum looks into the estimated costs of the new regulations the Obama administration put in the Federal Register this year.

On the day before the nation celebrated its independence, the administration handed the country a regulatory bill worth more than $104 billion for just one half of 2014. At the current pace, regulatory costs will eclipse $200 billion, well above even AAF’s projection of $143 billion.

While the magnitude of all of the new regulations is striking, the graph Batkins used in his piece is most interesting. Two sectors to note are energy and education; energy because its new regulatory burden is so large and education because, in terms of hours needed to comply, it’s got new costs as large as any other sector.

Conservatives have sought deregulation in both fields for some time, and the chapters by Adam White and Rick Hess in Room to Grow describe how those sentiments could be spelled out practically, in expanding educational choice and enabling the growth of the natural-gas industry.

More good labor-market news: Jobless claims are low, and they just came in lower than expected.

Jonathan House summarizes the new claims for unemployment benefits data for the Wall Street Journal.

New applications for unemployment benefits fell last week, a sign the labor market continues to strengthen.

Initial claims for unemployment benefits decreased by 11,000 to a seasonally adjusted 304,000 in the week ended July 5, the Labor Department said Thursday. That matched the third-lowest reading this year and was lower than the 319,000 new claims forecast from a survey of economists by The Wall Street Journal.

The four-week moving average of claims, which smooths out weekly volatility, fell by 3,500 to 311,500. Claims for the week ending June 28 were unrevised at 315,000.

While there’s still troubling data to be found in the labor market — especially if you look at teenagers and the long-term unemployed or the labor-force-participation rate, this number combined with last week’s unemployment report are really encouraging news about the economy. However, despite the mostly positive recent findings, the persistent struggles of the long-term unemployed and insufficient churn continue to recommend policies to improve the labor market. 

Amtrak is a dumpster-fire.

For Wonkblog, Christopher Ingram details the total ineptitude of Amtrak, which belongs alongside the VA, the launch of HealthCare.gov, and the Postal Service as conservatives’ best examples of costly federal failures:

Swiss rail travel is actually affordable compared to the U.S. A weekend round trip between Geneva and Zurich costs about $189, or $0.53 per mile traveled. A weekend round-trip from D.C. to New York, on trains leaving at a reasonable hour (e.g., not in the middle of the night) will run you about twice that much, or $0.98 per mile. And if you were to take the Acela you’d be paying almost twice as much as that for the privilege of arriving 35 minutes earlier…

Eight of the 33 routes, including most of the long-distance cross-country lines, experienced on-time arrivals less than 50 percent of the time over the past 12 months. The Empire Builder, running from Chicago to Washington, ran on time only 21 percent of the time in the past year. Only one in three California Zephyr trains made their trips between Chicago and San Francisco on time . . .

There are two major forces behind Amtrak’s poor performance. The first is that Amtrak doesn’t own most of the track it runs on, but leases it from a panoply of freight rail companies. You might think that would be a perfect recipe for finger-pointing and buck-passing whenever a problem arises, and you’d be absolutely right! A byzantine system of regulations governs rights-of-way between freight and passenger trains running on these tracks, and Amtrak is usually all too happy to blame the freight operators whenever a problem arises . . . How could we make things better? For starters, it’s probably time to eliminate those costly, poorly-performing long-distance routes completely. According to a Brookings Institution study last year, few people ride them and they’re costing Amtrak (and taxpayers) hundreds of millions of dollars per year.

Obviously, this performance is embarrassing, and given the level of taxpayer support – over $40 billion since 1970 – serious reform is in order. Ending expensive and lightly used long-distance lines, as Ingram describes, seems like a reasonable first step.

But is there anything we can take from the experiences of Amtrak to broader policy debates, beyond the obvious conservative talking point of “government can’t do anything right”? When Ingram mentions that the main cause of Amtrak’s failure is a failed structure of shared responsibility between two entities, I think immediately of Medicaid. Medicaid is a state-federal partnership in which states ostensibly run their own programs but with heavy federal regulation and funding divided between the states and federal government. By giving neither party complete control of the operation, states are not incentivized to seek savings because of half of their savings go back to the federal government. And neither administration could really do much if it wanted, because neither has the power to actually implement a program that works.

As Lamar Alexander has argued in the past, swapping Medicaid and education so that states have complete control of schools while the federal government takes over Medicaid could help fix this problem. Or in the other direction, moving to a block-grant — not for the sake of just cutting budgets – could move us to a Medicaid program that actually improves the lives of those we want it to serve.

Congress passed a new job training program, and it’s not terrible!

For Politico, Maggie Severns discusses the bipartisan Workforce Investment and Opportunity Act, which passed Congress with overwhelming support:

The rewrite of workforce policy has roughly the same goals as the original: creating an adaptable system of “one-stop” job centers where someone looking for employment can go to for help finding work and, if needed, training. It would give businesses a bigger say in local workforce development, and it would give governors more flexibility with federal workforce funds.

These changes appear mundane, but it took years for members of Congress to hash out specifics — and gain enough steam — to reauthorize the bill. It was extensively pre-conferenced behind closed doors to smooth over issues that could derail the bill in either chamber by key members of the House and Senate education committees, including retiring Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.), as well as Kline and Sen. Lamar Alexander (R-Tenn.).

Not only is it encouraging to see lawmakers focus on something that could help the jobless, the new law seems to have embraced the conservative critique of the job-training program. As Danielle Kurtzleben explains for Vox, the new law consolidates and simplifies many of the duplicative and overlapping programs WIA had morphed into and gives businesses a bigger role in workforce development. The bill also includes new metrics that can be used to more effectively measure the success of the programs. All the lawmakers were quick to say the bill wasn’t perfect, but it does seem to be a step in the right direction on labor-market policy.