A key pillar of the deceptively named “Inflation Reduction Act” is furthering the climate agenda of the Democratic majority. Leaders in both chambers and the White House say that the bill, to be passed via reconciliation, is urgently needed to reduce carbon emissions in the industrialized economy.
Ironically, and in keeping with recent precedent, leaders are at the same time pursuing separate policies that run directly counter to these stated goals.
Specifically, members of the House Transportation & Infrastructure committee just released a separate bill that would re-regulate the private freight rail sector, currently the most green-friendly way to move goods. In making rail less competitive through a grab bag of measures pushed primarily by organized labor, lawmakers threaten to push freight to highways and in turn increase the very emissions they say must be reduced.
Unsurprisingly, they are doing this all under a broad rubric of “fixing” the supply chain and inflation – singling out rail in the process. Yet as economic expert Steve Forbes recently wrote, such blame is misplaced. Railroads certainly have their challenges, but they are hardly alone. “It's true [policymakers have] cycled through a host of scapegoats when it comes to the extraordinary rise in inflation,” says Forbes. “But the ongoing fixation on railroads by other parties as well displays an astonishing lack of perspective and understanding of the real world.”
House lawmakers should stand firm in opposing this unneeded and counterproductive legislation. Doing so should send a clear signal to the Senate, where policymaking outside of reconciliation still requires bipartisanship and 60 votes, that this exercise is nothing more than special interests trying to take advantage of a window – perhaps before that window closes because of the 2022 midterms.
At issue is the “The Freight Rail Shipping Fair Market Act,” led by Reps. Peter Defazio (D-Ore.) and Donald Payne (D-N.J.), chairs of the transportation committee and rail subcommittee, respectively. It seeks to reauthorize the Surface Transportation Board, an independent agency already pursuing a host of re-regulatory policies, including many that my organization and others staunchly oppose – such as forcing railroads to carry their competitor’s traffic. Observers note the agency, also weighing a significant merger of rail companies, is the busiest it has been since its creation in 1995.
Like the agency regulatory push, the new House legislation puts the government, rather than private enterprise, in the driver’s seat for business decisions. For instance, the approach in this market has always been to exempt traffic segments from strict utility style rate regulation if there are competitive alternatives for moving the goods by other modes, like trucks, which are subject to no such price controls. This bill would revoke many of those exemptions to grow rate regulation.
Yet we know this type of policy doesn’t work, particularly not for railroads. Legislation like this is in direct contradiction to the transformative deregulation signed into law by President Carter.
The Staggers Rail Act of 1980 got the government out of such utility-style central planning that has served as the footing for railroads to benefit the entire economy and in turn, U.S. consumers. Rail service today may be an issue in places, but wholesale policy changes cannot end well.
Republicans and Democrats long stood united on not reverting to the failed system that existed before rail deregulation. A large swath of organizations and individuals across the political spectrum wrote to federal policymakers just a few years ago encouraging a continuation of the current regulatory framework that has proven so successful.
While slivers of the current Congress may be seeking to reverse this longstanding policy, backstops still exist. People who are serious about bringing down costs and improving the supply chain should hope they hold. Because the charade in the House will only make things worse.