By Stuart Rosenblatt
July 31, 2018–It is time for the nation to embark on a bold national mission, akin to the Kennedy Space Program of the 1960s and the Franklin Roosevelt New Deal and WWII economic mobilizations. We are in the paradoxical situation where nominal job creation is continuing to rise at about 200,000 plus per month, while productivity is limping along at .5% per year, wages are stagnant or falling, and income inequality is increasing. Lurking just behind the curtain is another massive financial bubble, this time centered in corporate, student loan, auto loan, housing, and other forms of debt. As they say, “something’s gotta give.”
What is urgently needed is a new economic build-out, focused on repairing our decrepit infrastructure, while also investing in new technologies. This bold approach will drive up productivity at the same time. An aggressive infrastructure program will jump-start our dormant industrial economy, create millions of new, high-paying union jobs, and restore the optimism which has all but vanished.
A national program to this effect has been outlined elsewhere on this blog, and only a national policy can reverse the entropic slide of the economy. This report will present a sketch of what that plan can look like in Virginia. We will concentrate on infrastructure–mostly transportation, especially rail–as an “economic driver” to boost the economy of the entire state.
The Case for New Rail Infrastructure
The Virginia Statewide Rail Plan, as developed by the Virginia Department of Rail and Public Transportation (DRPT), is a good place to start. The report was issued in December 2017. Virginia already has a significant rail commitment. Six percent of the GDP of the state is linked to rail, and 6,000 jobs are directly tied to it. That is a significant underestimate when one considers the spinoff jobs that are created and sustained as a result of this industry. There are 3,000 miles of rail in Virginia, and the state is a significant contributor to inland and export activities in the mid-Atlantic region.
There are three components to the rail system: freight, passenger (especially intercity), and urban commuter and subway. All rail lines in the state are owned by freight companies, with CSX Corporation and Norfolk Southern owning the lion’s share. These behemoths own 94% of the track, while the short -line freight companies own the remaining 6%. This arrangement is not unique to Virginia. It was deliberately set into motion in 1971 with the creation of Amtrak, as the sorry remains of a once-envied national rail network following the bankruptcy of Penn Central. Now the freight companies have ownership of the track, and Amtrak has been left in a neutered state. All passenger trains in Virginia share track with the big freight companies and are at their beck and call.
Freight: Freight service is going full throttle in the state. 800,000 rail cars of coal move through the state every year, along with 534,000 cars of mixed goods; 120,000 cars of chemicals; 100,000 carloads of food; and 85,000 cars of pulp and paper products.
Given the centrality of freight traffic to the Virginia economy, continuous improvements are being made to the freight capability, especially by the two main transportation companies. CSX just increased the tunnel height of the Virginia Avenue tunnel in southeast Washington, D.C., allowing it to run double-stack cars in the area. A second tunnel is under construction in the area for the same purpose. CSX spent $42 million in 2015 on improving its lines Virginia. Norfolk Southern is doing the same kinds of upgrading.
One of the most important focal points of commerce for rail, truck, and other modes of transportation is the Port of Virginia. This port facility, based largely in Hampton Roads, is gaining traction on an annual basis. This is the main deep water port in the state, and likely the deepest port on the East Coast. It is a magnet for growing freight deliveries of all kinds in and out of the East Coast and Virginia. It is composed of four terminals in Hampton Roads, the Marine Terminal in Richmond and the Virginia Inland Port in Front Royal. The port interfaces with freight rail lines and trucking operations, and moves an immense amount of goods around the state as well as to contiguous states and the Midwest. It is also a center of exports servicing South America, Europe, and Asia. The Virginia Statewide Rail Plan correctly projects that with the opening of a new canal in Panama (and another canal south of Panama, not mentioned but in the process of construction), global trade will increase, and the Port of Virginia is well-positioned to take advantage of that situation.
Virginia is in the top ranks of many key freight categories. It ranks 16th in rail tons originated, and 21st in rail carloads carried. It not only ranks 9th in coal tons originating in the state, but also ranks ninth in crushed rock, sand, and gravel, with nearly 5% of the U.S. total. For rail commodities terminating in the state, Virginia ranks 3rd in coal, 5th in crushed rock and gravel, and 5th in waste and scrap.
The big question mark in the equation is coal, as current policy is downgrading its importance, and the state will have to account for this change.
Passenger: Virginia also has a large passenger rail operation, with intercity service being conducted by Amtrak. Twenty-four passenger trains run daily, including service between Washington, D.C. and Roanoke, Richmond, Norfolk, and Newport News. Five long-distance trains run daily between New York and Chicago, New Orleans, Savannah, Miami, and Charlotte, making stops in Virginia. The Virginia Rail Express (VRE) Service runs two main commuter lines from Fredericksburg and Manassas (32 trains) into Washington, D.C. every day. Approximately 1.6 million passengers per year ride Amtrak in Virginia, and 1 million of those intersect Washington, D.C.
There is a clear demand for more rail transportation. Since 2007, rail ridership in Virginia is up 70%. Ridership in Richmond, which has two terminals, is up 263% over the last few years, and ridership is up overall by 1.8% over the last year in Virginia. Four of the top five lines which showed increases nationally were in Virginia.
The state of Virginia has responsibility for much of the infrastructure of this system, in concert with the federal government. The state has budgeted $140 million per year for rail projects in the Commonwealth.
Funding is also provided by federal grants, but the state has several dedicated venues through which the Department of Rail and Public Transportation of the State of Virginia dispenses its funds. These include: the Intercity Passenger Rail and Operating Capital Fund (IPROC), which funds Amtrak programs; the Rail Enhancement Fund (REF), which requires matching funds from applicants, and funds capital projects; the Rail Industrial Access (RIA) Program, and other grant operators. Virginia Rail Express is funded jointly by the federal and state governments.
The state has identified more than 10 major rail corridors in the state for upgrade. They include: I-81, which currently is a freight-only corridor down the western part of the state; I-64, a crucial East-West rail corridor into the Port of Virginia, freight and passenger, going from Hampton Roads to Clifton Forge; US 460 Corridor, from Hampton Roads to Radford, a freight and passenger line; U.S. 220, from Monterey to Martinsville, freight only; I-66, Northern Virginia, Freight and passenger; US 29, freight and passenger, Arlington to Danville; US 58, Hampton Roads to the Cumberland Gap, freight only; and the I-95 corridor Gateway project, freight and passenger, from Arlington to Emporia.
The state also is involved in several multi-state operations: viz. the I-81 corridor, which connects Tennessee to Pennsylvania; the I -95 corridor; the Virginia-North Carolina High Speed Rail Compact, which is a joint state committee trying to bring 110 mile/hour trains service between the two states; and the Southeast High Speed Rail Coalition, reaching into the Deep South, again trying to bring higher speed service to the region. Amtrak’s new “definition” of high speed starts at 90 mph, as compared to 200 mph in Europe and Asia. Ahem, they are hardly “up to speed”.
The state’s six-year plan (2018-2023) to improve all the above-mentioned corridors includes:
- $600 million for the I-95 corridor, including programs for straightening curves, fixing rails, etc., and also $4 million for a study to address/fix/build a new Long Bridge, over the Potomac. This bridge is the major roadblock for all rail traffic into and out of D.C., as it is 104 years old, worn out, and overloaded. It must be fixed and a new parallel bridge/track added;
- Richmond crossovers, $140 million;
- Lynchburg to Roanoke and other connections, $160 million;
- Hampton Roads improvements, $45 million.
Longer-term project budgeting includes $700 million to replace/add on to the Long Bridge; and $1.3 billion to expand VRE service. There are many more projects “in the works.”
New Rail Infrastructure Requirements
The following are the key problems to be addressed in a comprehensive transportation program:
- Aging infrastructure. Rail cars are now increasing in size and weight, with the larger containers being used globally. The containers are now also being stacked up. This puts strain on the rails themselves, requiring them to be upgraded. Many tunnels must also be upgraded to handle the new configurations. The best example of this problem is the Long Bridge, mentioned above. The state of this one track, which that controls entrance and exit into Washington, D.C., is continually impeding traffic.
In addition, Washington, D.C.’s Union Station needs more platforms. There are not enough to handle current and projected traffic into the station. Just from the Virginia side, population in the northern Virginia region, from Fredericksburg to DC, is expected to grow to from approximately 2.9 currently to 4.5 million people by 2040. This was the projection of a recent study done by the University of Virginia. Increased rail service will be a must over the next years to handle the congestion.
- Need to install POSI Train. The state has yet to install Positive Train Control track guide mechanisms that will halt the potential for accidents. Amtrak is very slow on the uptake on this; and it costs both money and lives, as was shown in deadly accidents over the past several years.
- Expand the Port of Virginia. On the freight side, traffic will be expanding over the coming 20 years, as openings to Asia, Latin America, and Africa place more emphasis on the Port of Virginia.
- Outdated rail policy. The biggest problem in Virginia rail is that Amtrak and the freight companies share the same lines. This is true nationally. In practice, it means that the freight companies determine the train schedules based on their needs. There are no dedicated passenger rail lines. More trains cannot be scheduled, as there is not enough track. This will become equally disastrous for freight as for passenger. Currently, Amtrak trains are on time only 74% of the time, frustrating and discouraging passengers. This must change.
- Passenger rail has been dependent on Congressional authorizations for Amtrak, which receives a piddling amount of money. Due to the congressional fights over even the need for government supported passenger rail, there is simply not enough Federal money being allocated. The system has to apply for Federal support yearly, and it has frequently been subjected to sharp budget cuts.
- There is little or no electric rail. Electric rail is not only “cleaner,” but it lends itself more easily to high-speed configuration. Also, power-generating stations can be used to provide power to cities or rural areas as well as power trains. They will require new catenary transmission lines and new substations. They are dual use. This construction will also generate thousands of new high-paying jobs.
- The need to install high-speed rail. Only isolated projects are currently underway in the United States, which has no mileage worth mentioning, as compared to China (with more than 12,000 miles) and Japan. Yet more rapid rail transport is key to increased productivity. (see below)
The Case for High-Speed Rail
The centerpiece of a new rail program must be real High-Speed Rail as a national system, like the highway system of the 1950s and 1960s. The High-Speed trains will coordinate with the passenger trains and subway/bus and automobile systems. It will be an integrated multi-modal system.
The US High Speed Rail Association has developed a 17,000 mile truly high speed rail plan. This could be expanded to 25,000 miles, and eventually 42,000 miles over time. High Speed rail, traveling at least 200 miles per hour, will dramatically increase the productivity of the work force, and cut unnecessary travel time by orders of magnitude. It will also relieve traffic for short-hop flights at the airports.
There should also be forays into Magnetic Levitation, such as the system being proposed by Maryland Governor Larry Hogan. This small system would connect Baltimore with Washington, D.C. and cut travel time immensely. Maglev trains can travel upwards of 300 mph, as they are propelled by magnetic force and move a “train” without wheels, in effect, flying. Similar systems have been studied for the trip from Dulles Airport to downtown D.C. and should be given serious consideration.
High Speed rail is now being built in California from Los Angeles to San Francisco. The 800-mile system is projected to cost at least $80 billion. It will create minimally 400,000 new jobs and radically expand the California economy. Both the state and the federal government are involved in funding the project.
The Texas Project
In Texas, a 200 mph bullet train system, using Japanese technologies that have been successfully transporting passengers for over 50 years, is being readied for construction. The high-speed train is slated to make the 240-mile trip between Houston and Dallas in less than 90 minutes. It is being built by a private company, so this is not necessarily the best model financially for the nation. It is projected to cost $15-20 billion.
The Houston-to-Dallas High Speed train is estimated to create 10,000 new, high-paying jobs per year in the construction phase, and at least 1500 permanent jobs just to operate the system. That does not count the multiplier effect at both ends. Infrastructure investment has the highest multiplier impact of any spending, with a ratio of 1.6%. Every $10 billion invested in infrastructure generates $16 billion of Gross Domestic Product. The company building the Texas High Speed system estimates that $36 billion will be pumped into the Texas economy as a result.
The magnitude of the Texas project is enormous. It is estimated that 10 million cubic yards of concrete will be used, including for building 1.4 million concrete rail ties. Additionally, 1100 miles of steel rail will be used, and many other products.
Estimating costs for high speed rail is tricky. No two projects will be the same. Costs will vary based on the terrain to be covered, the need for tunnels in rural areas and urban areas, rights of way, lawsuits, etc. Tunneling is very expensive. Building a system across desert is obviously far less costly than in an urban area like Los Angeles or San Francisco. Traveling through or around mountains are another high expense variable, etc. But these impediments don’t outweigh the massive benefits.
The American Public Transportation Association estimates that every $1 billion invested in High Speed Rail (HSR) creates 24,000 new skilled jobs. It adds that for every dollar spent on HSR, the minimal return will be $4 to the economy. As for efficiency, i.e. productivity, HSR is eight times more energy-efficient than air travel, and four times more efficient than automobiles. (Source—International Union of Railways)
As the nation embarks on a national system, costs will come way down as new technologies are invented. The Chinese can now build these trains faster and cheaper than previously. They have not only accrued vast experience, but they have invented all sorts of labor-saving devices. They can produce large concrete sections of train support systems right on-site, and then employ gigantic cranes to lift them into place.
This is not dissimilar to the breakthroughs in mass production made during WWII and the Space program. War ships and Liberty Ships (merchant transports) were built on site in California by section, and then assembled near the dry dock, hoisted by immense cranes and lowered into place. Piecemeal gave way to “ship” assembly lines. At the outset of WWII it took over 8 months to build one merchant ship. By 1943 they were being built in a few weeks, and in some cases mere days. The same thing happened with war plane production, tank production, and more. Productivity during WWII was increasing at over 4% per year, and Gross Domestic Product increased at over 10% per year, a far cry from today’s anemic economy.
Not all trains will be high speed. We need to ramp up passenger service as well. These trains can be built at considerably less cost, not more than $10 million per mile. In flat areas that cost can be reduced by 50%. River crossings are still expensive and can run $100 million.
For example, a proposed New Haven to Springfield system, traveling at speeds up to 110 mph, and covering 62 miles, is slated to cost $2 billion. It is projected to cover the trip in 80 minutes.
A similar system, now in final stages of completion, will link Chicago to St. Louis, with trains going between 90 and 110 mph. The 284-mile trip will take 4 hours, and the project cost $2 billion. This will cut travel time dramatically. The federal government put in $1.65 billion, and the state of Illinois is paying $300 million. A study has been done to build a fully high-speed system, at 220 mph, which would cost $11.5 billion and cut travel time by over 50%. Ridership is already up from 359,000 to 589,000 as the speed has increased. It is expected to increase to 1 million riders at 110 mph and 10 million when the system goes to 220 mph. (study done by the University of Illinois)
To power this new system, the federal government should embark on a policy of electrification of the rail system, including bringing on line new power plants. Electric power will power both high-speed systems and future maglev trains. New electricity generating capacity is needed. Were the United States to go to nuclear energy as a power source, a 17,000 mile High Speed system would require an estimated 15-20 large plants, or 25-50 smaller ones. The U.S. is now actively researching building new smaller nuclear plants that will be 40 to 60% cheaper to build, and financially competitive with natural gas and other sources, which could obviously be part of the mix.
We should build high-speed freight train systems as well. In a rapidly growing economy, such as Virginia, it is necessary to operate freight trains going over 100 mph. China is now building freight trains that go 155 mph. We certainly can do the same.
Priority Transport Projects for Virginia
- I-81 corridor. The I-81 corridor runs from Knoxville, Tn. to Harrisburg, Pa. It covers 600 miles. Currently the corridor carries only freight in Virginia. It is also only single track. According to experts, a second track would increase throughput seven-fold, and this is still assuming only freight. Were a second track built and dedicated to passenger rail, it could begin the growth long proposed for the western part of the state. The I-81 Rail corridor already has a dedicated right of way, so this would cut the cost of a new rail line dedicated to passenger traffic dramatically. This new line would provide service at 110 mph, but should be electrified, to prepare the way for High Speed service in the next decades. This would revive much of the industry in the area, upgrade Roanoke into a regional hub, and revive Winchester as the railroad city it once was. This project would also connect Bristol with Knoxville, and launch a new industrial recovery in the very depressed southwest Virginia. Bristol, Va. has been clamoring for rail service, as it once was a rail center, and sees this as a vehicle for new economic opportunity.
However, there should also be a third line built. That new line, which will also fit in the already existing right of way, should be dedicated to rail/truck service. This unique approach is already used in other parts of the world. What would be created is a dedicated line to allow trains to haul trucks, load and all, along the I-81 corridor. The trains, known as Truck Ferries, should be outfitted with sleeping cars and dining cars for the drivers. The drivers can drive on, get their required sleep, eat and do paperwork, and drive their trucks off at the end of the trip. This will increase productivity by as much as 25%, according to studies already done. Rather than sleeping and not driving, they will be able to keep their trucks moving and cut considerable time off their trips, thus allowing for more hauling. A crucial advantage of this policy would be to finally cut the truck traffic down substantially on roads like I-81, which are otherwise becoming more dangerous and also more worn. (source, Rail Solutions)
Thus I-81 would become a rail, power, highway corridor, providing the basis for new industries to spring up to service this facility, and in turn, jobs, revenue, and rising standards of living.
This new initiative would be crucial for the lower part of the state and southwest Virginia. The Washington Post article on July 2, 2018 on the case of Bristol as a center of economic blight, simply underscored the need for a new development perspective. The city is bankrupt in all but name. Twenty-five percent of the population lives in poverty; 42% receive monthly government assistance, and the entire school system gets free lunches, as over 83% of the students qualify for it. The region has been hit with the same kind of drug and opioid problem that grips the country. The city jail is massively overpopulated with drug related criminals, due strictly to the economic and cultural crisis overwhelming the area.
The new I-81 passenger system can add an extra dimension to the overall economy from Winchester to the Tennessee line and beyond. Feeder lines can be built from various other locations into the main line. Freight traffic in the region is already expanding, and that will only increase. Most of the east-west rail lines feed directly into the Port of Virginia, and these all intersect western Virginia, i.e. Routes 460, 220, I-64, and 58.
The state should also consider making Wytheville a mini-hub. It is one hour from all the outlying cities in southwest Virginia, and could serve as a transshipment center for both freight and passenger service.
Southwest Virginia is in economic turmoil due to the downsizing of the coal industry, but the area has a labor force that can be retrained and plowed into rail and related projects. Dublin is home to the Volvo truck plant, which employs 2500 workers and also skilled and semi- skilled feeder industries. Bristol Compressors is a significant producer in the area and employs machinists and other skilled labor, which can contribute to rail and power industries. General Dynamics has operations in the region as well. There is a base of semi-skilled and skilled workers.
- I-95 corridor. This corridor should be completely reconfigured as a 220 mph High Speed project, stretching from Raleigh to Washington, D.C. and north. What is proposed in the Virginia Statewide Plan of December 2017 is well and good, but frankly a painfully slow moving “incremental” approach. It is like squaring the circle, only traveling a train line. If the nation committed itself to a network of High Speed rail, it would probably cost $25 billion, give or take, to get to Raleigh; and half of that to get to Emporia. Washington, D.C. to Richmond is 108 miles and would probably cost $10 billion maximum. That should be the plan. The rail will pay itself back in new jobs, GDP, and tax revenue. This could generate conservatively 25,000 to 40,000 new jobs. It will further increase the business of the freight service “up and down the line.”
As part of a nationwide plan, this project will see costs fall as economies of scale and scientific and technological breakthroughs are implemented. This will be a joint federal-state project, and financing will be worked out. At the end of this report we will discuss a funding mechanism, a National Infrastructure Bank, which can help mightily with these projects.
Additionally, priority should be given to key connecting rail lines into Tidewater, including passenger rail to Norfolk, Newport News, etc. Those routes are already being serviced by Amtrak and should be upgraded, and more trips added as circumstances demand.
- Port of Virginia. This facility is becoming a centerpiece for East Coast freight service. It should be upgraded to utilize the latest port technologies, roll-on/roll-off capabilities, etc. Additionally, it should be connected with high-speed freight lines to the major East-West and North-South corridors that empty into Hampton Roads. This means that the areas contiguous to Hampton Roads, including the Northern Neck, Fredericksburg, and the Peninsula, should be upgraded in all intermodal transportation capabilities.
- New Ports—Given the density of population and traffic in the I-95 corridor, one planning district is now investigating the need for constructing one or two new ports on the Virginia waterways, which would redirect some of the commodity traffic from the Port of Virginia via water. Two sites being considered are King George and Stafford Counties on the Potomac River. A new port will be needed at some point, and this will also provide employment, tax revenue, etc.
The Metro subway and bus system serves the entire D.C.-Maryland-Virginia (DMV) region and interfaces with rail, air, auto, and other transportation modes. According to an authoritative report by the American Public Transport Association in May 2018, there is a pressing need for continuous work to maintain the Metropolitan Area Transit Authority (MATA) in a “state of good repair”. (SGR) The backlog of needed repairs of MATA is estimated at $6.6 billion, almost 17% of the system’s $40 billion in physical assets. The APTA estimates that the failure to address the backlog will cost the region near $10 billion in lost GDP.
Vehicle replacement and rehabilitation accounts for the biggest portion of the backlog. To achieve SGR in maintenance will require $1.8 billion over the next ten years. Capital needs must also be met, including replacing rail cars, ventilation system improvements, installing new radio and cellular circuits, etc. After achieving good repair, the system will have to invest $1.1 billion annually to maintain that status.
Maintaining Metro and MATA as a whole is crucial to the economic vibrancy of the region. According to WMATA, 54% of all jobs in the region are within ½ mile of a Metrorail station, and property values are 7-9 percent higher in the proximity of those stations than elsewhere. Having a dependable large-scale service is crucial to attracting and keeping new businesses.
The system lacks a dedicated bonding or other funding source so this year the DMV jurisdictions voted to give Metro $500 million. That is a start, and other funding plans are being discussed, including a new long-term federal funding of $20 billion over ten years, which would increase the Federal contribution to the system by $50 million per year.
ll of that is useful, but it must be stated that Virginia robbed Peter to pay Metro this year. It voted to authorize $150 million at the expense of other Northern Virginia transportation projects. The Northern Virginia Transportation Authority (NVTA) said that it expects a drop of $276 million expended over 6 years for regional projects. They expect an additional drop of $118 million in NVTA revenues distributed to local governments for projects other than Metro, and they are now required to contribute new money to Metro above their current amounts. So the region will lose nearly $400 million over six years as part of the deal to fund Metro.
In other words, the money for Metro is being taken from programs for new roads, widening roadways, new interchanges, Metro or VRE station upgrades, and the like. The region is cutting transit programs to cover Metro; it is merely moving money around, and a significant deficit still remains for Metro itself. Hence the pressing need for a new funding source to not only achieve SGR but to move beyond it. (discussed at the end).
As in the case of Metro, the lack of long-term underfunding of infrastructure has consequences. This is not only a Virginia problem but a national crisis. The American Public Transportation Report says that over the next six years, failure to invest in public transportation will cause a loss of $340 billion in business sales, which translates into a loss of $180 billion GDP. It would spell a loss of $109 billion in disposable income for families, and at least 162,000 jobs.
Here is a thumbnail sketch of the issue. Nationally, 39% of rural America does not have access to high speed internet service. 21% of schools in rural areas still lack a fiber connection. That statistic is also applicable to rural Virginia, away from the major metropolitan areas of D.C., Richmond, and Hampton Roads. This must be rectified. Business is being lost, personal connection to families and loved ones is very difficult, and key institutions like schools and libraries are compromised.
Cost estimates to provide the needed service vary widely. One study estimates the price to be $15,000 per mile to lay fiber optic cable in rural areas. The U.S. Department of Transportation estimates that costs can run as high as $27,000 per mile in those regions. It is very expensive for local cable companies to do this in many areas, so the federal government must step in.
One report from the Schools, Health and Libraries Broadband Coalition (SHLB) proposed that high-speed internet can be fed to key anchor institutions in rural areas, such as libraries, community colleges, or health care providers. These recipients could in turn distribute it to the remainder of users in the area through a combination of wired and wireless technologies. The cost of this approach is about $20 billion.
The Federal Communications Commissions (FCC) estimated in 2017 that it would cost $40 billion to deploy high-speed broadband to 98% of American homes, and double that to reach 100% of the homes. Whatever the cost, this is now part of the required standard of living of all Americans, hence it must be provided. The price tag is relatively small and must be covered.
Agriculture is Virginia’s largest private industry by far, with nothing else coming a close second. The industry has an economic impact of $70 billion annually and provides more than 334,000 jobs in the Commonwealth. The industries of agriculture and forestry together have a total economic impact of over $91 billion and provide more than 442,000 jobs in the Commonwealth. Every job in agriculture and forestry supports 1.7 jobs elsewhere in Virginia’s economy.
According to a 2017 economic impact study, production agriculture employs nearly 54,000 farmers and workers in Virginia and generates approximately $3.8 billion in total output. In addition, value-added industries, those that depend on farm commodities, employ more than 69,000 workers. When the employment and value-added impact of agriculture and forestry are considered together, they make up 9.5 percent of the state’s total gross domestic product.
In addition to its tangible benefits such as farm cash receipts and jobs, agriculture provides many intangible benefits. These include recreation, tourism, wildlife habitat, biodiversity, flood mitigation, improved water quality, and soil stabilization. (Virginia Department of Agriculture statement)
However, agriculture remains in a serious crisis, nationwide. Commodity prices paid to the farmers have generally plummeted, leaving many farmers wondering if they will make ends meet. The key measurement of farm commodity security is called parity pricing. Simply put, this is like a minimum wage, calculated as the price that the farmer needs to cover the cost of production, living expenses for his family, and a margin of profit for reinvestment. This net profit can be used to buy new equipment or repair older equipment. It may also be invested in building or maintaining the infrastructure of the farm, planting new varieties, etc.
Today, many crops are way below the parity price, and this includes crops grown in Virginia. Corn is bringing $3.67 per bushel at market, while the parity price (cost to produce that bushel) is $13.30 per bushel. Soybeans are fetching $9.84 per bushel, while parity is $32.80 per bushel! Peanuts, which are a big product in the state, are paying 23 cents per pound, while parity is 68 cents/lb. Finally, hogs are yielding $5.10/lb., while parity is currently $16.70 per pound.
Again, this is not a Virginia problem; it is national. The nation must enact legislation as was done under Franklin Roosevelt and John Kennedy, to mandate that farmers receive a parity price for their commodities. This would boost the rural economy immensely. It will also allow farmers to invest in the new scientific breakthroughs and new equipment that can increase output and feed the nation and others less fortunate throughout the world.
A total assessment of the needs of the state must be done, at least from the standpoint of needed trauma units, clinics, and hospitals.
One example of the infrastructure deficit in the state is the shortage of trauma programs. The state has 5 Level I facilities, a level I being the most comprehensive and fully staffed. They can provide total care for all types of injuries, including the most serious and life-threatening. The closest unit to Southwest Virginia is in Roanoke, leaving the entire area without a level I unit. The same is true in the Southside, south central region, the central region and much of the Northern Neck and northeast region.
The state has 7 Level II facilities, which are also well-organized response operations, and can provide at least initial care, regardless of the severity of the injury. But they must transfer more serious cases to Level I operations. Again, the same problem persists, with many rural areas uncovered, and Level I or II providers quite a distance away from rural residents.
There are five Level III facilities which provide a level of assessment, emergency, and stabilization, operations. However, very serious cases must be transferred to the higher level facilities. The closest that Southwest Virginia has to a Level III unit is in Blacksburg. Again, the Southern/Southside, Southwest, central, and northeastern counties have nothing.
One suggestion for Southwest Virginia from a planning director in that region was to put a Level II Trauma facility in Wytheville. Wytheville has a good community hospital that could house such a capability and is right in the center of the region, a one-hour drive to all the neighboring cities. Currently all serious trauma victims are air-lifted to Roanoke or Winston-Salem for treatment, hardly a reasonable policy.
Funding For a Comprehensive Infrastructure Plan
The State of Virginia must partner with the federal government to address the needs reviewed in this report. The state already is involved, as has been stated, funding programs in every area from transportation to health care. The issue is filling the need for new funding to truly solve the shortfalls and launch new projects which will lift the state into the 21st century in many areas.
Congress can enact a new budget, along the lines of the Congressional Progressive Caucus proposal, which will definitely help fund infrastructure, health care, and other areas. The question still remains as to how to fund that. One proposal that is being circulated is to borrow $2 trillion to cover much of the cost. The downside is that it will blow a hole in the federal deficit, which is already mushrooming due to the tax cuts of 2017.
Another proposal is to rescind the Trump tax cuts, and deploy $1 trillion toward infrastructure projects, including some contained in this report. Again, however, the amount that would be available is absolutely not adequate, and you are still stuck with the $1 to $1.5 trillion federal addition to the deficit.
In the opinion of this author, the best proposal, which is now being circulated, is for the Congress to create a National Bank for Industry and Infrastructure, along the lines of the First and Second National Banks (George Washington and John Quincy Adams Administrations), the Lincoln National Banking System, and the Roosevelt Reconstruction Finance Corporation (a de facto National Bank). This new Bank could be capitalized at over $3 trillion, with no addition to the federal deficit. That new capital could be the basis for loans at low interest, long term (10 to 20 years), to help fund the infrastructure plan being floated in this report.
The bank would have to function in concert with the states, the Congress, and the private sector, to carry out the program contained here. For example, the Bank could partner with Metro, the DMV states/city, and the state of Virginia, to fully fund and expand the Metro system. Additionally, it could partner with Virginia, North Carolina, and the other contiguous states to build the I-95 corridor High Speed Rail system. It could partner with the state, and Tennessee and Pennsylvania, to help on funding the I-81 passenger rail service from Knoxville to Harrisburg.
In sum, a Bank such as the Infrastructure Bank would be a perfect partner in the needed short and long-term projects this state and the nation need to build. In the process, productivity would rise dramatically, the GDP would also increase back to the true 3-5% per year level, and the dilapidated state of our national infrastructure would be repaired and dramatically upgraded. This approach has been taken four times in our nation’s history, and each time it worked to build the infrastructure we take for granted today.