President Trump on Friday signed the $1.3-trillion omnibus spending bill, keeping the government running through September and freeing up federal funding for Amtrak and the Gateway project he had opposed.
As much as $541 million is available for Gateway, which would construct a new tunnel underneath the Hudson River linking New Jersey and New York, and replace the century-old Portal Bridge on the Northeast Corridor leading to Manhattan.
Approval for the funds would circumvent opposition from the Department of Transportation; Seceretary Elaine Chao had wanted New York and New Jersey to finance most of the massive project.
According to reports, Amtrak is expected to contribute a minimum of $388 million to Gateway though its Northeast Corridor Account, while New York and New Jersey will receive an additional $153 million from the Federal Transit Administration’s High-Density States and State of Good Repair grant programs.
While negotiations are ongoing, Gateway will likely receive 60% of the original federal dollars intended for it within omnibus. Trump had threatened to veto the spending bill if it included funds for Gateway, among other reasons.
Although DOT reviews Amtrak’s operations, reports said it will have limited ability to withhold $650 million for the Northeast Corridor Account under the omnibus, for projects throughout the region.
At the same time, Gateway can compete for additional money through the New Starts Capital Investment Grants (CIG) program, which is slated to receive $2.645 billion.
Gateway has two pending applications for the grants, to replace the Portal Bridge over the Hackensack River in northern New Jersey, and for the Hudson Tunnel project.
USDOT will have $27.3 billion in discretionary appropriations for FY18, but the House Appropriations Committee says that in total budgetary resources, including offsetting collections, the bill provides $86.2 billion to improve and maintain transportation infrastructure.
The popular Transportation Investment Generating Economic Recovery (TIGER) program will get a $1 billion boost over FY17 levels with $1.5 billion available. Language in the bill ensures that at least 30 percent of these grants will go to rural communities.
Federal investments in rail infrastructure and safety programs are funded at $3.1 billion. Amtrak is provided with $1.9 billion, which includes $650 million for Northeast Corridor (NEC) grants and $1.3 billion to support the national intercity network. Also included is funding for the Federal-State Partnership for State of Good Repair grants at $250 million to address critical rail investments nationwide and on the NEC. Rail safety and research programs are funded at $287 million to fund inspectors and training, plus maintenance and safety investments to the physical rail infrastructure.
Consolidated Rail Infrastructure and Safety Improvements (CRISI) grants are funded at $593 million to fund capital and safety improvements, planning, environmental work and research. There is also $250 million included for grants available to rail operators in install Positive Train Control.
The Railroad Rehabilitation and Improvement Financing loan program receives a $25 million allocation for the first time and $350,000 has been allotted to help short line and regional railroads apply and take advantage of the program.
The Federal Transit Administration is provided with $13.5 billion in total budgetary resources, which include $9.7 billion “to help local communities build, maintain, and ensure the safety of their mass transit systems.” Within the $9.7 billion is $2.6 billion for Capital Investment Grants transit projects. “New Starts” projects are funded at $1.5 billion, Core Capacity projects at $716 million and Small Starts projects at $400 million.
There is new hope Thursday for the Gateway Project to build a much-needed additional rail tunnel underneath the Hudson River to be used by both Amtrak and New Jersey Transit along the Northeast Corridor, the nation’s busiest.
As part of a new spending package to keep the government running past Friday, Congressional lawmakers have agreed to more than half a billion dollars for the project.
President Donald Trump has opposed the new tunnel that supporters say are desperately needed to to keep train running amid an aging infrastructure, in part because it is a top priority of Senate Minority Leader Senator Charles Schumer.
Related: 7 On Your Side Investigates: New rail tunnel needed to avoid transportation Armageddon
“People in New York are very happy with the results we achieved,” Schumer said Thursday.
A smiling Schumer announced that he got key Republicans to agree to put the money in the budget to jump start the project. While the $500 million commitment is less than 5 percent of the $11 billion tunnel price tag, Schumer praised the agreement.
“We provided a reliable pathway for one of the most important infrastructure projects in the country,” he said.
Last month, an Eyewitness News investigation showed exclusively how the existing 107-year-old tunnel is crumbling due to its age and damage from Superstorm Sandy.
“Every day, salt and chlorides left behind are eating away at the tunnel walls and infrastructure protecting high voltage cables,” Amtrak’s Craig Schultz said.
Amtrak knows the time is coming, soon perhaps, when patching the crumbling concrete won’t be enough.
“It’s that urgent,” Schultz said. “Every day that we don’t begin construction on a new tunnel, we increase the risk of an infrastructure failure on the old one.”
Both New York Governor Andrew Cuomo and New Jersey Governor Phil Murphy have committed to picking up half of the $11 billion price tag. The commitment from Congress keeps the project alive, but barely.
“One big step, with a lot more that needs to come,” Murphy said. “But we need the federal government to be a full partner in this project. But a big step in the right direction.”
Construction of the estimated $11 billion tunnel is planned for next year. Under the current spending bill, they also can compete for $2.9 billion in federal grants for the project.
Amtrak also praised the appropriations bill.
“Amtrak applauds Congress for providing increased funding for intercity passenger rail, including grants to Amtrak, in the Fiscal Year 2018 Omnibus Appropriations Bill,” Amtrak President and CEO Richard Anderson said in a statement. “Amtrak thanks Congress for recognizing the importance of intercity passenger rail and the Northeast Corridor (NEC). The increased NEC capital funding will allow us to address many important needs along the Corridor and we look forward to working closely with the Department of Transportation on investing these funds to advance the most critical projects.”
GE has completed its first flight test of the world’s largest jet engine GE has completed its first flight test of the world’s largest jet engine
2:30 PM ET Thu, 15 March 2018 | 00:52
General Electric has conducted its first flight test of the world’s largest-ever jet engine.
The GE9X engine lifted off Wednesday, under the wing of GE Aviation’s Boeing 747 flying test-bed in Victorville, California.
The test had been delayed from February after engineers discovered a design issue with the turbofan. GE described the issue as minor and that it would not delay the program.
The engine has approximately the same diameter as the fuselage of a Boeing 737 and houses a 134-inch-diameter front fan, that GE has claimed to be the largest of any commercial engine in production.
In a press release, Ted Ingling, the general manager of the GE9X program, said the test flight was “picture perfect,” adding that final engine certification is expected in 2019.
GE is building the GE9X for Boeing’s new 777x long-haul airplane, due to take to the skies in 2020. Almost 700 GE9X engines are already on order.
The WeekThe Week
What happened to General Electric? For much of its 128-year history, GE was a quintessential American company. It produced the iconic incandescent bulb, the first commercial power station, the first commercial nuclear plant, the first American jet engine, and early advancements in plastics and silicon, just to name a few.
But today, the company’s market capitalization is plummeting, and it’s frantically selling off divisions for spare parts. It may eventually break up entirely.
The story of GE’s fall is one of bad luck, spectacularly bad decisions, and a very particular kind of elite American hubris.
It arguably begins with the arrival of the legendary Jack Welch as CEO in 1981.
Welch expanded GE beyond its familiar territories of manufacturing, engineering, and chemicals. He laid off workers and bought up new companies, including a 1986 purchase of RCA, which handed over NBC television. During this time, GE grew from a $25 billion manufacturing company to a $100 billion conglomerate.
But Welch’s particular interest was in finance, and this is where the trouble really starts.
It was under Welch’s leadership that GE Capital, the company’s banking arm, was created. It became a $500 billion Wall Street player, accounting for almost two-thirds of GE’s profits at its peak. Its hands were in everything from credit cards, to insurance, to mortgages. At the time, this was all seen as a smart, low-cost way to boost profits. “And you don’t have to build a factory,” Welch supposedly enthused.
The trend continued under Welch’s successor, Jeffrey Immelt, who took over as CEO in 2001. GE got into real estate, bought 80 percent of Universal Pictures, and even snatched up a subprime mortgage lender in California.
But GE’s transformation was always Welch’s legacy. It was hailed as a “landmark in American capitalism” and “the house that Jack built.” GE Capital was cited as proof that financial regulations needed to be slimmed down and modernized for the 21st century. (Democrats and Republicans alike were happy to oblige.) Welch was declared a “visionary,” and named “manager of the century” in 1999 by Fortune. A New York Times story from that same year oohed and aahed over Welch’s GE for its downsizing, profitability, internet savvy, and embrace of the efficiency strategy Sigma Six.
Then the Great Recession happened.
As entangled as it was in the mortgage bubble and the shadow banking sector, GE Capital toppled over. At the height of the 2008 crisis, literally no one would lend to it in the overnight markets. GE Capital was only saved by an emergency injection of $12 billion from Warren Buffet and other investors. It turned out that the good reputation and credit rating of GE’s traditional businesses had essentially been used to gamble wildly in the financial markets.
So for the first time in its history, GE had to slash its dividend payments, from 30 cents to 10 cents a share; a massive two-thirds reduction. In terms of total dollars going to shareholders, it was the biggest single dividend cut by an American company ever.
Ultimately, GE Capital got a whopping $139 billion bailout from the federal government. And still, from 2008 to 2014, the financial arm’s revenue shrank from $68.5 billion to $42.7 billion.
Wall Street shenanigans were not GE’s only mistake. In 2015, it bought Alstom, which specialized in coal turbines — GE’s biggest industrial purchase ever at the time. But doubling down on fossil fuels just as renewables were booming proved a costly mistake, and GE was forced to merge its oil and gas holdings with Baker Hughes in 2016. The company’s unusual accounting methods have also been controversial, obscuring the company’s true health from investors. In 2009, the SEC charged GE with “overly aggressive accounting” and false statements. GE forked over $50 million to settle the charges, while never admitting, or even denying, wrongdoing.
But GE Capital was always the lead weight dragging down the overall company, threatening its ability to borrow or finance operations. By 2015, the division’s assets were down to $363 billion.
Immelt and the company decided to sell off another $275 billion — so far they’ve gotten about $200 billion out the door — and return to GE’s roots. The plan was to raise the company’s manufacturing and industrial operations from 58 percent of earnings to 90 percent by 2018. (They also decided to issue $50 billion in stock buybacks to shareholders.)
It wasn’t enough to stanch the bleeding.
By late 2017, when Immelt finally stepped down, GE was forced to slice its dividend payments again, this time from 24 cents a share to 12 cents. Along with the financial wing, GE had also amputated its media holdings, its well-respected appliance business, NBC Universal, and its plastics business. The new CEO, John Flannery, was talking about refocusing on GE’s small number of successful projects, particularly aviation, health care, and renewable energy. There was even discussion of selling its railway operations and light bulb business.
In both the 2001 and the 2008 bubbles, GE’s market capitalization had spiked and then collapsed. But both times it returned to a steady upward climb. By 2016 it was back near the $260 billion it achieved just before the 2008 bust. But in 2017 — an otherwise boom year for corporate America — it collapsed again, and now stands just under $130 billion.
That brings us up to January 2018, and a final blow. Among GE Capital’s many endeavors was getting into long-term care insurance. It’s proven a particularly devilish business, as many insurers badly underestimated customers’ longevity and medical needs. GE hasn’t actually offered any new policies since 2006, but these long-term care obligations remain. Earlier this year, Flannery admitted the company had underestimated them, too: GE will take a $7.5 billion after-tax charge, and will have to reroute $15 billion in cash over the next seven years to shore up its insurance business. GE Capital, it seems, can do nothing right.
At this point, Flannery might break up the company entirely, but it’s not even clear that’s possible. Many observers suspect GE’s constituent parts are more valuable together than sold separately. Many of those parts still backstop the remaining financial entanglements that GE Capital spawned. Yet the rest of the company still can’t generate enough money to pay shareholders and make new investments.
As a result, GE is now a husk of its former self: A monument to the obviously insane yet somehow still-fashionable idea that it’s smarter to make money off mergers and downsizing and financial games than by building real things for real people.
“This is the opportunity, really of a lifetime, to reinvent an iconic company,” Flannery said in 2017. We’ll see.
President Trump is stumping for his sweeping $1.5 trillion infrastructure plan on Thursday, as the proposal appears to be stalled in Congress.
We certainly need to fix our roads and bridges. But the plan as it stands would starve our public transportation systems of funding. It slashes money for crucial grant programs. And, it would force transit projects to compete against other infrastructure proposals for a relatively small sum of federal funding.
That’s awful. Our aging rail and bus systems would continue to deteriorate. Expansion plans would be cancelled. Drivers would face worse traffic. And our big cities would become less globally competitive.
Governors, who control most of the nation’s regional transit authorities, must demand more federal transit funding.
America’s public transit infrastructure is already woefully outdated. More than half of the country’s buses and heavy rail cars — which are used in subways — need to be replaced
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- Jack Welch is the former CEO and chairman of General Electric.
- Early on in his career there, he was a chemical engineer, and he accidentally blew up a factory.
- When Welch met with a manager to discuss the situation, the manager coached him through the mistake and what he could have done differently.
- In the years that followed, Welch treated his own employees the same way.
The first time Jack Welch met his boss’ boss’ boss, it wasn’t to talk about promotion opportunities or about anything impressive he’d done.
It was 1963, and Welch was a chemical engineer at General Electric, the company where he’d eventually become CEO and chairman.
The issue at hand? Welch had inadvertently blown up a factory. Fortunately, no one was killed.
Welch recounted the experience and what it taught him in an interview with Stephen Dubner on the Freakonomics podcast.
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