A blog about business and economics.

Feb. 24 2017 7:22 PM

The GOP’s Leaked Obamacare Replacement Is Terrible for the Needy

On Friday, a draft of the House Republicans' Obamacare replacement plan—which may or may not have broad support in the caucus—leaked to the press and it bodes horribly for America's needy. This is not a surprise, as the document sprung from the cold, granite hearts of the congressional GOP—members of which literally think that leaving more Americans uninsured would be a victory for liberty. But it's worth noting nonetheless.

To begin, the plan would roll back the Affordable Care Act's Medicaid expansion starting in 2020 and slap spending caps on the program. This is a noteworthy problem for low-income families, as Medicaid is a program specifically designed to provide them with insurance. Second, the plan would replace Obamacare's premium subsidies, which are more generous for poorer families, with a new system of subsidies (or refundable tax credits, whatever you want to call them) that will rise with a person's age. Though I'm sure these numbers are nowhere near final, they'd be worth the following:

  • Under 30: $2,000
  • 30 to 40: $2,500
  • 40 to 50: $3,000
  • 50 to 60: $3,500
  • Over 60: $4,000

The bright side of this approach is that the subsidies would be available to everybody, whereas Obamacare's are only available to families earning less than 400 percent of the poverty line. The downside is that Bruce Springsteen is eligible for a bigger credit than a 27-year-old struggling to make ends meet as a home health aide. Republicans will probably argue that their plan will still make insurance affordable for lower-income Americans by eliminating Obamacare's insurance market regulations. But there are almost certainly going to be losers—a single 27-year-old making $20,000 would currently be eligible for about $2,500 in subsidies on average, according to the Kaiser Family Foundation's calculator, so they'd be looking at a 20 percent drop in assistance.

There is one major reason why you would structure premium subsidies by age instead of income. Since Obamacare's subsidies decrease with earnings, they theoretically discourage people from working or making more. A couple years ago, the Congressional Budget Office projected that this implicit tax would reduce the country's labor supply by 0.35 percent by 2025. Using an age-based scale fixes that problem.

But let's be serious. You're really going to structure a massive health insurance program to prioritize the old and wealthy over the young and poor in order to deal with a theoretical 0.35 percent decline in aggregate labor supply? That speaks to a fairly strange set of priorities.

It potentially gets worse, too. Obamacare's subsidies are designed to cap insurance premiums at a percentage of a family's income, so they grow with health care costs (they do start getting less generous if their total price exceeds a certain level of GDP). The GOP's subsidies, however, are set to increase each year by the CPI, plus 1 percent. That may well be lower than the rising cost of insurance, meaning the tax credits could become less useful over time. (Again, Republicans might argue that their formula will encourage insurers to keep premiums in check, but call me skeptical.)

Of course, one might argue that this proposed subsidy system is more a reflection of conservative philosophy than technocratic policy considerations. Which would figure. In Republican eyes, the neediest don't need the most help.

Feb. 24 2017 4:20 PM

Trump’s Latest Economics Pick: The Author of One of the Wrongest Books Ever on Investing

Kevin Hassett of the American Enterprise Institute is President Trump’s pick to lead the Council of Economic Advisers, Politico is reporting. Which makes perfect sense.

In many ways, Hassett is exactly the sort of person you would imagine filling this post in a Republican administration. He’s got a Ph.D. in economics from an Ivy League university (insert your own Penn joke, snobs); taught at another (Columbia); advised the McCain, Bush, and Romney campaigns; has a long record as a pundit (Bloomberg, National Review, Fox Business); and has published more than his fair share of wonky policy papers. (Here’s his CV, and here is his list of media hits and op-eds.)


And in some ways, Hassett would be a welcome departure from many of Trump’s appointees. He’s not a jerk. He’s genial and pleasant. He’s a supply-sider but not angry about it. He respects norms. He’s a decent guy—who just happens to be wrong about a lot of things in the way supply-siders who work at the American Enterprise Institute typically are. Here he is in 2013, saying Obamacare would lead people not to work. Here he is in August 2014, saying the end of quantitative easing would be bad news for U.S. stock markets. I could go on.

Hassett’s celebrity rests on being the less flamboyant half of the duo that penned Dow 36,000, one of the most wrong books ever published on investing and the markets. In the book, published in 1999, Hassett and co-author James K. Glassman argued that the stock market, which had essentially tripled in the previous years, was remarkably undervalued. Investors didn’t fully comprehend the declining risk associated with stocks, they argued. As a result, they argued, the Dow could triple again, to 36,000. Not in 10 years, not in 20 years, but in three to five years. (As bad as the book read, it tasted worse when I ate a chapter of it after losing a bet in 2006.)

But that kind of prognosticator is actually what Trump needs: someone who is unafraid to make bold, highly optimistic projections of growth based on flimsy evidence and shoddy reasoning—and then to stick by them or explain them away when they fail to come true.

There are a couple ways to resolve the contradictions of Trump’s proposed and promised policies: leaving Social Security and Medicare untouched, ramping up spending on defense, deportations, and infrastructure, and cutting taxes massively while keeping the deficit in check. The first is to assume a rate of growth that is significantly higher than we’ve had in the last couple decades. Treasury Secretary Steven Mnuchin, in his highly unconvincing media forays earlier this week, argued that the U.S. could easily get back to 3 percent annual growth. President Trump himself last fall promised the U.S. could easily grow at a rate above 4 percent annually. The second, related way is to engage in dynamic scoring—to assume that changes in tax and social policy will magically produce higher growth and tax revenues, and lower deficits.

On each of the above measures, Hassett fits the bill. Here he is reaffirming his belief in Dow 36,000 after the stock market crashed in 2001. Here he is testifying in 2015 on the wonders of dynamic scoring. As for 4 percent growth, Hassett was a contributor to the 2012 book The 4% Solution: Unleashing the Economic Growth America Needs, which was published by the George W. Bush Institute. The notion that tax cuts, a changed mindset, and regulatory reform could push growth to 4 percent annually was always a bit fanciful—especially at a time when the baby boomers were beginning to enter their retirement years. And it was especially fanciful coming from an institution and authors associated with George W. Bush. His presidency’s record on GDP growth (1.6 percent per year) was literally the worst in the past 50 years. Four percent growth will be even harder to achieve if we start deporting all the people who do the work of building homes and harvesting crops.

But Hassett will gamely make the case, and will likely find receptive ears. He has a long history of playing well with others. In 2013, when Jason Furman was named to head Obama’s CEA, Hassett co-signed a letter with a bunch of other Bush administration veterans supporting the move. While the signers didn’t agree with policies, they said, “We are confident, however, that Jason Furman, if confirmed as CEA chair, will provide President Obama with advice that presents both the advantages and disadvantages of the policy proposals under consideration.”

We should hope that Kevin Hassett will be an honest broker and present arguments for and against policy proposals that promise rosy results. But given President Trump’s inability to tolerate dissent and lack of knowledge about economic policy, I’m skeptical the ever-rosy Hassett will do so.

Then again, Hassett’s famous optimism might actually be par for the course: In both Democratic and Republican administrations, White House official forecasts have generally erred on the side of growth. Appointing a CEA head who thinks the economy should be doing better than the reported results is one of the few conventional moves Trump has made.

Feb. 23 2017 1:56 PM

John Boehner Is Pretty Sure Republicans Won’t Repeal and Replace Obamacare

Former Speaker of the House John Boehner has become an occassional—and delightful—fount of Capitol Hill real talk ever since he was forced into early retirement by ticked-off conservatives in his party. And at the moment, he thinks it's pretty unlikely Republicans will succeed in their goal of repealing and replacing their great white whale, Obamacare.

According to Politico, Boehner told an Orlando, Florida, health care conference that while his erstwhile GOP colleagues were "going to fix Obamacare—I shouldn’t call it repeal-and-replace, because it’s not going to happen.”


Boehner added, for good measure: “Most of the framework of the Affordable Care Act … that’s going to be there.”

So, a man who knows a thing or two about GOP dysfunction thinks President Obama's namesake legislative achievement will survive in some form, with small changes. Boehner also said he “started laughing” when Republicans started talking about rapidly replacing the law after Trump won the election because “Republicans never ever agree on health care.” At which point, I can only assume he experienced an acid flashback to his days trying to resolve the debt ceiling standoff, then smiled ever so slightly at the thought of his lawn.

Feb. 23 2017 12:27 PM

Steve Mnuchin Is Happy to Give Trump Credit for the Booming Stock Market. We’ll See How Long That Lasts.

“This is a mark-to-market business, and you see what the market thinks.” That was Treasury Secretary Steve Mnuchin telling CNBC on Thursday morning that, yes, of course President Trump deserves credit for the 10 percent stock market rally since Election Day. Every day, Mnuchin argued, the stock market functions as a report card, a sort of running poll on the success or failure of the administration.

In this schema, traders and investors wake up every morning, look at the resident of the White House and the policy pronouncements emanating from the administration, and decide whether they think stock returns will be positive or negative in the future. They are participating in a sort of online daily tracking pool, but with real money at stake.


You hear this kind of argument a lot from financiers and financial pundits—but only when two things are happening: a Republican is in the White House, and the stock market is going up.

This is an old intellectual tic of Republican market types. If the stock market rises when a Democrat is president, he’ll get no credit. During Bill Clinton’s presidency, for example, the S&P 500 quadrupled. But right-wingers, who predicted the economy would plunge into recession when Clinton raised taxes on the wealthy in 1993, didn’t regard the 1990s bull market as a report card on the Clinton administration. Instead they ascribed the longest peacetime expansion in history to other factors: like the brilliance of Federal Reserve Chairman Alan Greenspan, the dot-com boom, NAFTA, the end of the Cold War, or the Republican takeover of Congress in 1994.

When George W. Bush came into office and promulgated tax cuts, easy money, and loose regulation of Wall Street, the switch was flicked. Supply-siders and Republicans were quick to ascribe any gains in the economy and the market directly to the president. It was the Bush Boom, as Jerry Bowyer argued in a 2003 book. Or “The Greatest Story Never Told,” as Larry Kudlow put it in National Review in 2006. But the boom was followed by a crash. In the eight years of George W. Bush’s presidency, the S&P 500 returned less than nothing.

Was this a judgment on the efficacy of Bush’s tenure? Of course not. The Wall Street Journal op-ed page and Republicans absolved Bush of all blame—how absurd to think a president has anything to do with the markets! They blamed the Federal Reserve, the Community Reinvestment Act, Barney Frank, subprime lenders.

You know what’s coming next. President Obama inherited an economy and stock market in free fall. Under his tenure, the market bottomed and then enjoyed an extraordinary resurgence. Between March 2009 and Nov. 8, 2016, the S&P 500 nearly tripled. The stimulus package, the bailouts, the Affordable Care Act, the appointment of Janet Yellen. Republicans assured us that every one of these steps would mean disaster for the markets and the economy. By and large, however, these moves worked. And the policies of aggressively guaranteeing every financial asset in existence proved to be a particular boon to banks. In fact, the Obama-era bull market and reflation enabled Steve Mnuchin to mint his fortune on One West.

Of course, throughout the Obama years, Republicans and right-leaning market analysts steadfastly refused to mark the Obama presidency to the market, or vice-versa. The stock market was rising because interest rates were low, because it was all a giant bubble, because companies were brilliant at finding new ways to profit, because of Silicon Valley innovation. How absurd to think that the stock market is some kind of report card on the president!

And here we are again. Never mind the immense gains in the stock market over the last eight years, or the eight years of economic expansion, or the record string of monthly job gains. Now that there’s a Republican in the White House again, Mnuchin’s simple-minded analysis goes, we’re really going to have prosperity. And it will all be due to the brilliance of the 45th president.

Marking your reputation—or company value or success or presidency—to the market is a really good idea when markets are booming. Those in charge are eager to claim credit for the valuations they get at the top. But the minute the market plummets, marking to market doesn’t sound like such a good idea. In fact, during the financial crisis, right-wingers suggested we should just suspend mark-to-market accounting to spare Wall Street banks from the carnage.

The minute the markets turn south, I would fully expect Steven Mnuchin to suggest that we do the same with regard to President Trump.

Feb. 21 2017 6:14 PM

Homeland Security Just Revealed the Trump Administration’s Road Map for Cracking Down on Undocumented Immigrants

On Tuesday, the Department of Homeland Security officially released two memos, first reported by McClatchy and others on Saturday, that outline the Trump administration’s strategy for deporting undocumented immigrants and other aliens with criminal records.

To a large extent, the memos detail how the department will enforce Trump’s omnibus executive order on immigration, signed on Jan. 25, that promised to defund sanctuary cities, deputize local law enforcement as immigration police, and hire thousands of new agents for Border Patrol and Immigration and Customs Enforcement. While there are only 6,000 ICE agents, there are more than 700,000 local police around the country. Together, those actions may create an effective “deportation force,” with or without the participation of the National Guard.

The memos also cement the broadened enforcement priorities that Trump outlined in his order. Under Obama, ICE had moved to limit its deportation focus to only convicted criminals, terrorist threats, and very recent arrivals. (Though many criminal aliens are guilty of nonviolent offenses like working with a false Social Security number, driving without a license, or marijuana possession.) The new DHS rules make all aliens without valid visas a priority for removal, though a DHS official told reporters on Tuesday the department would still focus its limited resources on those who have committed “serious crimes.”

Feb. 21 2017 1:41 PM

Trump Visited the Smithsonian African American History Museum. What Might He Have Learned?

President Donald Trump spent Tuesday morning touring the National Museum of African American History and Culture, a makeup visit for the trip he was supposed to have made on Martin Luther King Jr. Day. One of Trump’s companions was Ben Carson, his pick for secretary of housing and urban development, whose career as a neurosurgeon is commemorated in one of the upstairs exhibits.

It would have been a good opportunity for the developer-president to update his notion of the “inner city” as a stand-in for black America, and perhaps even examine his own role in creating that stereotype.

Fittingly, there is nothing in the museum about Donald Trump’s own brush with fair housing law. In 1973, Trump was sued by the Department of Justice for refusing to rent or negotiate rentals with black tenants in the buildings his father had built in outer-borough New York City. The 27-year-old Trump vehemently denied the accusation. The standout detail from the case, which Trump settled in 1975 without admission of guilt but with a formal structure to help black tenants find apartments in Trump buildings, was that applications from blacks were marked with a for colored. A review of some related documents released last week by the FBI reveals a blunter approach at some of the buildings in the Trump Management Co.: A black prospective tenant would be told there were no vacancies, despite a newspaper listing; a white prospective tenant would be shown an empty apartment immediately.

Tucked away on the third level of the underground history galleries at the NMAAHC is a room called “Cities and Suburbs” that to some extent tells the other side of this story: the diverse but largely segregated set of black communities that emerged after 1968. Like the rest of the museum, its focus is on black agency—on places like Soul City, the utopian black community that the Washington Post called “perhaps the most vital experiment yet in this country’s halting struggle against the cancer of hectic urbanization.” The endeavor got a $14 million grant from President Nixon’s Department of Housing and Urban Development.

Feb. 17 2017 6:59 PM

The Republican “Plan” to Replace Obamacare Includes a Huge Assault on Abortion Access

In an attempt to project some semblance of party unity and momentum, House Speaker Paul Ryan unveiled the latest Republican road map for replacing the Affordable Care Act this week. It is not the most detailed document—more a collection of broad-stroke ideas than a concrete policy plan—and it's unclear how much support it would find in Congress. But at least one thing is obvious from this outline: Republicans are looking to turn Obamacare repeal into an assault on abortion access.

Here's how they'd go about it: To make health insurance (somewhat) affordable, Ryan's plan would offer tax credits to all Americans purchasing coverage on the individual market. However, women would not be allowed to use those subsidies to buy plans that paid for abortion. Given that the vast majority of customers would want to use their tax credits, most carriers would likely drop abortion coverage from their offerings.


“It seems pretty clear that this would drastically scale back or possibly eliminate abortion coverage in the individual market,” Adam Sonfield, a senior policy manager at the Guttmacher Institute, told me. He added that the rule could also have “spillover effects” on employer-based insurance, because of the way the Republican idea could affect COBRA coverage.

Reproductive health advocates faced down a similar threat when Congress was crafting Obamacare in 2010. Back then, the House of Representatives passed the notorious Stupak amendment, which would have banned Americans from using the ACA's tax credits to buy coverage that included abortion benefits. The worry then was that if insurers couldn't sell subsidized plans that covered abortion, they wouldn't bother selling any. One analysis from the George Washington University School of Public Health suggested that would spark an industrywide change in standards that would end coverage of medically necessary abortions “for all women, not only those whose coverage is derived through a health insurance exchange.” Before Obamacare became law, however, the Stupak amendment was subbed out for a watered-down replacement proposed by Florida Sen. Bill Nelson.

The map of abortion coverage under the ACA is complicated. Thanks to the Hyde amendment, which prevents federal money from being used to fund abortions, Medicaid can't cover abortion anywhere. Meanwhile, 25 states currently restrict or ban insurance plans sold on Obamacare's insurance exchanges from covering abortion, according to Guttmacher. Ten states limit it on all private insurance plans. But in others there are no restrictions on abortion benefits in the private market at all.

The new Republican plan is a bit like the Stupak amendment on steroids. After all, Obamacare's subsidies are only eligible to those with incomes up to 400 percent of the poverty line. The Republican tax credit would be available to anybody in the individual market, meaning insurers would likely expect pretty much everyone to use one, and tailor their offerings accordingly. (For those wondering: No, Ryan has not said how much the credits would be worth, and since they'd be universal, they'd also likely be pretty small.) You would expect abortion coverage to disappear from the whole individual market rapidly. Like the GW team argued years ago, it's possible that the change in industry norms would lead insurers to drop the benefits from the plans they sell to employers. Some might suggest that women could purchase special riders to cover abortion, but those sorts of add-ons haven't worked particularly well in health insurance, since they tend to be extremely expensive.

It's hard to quantify how deeply the GOP plan would damage abortion access. “Even when women do have private insurance coverage, most of them end up paying out of pocket [for abortions]. What is not clear is why,” Sonfield told me. However, driving abortion coverage out of the individual market would certainly make the procedure less affordable for many, while further stigmatizing a procedure that should be considered a standard part of reproductive care.

Of course, that might be the only part of health reform every Republican will be able to get behind.

Feb. 17 2017 4:53 PM

Even in 2016, Democrats Carried Rust Belt Town Centers. Why?

Back in early November (such a simple time!), I wrote a piece for Slate on political scientist Jonathan Rodden’s analysis of precinct-level voting patterns. Rodden, a professor at Stanford, showed that the familiar pattern of high-density Democratic areas and low-density Republican areas had been re-created, fractal-like, in the small towns and cities of the Rust Belt during Barack Obama’s presidential election in 2008.


These little-downtown voters, who helped Obama carry several swing states, were supposed to be irrelevant to the Democratic Party in 2016, as Chuck Schumer infamously said in July: “For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin.” After Wisconsin, Michigan, and Pennsylvania flipped for Trump on November 8, it was easy to think that small-town Democrats had abandoned the party wholesale.


But it turns out Democrats didn’t lose those town cores in Pennsylvania and Ohio; in fact, as Rodden showed with new data this week, the correlation between living downtown and voting Democrat was (relative to nearby rural areas) just as strong in this presidential election as in its predecessors. Red counties weren’t homogenous before, and they’re not homogenous now.


Rodden thinks this trend rebuts a common cultural trope about small-town America: "A popular claim is that Trump’s populist anti-trade rhetoric resonated most in postindustrial towns with severe job losses,” he writes in the Post. "If so, we might expect that these towns suddenly started to vote more like their neighboring Republican precincts, with the graphs flattening in 2016.”

Feb. 16 2017 4:52 PM

Trump’s New Labor Secretary Nominee Seems Boring, Professional, and Conservative

Here are a few words that immediately come mind when considering President Trump's new nominee to be secretary of labor, R. Alexander Acosta: Dull. Accomplished. Conservative. Dull.

Perhaps this was to be expected. Trump's first pick for the job, fast food CEO Andrew Puzder, was a fascinating train wreck who had to withdraw his name Wednesday after alienating liberals, conservatives, and anybody who thought using bikini models to sell burgers was kind of crass.


Acosta is pretty much the opposite—a textbook product of the Republican legal and political establishment. Currently the dean of Florida International University's College of Law, he's a double Harvard grad who clerked for Supreme Court Justice Samuel Alito while the judge served on the 3rd U.S. Circuit Court of Appeals. He sat on the National Labor Relations Board under President George W. Bush for a couple of years before moving to the Justice Department to head the Civil Rights Division. He later became the U.S. attorney in Miami, where he prosecuted the corrupt lobbyist Jack Abramoff, among others. He likes to give talks at the Federalist Society, which is pretty much the Rotary Club for deeply conservative lawyers.

He was also born in Cuba, meaning he would be the only Hispanic member of Trump's Cabinet. And he spoke out against anti-Muslim discrimination in testimony before Congress in 2011, emphasizing how federal prosecutors aggressively investigated anti-Islam backlash crimes after the Sept. 11 attacks.

Labor groups haven't had much time to dig into Acosta's record, and they'll be sure to scrutinize the opinions he authored or joined while on the NLRB, which decides cases on union organizing and unfair labor practices. But so far, there seems to be some cautious optimism that he'll be an improvement over Puzder, who had never worked in government and many feared would be deeply hostile to the agency's core mission of policing and enforcing labor law.

“He was in the Civil Rights Division,” the National Employment Law Project's Deborah Berkowitz said of Acosta. “He did uphold the law there. He did prosecute Jack Abramoff and others. He has a history of public service. And gets what public service is about. And I think that’s important. Because in the end, the Department of Labor is a law enforcement agency.”

Wilma Liebman, one of Acosta's Democratic colleagues on the NLRB, also had flattering things to say about the nominee in an interview with Politico:

“Even though we often came out differently on policy conclusions or the outcome of a case, he was a good colleague and he was always willing to talk and bounce around ideas,” Liebman said. “I would say he’s very smart and he’s an independent thinker.”
Liebman said that while unions may not “be thrilled with every decision he’ll make...they’ll get a good hearing.”

Is there anything controversial that Democrats might latch onto? Sort of. For starters, Bush's Civil Rights Division was marred by a scandal over politicized hiring practices thanks to an official named Bradley Schlozman, who (illegally) tried to hire Republicans and had a habit of calling Democrats “libs” and “commies” and “pinkos.” Of his HR philosophy, Schlozman once mused: “I just want to make sure we don’t start confining ourselves to, you know, politburo members because they happen to be a member of some, you know, psychopathic left-wing organization designed to overthrow the government.” Swell guy!

Acosta, who ran the Civil Rights Division from 2003 to 2005, wasn't directly implicated in any wrongdoing. But he did leave hiring to Schlozman. And a January 2009 report by the Justice Department's Office of the Inspector General concluded that Acosta had failed to take any action despite some obvious red flags concerning Schlozman's activity.

Bush's Civil Rights Division was also accused by critics of backing away from traditional voting rights cases involving black and Hispanic victims, and of seeking to protect whites against reverse-discrimination instead. However, a March 2013 inspector general report couldn't find evidence that was really the case. Meanwhile, Acosta substantially increased the number of voting rights cases on behalf of Spanish and other foreign language speakers.

What about his time as a U.S. attorney? It's possible that Democrats will bring up Acosta's decision not to file federal charges against Jeffrey Epstein, the billionaire pedophile financier who, as the New York Post summed it up, has been “accused of recruiting dozens of underage girls into a sex-slave network, buying their silence and moving along.” After a ferocious battle with federal and Florida prosecutors, Epstein pleaded guilty to state charges of soliciting an underage prostitute in 2008 and served a fairly cushy 18-month jail sentence. Many have questioned Acosta's choice to, quite literally, not make a federal case of it, which led to an unusual lawsuit by some of Epstein's alleged victims. Acosta has defended his choice, however, essentially saying it was necessary to win a plea that would send Epstein to prison.

Are Democrats going to try and claim Acosta purposefully gave a sweetheart deal to a rich sex offender? It seems unlikely. Again, this is the same guy whose office prosecuted Abramoff. It would be a bit dissonant to argue that he's soft on wealthy, politically connected types.

There's no reason to think Acosta will be particularly friendly to unions or workers. Nobody should expect any new pro-labor regulations to emerge from his department. But at this very early stage, it at least seems like he might bring a dose of professionalism and civic-mindedness to the Trump administration.

So I might have to take back what I said Wednesday about how Puzder's defeat wasn't much of a victory for liberals. If so, that's actually a relief.

Feb. 16 2017 11:24 AM

If Elaine Chao Axes This Bay Area Rail Funding, We’ll Know She’s Politicizing Transportation

For the past 20 years, as Bay Area workers have invented the apps and devices that define this young century, system engineers have sought to bring the Caltrain rail corridor up to date with the last one.

Transforming the Caltrain into an electric railway would be expensive, they knew, but it would bring benefits like cleaner, quieter trains (compared with today’s diesel locomotives), more efficient schedules, and increased passenger capacity. The last piece has come to seem especially necessary: The system’s ridership, which now tallies 65,000 riders a day, has doubled since 2005.

The $2 billion modernization project draws its funding from local, regional, and state revenues, plus a federal grant, two years in the making, that planners thought was all but approved. On Friday, Caltrain’s Core Capacity grant becomes eligible for a signature from U.S. Transportation Secretary Elaine Chao. It’s supposed to be a formality capping a long period of review at the Federal Transit Administration; contractors are in place to start work on electrification on March 1.