In Washington, 'federal' is no longer a dirty word

Since Sept. 11, efforts to privatize everything from Amtrak to the Postal Service are on hold.

When officials in Washington speak these days, some of the most unexpected things come out of their mouths.

Take Sen. Kay Bailey Hutchison and her speech on the Aviation and Transportation Security Act.

In the speech, Senator Hutchison, a Texas Republican with impeccable conservative credentials, said "federal" over and over in the most complimentary way. And, in fact, all of her Republican brethren in the Senate supported the bill, which has since been signed into law by President Bush. It will replace private security systems at airports with a 28,000-person federal workforce.

For the past few years, the road to privatizing the federal government has been a kind of one-way superhighway leading away from Washington. But in the wake of Sept. 11, things have changed. The federal government, long distrusted and disliked, has again become popular, seeing better poll numbers than it has in 30 years. And privatization has begun to hit some speed bumps.

"In general, the enthusiasm for privatization across the board is waning," says Don Kettl, a University of Wisconsin political scientist who has written extensively on privatizing. "And Sept. 11 has reminded us that more than profits and markets matter to us."

The question now is whether the privatization debate has fundamentally changed, or only temporarily slowed as the nation responds to a crisis.

The change in tenor is particularly noticeable for two major government entities: Amtrak and the Postal Service.

New hope for Amtrak

For Amtrak, a perennial money loser that Congress has considered dissolving, the attacks were an opportunity to show it could offer more than pleasant views and comparatively slow travel. In the days immediately following the attacks, as the skies remained closed, Amtrak and rental cars were the primary forms of transportation for stranded travelers.

But the company wound up with little to show for the month of September. Though Amtrak reported increases of nearly 60 percent in reservations, reservations don't require advanced purchase, and in the end, ridership was actually down 6.4 percent from September 2000.

Still, the terrorist shake-up weighed on the minds of the government-appointed Amtrak Reform Council.

In early November, the council released findings that the company would not be self-sufficient by 2002 and set in motion a chain of events that could lead to restructuring. But the council's vote to release their findings was extremely close - deadlocked at 5-5 until the eleventh member was reached by cellphone - in part because of Amtrak's increased visibility following Sept. 11. And the memories of closed airports make it unlikely that Congress will do anything drastic to Amtrak.

"I didn't expect any major changes in Amtrak before Sept. 11, and I think they are probably less likely now," says Robert Hahn, director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies.

The Postal Service also took a serious hit from the terrorist attacks. Postmaster General John Potter told a Senate committee that the attacks cost the service an estimated $3 billion. That comes on top of $9.3 billion in debt from fiscal year 2000.

The service's struggles had stirred some talk of privatization before the attacks. One leading advocate in favor of taking away its government monopoly was former Postmaster General William Henderson. But now, even as its debt grows, there is less discussion of any such change - and a recent Gallup survey showing more than 70 percent of Americans approve of the way the Postal Service is handling its duties is another disincentive for privatization.

The stream of government bailouts that industries from airlines to insurance are seeking makes privatization less appealing, Mr. Kettl says. "Why privatize the Postal Service, when they are just going to

end up asking for federal money ... anyway?"

In essence, the privatization debate, the battle between making a profit and providing a public service, looks as though it has shifted - for the moment. But how long that change lasts remains to be seen.

Not much left to privatize?

Kettl thinks the movement toward privatizing was already slowing before the attacks.

"Most of the easy targets, the low-hanging fruit, have been picked off by privatization advocates. There isn't much left that you can privatize," he says.

Others, however, feel the change is more ephemeral. Mr. Hahn, for instance, says much of the talk is overstated.

Hahn says the shock that came with the attacks has given people a newfound respect for police and firemen and the military, but that doesn't translate into a long-term change in people's view of government in general.

"The general feeling is: This debate can wait. Anything that doesn't have to do with the war in Afghanistan or homeland security is on hold."

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