Is California High-Speed Rail Dead?
The CEO and board chair of the California High Speed Rail Authority have resigned in disgrace over erroneous cost projections. A peer-review commission created by the California legislature says the authority’s high-speed rail plan is “not financially feasible.” Surveys show a majority of Democrats, Independents, and Republicans in the state all oppose construction.
Yet the authority’s scheme to build a new rail line capable of moving trains from Los Angeles to San Francisco in two hours and 40 minutes won’t die unless the state legislature kills it. Officially, the authority plans to begin construction by September 2012, despite the fact that it has less than 10 percent of the money it needs to complete the project.
The tide definitely turned against the plan when the authority published a new business plan admitting that estimated inflation-adjusted construction costs had more than doubled from $43 billion to $98.5 billion. Moreover, under the new plan the promised 220-mph trains would not roll until 2033, more than a decade later than voters were promised in 2008.
America 2050: Forget the Forgotten Mode
Half truths, innuendo, and pseudo-science form the basis of a response to my recent Cato paper, Intercity Buses: The Forgotten Mode. The response is produced by America 2050, a project of the Regional Plan Association, a New York City–area regional planning organization. The response’s basic thesis of the response is that intercity buses have a role to play in a “balanced transportation system,” but they are “no replacement for high-speed rail.”
Of course, my report never argued that buses were a replacement for true high-speed rail. But it did show that existing bus schedules in many corridors are faster, more frequent, and charge far lower fares than Amtrak in the same corridors. Of course, there is a “replacement” for high-speed rail: it is called “air travel” and it is far faster and costs about a fifth as much per passenger mile as Amtrak’s Acela.
In any case, America 2050 says my report ignored “one of the most powerful arguments for rail: providing an alternative to highway congestion.” I didn’t address that argument in the paper on buses because, as I’ve shown in other papers, it’s a bad argument. Highways move about 85 percent of all passenger travel and more than a quarter of all ton-miles of freight in this country. If they are congested, maybe we should relieve that congestion rather than spending hundreds of billions of dollars on an elitist rail network that won’t relieve congestion and won’t carry more than a tiny fraction of the number of people (and none of the freight) moved on the highways.
But we can’t fix highway congestion, says America 2050: “providing additional road space does not solve congestion; in fact it creates additional demand for driving.” That’s another bad argument, for four reasons. First, my bus paper never advocated building new roads, and if asked, I would have suggested relieving congestion using congestion pricing of roads before building new capacity.
Michigan State Policymakers Push to Keep Federal Gas Taxes
Last week I discussed the Obama administration’s decision to redistribute federal high-speed rail money rejected by Florida Gov. Rick Scott. I noted that “Florida taxpayers were spared their state’s share of maintaining the line, but they’re still going to be forced to help foot the bill for passenger-rail projects in other states.” My underlying point was that the states should be allowed to make their own transportation decisions with their own money.
Two Michigan state policymakers — both Republican — want to send the same message to Washington. State representatives Paul Opsommer and Tom McMillin have introduced resolutions that call on the federal government to allow the states to keep the federal gasoline taxes that they send to Washington. (Opsommer’s resolution would have to pass both state chambers, whereas McMillin’s resolution would only need to pass in the Michigan House.)
Michigan would no longer send its money to Washington so that it can be washed through Congress and the federal bureaucracy and sent back to Michigan (and the other states) with costly federal strings attached. Instead, highway financing and control would be left to the states. As a Cato essay on federal highway funding argues, re-empowering the states is clearly preferable to the current top-down approach:
With the devolution of highway financing and control to the states, successful innovations in one state would be copied in other states. And without federal subsidies, state governments would have stronger incentives to ensure that funds were spent efficiently. An additional advantage is that highway financing would be more transparent without the complex federal trust fund. Citizens could better understand how their transportation dollars were being spent.
The time is ripe for repeal of the current central planning approach to highway financing. Given more autonomy, state governments and the private sector would have the power and flexibility to meet the huge challenges ahead that America faces in highway infrastructure.
Some people, particularly those with an interest in the current convoluted arrangement, argue that it’s necessary for the enlightened beings in Washington to provide us with a national “vision” or “plan.” But the redirection of Florida’s high-speed rail allotment to other states shows that decision-making in Washington usually has more to do with politics than economics.
Conspicuously left out of the Obama administration’s re-spreading of high-speed cheese was Wisconsin, which tried to grab some of the Florida money for an intercity rail line that connects the state to Chicago. Reason’s Sam Staley points out that Wisconsin Gov. Scott Walker also said “no thanks” to the administration’s high-speed rail money. Staley says “the snubbing of the State of Wisconsin smells a lot like political payback,” and links to a piece from a Milwaukee Journal-Sentinel columnist who doesn’t have any doubts.
If either or both of the Michigan resolutions pass, Congress can simply choose to ignore the message. Hopefully, more states will take a cue from Michigan, which could make it harder for the folks in Washington to simply look the other way. Regardless, Opsommer and McMillan deserve a round of applause for trying to score one for fiscal federalism.
High-Speed Rail and Federalism
Florida Governor Rick Scott deserves a big round of applause for dealing a major setback to the Obama administration’s costly plan for a national system of high-speed rail. As Randal O’Toole explains, the administration needed Florida to keep the $2.4 billion it was awarded to build a high-speed Orlando-to-Tampa line in order to build “momentum” for its plan. Instead, Scott put the interests of his taxpayers first and told the administration “no thanks.”
That’s the good news.
The bad news is that the administration is going to dole the money back out to 22 passenger-rail projects in other states. Florida taxpayers were spared their state’s share of maintaining the line, but they’re still going to be forced to help foot the bill for passenger-rail projects in other states.
Here’s Randal’s summary:
Instead, the Department of Transportation gave nearly $1 billion of the $2.4 billion to Amtrak and states in the Northeast Corridor to replace worn out infrastructure and slightly speed up trains in that corridor, as well as connecting routes such as New Haven to Hartford and New York to Albany. Most of the rest of the money went to Midwestern states—Illinois, Iowa, Minnesota, Michigan, and Missouri—to buy new trains, improve stations, and do engineering studies of a few corridors such as the vital Minneapolis-to-Duluth corridor. Trains going an average of 57 mph instead of 52 mph are not going to inspire the public to spend $53 billion more on high-speed rail.
The administration did give California $300 million for its high-speed rail program. But, with that grant, the state still has only about 10 percent of the $65 billion estimated cost of a San Francisco-to-Los Angeles line, and there is no more money in the till. If the $300 million is ever spent, it will be for a 220-mph train to nowhere in California’s Central Valley.
Why should Floridians be taxed by the federal government to pay for passenger-rail in the northeast? If the states in the Northeast Corridor want to pick up the subsidy tab from the federal government, go for it. (I argue in a Cato essay on Amtrak that if the Northeast Corridor possesses the population density to support passenger-rail then it should just be privatized.)
I don’t know if taxpayers in Northeast Corridor would want to pick up the federal government’s share of the subsidies, but I’m pretty sure California taxpayers wouldn’t be interested in footing the entire $65 billion for their state’s high-speed boondoggle-in-the-works. As I’ve discussed before, the agitators for a national system of high-speed rail know this:
If California’s beleaguered taxpayers were asked to bear the full cost of financing HSR in their state, they would likely reject it. High-speed rail proponents know this, which is why they agitate to foist a big chunk of the burden onto federal taxpayers. The proponents pretend that HSR rail is in “the national interest,” but as a Cato essay on high-speed rail explains, “high-speed rail would not likely capture more than about 1 percent of the nation’s market for passenger travel.”
According to the Wall Street Journal, congressional Republicans aren’t happy that the administration is taking Florida’s money and spreading it around the country:
Monday’s announcement drew criticism from House Republican leaders, who questioned both the decision to divide the money into nearly two-dozen grants around the country—instead of concentrating it into fewer major projects—and the fact that many of the projects will benefit Amtrak, the federally subsidized passenger-rail operator.
I heartily agree with the Amtrak complaint, but I’m not sure why as a federal taxpayer I should feel better about instead “concentrating [the money] into fewer major projects.” Subsidizing passenger-rail is no more a proper role of the federal government than education or housing. Unfortunately, for all the criticisms of the Obama administrations and the constant talk about spending cuts, Republicans don’t appear to possess much more desire to limit the scope of the federal government’s activities than the Democrats.
See this Cato essay for more on fiscal federalism.
The Administration Concedes Defeat
To sell his high-speed rail program, President Obama desperately needed a success story—a high-speed train operating during his administration that would awe the public and lead to a national demand for more such lines. That success story was going to be Florida’s Orlando-to-Tampa line, the only true high-speed route (as opposed to speeding up existing trains by 3 to 5 mph) that could have been completed during Obama’s term in office (assuming he is re-elected).
Anticipating that success, the administration drafted a proposal to use federal gasoline taxes and a “new energy tax” to fund $53 billion for more high-speed rail lines over the next six years. (The proposal also included $250 billion for highways, $120 billion for urban transit, $27 billion for “livability,” and $25 billion for an infrastructure bank.)
The chances of that happening died when Florida Governor Rick Scott decided to turn back the $2.4 billion in federal dollars dedicated to the Orlando-Tampa line. To maintain momentum behind high-speed rail, the administration could have given all of that money to California, the only other state proposing to build true high-speed rail.
Instead, the Department of Transportation gave nearly $1 billion of the $2.4 billion to Amtrak and states in the Northeast Corridor to replace worn out infrastructure and slightly speed up trains in that corridor, as well as connecting routes such as New Haven to Hartford and New York to Albany. Most of the rest of the money went to Midwestern states—Illinois, Iowa, Minnesota, Michigan, and Missouri—to buy new trains, improve stations, and do engineering studies of a few corridors such as the vital Minneapolis-to-Duluth corridor. Trains going an average of 57 mph instead of 52 mph are not going to inspire the public to spend $53 billion more on high-speed rail.
Dodging the High-Speed Bullet Train
President Obama’s dream of connecting 80 percent of Americans to a high-speed rail line appears to be dead. Congress appropriated $8 billion for high-speed rail in the 2009 stimulus bill and $2 billion more in the 2010 appropriations bill. But, after newly elected governors of Florida, Ohio, and Wisconsin rejected high-speed rail projects in those states, Congress declined to include any more funds in 2011 and it is unlikely to spend any more on this boondoggle as long as Republicans have a hold on the House.
What will Americans get for the $10 billion or so already committed?
- California appears ready to spend $5.5 billion building a 220-mph rail line from Corcoran–a town south of Fresno mainly known for the prison housing Charles Manson–to Borden–a ghost town north of Fresno. Considering that trains were not scheduled to stop in either Corcoran or Borden, this will truly be a train to nowhere.
- Illinois is spending more than $3 billion adding three trains per day (to the current five) between Chicago and St. Louis and increasing average train speeds from 51.6 to 56.8 mph, saving train travelers a half hour on the current 5.5-hour trip. Illinois hopes to eventually boost average speeds to 72.6 mph, but that will require more money.
- Washington state is spending $700 million adding two trains per day (to the current three) between Seattle and Portland and increasing average train speeds from 53.4 to 56.1 mph, thus saving rail travelers 10 minutes on the current 3.5-hour journey.
- North Carolina is spending $545 million adding two trains a day (to the current three) between Charlotte and Raleigh and increasing speeds from 54.1 to 57.7 mph, thus saving travelers 12 minutes on the current 3.2-hour trip.
Energy Error Continued
When Barack Obama emerged as a serious contender for the presidency, he offered a core menu of curing everything by increased federal intervention in health care, education, and energy. Whenever new problems arose that lessened the urgency of earlier concerns, Obama has crafted assertions that his original prescriptions will also resolve the new difficulties. In energy, this has involved extending his program to new, even more dubious projects. He also has a habit of incessantly repeating the same tired arguments in the vain hope that his skill at persuasion will win the day.
His March 30, 2011 energy speech and accompanying Blueprint are typical. About the only differences between these and his June 15, 2010 speech on energy were more bad ideas. He added to the panic-driven slowdown in offshore oil and gas drilling permits, now rationalized as a prudent response; a post-Japan crisis review of nuclear power; and another for new methods of producing natural gas. For no good reason, he argued that Brazilian oil development needed U.S. government support despite the long history that successful oil development in some of the most backward countries in the world has occurred without major U.S. government aid. (In fact, the aid offered was an Export-Import Bank loan and thus more an exercise in crony capitalism than a useful move.)
Otherwise Obama continued to display the central characteristic of his philosophy — that he and his advisers possess such superior insight that they can guide the average American to better decisions. This is precisely the Progressive error that has led to the present political mess and the cause of the dramatic 2010 shift in the composition of the U.S. House of Representatives. Whenever concerns arise that he has overreached, he claims that he was doing the sensible thing.
His Blueprint constitutes Exhibit A in the case against this interventionism. It is essentially a list of the many mandates that Obama has achieved or desires, ranging from high-speed rail to micromanaging the design of every new building in the United States. This list is dominated by the many provisions of the infamous stimulus bill that indiscriminately threw money at every favored area including energy. Obama seems to believe that seeing where the money went will counteract the outrage at ill-conceived, unnecessary, and counterproductive spending. At least to energy specialists, what actually appears is resounding proof that the voters were right — every idea is bad.
The speech also showcased Obama’s talent at making dubious assertions. Many have commented that he does not deserve the credit that he seems to claim for the rise in U.S. oil output. The very long lead times, which Democrats traditionally use to oppose expanded oil-and-gas leasing, imply that the rise was facilitated by actions in prior administrations. An even greater whopper was his intimation that the existence of many undeveloped leases suggests that no rush exists to lease and license more. The more obvious criticism is that his cumbersome licensing policy contributes to the inability to develop. Less apparent is the likelihood that many of those leases proved, after further examination, to be unattractive while more promising areas are being withheld from leasing.
He similarly selected the most misleading possible way to understate U.S. oil-production potential. He indicated correctly that the United States has only 2 percent of world “proved” reserves of oil. What he ignored is that proved reserves cover only already-known sources and wild methodological differences among countries in how this is calculated make cross-country comparisons dubious. (This situation was worsened by 1970s hysteria. The highly efficient existing U.S. system was replaced because it was run by the supposedly untrustworthy industry. The government created its own far more expensive and far less satisfactory system.) The more reliable measure of actual production shows an 8.5 percent U.S. share in 2009. Neither measure satisfactorily indicates what really matters — the potential efficiently to add production. Obama thus adds to his prior unjustifiable aim to reduce petroleum use by also misstating the petroleum potential. Substantial oil imports remain desirable for the U.S. because of the underlying economics. Nevertheless, the federal government has imposed undesirable restrictions on oil and gas production.
HSR: Joe Biden Channels The Simpsons
In his customary salesman style, Vice President Joe Biden recently made a pitch to a Philadelphia crowd for a plan to spend $53 billion over the next six years on a national system of high-speed rail.
Biden’s performance brings to mind the classic Simpsons episode “Marge vs. the Monorail” in which con-man Lyle Lanley convinces the town’s residents to waste money on an exciting-sounding high-speed train that turns out to be a boondoggle.
The full episode can be viewed here, but here’s the scene in which Lanley whips the crowd into frenzied support of his plan:
Is Obama Serious?
Today POLITICO Arena asks:
Although President Obama proposed a five-year, $40 billion per year freeze in non-security, discretionary spending, and Republicans want to cut spending by at least $100 billion a year, is either side serious about real spending cuts?
My response:
With uncontrolled deficits well into the future and a debt exceeding $14 trillion, for Obama to propose saving only $40 billion per year in discretionary spending over the next five years, while “investing” in pie-in-the-sky things like high-speed rail, wind farms, environmentally destructive ethanol, and the like, is worse than unserious — it’s an insult to our intelligence. Like Obama, many Republicans too treat military spending, among other things, as sacrosanct, but at least they’re proposing more serious budget cuts.
The deeper problem, of course, is systemic. Socialism, a large dose of which we have in America today, brings out the very worst in people. In the name of collective responsibility, it saps and then destroys individual responsibility, leading to a war of all against all. No one wants “his” entitlement cut for fear that his neighbor might profit at his expense — because, after all, “we’re all in this together.” Suspicion and envy are the order of the day. Meanwhile, dreamers like Obama (at least that’s his pose), who promote our collective drift, either can’t or won’t grasp the hard reality until it crashes down upon them, and us, as it is doing now in several of our states and in Europe. For the “hard-hearted” realists among us, November 2012 can’t come soon enough.
Slow Death for High-Speed Rail
Tea party victories in November likely signal the beginning of the end for President Obama’s ambitious and expensive high-speed rail plans. Republican governors-elect of both Ohio and Wisconsin have vowed to return federal high-speed rail funds that had been granted to those states. The governor-elect of Florida is also a rail skeptic, and more and more obstacles are being thrown in front of California’s rail plans.
Obama Replaces Costly High-Speed Rail Plan With High-Speed Bus Plan
The prospects for high-speed rail are so dire that the Onion recently suggested that President Obama would shift his support to high-speed buses instead. Even the Washington Post has sounded caution about spending much more money on this obsolete form of travel.
High-Speed Federalism Fight
In October, I speculated that the upcoming elections could be the nail in the coffin for the Obama administration’s plan for a nationwide system of high-speed rail. Indeed, some notable gubernatorial candidates who ran, in part, on opposition to federal subsidies for HSR in their states proceeded to win. However, Transportation Secretary Ray LaHood made it clear in a recent speech to HSR supporters that the administration intends to push ahead.
LaHood’s message was targeted specifically to incoming governors John Kasich in Ohio and Scott Walker in Wisconsin, who argued that HSR doesn’t make any economic or practical sense for their states.
LaHood said that states rejecting federal HSR subsidies won’t be able to reroute the money to other uses, such as roads. Instead, LaHood said the rejected money will redistributed “in a professional way in places where the money can be well spent” — i.e., other states. And sure enough, other governors were quick to belly up to the Department of Transportation’s bar in order to grab Ohio and Wisconsin’s share.
From the Columbus-Dispatch:
New York Gov.-elect Andrew Cuomo has said he would be happy to take Ohio’s money. Last week, California Democratic Sens. Barbara Boxer and Dianne Feinstein wrote LaHood saying that California stands ready to take some, too, noting that several states that elected GOP governors this month have said they no longer want to use the rail money for that purpose.
“It has come to our attention that several states plan to cancel their high-speed rail projects. We ask that you withdraw the federal grants to these states and award the funds to states that have made a strong financial commitment to these very important infrastructure projects,” Boxer and Feinstein said in their letter to LaHood.
This is a textbook example of why the Department of Transportation should be eliminated and responsibility for transportation infrastructure returned to state and local governments. If California wishes to pursue a high-speed rail boondoggle, it should do so with its own state taxpayers’ money. Instead, Ohio and Wisconsin taxpayers now face the prospect of being taxed to fund high-speed rail projects in other states.
If California’s beleaguered taxpayers were asked to bear the full cost of financing HSR in their state, they would likely reject it. High-speed rail proponents know this, which is why they agitate to foist a big chunk of the burden onto federal taxpayers. The proponents pretend that HSR is in “the national interest,” but as a Cato essay on high-speed rail explains, “high-speed rail would not likely capture more than about 1 percent of the nation’s market for passenger travel.”
This Week in Government Failure
Over at Downsizing the Federal Government, we focused on the following issues this week:
- Unfortunately, the party favored by tea party supporters at the moment has no interest in shuttering the Department of Education.
- Columnist Robert Samuelson is right: the Obama administration’s high-speed rail dreams “represent shortsighted, thoughtless government at its worst.”
- Attention GOP: the electorate wants spending cuts, and they will support the policymakers who take the lead on cuts if they are pursued in a forthright and serious-minded manner.
- New Republican members of Congress will be looking for ways to cut the budget deficit and also to increase economic growth. One way to do both is to privatize government assets.
- Will the House Republican leadership embrace spending cuts proposed by their own members in the conservative Republican Study Committee?
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