Wednesday, February 9, 2011

More about the Obama Administration's newest HSR chess-move

Many of you may have already seen Mike Rosenberg's article about Obama's intended gift of $53 billion to the Democrats in all the states that have HSR corridors, or even if they don't.

One of my colleagues called it "too little, too late."  No matter how much money they want to throw at this HSR vision, it can't be enough to actually build it.  

It's not like building the Washington Monument, where private donations kept pouring in from generous donors in dribs and drabs, and it took a very long time to complete this obelisk.  That is to say, there will never be funds from any source other than the federal government.  The required amounts are just too large.

And, those amounts keep growing.  A Peninsula group called Californians Advocating Responsible Rail Design (CARRD ) has crunched some numbers derived from the rail authority's own budget documentation and they see the actual costs now at $63 billion.

Remember, just before the elections in 2008, the CHSRA  projected their total costs to be around $40 billion.  They also claimed that the $9.95 billion bond would be the ONLY funds required from California taxpayers. And, leaving no lie unturned, they projected $3 billion in annual surplus revenues.

No one -- NO ONE -- believes the rail authority's numbers any longer. Why should we? And, given that fact, how pernicious is it of our government's willingness to keep throwing money in the CHSRA's directions. 

See the CARRD discussion and numbers here:

As you can read in the prior blogs, these numbers put out by the Obama Administration don't actually mean anything, since they know they won't fly in the Republican House.  However, the Obama people know that they better do something about unemployment if they want to be re-elected in 2012.  So HSR looks like a jobs program.  However, it really isn't, as we've been trying to explain.

Please do not consider this a news forecast, merely an informed speculation.  I think that the Democrats and Republicans in the Congress and Administration will negotiate a far more modest HSR package that will make everybody look good.  The Republicans will cut this ridiculous $53 billion down to a token amount.  However, as we've heard from John Mica numerous times, that money will be earmarked for the Northeast corridor, which Mica thinks should have a fast train. The HSR advocating train-traveller Vice-President, Joe Biden, will approve of this, the Republicans will look like budget cutters and everybody saves face. 

Possible windfall for high-speed rail
By Mike Rosenberg
Posted: 02/08/2011 09:40:17 PM PST

SAN MATEO -- The White House on Tuesday announced plans to spend $56 billion over the next six years to build high-speed railroads, bringing California's massive bullet train project closer to reality.

Should the plan -- one of Obama's signature job-creation initiatives -- make its way through Congress, California would be in line for the biggest chunk. That money would fuel the state's $43 billion bullet train project -- its biggest public works undertaking in a generation.

"This is the kind of bold investment in the future of our nation's infrastructure that will get the attention of the private sector and make high-speed travel a reality in the United States," Roelof van Ark, CEO of the California High-Speed Rail Authority, said in a statement.

The money could be used to extend the first stage of construction -- a $5.5 billion, 120-mile line between roughly Fresno and Bakersfield -- toward the Bay Area and Southern California.

The tracks will run along the Caltrain corridor between San Francisco and San Jose.

Critics challenged the plans, especially after Obama called for freezing discretionary spending in his State of the Union address.

"This is like giving Bernie Madoff another chance at handling your investment portfolio," Rep. Joe Mica, R-Fla., the House Transportation Committee chairman, said in a statement.

Although Senate Democrats have generally supported funding high-speed rail, the Republican-led House could veto the plans if a compromise isn't reached.

Even if the funds come through to California, state critics have spent the last two years arguing the project will balloon well past its $43 billion price tag.

A Bay Area News Group analysis of comparable projects around the world showed the project should actually cost between $38 billion and $73 billion.

Californians Advocating Responsible Rail Design, a Palo Alto-based group, poured through thousands of pages of rail authority documents and determined last week that the actual projected price tag, based on estimates of each section of track, should be $63 billion.

Skepticism has been laid on the rail authority for relying on another $10 billion from private investors and up to $5 billion from local governments, even though they have no funding commitments from either sector.

White House officials said the first $8 billion would come from the federal budget for the coming fiscal year, which Obama plans to unveil next week. But officials would not say where the rest of the money would come from. Most of its previous high-speed rail funds came from the stimulus package approved by Congress.

Contact Mike Rosenberg at 650-348-4324.