Sunday, February 13, 2011

Robert Samuelson's op-ed. article in the Washington Post

I should mention, parenthetically, that the Washington Post is a liberal, Democratic newspaper. However, Robert Samuelson is a conservative economics journalist.
I would expect such a critical view as Samuelson's to be found in the Wall Street Journal, not the Washington Post.  All of which is to say, it's really time for all of us to pay attention. Thanks to Ken Orski for getting me a copy of this a day early.  

The first fact to introduce here is the total cost of Obama/Ray LaHood's high-speed rail vision.  Samuelson quotes LaHood as having said the total cost for building out the 11 HSR corridors in the US would be $500 billion.  That's obviously not possible if the California 800 mile project ALONE will be $100 billion or better.  

Indeed, on a per mile basis for the 11 corridors, the total costs are more like two trillion dollars. There is NO WAY that this amount of government expenditure can produce even a return of those two trillion dollars with a fully operational national high-speed rail system, much less "stimulate" economic productivity beyond that amount.  And if not, what's the point?

Samuelson (who knows a lot more than I do) makes an argument similar to mine.  If the train tickets were to cover the actual operational costs of riding HSR, no one could afford it.  They would either run empty trains, or run so few trains that you would wonder why it was built in the first place.  

OR, the tickets cost less so that more people can afford it.  Then, the actual operating costs would have to be supplemented heavily by the government, subsidizing each ticket.  That's not fair since we all have to pay with our taxes to supplement the ticket fares (which would still be higher than any other train ticket) of the already well-to-do to ride a luxury train.  

A lot of people have done the math.  Wendell Cox and Joe Vranich did so before Proposition 1A was (barely) passed by the voters in 2008.  Most recently, William Grindley, Alain Enthoven, William Warren and others have been producing detailed, carefully researched papers one after the other to demonstrate the financial disaster coming at us down the high-speed rail tracks.

Samuelson has it right. This is not merely wrong as a government policy.  It's far too much money to possibly produce all the wished for results.  In cost/effective terms, it's a terrible idea.  Why don't they all realize that, or don't they care? It's amazing that there aren't critics within the Administration that are pointing that out. 

Contrary to what the Administration believes, it will not make them look good in the eyes of a nation of unemployed people struggling to survive as their government promotes the construction of a lavish, luxury rail system.  But perhaps even more important is, that purely in dollar-and-cents, it's a very bad business decision.

It will become a permanent drain on the treasuries of the participating states that host a HSR system, as well as the federal government.  That's a very bad deal, especially since most of the states are in a virtual state of bankruptcy already, declared or not. Isn't the Administration eager to cut unnecessary costs from the budget to get a grip on the run-away deficit?

Obama would do well to graciously suspend his support for this "vision" and not pursue further federal expenditures for this project.  It can never be enough funding to actually bring it to full operation, and that way spending a little is worse than not spending enough.  It is the height of irony that the projected spending of $53 billion won't scratch the surface of this vast enterprise. 

Mr. President, please stop before a great deal more damage is done.

February 14, 20011

High-Speed Rail is a Fast Track to Government Waste

By Robert J. Samuelson
The Washington Post, February 14, 2011

Vice President Biden, an avowed friend of good government, is giving it a bad
name. With great fanfare, he went to Philadelphia last week to announce that the
Obama administration proposes spending $53 billion over six years to construct a
"national high-speed rail system." Translation: The administration would pay
states $53 billion to build rail networks that would then lose money - lots -
thereby aggravating the budget squeezes of the states or federal government,
depending on which covered the deficits.

There's something wildly irresponsible about the national government undermining
states' already poor long-term budget prospects by plying them with grants that
provide short-term jobs. Worse, the rail proposal casts doubt on the
administration's commitment to reducing huge budget deficits. The president's
2012 budget is due Monday. How can it subdue deficits if it keeps proposing big
spending programs?

High-speed rail would definitely be big. Transportation Secretary Ray LaHood has
estimated the administration's ultimate goal - bringing high-speed rail to 80
percent of the population - could cost $500 billion over 25 years. For this
stupendous sum, there would be scant public benefits. Precisely the opposite.
Rail subsidies would threaten funding for more pressing public needs: schools,
police, defense.

How can we know this? History, for starters.

Passenger rail service inspires wishful thinking. In 1970, when Congress created
Amtrak to preserve intercity passenger trains, the idea was that the system
would become profitable and self-sustaining after an initial infusion of federal
money. This never happened. Amtrak has swallowed $35 billion in subsidies, and
they're increasing by more than $1 billion annually.

Despite the subsidies, Amtrak does not provide low-cost transportation. Longtime
critic Randal O'Toole of the Cato Institute recently planned a trip from
Washington to New York. Noting that fares on Amtrak's high-speed Acela start at
$139 one-way, he decided to take a private bus service. The roundtrip fare:
$21.50. Nor does Amtrak do much to relieve congestion, cut oil use, reduce
pollution or eliminate greenhouse gases. Its traffic volumes are simply too
small to matter.

In 2010, Amtrak carried 29.1 million passengers for the entire year. That's
about about 4 percent of annual air travel (2010 estimate: 725 million
passengers). It's also roughly a quarter of daily automobile commuters (124
million in 2008). Measured by passenger-miles traveled, Amtrak represents
one-tenth of 1 percent of the national total.

Rail buffs argue that subsidies for passenger service simply offset the huge
government support of highways and airways. The subsidies "level the playing
field." Wrong. In 2004, the Transportation Department evaluated federal
transportation subsidies from 1990 to 2002. It found passenger rail service had
the highest subsidy ($186.35 per thousand passenger-miles) followed by mass
transit ($118.26 per thousand miles). By contrast, drivers received no net
subsidy; their fuel taxes more than covered federal spending. Subsidies for
airline passengers were about $5 per thousand miles traveled. (All figures are
in inflation-adjusted year 2000 dollars.)

High-speed rail would transform Amtrak's small drain into a much larger drain.
Once built, high-speed-rail systems would face a dilemma. To recoup initial
capital costs - construction and train purchases - ticket prices would have to
be set so high that few people would choose rail. But lower prices, even with
favorable passenger loads, might not cover costs. Government would be stuck with
huge subsidies. Even without recovering capital costs, high-speed-rail systems
would probably run in the red. Most mass-transit systems, despite high
ridership, routinely have deficits.

The reasons passenger rail service doesn't work in America are well-known:
Interstate highways shorten many trip times; suburbanization has fragmented
destination points; air travel is quicker and more flexible for long distances
(if fewer people fly from Denver to Los Angeles and more go to Houston, flight
schedules simply adjust). Against history and logic is the imagery of high-speed
rail as "green" and a cutting-edge technology.

It's a triumph of fancy over fact. Even if ridership increased fifteenfold over
Amtrak levels, the effects on congestion, national fuel consumption and
emissions would still be trivial. Land-use patterns would change modestly, if at
all; cutting 20 minutes off travel times between New York and Philadelphia
wouldn't much alter real estate development in either. Nor is high-speed rail a
technology where the United States would likely lead; European and Asian firms
already dominate the market.

Governing ought to be about making wise choices. What's disheartening about the
Obama administration's embrace of high-speed rail is that it ignores history,
evidence and logic. The case against it is overwhelming. The case in favor rests
on fashionable platitudes. High-speed rail is not an "investment in the future";
it's mostly a waste of money. Good government can't solve all our problems, but
it can at least not make them worse.

Forwarded by:
C. Kenneth Orski (>
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