Saturday, April 30, 2011

What was the Government thinking when it cooked up High-Speed Rail?

As you all know, I'm a big Ken Orski fan because of his very thorough and in-depth analyses of government processes concerning high-speed rail.  Here's a discussion from April 12th in which he brings in both the writings of Matt Dellinger and Ron Utt.  So, what we have here is a three-fer, with Ken's introduction, Matt's and Ron's comments, one below the other.

The overall context for these articles is a Conservative ideology.  Having said that, the focus on the high-speed rail project and all its shortcomings are unambiguous and not easily dismissed on ideological grounds.  Ken has been consistent and quite dispassionate is his critique and I admire it immensely.

The President's program for high-speed rail was hastily assembled out of all the hype and advocacy rhetoric of people such as those who were on the CHSRA Board and lobbied Washington aggressively for funding.  "High-Speed Rail," as an expression had little substance in the US.  It became a holy grail, a vision, that was construed to enhance the President's image as a far sighted leader who motto is "winning the future."  

Despite extensive criticism of the underlying realities of such programs, and, as we put it, without doing their due diligence or homework, they launched an $8 billion effort embedded in the Stimulus ARRA Act.  Congressionals like Jim Oberstar, a HSR admirer from way back, had been pushing for a $50 billion Transportation inclusion for high-speed rail.  However those proposed dollars also lacked a substantive conceptual foundation. 

The US Department of Transportation still does not have a firm construction of what a national high-speed rail program requires in order to become a reality.  They have kicked the ball into play with no strategy or game plan.

Over-reaching often has tragic implications.  While we all enjoy the rhetoric of "reaching for the stars" as a metaphor for creativity and achievement, the reality underpinnings are essential, especially for a government program that back of the envelope calculations suggest costs exceeding one trillion dollars. 

We are now either gleeful or pained observers as this vision begins to disintegrate.  And so it should.  We have no business walking into a Rolls-Royce Car Dealership without the money in the bank. 

A Requiem for "High-Speed Rail" 
An Editorial Point of View
Ken Orski

Innovation Briefs, now in their 20th year of publication, are published by Ken Orski. Cascadia Prospectus reprints them with permission. The content of Innovation Briefs does not necessarily represent the view of Cascadia Center of Discovery Institute.

April 12, 2012

In the interest of maintaining some balance and perspective on what the Administration proudly calls "President Obama's bold vision for a national high-speed rail network" we have tried to offer our readers a range of different points of view. It is in this spirit that we present below two commentaries. 

The first contribution is by Matt Dellinger, author of the highly praised book, "Interstate 69: The Unfinished History of the Last Great American Highway" and a frequent contributor on transportation topics to the progressive website, Transportation Nation. 

The second contribution is by Ron Utt, Senior Research Fellow at the conservative Heritage Foundation, whose analyses of transportation policy have been a longstanding feature of that Foundation's work.

Along with our two commentators, we do not question the merits of intercity rail transportation--- an integral and essential part of this nation's economy, culture and history over the past century and a half. Readers of Steven Ambrose's history of the transcontinental railroad, Nothing Like it in the World, can only marvel at the indomitable spirit and entrepreneurial energy that drove the creation of the continental rail network. 

Rail transportation has been intimately woven into the social and economic fabric of this nation ever since. Nor do we forget the huge contribution that private railroad companies have made, and continue to make, to maintaining and growing the nation's rail network. 

By investing billions of private dollars, they have made the US freight rail system the envy of the world. Lastly, we believe that intercity passenger rail service is essential in densely populated heavily traveled corridors, in particular in the Northeast Corridor, where road and air traffic congestion will soon be reaching levels that will threaten its continued growth and productivity. In sum, we are not mindless opponents of rail transportation. 

Rather, along with Messrs. Dellinger and Utt, and many other responsible observers inside and outside the railroad community (including notably, Michael Ward, Chief Executive Officer of CSX, the nation's third largest freight railroad), we take issue with the Obama Administration's lofty but misleading rhetoric of "high-speed rail." Instead of representing its initiative for what it really is ---a program of incremental improvements to the existing rail infrastructure--- the Administration has tried to create the impression that it has embarked on a bold and revolutionary program of building a continent-wide high-speed rail network--- a legacy reminiscent of President Eisenhower's Interstate Highway Program.

As Dellinger and Utt point out, the recently announced spate of awards will hardly lead to bullet trains speeding from coast-to-coast at 250 mph. These grants, along with most of the earlier awards, will support engineering and planning studies, incremental upgrades in the facilities of freight railroads and modest improvements in existing passenger rail service. For example, the latest list includes a study to replace Amtrak's Baltimore Tunnel; development of Missouri's and West Virginia's state rail plans; final design of the New Jersey Portal Bridge; and modest corridor improvements in Amtrak service in Connecticut, New York and Washington State.

The above-mentioned $300 million worth of awards was announced on April 8, just a few hours before agreement was reached on a short-term continuing resolution that would cut $1.5 billion in unobligated HSR money. It also preceded by three days the release of a GAO report criticizing the lack of transparency in the Administration's HSR grant selection process (GAO-11-283). Citing the GAO findings, Rep. John Mica, Chairman of the House Transportation and Infrastructure Committee blasted the Administration in a strongly worded press release. "In the name of high-speed rail, the Administration has squandered limited resources on dozens of slow-speed rail projects across the country," Mica said. "I cannot imagine a worse beginning to a U.S. high-speed rail effort. ...It is critical that there be transparency for why these projects were selected in the first place and why any future projects will be selected."

Had the objective and the selection criteria of the $10 billion program been stated candidly from the outset as an effort to modestly upgrade existing intercity passenger rail services, the White House would have spared itself this criticism and the attendant ridicule of "ObamaRail" and "the Railroad to Nowhere." 

As it is, the Administration dug itself into an even deeper hole with a quixotic and hardly credible pledge of "making high-speed rail accessible to 80 percent of Americans in 25 years." A promise that was made without any hint as to how this ambitious plan would be paid for, and against a background of the House Republicans' announced intention to totally eliminate federal support for high-speed rail beginning next year. Without further congressional appropriations, the President's dogged pursuit of the $53 billion high-speed rail initiative will simply collapse. (Late news: the final continuing resolution announced on April 12 zeroes out funding for high-speed rail in FY 2011 and rescinds $400 million from the FY 2010 HSR funding.)

As Matt Dellinger pointedly concluded, "If High-Speed Rail ever happens, future Americans might not remember the President who circulated the maps and funded the studies. They'll remember the President who figured out how to pay for it all." 

Kenneth Orski, Editor-Publisher


How Much High Speed Rail Will $2.4 Billion Buy?

by Matt Dellinger (reprinted from Transportation Nation, April 7, 2011)

It should be more fun to give away billions of dollars for rail. One of the happiest things a politician gets to do, after all, is fork over cash for transportation projects. All those gold shovels, ribbon cuttings, and bridge-naming ceremonies! And, one could argue, President Barack Obama and SecretaryRay LaHood should feel triply blessed. With today's politics being what they are, they get to dole out money more than once!

But there's something of a deflated mood around the bids that came in this week for the $2.4 billion in High Speed Rail funds that Florida rejected in February. The money seems a little tainted, perhaps, and politically heavy. It's unseemly to celebrate over such federal largesse when Washington is on the verge of a shutdown and budget negotiators are contemplating cutting vital programs. New Jersey Governor Chris Christie and Wisconsin Governor Scott Walker and Florida Governor Rick Scott, elected as budget hawks, decided the safe bet was to show restraint and send back big fat slices of the transportation pie. By doing so, they left more for everyone else---but they also made the indulgence more fraught. These are hungry times, though, and money won't sit around long. By Monday, twenty four states, plus Washington D.C. and Amtrak, had bid for pieces of Florida's pie.

What the Administration and rail boosters lost in the Florida debacle---a truly high-speed segment with right-of-way secured and private investors in line, that could have been built in the visible future (the next Presidential term, for instance)---will not be gained back by anything proposed Monday. Among the list of projects there is no item that will similarly turn a rail-less corridor into a futuristic proof-of-concept. The speeds mentioned are all easily imaginable by anyone with a decent car. Without a confidence in messaging that has so far eluded the Administration when it comes to transportation, it will be hard to sell this reapportionment as anything earth-shattering, or even (literally) ground-breaking.

So what can this money do? If you read about the bids (such as Michigan's, Pennsylvania's, and Illinois'), you know that most of the bidders have in mind a set of very worthy incremental upgrades---a renovated bridge here, a bypass there, upgraded switches here---and studies to advance future megaprojects such as the Gateway Tunnel under the Hudson. Skeptics will point out, as the venerable publisher of Innovation Briefs, Ken Orski, has done, that this kind of birdshot smattering of small projects is hardly lunar-landing stuff.

But this serves as criticism only because the Administration's rhetoric has routinely exceeded the nation's grasp. It's not the time for rail, they argue, it's the time frral [sic]. On the other hand, the administration argues, if you don't dream, dreams will never be real. Everyone understands that President Eisenhower built the Interstates. But the system was drawn up in 1944, twelve whole years before the Federal-Aid Highway Act of 1956. It was FDR who made the plans for a system of "Interregional Highways" and who, during the Depression, first wrestled with the question of how to build them. Eisenhower blew the dust off those plans and signed a bill that created a mechanism for funding them. If High Speed Rail ever happens, future Americans might not remember the President who circulated the maps and funded the studies. They'll remember the President who figured out how to pay for it all.

Matt Dellinger is the author of the book "Interstate 69: The Unfinished History of the Last Great American Highway"


The Death of a High-Speed-Rail Program 

How a handful of think tanks and the Florida Tea Party changed the debate
by Ron Utt, (reprinted from National Review Online, April 11, 2011)

On March 4, 2011, the Florida supreme court unanimously confirmed Gov. Rick Scott's authority to reject $2.4 billion in federal funding to build an 84 mile high-speed-rail (HSR) line connecting Tampa to the Orlando Airport and Disney World. Governor Scott had rejected the funds in late February, but the combined power and vast financial resources of the federal government, multinational high-speed-rail builders, some local governments, and the Florida business community worked to find a legal loophole with which to circumvent Scott's repeated rejections.

As a result of the court decision, the project has joined the Ohio and Wisconsin pseudo-HSR proposals, which were rejected by governors John Kasich and Scott Walker, respectively. Transportation Secretary Ray LaHood has announced that he will redeploy the rejected $2.4 billion to other, more willing states, and on April 6, 2011, he announced that the Department of Transportation would be selecting among the 90 new applicants seeking the funds. None of these projects are for genuine HSR, and instead focus on improving existing slow-speed Amtrak service.

While much of this has been in the national news, what most journalists and commentators have overlooked is the decisive role a handful of pro-market think tanks and Tea Party activists played in putting these projects in the morgue. Beginning in early 2009, when Congress agreed to fund Obama's new HSR plan with $8 billion from the American Recovery and Reinvestment Act, analysts at Cato, Reason, and Heritage, working both individually and collectively (through the American Dream Coalition), began to produce work that was critical of the proposals. Cato and Heritage (note: I work at the latter) published several overview papers on the subject, Heritage hosted a total of four seminars, and the Reason Foundation arranged for detailed studies of the California and Florida proposals. Ken Orski, publisher of Innovation Briefs, hammered away with weekly skeptical article that were widely circulated through the transportation-policy community and media.

As the issue heated up and the projected costs soared, think tanks' work in this area led to scores of interviews with journalists who were becoming increasingly skeptical of the Administration's claims. By early 2011, even the Washington Post and the New York Times expressed doubts about the plan.The first victory came in Hillsborough County, Fla. (near Tampa), where the local Tea Party had established an organization called "No Tax for Tracks." The name referred to a proposal to hike local sales taxes to pay for a light-rail line that would connect the area to the proposed Tampa/Orlando HSR line.

In September of 2010, the group held a rally to encourage people to vote "no" in a referendum on the proposal, and several members of the American Dream Coalition spoke at the event. Despite being outspent $1,600,000 to $25,000 by the business community and opposed by the political establishment, the Tea Party won, and funding for the light-rail line was defeated.

Having won against overwhelming odds, the Tampa Tea Party activists turned their attention to Florida's proposed HSR boondoggle. During the 2010 campaign, Republican gubernatorial candidate Rick Scott expressed skepticism about the HSR plan and promised a thorough review of it if elected. Scott was elected and did conduct the review, which was influenced by -- and several times quoted --- the Reason Foundations's analysis. At the same time, the Hillsborough County Tea Party team, joined by allies throughout the state and supported by the think tanks, went to work opposing the project. In the process, they met with media, elected officials, and the new governor. By late February, they had convinced enough of those in need of convincing, and the project seemed dead.

But not quite. President Obama's refusal to let go of this scheme, and his ability to expend vast sums of taxpayer dollars to keep it alive, allowed it to flounder along for a week or two after the court's ruling as his aides tried to circumvent the decision. In the end, the Florida project died, and with the California HSR project unlikely to be built because of high costs and tight budgets, all that is left of the Obama rail plan is an effort to increase spending on Amtrak.

The success of this effort illustrates how a small number of dedicated people with limited money but lots of energy and commitment can take on powerful forces and bring them to heel. As the Miami Herald noted, Governor Scott "said he made the decision based on a verbal review of the ridership study, as well as documents provided by the libertarian Reason Foundation and the Heritage Foundation, a conservative think tank." Importantly, the majority in Congress agrees: The House Budget Resolution for FY2012 states that "the threat of large, endless subsidies is precisely the reason governors across the country are rejecting federally-funded high-speed rail projects. This budget eliminates these projects which have failed numerous and clear cost-benefit analyses."

Ronald D. Utt is the Herbert and Joyce Morgan Senior Research Fellow in the Heritage Foundation's Roe Institute for Economic Policy Studies.

11:56 AM | Permalink

The GAO looks at the FRA granting process for High-Speed Rail award making

You may not recall a recent Federal Government Accounting Office (GAO) edict about the hastiness with which the Federal Railroad Administration (FRA) administered the granting of the $8 billion in stimulus dollars for high-speed rail.  I only have a vague recollection. I do remember that there was no preparation, strategic studies, policy debates or considerations of the larger transportation context into which this program was intended to be inserted.

So, let's take a closer look at this, since it is the federal government this time, not just California's high-speed rail authority, that is improvising a massive funding program for a fantasy vision of high-speed rail.

The GAO has not drawn the inferences we have here. That is to say, we believe that the funding decisions were guided by the White House for political reasons, providing funding to appropriate States and Congressional Districts that needed earmark funds from Washington to assist the re-election of relevant candidates.  That indeed was the process to support the re-election of Democratic California Congressman Jim Costa, whose district is dominant in the Central Valley rail route required by the FRA, which specified that route to accompany additional funding.

It should be noted that the HSR Stimulus awards for California were announced in January, at the beginning of the 2010 November election cycle.

We also believe that the entire $8 billion stimulus package was inserted in the legislation at the last minute with the powerful persuasion of President Obama's Chief of Staff at that time, Rahm Emanuel.  The primary target of those dollars was centered in the Chicago hub, intended for "high-speed rail" corridors which reach out like a spiderweb in various directions. Emanuel is now Mayor of Chicago.  Before joining the President in Washington, he had been a Congressman from Illinois; just as Obama had been an Illinois Senator, Ray LaHood was an Illinois Congressman; Joe Szabo, the FRA head, is also from Illinois.

The language of the GAO report is very forgiving and mild in its criticism. At the time the award program was assigned to the FRA,  that agency had no grant making capacity or staff. One was hastily assembled.  I would imagine the political pressures on them were enormous. $8 billion is a lot of money to give away.  [Disclosure: I was a program officer in the US Department of Education Research Group, the National Institute of Education, for fifteen years. It was a fund granting agency. I learned how the bureaucratic machinery operates.]

Let me say here that this is no big deal.  It's not intended to be an "expose."  However, we need to recognize the national high-speed rail program for what it actually is, not what the government wants us to believe.  We have consistently pointed out our opinion that this is a government program intended for the distribution of federal dollars; the transportation aspects being subordinate to that cause.

It is also, of course, a show-piece. An attempt to reify the President's "Vision for Winning the Future."

GAO-11-283, Intercity Passenger Rail: Recording Clearer Reasons for Awards Decisions Would Improve Otherwise Good Grantmaking Practices, March 10,…
Posted by on April 10, 2011 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) appropriated $8 billion for high and conventional speed passenger rail. The Federal Railroad Administration (FRA), within the Department of Transportation (the department), was responsible for soliciting applications, evaluating them to determine program eligibility and technical merits, and selecting awards, which were announced in January 2010. This report examines the …

Read more from the original source:

GAO-11-283, Intercity Passenger Rail: Recording Clearer Reasons for Awards Decisions Would Improve Otherwise Good Grantmaking Practices, March 10,…


The American Recovery and Reinvestment Act of 2009 (Recovery Act) appropriated $8 billion for high and conventional speed passenger rail. The Federal Railroad Administration (FRA), within the Department of Transportation (the department), was responsible for soliciting applications, evaluating them to determine program eligibility and technical merits, and selecting awards, which were announced in January 2010. 

This report examines the extent to which FRA (1) applied its established criteria to select projects, (2) followed recommended practices for awarding discretionary grants, and (3) communicated outcomes to the public, compared with selected other Recovery Act competitive grant programs. 

To address these topics GAO reviewed federal legislation, FRA documents, and guidance for other competitive grant programs using Recovery Act funds. GAO also analyzed data resulting from the evaluation and selection process and interviewed a cross-section of FRA officials and applicants.

FRA applied its established criteria during the eligibility and technical reviews, but GAO could not verify whether it applied its final selection criteria because the documented rationales for selecting projects were typically vague. 

Specifically, FRA used worksheets and guidebooks that included the criteria outlined in the funding announcement to aid in assessing the eligibility and technical merit of applications. FRA also recorded general reasons for selecting applications and publicly posted broad descriptions of the selected projects. However, the documented reasons for these selection decisions were typically vague or restated the criteria listed in the funding announcement. 

In addition, there were only general reasons given for the applications not selected or for adjusting applicants' requested funding amounts. FRA subsequently provided GAO with more detailed reasons for several of its selection decisions, but this information was not included in the department's record of its decisions. 

Documentation on the rationales for selection decisions is a key part of ensuring accountability and is recommended by the department as well as other federal agencies. Without a detailed record of selection decisions, FRA leaves itself vulnerable to criticism over the integrity of those decisions--an important consideration, given that passenger rail investments have a very public profile. 

FRA also substantially followed recommended practices when awarding grants, including communicating key information to applicants prior to the competition, planning for the competition, using a merit review panel with certain characteristics, assessing whether applicants were likely to be able to account for grant funds, notifying applicants of awards decisions, and documenting the rationale for awards decisions (albeit generally). 

For example, FRA issued a funding announcement that communicated key pieces of information, such as eligibility, technical review, and selection criteria. FRA officials also conducted extensive outreach to potential applicants, including participating in biweekly conference calls, providing several public presentations on the program, and conducting one-on-one site visits with potential applicants. 

According to FRA, officials used lessons from a number of other grant programs when developing its approach to reviewing and selecting projects. FRA publicly communicated outcome information similar to other Recovery Act competitive grant programs we examined, including projects selected, how much money they were to receive, and a general description of projects and their intended benefits. 

Only one of the programs GAO examined communicated more outcome information on technical scores and comments; however, this program used a much different approach to select awards than FRA used to select intercity passenger rail awards. According to officials, FRA did not disclose outcome information from the technical reviews because officials were concerned that releasing reviewers' names and associated scores could discourage them from participating in future grant application reviews. 

GAO recommends that FRA create additional records to document the substantive reasons behind award decisions to better ensure accountability for its use of federal funds. In commenting on a draft of this report, the department agreed to consider our recommendation. The department also provided technical comments, which were incorporated as appropriate.

Recommendations for Executive Action

Recommendation: To help ensure accountability over federal funds, the Secretary of Transportation should direct the Administrator of the Federal Railroad Administration to create additional records that document the rationales for award decisions in future high speed intercity passenger rail (HSIPR) funding rounds, including substantive reasons (1) why individual projects are selected or not selected and (2) for changes made to requested funding amounts.

Agency Affected: Department of Transportation

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Playing high-stakes dice with high-speed rail at the Washington Casino

Attention Washington Politics watchers.  About what this article says. . . .We can only hope! 

In California, denying the CHSRA further funding will go a long way to bringing this nightmare to an end.  The Northeast corridor qualifies far more as a regional urban mass transit system corridor than any other geography in the US.  Even John Mica, a high-speed rail opposer, acknowledges the benefits of additional rail improvements for that corridor.  

As a high-speed rail opposer, I don't stand with those who object to all matters rail or all public mass transit.  However, I do endorse parsimonious management, and social service benefits to the less well off.  If public mass transit enables employment and commutation for large numbers of those struggling to survive, it's a good investment. That, of course, is not the case with inter-city travel. 

Where HSR is unmistakeably a terrible investment is in California.  The project is perverse, because it does what is not needed, fancy rail connections between San Francisco and Los Angeles, and at the same time it fails to do what is needed, upgrade the urban and regional public mass transit services within those two major population regions.
Amtrak Seeking Florida's Rail Funds

APRIL 28, 2011


Amtrak, previously blocked from receiving federal money for high-speed rail, is now in the running for a big chunk of the $2 billion in funds freed up by Florida's decision to cancel a fast-train project earlier this year.

The federally subsidized railroad, formally the National Railroad Passenger Corp., is lobbying for $1.3 billion in federal money to upgrade service on its Northeast Corridor between Boston and Washington so that trains could eventually reach 160 miles an hour. Amtrak's fastest Acela trains now average 85 miles an hour between New York and Washington.

Amtrak also is competing with several states, including California and Illinois, for the remaining $2 billion of uncommitted funds in the Obama administration's high-speed rail program.

The first $8 billion has already been allocated to various projects around the country.

Florida Gov. Rick Scott's decision to scrap plans for a fast train linking Tampa to Orlando has sparked an intense lobbying campaign by states and by U.S. and foreign rail firms hoping to grab dwindling federal dollars for intercity passenger rail. Budget battles make future funding uncertain.

Rail advocates say another front runner for funds is a project to upgrade service between Chicago and St. Louis.

Those monies could also benefit rail manufacturers that would provide modern locomotives and cars for the improved segments. Companies such as Siemens AG of Germany, Alstom SA of France, Bombardier Inc. of Canada, and Patentes Talgo SL of Spain could compete for contracts.

California is also looking for more rail money for a plan to build a segment of a planned high-speed rail line between San Francisco and Los Angeles.

The Federal Railroad Administration is expected to announce awards in coming days or weeks.
Write to Josh Mitchell at

High-Speed Rail Turns the Spanish Economy Around; NOT!

A quickie about Spain.  That country, as you know, has a high-speed rail system (AVE) that whips the well to do and professionals from Madrid to Barcelona.  The high-speed rail supporters love to tell you what a dazzling success that is, how it is obliging people to no longer fly that route (the government has cut back on short haul flights to build rail traffic), and how it is bestowing all the anticipated benefits on the Spanish people.

Here is some description from a NYT article in 2010:  "AVE tickets cost as much as plane tickets — from about €120 to €200 one way, or $160 to $300, though cheaper advance fares can be found. The train offers assigned reclining seats, computer outlets, movies, headsets, good food, even gloved attendants…
Spain’s high-speed train sector seems well positioned to expand. All AVE lines turn a profit and have easily survived price wars waged by airlines, Mr. Valls said. What is more, trains require fewer employees and far less costly infrastructure than do planes."
How's that for raising expectations? Especially the comment about profitability. Sorry. That's not reality.
Can you imagine, with those fares, what a class sorting mechanism this train is? Spain is still, compared to the rest of Europe, a poor country. However, the rich now have a fancy fast train to ride on, paid for with money Spain doesn't have.  I make this point because we will be seeing the same thing here, in California if the HSR project continues.
The  Spanish economy is struggling like never before. Their debts are higher thanks in part to vast cost overruns for their multi-billion dollar HSR construction and operation, and the European Community is struggling to help them out.

AND, as the article, below, from CNN points out, their unemployment rate is a spectacular 21%.   Thanks, high-speed rail, for being the panacea we are being promised here, in California.

We are seeing this in China as well as Spain.  High-Speed Rail does none of the many promised things; such as job creation or boosting the economy.  It just doesn't.  It is a luxury and much faster train ride than regular trains.  Doubtlessly a delight to ride for those who can afford it.  And, European nations have been rail dependent for centuries. The US is different and far less appropriate as a high-speed rail host. We have no extended passenger rail system in place that high-speed rail, especially 200+mph trains, can enhance.  High-speed rail will come to the US travel industries as if from another planet.

Here's another analogy.  For air travel, a dedicated first class, premium, scheduled commercial flight, like the Concorde used to provide.  Very fancy and much faster than normal commercial air travel.  Highly subsidized by the government but nonetheless the most expensive air travel there is.  Does that sound like something that will turn a state or nation's economy around? Will that create jobs (especially in the huge numbers promised by the HSR promoters)? Of course not. In retrospect, the Concorde "experiment" was a dismal failure.
Spain's jobless rate tops 21% as all major sectors lose jobs
By Al Goodman, CNN
April 29, 2011 5:09 a.m. EDT

Madrid, Spain (CNN) -- Spain's unemployment rate rose nearly a point to 21.29%, with 4.9 million jobless for the first quarter of 2011, the government reported Friday, as the prolonged economic crisis continues to squeeze the nation.

Some analysts had predicted the number of jobless might surpass 5 million. But while that didn't happen, the latest statistics were another blow to the economy and to the embattled socialist government.

The numbers for the fourth quarter of 2010 -- 20.33% unemployment and almost 4.7 million jobless --- already represented the highest joblessness rate in 13 years.

The latest numbers, for the first quarter of this year, added more somber news. The number of unemployed increased by 213,000, pushing the overall number to 4.9 million.

All major sectors --- industry, construction, services and agriculture --- shed jobs during the quarter. 

The number of Spanish households in which no adult had a job increased by 58,000, to a new total of 1.38 million, the government said.

Earlier this month, embattled Socialist Prime Minister Jose Luis Rodriguez Zapatero announced he would not seek a third term. Elections are due by March 2012.

For months, Zapatero's Socialists have trailed in opinion polls behind the main opposition conservative Popular Party.

In announcing his decision on April 2 to Socialist Party leaders, Zapatero said, "We have made mistakes."

He added that "recent months have been very difficult for the work of the government" because even after enacting a budget austerity plan to reduce the public deficit that put Spain under pressure from international financial markets, the destruction of jobs continued.

Local elections in all Spanish cities and for 13 of its 17 regional parliaments will be held May 22. They are widely seen as a bellwether of voter sentiment for the general elections to follow.

Friday, April 29, 2011

"The Economist's" take on America's Transportation Needs: High-Speed Rail is not among them

The Economist raises several key questions about transport infrastructure and innovation in America. 

Let's get the 'innovation' issue out of the way promptly.  High-Speed Rail in the US is neither 'innovative' nor 'experimental,' both terms frequently used by the media and by HSR promoters. What our HSR builders intend to do is to buy tried and true off-the-shelf rolling stock and other components of a HSR system from overseas. 

In California, the High Speed Rail Authority has hired high-speed rail professionals from Europe to emulate what they built there. The big thrust here is to play catch-up with all the other industrialized nations that have supported extensive rail systems and have upgraded them with high-speed rail. No one in the US is going to be doing much experimenting. 

If Obama wishes to "win the future," he has to get out from under other nation's aging technologies and support actual innovative endeavors in transit, take risks, experiment, think outside the train box, invest in proof-of-concept early adopter models, and anticipate endless failures (without everyone tearing their hair out) until that technology is market ready.  I'm thinking of the Silicon Valley model.  That's certainly not a description of the intended high-speed rail program.

Although I'm not a maglev fan, for example, I certainly can see a Silicon Valley effort to make that technology a next generation public transit system if it can be done cost-effectively.  Perhaps it can never be massively deployed, maybe it can.  It can be, however, an innovative approach that harkens back to Henry Ford's Model-T breakthrough for marketable vehicles for the rest of us. In any case, we won't know by merely speculating about it. We need to try it. That's what we, in the US, are great at.

Now, about out transportation infrastructure in the US and its deplorable condition. Our highways are in dreadful shape and they are crowded with cars to the point of grid-lock during commute times in and around our major metropolitan regions.  Everything having to do with mass transportation in the US is in terrible condition. And building high-speed rail projects, no matter how many, will not fix any of that. To the contrary. It will cost funding that could have been invested in that infrastructure repair and maintenance.

We once had a great passenger rail system, owned and operated by dozens of railroad companies. That system declined with a declining transit market which turned to automobiles and aviation to get around more efficiently for both short and long trips. Yet, "Its roads, railways, ports and air-transport infrastructure are all judged mediocre against networks in northern Europe." Please note that it's those same Europeans that built the high-speed rail icing on their railroad system cake, but nonetheless still have superior multi-modal networks outside of rail.

It is hard to fathom why a nation that has taken such pride in its automobile culture and it's now crowded skies, neglects them and permits their deterioration. Why can't we afford the $12 billion NextGen air traffic system which will make all those who fly safer and make air-travel more efficient?  

Rail requires a different perspective and we can talk more about that.  But, when we read "The absence of true high-speed rail is a continuing embarrassment to the nation’s rail enthusiasts," the basic point appears to be lost. 

Our passenger rail capacity declined, you could say, intentionally. Being demand driven, when the demand diminishes, there's no profit in maintaining a high customer transit capacity. The absence of true high-speed rail is not an embarrassment to anyone but the politicians who promote them for the funding benefits. Not since the fifties has there been
pent-up demand for luxury trains that go fast.

As the Economist article points out, US demographics are distinctly different than those of Europe or Japan.

Our anticipated population growth is based on twenty year old forecasting models and wishful speculation.  It is not inevitable.  The decline of permanent jobs in the US should suggest a declining demand for workers or work opportunity availability. As our middle and lower class Recession continues, the US may seem less attractive except for those at the bottom of the economic ladder.

However, there is even now a demand for urban and regional public mass transit, rail and otherwise and that has been willfully neglected. Let us say it again.  The Class 1 freight rail operators were once in the passenger rail business as well.  Unlike the freight part of their business, very few made money carrying passengers and most passenger service was considered a 'loss-leader.'  They were, by and large, happy to unload the passenger service to the Congress and its creation, Amtrak.  Freight rail, on the other hand, has not deteriorated or been left fallow.  Freight rail is profitable and supported.

And that brings us back to the high-speed rail advocacy issue.  One camp seeks high-speed rail as a carbon fuel-saving mode of transit and wishes to oblige travellers out of their automobiles and off aircraft to the benefit of rail. For them, it's seen as a zero-sum game. Cars and planes; bad. HSR; good. Unfortunately, that equation is simple, clear and wrong.  Nonetheless, these HSR supporters have, for obvious reasons, little interest in maintaining, much less upgrading, highways and airways. Nor have the rest of us.  And, as the article eloquently explains, it shows.

Another HSR camp sees golden opportunities for developers, including those in the high-rise, high-density housing business, land speculators, and the broad array of businesses tailored to profit-making in urban development and high-speed rail and related industries and interests. That is the self-serving cohort that includes those politicians who themselves stand to benefit from their HSR support. They compete for limited federal and state resources with highway and commercial air interests.

The article devotes considerable space to illustrating how we need to invest from $20 billion more each year (the CBO) on infrastructure just to stay even with what we now have, shabby as that might be. "In 2008 the commission (National Surface Transportation Policy and Revenue Study Commission) reckoned that America needed at least $255 billion per year in transport spending over the next half-century to keep the system in good repair and make the needed upgrades. Current spending falls 60% short of that amount."

For us, in this blog, the question becomes, do we fix what we have, or do we continue to neglect it so that we can build a passenger rail transit system of very limited scope (unlike the Interstate Highway System), extremely high costs, and very limited ridership?

And here's where it gets problematic. Should the US impose far higher tax based infrastructure investments, as more centralized foreign economies are doing?  Democrats wish to do so, Republicans don't.  Other countries also make car ownership far more onerous than we do, with higher fuel costs, taxation, insurance and other owning expenses. That is, should the US government be pushing us out of our cars and on to our trains?  Meanwhile, permitting our highways (and airways) to deteriorate even further?  We could impose higher fuel and road taxes, and have these pay for rail subsidies; that is, let car drivers be economically punished for driving cars and not taking the train.

Interestingly, the burden of that would fall more heavily on those less able to afford it, while the well to do can indeed afford the higher high-speed rail tickets which are subsidized by those who can't afford to take the train.

The biggest problem is the bottom line, which the government has neglected to consider as part of the overall analysis of a transportation policy for the US. In other words, we have no cost-benefit assessment of high-speed rail, and we have no cost-benefit assessment of all other modalities for the movement of people and goods.  All we have is the endless promotional rhetoric of the advocates for one modality over the others.  There is no US business plan for transportation.  Shouldn't there be one before we throw billions of dollars into a bottomless pit?
America's transport infrastructure

Life in the slow lane
Americans are gloomy about their economy’s ability to produce. Are they right to be? We look at two areas of concern, transport infrastructure and innovation

Apr 28th 2011 |

ON FRIDAY afternoons, residents of Washington, DC, often find a clear route out of the city as elusive as a deal to cut the deficit. Ribbons of red rear-lights stretch off into the distance along the highways that radiate from the city’s centre. Occasionally, adventurous southbound travellers experiment with Amtrak, America’s national rail company. The distance from Washington to Raleigh, North Carolina (a metropolitan area about the size of Brussels) is roughly the same as from London’s St Pancras Station to the Gare du Nord in Paris. But this is no Eurostar journey.

Trains creep out of Washington’s Union Station and pause at intervals, inexplicably, as they travel through the northern Virginia suburbs. In the summer, high temperatures threaten to kink the steel tracks, forcing trains to slow down even more. Riders may find themselves inching along behind a lumbering freight train for miles at a time, until the route reaches a side track on which the Amtrak train can pass. The trip takes six hours, well over twice as long as the London-Paris journey, if there are no delays. And there often are.

America, despite its wealth and strength, often seems to be falling apart. American cities have suffered a rash of recent infrastructure calamities, from the failure of the New Orleans levees to the collapse of a highway bridge in Minneapolis, to a fatal crash on Washington, DC’s (generally impressive) metro system. But just as striking are the common shortcomings. America’s civil engineers routinely give its transport structures poor marks, rating roads, rails and bridges as deficient or functionally obsolete. And according to a World Economic Forum study America’s infrastructure has got worse, by comparison with other countries, over the past decade. In the WEF 2010 league table America now ranks 23rd for overall infrastructure quality, between Spain and Chile. Its roads, railways, ports and air-transport infrastructure are all judged mediocre against networks in northern Europe.

America is known for its huge highways, but with few exceptions (London among them) American traffic congestion is worse than western Europe’s. Average delays in America’s largest cities exceed those in cities like Berlin and Copenhagen. Americans spend considerably more time commuting than most Europeans; only Hungarians and Romanians take longer to get to work (see chart 1). More time on lower quality roads also makes for a deadlier transport network. With some 15 deaths a year for every 100,000 people, the road fatality rate in America is 60% above the OECD average; 33,000 Americans were killed on roads in 2010.

There is little relief for the weary traveller on America’s rail system. The absence of true high-speed rail is a continuing embarrassment to the nation’s rail enthusiasts. America’s fastest and most reliable line, the north-eastern corridor’s Acela, averages a sluggish 70 miles per hour between Washington and Boston. The French TGV from Paris to Lyon, by contrast, runs at an average speed of 140mph. America’s trains aren’t just slow; they are late. Where European passenger service is punctual around 90% of the time, American short-haul service achieves just a 77% punctuality rating. Long-distance trains are even less reliable.

The Amtrak alternative

Air travel is no relief. Airport delays at hubs like Chicago and Atlanta are as bad as any in Europe. Air travel still relies on a ground-based tracking system from the 1950s, which forces planes to use inefficient routes in order to stay in contact with controllers. The system’s imprecision obliges controllers to keep more distance between air traffic, reducing the number of planes that can fly in the available space. And this is not the system’s only bottleneck. Overbooked airports frequently lead to runway congestion, forcing travellers to spend long hours stranded on the tarmac while they wait to take off or disembark.

Meanwhile, security and immigration procedures in American airports drive travellers to the brink of rebellion.

And worse looms. The country’s already stressed infrastructure must handle a growing load in decades to come, thanks to America’s distinctly non-European demographics. The Census Bureau expects the population to grow by 40% over the next four decades, equivalent to the entire population of Japan.

All this is puzzling. America’s economy remains the world’s largest; its citizens are among the world’s richest. The government is not constitutionally opposed to grand public works. The country stitched its continental expanse together through two centuries of ambitious earthmoving. Almost from the beginning of the republic the federal government encouraged the building of critical canals and roadways. In the 19th century Congress provided funding for a transcontinental railway linking the east and west coasts. And between 1956 and 1992 America constructed the interstate system, among the largest public-works projects in history, which criss-crossed the continent with nearly 50,000 miles of motorways.

But modern America is stingier. Total public spending on transport and water infrastructure has fallen steadily since the 1960s and now stands at 2.4% of GDP. Europe, by contrast, invests 5% of GDP in its infrastructure, while China is racing into the future at 9%. America’s spending as a share of GDP has not come close to European levels for over 50 years. Over that time funds for both capital investments and operations and maintenance have steadily dropped (see chart 2).

Although America still builds roads with enthusiasm, according to the OECD’s International Transport Forum, it spends considerably less than Europe on maintaining them. In 2006 America spent more than twice as much per person as Britain on new construction; but Britain spent 23% more per person maintaining its roads.

America’s dependence on its cars is reinforced by a shortage of alternative forms of transport. Europe’s large economies and Japan routinely spend more than America on rail investments, in absolute not just relative terms, despite much smaller populations and land areas. America spends more building airports than Europe but its underdeveloped rail network shunts more short-haul traffic onto planes, leaving many of its airports perpetually overburdened. Plans to upgrade air-traffic-control technology to a modern satellite-guided system have faced repeated delays. The current plan is now threatened by proposed cuts to the budget of the Federal Aviation Administration.

The Congressional Budget Office estimates that America needs to spend $20 billion more a year just to maintain its infrastructure at the present, inadequate, levels. Up to $80 billion a year in additional spending could be spent on projects which would show positive economic returns. Other reports go further. In 2005 Congress established the National Surface Transportation Policy and Revenue Study Commission. In 2008 the commission reckoned that America needed at least $255 billion per year in transport spending over the next half-century to keep the system in good repair and make the needed upgrades. Current spending falls 60% short of that amount.

If they had a little money…

If Washington is spending less than it should, falling tax revenues are partly to blame. Revenue from taxes on petrol and diesel flow into trust funds that are the primary source of federal money for roads and mass transit. That flow has diminished to a drip. America’s petrol tax is low by international standards, and has not gone up since 1993 (see chart 3). While the real value of the tax has eroded, the cost of building and maintaining infrastructure has gone up. As a result, the highway trust fund no longer supports even current spending.

Congress has repeatedly been forced to top up the trust fund, with $30 billion since 2008.

Other rich nations avoid these problems. The cost of car ownership in Germany is 50% higher than it is in America, thanks to higher taxes on cars and petrol and higher fees on drivers’ licences. The result is a more sustainably funded transport system. In 2006 German road fees brought in 2.6 times the money spent building and maintaining roads. American road taxes collected at the federal, state and local level covered just 72% of the money spent on highways that year, according to the Brookings Institution, a think-tank.

The federal government is responsible for only a quarter of total transport spending, but the way it allocates funding shapes the way things are done at the state and local levels. Unfortunately, it tends not to reward the prudent, thanks to formulas that govern over 70% of federal investment. Petrol-tax revenues, for instance, are returned to the states according to the miles of highway they contain, the distances their residents drive, and the fuel they burn. The system is awash with perverse incentives. A state using road-pricing to limit travel and congestion would be punished for its efforts with reduced funding, whereas one that built highways it could not afford to maintain would receive a larger allocation.

Formula-determined block grants to states are, at least, designed to leave important decisions to local authorities. But the formulas used to allocate the money shape infrastructure planning in a remarkably block-headed manner. Cost-benefit studies are almost entirely lacking. Federal guidelines for new construction tend to reflect politics rather than anything else. States tend to use federal money as a substitute for local spending, rather than to supplement or leverage it. The Government Accountability Office estimates that substitution has risen substantially since the 1980s, and increases particularly when states get into budget difficulties. From 1998 to 2002, a period during which economic fortunes were generally deteriorating, state and local transport investment declined by 4% while federal investment rose by 40%. State and local shrinkage is almost certainly worse now.

States can make bad planners. Big metropolitan areas—Chicago, New York and Washington among them—often sprawl across state lines. State governments frequently bicker over how (and how much) to invest. Facing tight budget constraints, New Jersey’s Republican governor, Chris Christie, recently scuttled a large project to expand the railway network into New York City. New Jersey commuter trains share a 100-year-old tunnel with Amtrak, a major bottleneck.

Mr Christie’s decision was widely criticised for short-sightedness; but New Jersey faced cost overruns that in a better system should have been shared with other potential beneficiaries all along the north-eastern corridor. Regional planning could help to avoid problems like this.

What is to be done?

The rehabilitation of America’s transport network will be neither easy nor cheap. To make the necessary repairs and upgrades, America will need to spend a lot more. In a deficit-conscious environment, that will require new revenue. The most straightforward first step would be a rise in fuel-tax rates, currently at 18.4 cents a gallon. But petrol-tax increases are even more unpopular than deficits, and rises may prove riskier as oil prices increase.

Some in Washington would rather take their cut further away from consumers.

A tax on oil, rather than petrol, could be a little easier for consumers to stomach. America’s big oil producers signalled openness to a similar policy during negotiations over the ill-fated but bipartisan Kerry-Graham-Lieberman climate bill. It could return as a means to fund infrastructure.

Economists press for direct user fees. An early Obama administration flirtation with a tax on miles driven attracted little support, but some cities have run, or are thinking of running, pilot schemes. Congestion charges present another possibility. State governments have increasingly turned to tolls to fund individual projects, but tolling inevitably meets stiff public resistance.

Meanwhile, Manhattan’s attempt to duplicate the congestion charges of London and Stockholm failed to win the necessary political support, despite the offer of a generous federal subsidy in return for trying the experiment. An earlier attempt to auction scarce landing and departure slots at New York’s three large airports faced stiff resistance from airlines and was ultimately killed.

Whatever the source of new revenue, America’s Byzantine funding system will remain an obstacle to improved planning. Policymakers are looking for ways around these constraints. Supporters of a National Infrastructure Bank—Mr Obama among them—believe it offers America just such a shortcut. A bank would use strict cost-benefit analyses as a matter of course, and could make interstate investments easier. A European analogue, the European Investment Bank, has turned out to work well. Co-owned by the member states of the European Union, the EIB holds some $300 billion in capital which it uses to provide loans to deserving projects across the continent. EIB funding may provide up to half the cost for projects that satisfy EU objectives and are judged cost-effective by a panel of experts.

American leaders hungrily eye the private money the EIB attracts, spying a potential solution to their own fiscal dilemma. But there are no free lunches. To keep project costs down, the bank must offer low rates, which depend in turn upon low capital costs. That may be impossible without government backing, but the spectacular failure of the two government-sponsored housing organisations, Fannie Mae and Freddie Mac, illustrates the dangers of such an arrangement. The EIB mitigates this problem by attempting to maximise public return rather than profit. 

To earn funding, projects must meet developmental and environmental goals, along with other requirements. But giving the bank a public mission would invite congressional oversight—and tempt legislators to meddle in funding decisions. The right balance of government support and independence may prove elusive.

Budget crises could give a boost to public-private partnerships. Partnerships can be a useful way to screen out poorly conceived projects that are unlikely to generate the promised returns. No private firm will bid to build and operate a project that will probably fail to cover its costs through toll or fare revenue. Well-designed contracts can also improve incentives by giving the construction firm a long-run interest in the project. Infrastructure projects built through public-private partnerships in Britain and Chile, where the arrangement is far more common than in America, have sometimes, though not always, been completed more cheaply and quickly than public plans.

At the state and local level transport budgets will remain tight while unemployment is high. With luck, this pressure could spark a wave of innovative planning focused on improving the return on infrastructure spending. The question in Washington, apart from how to escape the city on traffic-choked Friday afternoons, is whether political leaders are capable of building on these ideas. The early signs are not encouraging.

Mr Obama is thinking big. His 2012 budget proposal contains $556 billion for transport, to be spent over six years. But his administration has declined to explain where the money will come from. Without new funding, some Democratic leaders have warned, a new, six-year transport bill will have to trim annual highway spending by about a third to keep up with falling petrol-tax revenues. But Republicans are increasingly sceptical of any new infrastructure spending. Party leaders have taken to using inverted commas around the word “investment” when Democrats apply it to infrastructure.

Roads, bridges and railways used to be neutral ground on which the parties could come together to support the country’s growth. But as politics has become more bitter, public works have been neglected. If the gridlock choking Washington finds its way to America’s statehouses too, then the American economy risks grinding to a standstill.

When it comes to High-Speed Rail, you have to be very careful about the news you pay attention to.

Here's where the media really screw up. NBC Bay Area local news gets it wrong.  At least, RJ Middleton, who presumably wrote this, gets it wrong.  Some of our disagreement has been interspersed into the article text.

I don't know about you, Mr. Middleton, but I'm not affluent. I'm certainly not rich.
Nonetheless, I do not want this high-speed rail project in my State. 


High-Speed Rail? Not in Their Back Yard (Literally)

Affluent suburbs renew their interest in killing the bullet train project.

By RJ Middleton
Posted on Friday, Apr 29, 2011 at 8:31 AM PDT

Having made their millions innovating technology and disrupting other markets, it seems Silicon Valley millionaires are against seeing innovation running through where they live, disrupting their property values. 

[Wrong, Mr. Middleton.  The Silicon Valley millionaires love this train. Why don't you ask them? It will permit their workers to commute greater distances and live in cheaper housing in the Valley and therefore they don't have to pay them so much. And, as we've said elsewhere, there's nothing "innovative" about this rail project. It's old stuff off the shelves of other countries.]

The Wall Street Journal has this choice quote from Atwater Mayor Jim Dobbie: "We have many houses close to the railroad in the multiple millions in value. We just hope the project dies."

[Mr. Middleton, that's Atherton, not "Atwater."  The mayor of Atherton, Jim Dobbie, is doing his job, which is to protect his city from harm, including financial harm, regardless of house values. If you were our mayor, and didn't do what Jim Dobbie is doing for his town, we would vote you out of office.]

Atherton, Menlo Park and Palo Alto have filed new briefs in their ongoing lawsuit to challenge, if not halt, the bullet train's route that would connect San Francisco and Los Angeles. 

[There are laws, Mr. Middleton, and the Rail Authority is breaking them. The lawsuits are intended to oblige the Rail Authority to perform their intended tasks legally. The State Attorney General, instead of enforcing these laws, is the attorney for the rail authority and defending their illegal actions.]

The elevated structure is a potential eyesore, according to the municipalities and their Congressional representative, Anna Eshoo (D). She issued a statement asking to the structure to be eliminated.

Another approach would be to put the train underground, but the cost would likely bury the entire project. 

[Say what you will, Mr. Middleton, but Congresswoman Eshoo is correct. Building a structure as vast and overwhelming as a concrete freeway overpass directly in front of your house does not seem to be a good idea.  That's not what other high-speed rail projects in envied Europe do. Why should our project be shoved through farms, pristine wild areas or urban environments? How would you feel, Mr. Middleton if the interstate highway department determined it should run a four-lane road through your living room; would you be OK with that?]

Construction is set to begin next year in the Central Valley on the California-voter-approved project. That approval entailed a $10 billion bond sale to fund construction, with the federal government kicking in more money. 

[What the voters approved is not what this project is about. It's quite different. The voters were snookered with false advertising.  Mr. Middleton, is that acceptable?]

The entire thing is estimated at $43 billion. 

[The current going cost estimate is up to $66 billion and it's far from complete.  It will doubtless go to $100 billion or more for the 800 miles of HSR rail.]