Tuesday, January 31, 2012

Get ready to take the High-Speed Rail 'Cap-and-Trade' Quiz

As you may already know if you are a high-speed rail naysayer, denier, objector, NIMBY, apostate, 'rich landowner', or otherwise trouble-maker, (or "rotten apple" as Rod Diridon called us), Jerry Brown has a number of divine revelations of the truth that have escaped just about everybody else.

Even the High-Speed Rail Authority Board, even the newly-appointed-by-Jerry-Brown Dan Richard, even all the contractors and consultants, even everybody else on the planet, didn't know what Jerry Brown knows.  And that is, "It will cost a lot less." That means, the agreed upon cost forecast the the CHSRA of around $100 billion for HSR in California is simply wrong. WRONG, I TELL YOU! Jerry knows.

And, there will be money. Yes, lots of money. The Governor proposes to use "cap and trade," a policy extensively promoted over the years to reduce CO2 production from power generation and manufacturing.  It is a form of tax for generating "dirty" air.

The Governor intends to peel off $1 billion annually from this tax and pour it into the development of high-speed rail. Not that long ago, the train project used to cost $100 billion to build it, in which case it would have taken 100 years at $1 billion per year.  But, now we know it will cost ever so much less, so it may only take one or two years to make it operational the way the Governor understands it. 

Unfortunately, as it happens, the state does not have a cap-and-trade program in place to make this simple solution possible. And if we did, it's not at all clear that it would produce as much as $1 billion in taxes annually.  But, never mind.

Which leads us to the next question. If, hypothetically, we had a cap-and-trade program, and if it were to produce $1 billion annually in a state still limping with a huge deficit and debt, how should we deploy these funds? On a high-speed train for which there certainly won't be any other funding sources? While at the same time we starve the schools, and therefore our children from an education critical to their survival? 

I don't want to get into the politics of cap-and-trade, since each Party has a very different take on how good or evil it is.  And, I don't intend to schlep the red herring of stem-cell research into this discussion either.  On this blog, we care about high-speed rail, why it's such a disaster and why the Governor can't stop himself from making such a fool out of himself.

One final point, alluding to the Governor's comment about not wishing to become a third world country (or state). 

Under what circumstances, realistically, could California become a "third world country?" Pick one:

A. Terminating the high-speed rail project and diverting any available funds into education, or
B.  Cutting education even further (for HSR) and reducing the quality of education for future generations of kids, thereby constraining their employability and earning potential.

You have one second.  You picked B.   Good job.

Want a bonus question for extra points?  Which of the following will be better for California? Again, pick one:

A. Investing in education so that our K-12 schools become as good as the ones in Finland or Taiwan.
B. Building a highly subsidized high-speed train like the one in Spain, a country with a 25% unemployment rate and on the verge of government default. (The train's success has now shut down one of their airlines. Is that a definition of success?)

Take your time.  Did you guess A?  Congratulations.  

Your pair of high-speed rail tickets is in the mail.  Please go to Chowchilla to pick them up. 

NEW: Cap and ‘Train’ Leaves the Station
JAN. 31, 2012

Gov. Jerry Brown just proposed a new idea for financing California’s $100 billion high-speed rail project: Use the fees from the state’s Cap and Trade emission taxation program to fund it.

This new hybrid between Cap and Trade and High-Speed Rail is likely to be dubbed “Cap ‘N Train.”

What this new proposal would do is transfer billions of dollars in higher costs for everything in California that has to be manufactured or trucked anywhere, thus creating air emissions. In turn, these higher costs will be transferred to an unproductive train project that will take riders away from commercial airlines serving the Bay Area and Los Angeles.

High-Speed Rail is Redevelopment in Another Guise

Brown has recently gotten some respect from political conservatives and school-funding advocates for shutting down redevelopment agencies because they rob schools of property taxes.  But it is apparently OK to create yet another redevelopment project because it won’t drain the state budget needed for public schools.  What Jerry Brown’s right hand takes away, his left hand re-creates in another form.  This proves the principle of California bureaucracy: “Problems can’t be solved — just shifted around.”

Brown is reportedly trying to sell his High-Speed Rail project to the skeptical Legislature. Earlier this month, Brown floated an idea to use $1 billion in Cap and Trade taxes to plug his state budget deficit.  But $1 billion yearly at today’s bond interest rates would only finance about $20 billion of the estimated $100 billion needed for the High-Speed Rail project.  Rider fees on the new train would not come anywhere near paying for the system.

Brown said that if the Legislature didn’t approve his proposal there “always would be the ballot initiative” route to financing the High-Speed Rail.  Brown was apparently referring to Proposition 71, which financed $3 billion in redundant stem-cell research. The cost to pay back those bonds, with interest, is $6 billion.

Using Ballot Initiative to Grow Stem Cells and Fast Trains

The state’s stem cell agency — with the private sounding title of the California Institute for Regenerative Medicine — is soliciting public comments for the idea to come back to the voters to ask for another $3 billion in bond financing in 2014 when their current funds run out.  As reported by Wesley J. Smith at the “Secondhand Smoke” blog, thus far only those who have received grants for stem-cell research have been added to the list of witnesses.

The way things are going, we could call all those proponents of using Cap and Trade taxes for High-Speed Rail the “High-Speed Freeriders”: those enjoying the benefits from a collective effort but contributing little or nothing to it.

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