Off the Rails on a Crazy Train

Let's ignore, for the moment, the President's 2012 budget proposal as a whole, just as the President ignored the recommendations of the bipartisan Fiscal Commission he created. The Commission was a failure. It couldn't get the 14 votes out of 18 votes it needed for final passage. The President's budget will be a failure as well. Democrats think it is too draconian. Republicans think, correctly, that it does nothing serious to return to the U.S. to fiscal solvency.

Instead, let's focus on one specific proposal in the budget. From Robert Samuelson:

Vice President Joe Biden, an avowed friend of good government, is giving it a bad name. With great fanfare, he went to Philadelphia the other day 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 -- not a little, but lots -- and, thereby, aggravate the budget squeezes of the states or federal government, depending on which covered the deficits.

High speed railroad is one of those things that glitter, but are not gold. Everyone wants them. The English, the French, and the Germans have built them. The Japanese have too, and theirs are generally regarded as the fastest. Some of their trains move at 180 mph. Modern governments like the idea of replacing automobiles with public transit. They also like the idea that massive government spending can solve problems that private investment cannot: investing a lot up front to show greater economic returns later.

Unfortunately, almost everywhere it has been tried it has come a cropper. High speed rail is not only very expensive to build, it is very expensive to maintain. Even if they were popular with commuters, most HPR lines would continue to require large government subsidies to remain in business. They aren't popular. After subsidizing the building and maintenance of HPR lines, governments have to subsidize ticket prices in order to attract riders. Even with all that, most surface passengers chose buses, planes, and, above all, cars.

The U.S. has already been through this with Amtrak.

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 already 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.

Government subsidized passenger rail is a bad idea. High speed rail is a bad idea on stilts. It won't solve any problem that needs solving. It won't significant reduce congestion, gasoline consumption, or air traffic. It will be a significant drain on the national budget. It will also further burden state governments already on the point of insolvency.

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

The inclusion of a high speed rail proposal in the President's budget is an ominous sign. The continued existence of Amtrak and ethanol subsidies shows how very difficult it is to eliminate even the most modest revenue sinks. The President wants to create more of the same in both directions. This suggests a pathological inability to come to grips with reality. Unfortunately that pathology has constituencies behind it. We are in real trouble.

Comments

[BillW]

Same story with the massive subsidies propping up manufacturers and buyers of wind and solar energy. The market will not pay for them any more than it will pay for high speed rail. Either the subsidies continue ad infinitum, or the companies receiving the subsidies go belly up and thousands of people lose their jobs.

Obama trying to stimulate the economy and simultaneously convert the USA to his environmental vision against the natural market forces creates long term economic problems on a frightening scale.

[Dave]

The very same argument could be made regarding this nations gargantuan defense budget which is split 5:1 right now between blowing crap up and practicing to blow crap up. I say we reel in "blowing crap up" spending and spend the money here at home to stimulate the economy and create jobs and make life better for Americans rather than blowing crap (and Americans) up.

[Dave]

BTW ken, your use of loaded language is really over the top. Are you a correspondent for Fox "news"?

[Ken Blanchard]

Dave: as for the Fox New comment, see "ad hominem". If you wish to take issue with my language, perhaps you could point out which portions were over the top. I think it was measured.

Your reference to military spending refutes your own point. Military spending is not an effective stimulus. It absorbs wealth without showing a return. Whether the money is spent wisely depends on foreign policy considerations, not economic ones.

With high speed rail, the whole purpose is supposed to be to produce an economic return. We know that in fact it does not do this. It is a drain on resources and therefore is the very opposite of stimulating.

[Donald Pay]

I haven't been a big fan of some of Obama's plans for "high speed rail." If it was really "high speed rail" it might be worthwhile, but the project that was to have rolled out between Madison, WI and Chicago was just going to be "medium speed rail." Unfortunately, the US is so far behind in rail technology that there are no US companies to produce the rail cars necessary. In Wisconsin a Spanish company was going to create hundreds of jobs in Milwaukee. The downside of the premature ending of that project at the instance of our new governor (who is probably heading for recall) is not just loss of jobs for our state. The project would have also improved miles of freight line used to carry the products of manufacturing industry to ship products to Great Lake.

My own feeling is that high speed rail is just another subsidy for the corporate/wealthy elite. A true high speed rail system would save time and money for business travel between Chicago and the Twin Cities. Air travel is iffy during the winter anyway. The average guy isn't going to use it. Rail is a very poor technology for moving people cheaply. Unless the density of people is like that of the East Coast, rail doesn't make sense as a people mover. It is far better as a mover of freight.

[KB]

I love your comment Donald. You acknowledge that rail technology in general and HSR in particular is a bad idea for moving people, but say "unfortunately the U.S. is behind" in this technology. I'd say we're ahead, just as we were with the SST decades ago. It was a boondoggle that we avoided because our government has tended to be a bit more sensible on these things.

[Donald Pay]

KB,

Although I'm very dubious of high speed rail, I would like to see a pilot project done in the US. I can see it making some sense for medium distance travel where densities are high, but I wouldn't put much money into it unless the pilot project works.

[larry kurtz]

Your post has nothing whatsoever to do with fixing South Dakota, Ken.

Diane Rehm conducted a superlative interview on the budget:
http://thedianerehmshow.org/shows/2011-02-15/president-obamas-2012-budget-proposal

Warren Buffett and his recent purchase of BNSF will determine the future of rail; it's all about real estate and rights-of-way.

[larry kurtz]

Sorry, forgot to add that ip likes the land ferry concept: http://faculty.washington.edu/jbs/itrans/vmts.htm

[Jimi]

Larry,

Yep...I do too! But you participate first and let me know how it goes. If you can convince me to participate maybe I'll think about it :)

[KB]

Larry: South Dakota is in the United States.

Donald: I am dubious about demonstration projects in cases where we already know that what is being demonstrated doesn't work. It is better than the massive investment that the President seems to want.

[Dave]

Ken,

"Your reference to military spending refutes your own point. Military spending is not an effective stimulus. It absorbs wealth without showing a return. Whether the money is spent wisely depends on foreign policy considerations, not economic ones."

I believe the point I made is that current military spending is wasteful... You may want to read my comment about blowing crap up again...

[KB]

Dave I got your point, at least if one assumes that you were saying something relevant to the discussion. Military spending is justified by military objectives, not by its effect at stimulating the domestic economy. Reducing military spending would eventually free up money for domestic spending, though it s always less than advertised.

Meanwhile, HSR can be justified only by its economic returns. We know that it does not in fact pay such returns. It's a money pit.

[larry kurtz]

Florida is going forward to skirt Republican governor: http://www.wusf.usf.edu/news/2011/02/17/politicians_scramble_to_outflank_gov._scott_on_high_speed_rail

[BillW]

Larry,

You seem to be confused (again). Florida is not going ahead to skirt the Republican governor. In fact, a Democrat senator is going ahead to skirt the will of the people of Florida who do not want to be stuck with the ongoing cost of a HSR project they don't want and cannot afford.

[Ken Blanchard]

I agree with BillW. HSR is not going to happen, in Florida or elsewhere. Larry: isn't it blatantly obvious that it shouldn't happen? Isn't the Administration's concern with this idea evidence of a disconnect with reality?

[larry kurtz]

Nothing is impossible, Ken.

Montana's Jon Tester is working with Berkshire Hathaway to advance HSR on existing rights-of-way in our state. You really think Buffett got a medal of freedom with no strings attached? Don't be thick. http://tester.senate.gov/Newsroom/pr_021411_budget.cfm

Here's the deal, fellers: I am stuck with two properties in your chemical toilet, when they sell what happens in/to South Dakota will be of no consequence to me.

[BillW]

Larry,

To think that Warren Buffet gives a damn about the medal of freedom is silly. Look up who owns the rairoad in Montana, and who stands to profit the most from leasing track rights, or the right of way along the rail corridor, for HSR. He is not paying back the gov't for the honor by supporting HSR - he is looking to make a lot of money - medal or no medal because he owns the railroad. Railroads make a lot of money leasing track rights to Amtrack. They will make a lot more leasing rights for HSR. It is a beautiful set up for them, they make money even though Amtrack doesn't, and they will make money no matter how big a loser HSR is. The government puts up all the money and takes all the risk - the rairoads make a profit with minimal investment and minimal risk. Pay back for the medal of freedom? That's a hoot. But if HSR were a money maker in Montana or anywhere else between LA and Chicago his railroad runs, you can be sure Buffet would have built it already.

[larry kurtz]

I don't disagree with you. Government undertakes the unprofitable by design. Is it perfect? Hell no. Do I agree that We the People should have bailed out the auto makers and the banks? Hell no. Do I think that the Bush regime looted the Treasury under false pretenses to solidify control in Iraq? Fuck yes.

http://www.progressive.org/moyers0211.html

[Jimi]

Larry,

"Bush regime looted the Treasury"

We have spent a little over 1.2 Trillion in both Afghanistan and Iraq over almost ten years...Obama's deficit every year since the Democrats took control of the 2009 Budget to present has been larger than that [EVERY YEAR]...What in God's Name are you talking about? Do expect people to believe this crap?

[larry kurtz]

Go ahead and ignore the numbers of butchered bodies. That will make you feel better. http://www.iraqbodycount.org/

[Dave]

Jimi...

W kept the spending off the books by maintaining it as "emergency" spending...

Read on...

Both CNN and MSNBC broadcast the first week after President Obama was sworn in that the new administration was ENDING the Bush/Cheney policy of keeping the war costs for both wars OFF the books. This meant a temporary misconception about "spending" that worked against President Obama, so adding these costs into the figures of the budget seemed like a huge "spending increase" instead of a simple reporting of the truth. Also in that first couple of weeks, President Obama CUT SPENDING from the Bush/Cheney final Fiscal Year (Oct. 1, 2008 through Sept. 30, 2009) budget by around $62 BILLION by simply canceling the Bush-ordered presidential helicopter fleet (also shown on MSNBC and CNN, but not given the applause deserved because both Boeing and Lockheed-Martin (who make these helicopters) had taken out one-time-aired ads to buy a negative slant to the coverage (which I reported to the White House).

There is probably a reference made to this adding in of the war costs somewhere on the whitehouse.gov website, and I think politifact.com mentions this as a "Promise Kept" on their Obameter.
6 months ago

[Dave]

OR...

This is the basis for the claim that Obama "tripled the Deficit" when all he did was stop lying about the cost of the Bush's Wars and Medicare Part D, which have to be paid by the taxpayers just like everything else.
This was part of Obama's "transparency" he promised, which he did, and now Cons are using to attack him by making up fake statistics they know aren't true.
Source(s):
Bush's real Deficit was well over 1 trillion.
Obama barely raised that by 50% his first year, most of the spending coming from having to deal with the enormous Bush Recession already in full swing before he took office.

[Dave]

more charts... D'oh!

http://www.ritholtz.com/blog/2010/07/cost-of-war/

[Dave]

and more crickets... whazup widat?

[Dharmesh]

Reasons to use the Central Terminal:1) Depew isnt close to downtown nor does it have the potnteial to be light rail accessible2) Central Terminal is on the Airport Corridor and the old Belt Line Loop3) Exchange Street Station would require trains to pull in and back out4) High Speed Passenger Rail will not be going to Niagara Falls, therefore it makes sense to reactivate the beltway and have an offshoot to Niagara Falls5) The Central Terminal Tower is ideal for government transportation offices like NYSDOT, NFTA and GBNRTC, as well as, transportation, logistics, distribution, import/export, international trade, etc. Infact this could change from a residential community surrounding Central Terminal to a Logistics campus similar to the Life Sciences Campus.6) The Central Terminal has plenty of parking for both PassengerHigh Speed Rail and a Light Rail Park and Ride7) If one looks at a 9 block campus for ECC downtown, then it becomes clear that the Bus Terminal must go! Central Terminal has plenty of room for Passenger Rail, Light Rail and Bus Terminal. Central Terminal is roughly equidistant between airport, downtown, Life Sciences Campus and Outer Harbor and only blocks from Larkin District and Humboldt Park.9) It would change the entire dynamic of the eastside.

[TANHA]

I read all the facts on why Central Terminal should be used for High Speed Rail and I thohugt it was very cool. The Central Terminal is made for High Speed Rail. Its time to stop using the Depew Station and use the Central Terminal.In my opinion I don't think the Central Terminal would be good for hotel space, residential, and condos. I think the tower space should be limited to simply railroad offices of Amtrak, CSX, Conrail, etc and other businesses that could rent a floor.

[Marzaq]

You wrote: Build HSR from Vancouver to Eugene, and from SF to LA, and that long stretch from Oregon to SF sartts to look like a lot of trouble for the return we're getting. I disagree entirely. I used to live in Northern California near the Oregon border. If you wanted to fly anywhere, you had to drive to San Francisco or Portland (7 or 8 hours either way, with a stop for lunch) for reasonably priced tickets. Flying from Redding or Medford costs at least $400 and often more, and that drive is also very expensive if you factor in depreciation, repairs, insurance, and lost time.With HSR in Sacramento and Eugene, you could catch an improved standard-speed train in Medford (perhaps averaging 60 mph, if some basic track maintenance was done, or even better if the route was electrified) and then get on the HSR system to get to Seattle in 5 hours or LA in 7 hours; twice as fast as driving, and not much slower than flying if you include the time wasted in airports and transferring in SF or Portland.This could compete very well with driving or flying for trips along the west coast, for people who live in So Oregon or far northern California, especially if the cost of driving keeps rising.

[Berenice]

Can't take vacation time but want an aveuntdre? Try the Empire Builder trip to Glacier National Park. My wife and I hopped on the Empire Builder on a Friday afternoon, and rode east on a sleeper car. We woke up early, had breakfast on the train, and hopped off the train at East Glacier. We rented a car (though there are good shuttle services), and spent the day hiking in the park. That evening we hopped on a west-bound train and were home Sunday morning.Getting a bed is pricey, but you're getting two nights stay, meals, and transportation all in one price. If you want to go cheap then get just a regular seat although it looked comparable to sleeping on an airplane (though with more legroom).

[Jay]

I have used Kansai Thru Pass（關西一卡通）twice and never use Kintetsu Rail Pass. Kansi Thru Pass is not cheap and you can't save much from using it. On my experience, you can at most save 2,000 yen from the 5,000 yen 3-days pass. However, it is very covnnnieet and a must have for Kansai trip. With it, you can jump in almost all train (you may need to buy extra ticket for some limited express train) and bus (except the city bus in Nara). You don't need to spend time to stand before the complicated price chart in the station to find out which ticket to be brought. It is much better than Kintetsu Rail Pass and JR Pass, if you want to spend 1 or 2 day(s) in Kyoto. Because you can use all train, subway and buses in Kyoto. Kyoto is not a big city but if you want to visit most spots by walking, you will be exhausted before 3:00pm.With Kansai Thru Pass, you can use Osaka as you base and visit Kobe, Kyoto and Nara. If you have time, you can even go to 和歌山，高野山，姬路，淡路島 without additional transport charge.