March 2, 2011

Obama's High Speed Rail System Will Be a Burden on Taxpayers

Government Can Save Money by Dropping Funding for High-speed Rail

Liberals are great at solving a problem that doesn't exist, with taxpayer money that doesn't belong to them, and money the government borrows from countries like China.

Michigan Live
December 16, 2010

I read the Gazette article regarding the $150 million federal grant for high-speed rail.

I would have rather seen an announcement that U.S. 131 from south of Three Rivers to the Indiana Toll Road was going to receive the funds. The widening of that stretch of highway has been more than 20 years in the “planning.”

Nowhere in the article did it mention that in the 40 years of Amtrak, it has never made a profit. The only thing I can envision that high-speed rail will accomplish is that taxpayers can now lose money faster.

The Cato Institute has quite a bit of information about this debacle and I believe last year the subsidy was more than $500 million for rail service. Each passenger was subsidized at a rate of $210 per person. What a boondoggle.

The story should have pointed out the “folly” of such an endeavor, based on four decades of losses. Why not invest in bridges, schools or highways in such a terrible economy?

If we are looking for places to save money, high-speed rail would be a terrific place to start.

Getting the Price Right: How Much Should High-Speed Fares Cost?

The Transport Politic
September 8, 2009

...Peer experience on specific high-speed routes demonstrates just how expensive Amtrak’s Acela trains are. Acela rides cost more than $0.35 a kilometer, compared to $0.20 for Milan-Bologna trains in Italy or $0.08 for Paris-Lyon trains in France.

The chart below illustrates that comparison; it also shows differences between “regular” prices offered on foreign trains and reduced prices that are easily available for any rider booking early. In terms of cost per distance, only Germany’s ICE comes close — and that’s only for regular-priced tickets. Note that none of the systems mentioned here — including Amtrak’s services in the Northeast — are subsidized in their operations.

Cost per Distance on World High-Speed Rail Systems

The comparison with foreign railways is even more stark when evaluating how much riders pay for average speed on the routes I have compared here. Whereas Acela costs more than a dollar per average km/h, Korea’s KTX between Seoul and Daejeon costs less than $0.10 per km/h. Amtrak’s Northeast Regional service, at a bit less than $0.50 per km/h, seems far more cost effective in this comparison — that’s because Regional trains travel almost as fast as does Acela but cost less than half as much to ride...

How Much Will Obama’s High-Speed Rail Cost You?

National Review Online
February 17, 2011

Fox News has a handy tax calculator up so you can see how many of your tax dollars will go to this $53 billion boondoggle. For example, if your income is $100,000, then $654.60 goes for the high-speed choo-choo.

To put this $654.60 in perspective, it’s 85 miles between Tampa and Orlando, the high-speed route that Gov. Scott of Florida just refused Federal funds to develop. With a car getting 20 mpg burning $4 a gallon gas, the trip would cost roughly $17 if you drove. So it would take 40 trips between Tampa and Orlando to equal the tax burden in our example — and that doesn’t include the cost of the rail ticket.

What’s more, the $53 billion doesn’t finish ANY rail project, it just gets the country pregnant with high-speed rail. The faster high-speed rail heads to the ash heap of history, the better.

Florida High Court: Governor Can Reject Rail Funding

Last week, Florida Governor Rick Scott (R) rejected $2.4 billion in federal funding for a proposed high-speed rail line from Tampa to Orlando. The governor’s decision was based upon the likelihood of an up to $3 billion cost overrun, the likelihood of operating subsidies, and the requirement that the federal grant would have to be repaid if trains were not operating frequently enough, even if they were nearly empty. Proponents are working overtime to convince the public that there is no taxpayer obligation and that a private consortium that would build and operate the system would pay for it. Anyone familiar with projects of this sort knows that no private consortium could sustain the potentially huge cost overruns and operating subsidies. All parties agree that neither state nor local taxpayers must be liable for cost increases, operating subsidies or the potential return of money to the federal government. The reality, however, is that federal policy requires the state or local government receiving the federal funding to assume these liabilities. When the costs exceed the limited resources of the private consortium, only the taxpayers will be left. - Wendell Cox, The Tampa to Orlando High-Speed Rail Line: Protecting Taxpayers, The Foundry, February 22, 2011

The Associated Press
March 4, 2011

U.S. Transportation Secretary Ray LaHood announced Friday that $2.4 billion in high-speed rail funding intended for Florida will be sent to other states after the state Supreme Court upheld Gov. Rick Scott's decision to reject the money.

The Republican governor's decision effectively kills the Tampa-Orlando route.

Until Scott's election in November, it had been on track to become a leading example of how the Obama administration's stimulus plan is creating jobs and reviving the nation's passenger rail system.

Several states, including New York and Rhode Island, have asked LaHood for Florida's rail funds, but the only project that would achieve the high speeds associated with bullet trains in Asia and Europe would be California's.
"I know that states across America are enthusiastic about receiving additional support to help bring America's high-speed rail network to life and deliver all its economic benefits to their citizens," LaHood said in a statement.
Scott submitted a formal rejection of the funding shortly after a Friday morning telephone conversation with LaHood.

The U.S. Department of Transportation said in a statement that it now will evaluate its options for making the $2.4 billion available elsewhere.

The Florida Supreme Court had put the bipartisan lawsuit filed Tuesday on a fast track because LaHood had given Scott until Friday to accept the money.

Scott, an outspoken critic of the stimulus program, has said he believes the rail project would put Florida taxpayers on the hook for billions in cost overruns and operating subsidies.

State Sens. Arthenia Joyner, a Tampa Democrat, and Thad Altman, a Viera Republican, disagreed and sued Scott. Joyner said in a statement that the lawsuit sends a message to the governor that his actions will not always go unchallenged.
"Just because he can do it, does not make it right," Joyner said.
They said overruns and subsidies would be the responsibility of the private company contracted to build and operate the system and argued state law gave Scott no choice but to accept the money.

The Supreme Court issued a brief but unanimous decision siding with Scott less than 24 hours after hearing oral arguments. The unsigned opinion said the senators did not show they were entitled to an emergency court order that would have required Scott to accept the money.

Scott spokesman Brian Burgess said in a statement that Scott was pleased with the court's decision.
"He is now focused on moving forward with infrastructure projects that create long-term jobs and turn Florida's economy around," he said.
The ruling disappointed rail boosters such as U.S. Sen. Bill Nelson, D-Fla.
"It's unfortunate for the state because we could remake our transportation system that is now built on an interstate system that gets so clogged at rush hour, and you can imagine what it's going to be like 20 or 30 years from now," Nelson said. "And it's unfortunate for the 24,000 people that will not have these jobs in the next few years."
LaHood thought he'd found another way to insulate the state from liability by reaching an agreement with local government officials in central and South Florida to let them manage the project. Even that proposal failed to win over Scott.

Scott is third Republican governor elected in November to kill rail projects approved by his predecessor. Governors in Wisconsin and Ohio also turned down funds previously agreed to by Democrats for the national high-speed rail system, which President Barack Obama wants to make a signature project of his administration.

In Florida, the money had been accepted by Republican-turned-independent Charlie Crist, who lost a U.S. Senate race last year.

Under the government plan, stimulus funds for the construction of a regional network of “faster passenger rail lines” will have its hub in Chicago. Big surprise there – hometown boy makes good… and shares the success with political cohorts and cronies. Obama’s words “faster passenger rail lines,” however, are misleading. “Faster passenger rail lines” do not equate to “high speed rail.” If all the Obama administration wants to achieve is make trains faster, it can do what the Atchison, Topeka and the Santa Fe did in 1938: Put two engines on the train and remove the wooden crossties that hold the tracks together and replace them with cement crossties designed to handle faster trains. - Marilyn M. Barnewall, Who Should Build Our High-Speed Rail System?,, June 28, 2009

When is the last time you saw a government project planned or run efficiently or on budget? Do you recall a government-sponsored program that didn’t hand taxpayer money to political cronies like peppermint candy? One might also ask how many favors will be passed out to elitists… companies like Blackstone, the Carlyle Group, BlackRock, J.P. Morgan, Citigroup, Goldman Sachs, and others? There is an alternative to having government build America’s high speed rail system. A private company has offered a high speed rail deal to the government – years ago. The deal offers high speed rail, not just “faster trains.” It promises to use no taxpayer funds. I repeat, no taxpayer money… just private capital. All of the country, not just the select Northeast, Chicago, and California Corridors, get high speed rail under this plan. - Marilyn M. Barnewall, Who Should Build Our High-Speed Rail System?,, June 28, 2009


High Speed Rail - Another Obama Liberal Fantasy Designed to Fleece the Taxpayers Over a Long-long Time!

PonteVedraMan's Blog
February 21, 2011

Here's a suggestion Obama; use all that Harvard, Yale and Chicago mob brilliance to make Amtrak profitable! Then if you can do that, let's talk about other rail projects. And you know, I bet if you kicked the unions out of the railroad business, even Amtrak could be profitable - but that's another story for another day.

The only way liberals can even make high speed rail a necessity in any respect is to position it as a moral issue, as in, we need to do it for the people. The economics do not, nor will they ever work in any respect.

Oh yes, we hear all the buzz words and talking points of Obama about this wonderful product. The imagery of bullet trains whizzing across the country at 220 mph. They mention things like creating jobs, "green" development, sustainability and transit-oriented-development. Believe me, this is all smoke and mirrors as is most things Obama and the Chicago Mafia come up with to use our taxpayer money to create boondoggles.

Economic facts to warrant high speed rail do not exist! But then facts have never been necessary for liberals to spend taxpayer money, it is their inalienable right to do so on whatever silly program they come up with. Andy Kunz, CEO of the U.S. High Speed Rail Association, when pressed for economic facts to warrant the investment (remember, it is no longer spending, it is investment) in high speed rail, admitted there weren't any!

The facts are that for every job created by high speed rail, it is estimated it will cost a subsidy of $1.2 million. Pretty much in line with the "green revolution" in Obama's beloved Spain, where each "green job" now cost the taxpayers approximately $1 million in subsidy, and for every "green job" created 3 traditional jobs are lost. And of course Spain has 24% unemployment in their wonderful "green revolution".

Liberals are great at solving a problem that doesn't exist, with taxpayer money that doesn't belong to them, and money the government borrows from countries like China. Liberal arrogance is all it takes, and Gene Skoropowski, who works for infrastructure development company HNTB, recently told ABC News that he didn't care about the economic arguments of high speed rail. He argued that is as a moral imperative that people should have more choices for travel.

Current California high speed rail projects originally estimated to cost $33 billion are now going to cost in the neighborhood of $65 billion. Taxpayers have already paid a $9 billion down-payment and are on the hook for the rest. And get this, riders of this rail system will have a higher than average income, so based on the tax system, it is a subsidy from the poor to the rich." Imagine that; the poor subsidizing the rich! But what do you expect from liberals who never consider the unintended consequences of anything they propose.

If you are getting the picture that Obama is only signing states up for projects that the states and taxpayers will later have to pay for with ever higher unforeseen costs, you are right. There is very little substance to these high speed rail projects which is why several brave governors are saying NO, NO, AND NO!


Florida High Speed Rail: How to Protect Taxpayers

Demographia Observations
February 21, 2011

There is discussion of resurrecting the Tampa to Orlando high speed rail line, on the assumption that this can be accomplished without creating any liability for taxpayers. As this note makes clear, there are substantial hurdles that make achieving this goal nearly impossible.

The starting point must be a guarantee that neither state nor local taxpayers will have any liability, under any circumstances, for increases in capital costs, for operating subsidies or to pay back the federal grant, regardless of whether such circumstances are or could have been foreseen.

This could prove to be difficult, if not impossible, and the minimum requirements of such a guarantee are described below.

(1) Capital cost increases: These will ultimately be the responsibility of taxpayers. It is claimed that the project will cost $2.7 billion. Based upon the international experience, this is a fantasy and cost increases could raise the cost to as much as $5.7 billion (a $3.0 billion increase). There are claims that the private builder/operator would pay any such cost increases. However, no private consortium will have the financial capacity to pay for any such cost increase, nor has any in the past.

(2) Promoters claim that the project will pay for its operating expenses. Few rail systems in the world accomplish this and operating subsidies are likely. Operating subsidies will ultimately be the responsibility of taxpayers. Proponents claim that the private sector will pay any operating subsidies. However, the operating subsidies could become too large for the private consortium to pay.

(3) Any Florida government (state or local) accepting the federal funding would have to guarantee a certain level of service for at least 20 years and would have to pay back the federal government if that level of service is not maintained. This is no idle threat. Florida is already paying millions in subsidies annually for higher service levels on Tri-Rail (Miami) area to avoid a demand to repay one-quarter billion dollars to the federal government.

It is inconceivable for the private company (a company created by other companies, and having limited liability) to have sufficient resources to pay the potential extent of these obligations (at least under normal operating procedures). The private consortium could become insolvent, leaving taxpayers of the government entity accepting the federal grant with the obligations...

High Speed Rail Will Cost £1,000 for Each Family in the UK

Every family in the country would be forced to pay more than a thousand pounds for the Government’s proposed high speed rail line linking London with the north of England and Scotland.

London Telegraph
March 5, 2011

A five month consultation into the scheme, which would eventually cost £32 billion, and would allow passengers to reach Manchester and Leeds in 75 minutes, was launched yesterday.

The first stage linking London and Birmingham would cost taxpayers £17 million and would cut journey times by half an hour to 49 minutes - the equivalent of £500 million for each minute saved.

Ministers are braced for a bitter struggle to get the proposals through Parliament, with many Conservative MPs, including the Cabinet Minister Cheryl Gillan, facing local outrage at having the line put through their constituencies. The most bitter rows centre on the protected countryside of the Chilterns, where residents are vehemently opposed to the proposals.

Unveiling the plans, Philip Hammond, the Transport Secretary, said that all but 1.2 miles of the track due to go through the Chilterns, an official area of natural beauty, would be in tunnels, cuttings, or beside a busy A-road.

At least 14 trains an hour are due to run on the line, each with up to 1,100 seats, shifting six million air trips and nine million road journeys on to the railway.

Over time, the link could serve Heathrow Airport and the Channel Tunnel rail link, London’s Crossrail scheme, the north of England and the major Scottish cities, as well as the West Midlands.

Speaking Birmingham International Conference centre, Mr Hammond claimed that the link would also deliver £44 billion of benefits to the economy. He said:
"The time for high speed rail in Britain has come. We have before us a once-in-a-lifetime opportunity, an opportunity to reshape our economic geography.

"Too often in the past, Britain has baulked at the big decisions.

"We must invest in Britain's future. We cannot afford to be left behind - investing in high speed rail now is vital to the prosperity of future generations."
But Matthew Sinclair, Director of the TaxPayers’ Alliance, said:
“With so much pressure on the budgets of families and businesses, it is utterly indefensible that the Government is planning on spending such an incredible amount of money on this project.

“There are more affordable ways of getting the capacity needed and a high speed line for the rich, on a route already served by very quick trains, can’t be the priority over giving ordinary families and firms across the country a better deal.”
The Campaign to Protect Rural England described the consultation as "a complete train wreck".

And Jerry Marshall, from Action Groups Against HS2, added:
"It seems crazy to throw away money on what is basically a vanity project.
"There is a much cheaper, better alternative - the economic case doesn't stack up.”

Obama's High-Speed Rail Plan is a Fiscal Pipedream

The Refugees Unleashed Forum
February 15, 2011

We suppose every President is entitled to a pipedream, but President Obama's vow in his State of the Union address that 80% of Americans should have access to high-speed rail in 25 years is a doozy. Vice President Joe Biden has followed up by proposing $53 billion in high-speed rail funding over the next six years. Seriously?

On recent evidence, this train is running in reverse. Though the Obama Administration has allocated more than $10 billion for high-speed rail projects the past two years, the new Republican governors of Wisconsin and Ohio, Scott Walker and John Kasich, have rejected the federal money. They don't want to put their taxpayers on the hook for projects destined for Insolvency Junction. Florida Governor Rick Scott is also reconsidering his state's proposed Orlando-Tampa line.

Even California, that famous incubator of pipedreams, is having second thoughts. The state has proposed an 800-mile high-speed rail plan from San Diego to San Francisco. Bay area residents are now protesting that the line will damage property values, while Central Valley farmers complain the line will ruin their land. The greater wonder is how the state will pay for a $43 billion train even as it's facing a $28 billion budget gap over the next 18 months and $20 billion annual deficits four years after that.

Two years ago California taxpayers approved a $9.95 billion bond initiative to fund the train, buying the pitch that it would create hundreds of thousands of jobs and attract 94 million riders. The state's high-speed rail authority told voters a one-way ticket from San Francisco to Los Angeles would cost $55—about the price of a Southwest flight. They said private equity firms were dying to invest, and that the train would operate without a public subsidy. [Editor's Note: Whenever you read that private equity firms are involved, know that these are the same financial giants who seized trillions of taxpayer dollars through bailouts, corporate takeovers and public-private partnerships since the financial crisis began in 2008.]

Studies by economists and financial consultants Alain Enthoven, William Grindley and William Warren have since debunked the rail authority's claims. Based on the costs of high-speed rail lines in Europe and Japan, the price tag likely will fall between $62 billion and $213 billion. A one-way ticket from San Francisco to Los Angeles will cost about $190, which means more people will choose to fly.

Because of uncertainty over costs and ridership forecasts, private equity firms say they won't invest without a revenue guarantee, i.e., an operating subsidy. Even if the state somehow manages to attract $10 billion in private equity, its business plan calls for another $5 billion in local grants and $15 billion more in federal funds. The $15 billion that they want from the feds would be nearly a third of Mr. Biden's $53 billion figure. Maybe high-speed rail is a back-door bailout for California.

Messrs. Obama and Biden argue that the U.S. has to invest in high-speed rail to stay competitive with the world. Only if we're competing in the Debt Bowl. Two high-speed railways in the world have broken even, and those are in densely populated areas of France and Japan where people drive less because gas prices are twice as high as in the U.S., and many foreign intercity highways levy tolls.

The only area of the United States where high-speed rail begins to make sense is along the high-traffic, high-population Northeast Corridor from Washington, D.C., to Boston. Amtrak's Acela peaks at 150 miles per hour but averages only about 70 miles per hour because it has to share tracks with other trains. A truly high-speed rail that runs on its own dedicated track could reach 220 mph and cut the travel time nearly in half.

While such a line might offer benefits for the region's commuters, Amtrak estimates the line would take 25 years to develop and cost $117 billion. According to a 2009 study by the Congressional Research Service, six to nine million riders would need to take the train each year to justify the costs of high-speed rail systems similar to those in other countries. The Acela carried 3.4 million people in 2008.

Until the proponents of high-speed rail solve the problem of runaway costs, we'll stick with the train in Disney's Fantasyland. Who knows, maybe 80% of the country has taken it for a ride by now.

The railroads got most of their land free from the Government !

With the size and density of today's cities that would be a project with 10,000 lawsuits a mile.

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