More Proposed Stimulus Spending On Infrastructure

When Barack Hussein Obama took office in January, 2009, he identified 10 corridors appropriate for high-speed rail in the US. His stimulus bill earmarked $8 billion to jump-start the project. High speed rail is Obama’s “Holy Grail” of public infrastructure projects. Proponents originally said the LA-to-SF bullet train project would create more than 1 million jobs, but recently revised that downward to several thousand jobs. (That’s quite a revision!) Almost every state originally identified dropped out of the running because they couldn’t afford their share of the cost. Only California is still seeking money for its “high speed rail” project that is to go between Los Angeles and San Francisco. Since the project was first unveiled in 2008, officials have tripled its projected cost, delayed its start of service for 13 years, downsized ridership projections and increased ticket prices. Almost two-thirds of Californians now say they’d vote against issuing bonds to pay for a project they narrowly approved just three years ago.


Original cost estimates (2008) were $33 billion for the entire project, with California, the federal government (that’s us taxpayers), and private enterprise sharing costs equally. Recent cost estimates (2011) are $98.5 billion. Recently revised ridership figures show that a one-way ticket price could require a government subsidy of $100 per passenger per ticket. Estimated travel time between the cities is 2 hours, 40 minutes. Flying takes about 1 hour, 5 minutes. The original cost of $55 for a one-way ticket was revised in 2009 to be 83% of the cost of a similar airline flight, or about $105. So the question is, “Why would anyone pay 83% of a flight cost to make the trip in over twice the time?”
When the California legislature undertook the most expensive public-works project in American history, they also created an independent review board to ensure that the LA-to-SF high-speed rail project would have solid financial footing. The name of the review board is “The California High-Speed Rail Peer Review Group.” But in a report Tuesday, January 3, 2012, the review board, a panel of experts created by state law to help safeguard the public’s interest, raised serious doubts about almost every aspect of the project, concluding that the current plan “is not financially feasible.” As a result, the panel said, it “cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project.”  Tom Umberg, chairman of the authority board, said in a letter to California lawmakers that the report is “deeply flawed, in some areas misleading and its conclusions are unfounded.” “As the report presents a narrow, inaccurate and superficial assessment of the HSR program, it does a disservice to policy-makers who must confront these decisions.”
California Governor Jerry Brown last week reiterated his commitment to the project, and the Rail Authority today blasted the Peer Review Group’s report. Brown spokesman Gil Duran said in an e-mail that the Peer Review Group’s report “does not appear to add any arguments that are new or compelling enough to suggest a change in course.” So if Governor Brown thinks that a project whose costs have tripled from original estimates, the estimates on which voters relied when approving the project in 2008, presents no fiscal problems, then why should he worry when the state-mandated review board tells him that the project can’t work?