WSJ: HSR subsidy trains to nowhere

Richard Rider, Chairman, San Diego Tax Fighters Richard Rider, Chairman, San Diego Tax Fighters 1 Comment


The flow of studies and editorials excoriating the California High Speed Rail train wreck come at us at ever-increasing speed and frequency. There’s only one description for this disaster that fits — FRAUD!!!

Read the latest WALL ST JOURNAL editorial below. Note particularly the lies used to sell this gigantic hoax to the gullible voters, compared to more real world estimates of ridership, cost of construction, jobs created, operating costs and ticket costs.

For instance, only two years ago, the rail boondoggle projection was that 94,000,000 passengers a year would ride on CA HSR paying $55 a ticket. Now the more realistic figures are predicted to be 5,000,000 to 10,000,000 riders at $190 a ticket.

And yet the project continues to lurch ahead — a Frankenstein monster that’s dead but still moving. Obama and his crowd can’t kill the creature.

Let’s see if the new GOP House majority can drive a stake through HSR’s heart.


DECEMBER 11, 2010
Subsidy Trains to Nowhere
Can we sell you a ticket to Borden? It only costs $4.15 billion.

Lest you think Washington has begun a new era of fiscal self-restraint, consider this week’s act of political retribution by Transportation Secretary Ray LaHood.

Newly elected GOP Governors in Ohio and Wisconsin wanted to kill high-speed rail projects in their states and instead use the money to fix their battered roads. Sorry, guys. Mr. LaHood reclaimed the $1.2 billion and handed it to 13 other states that still want to build these high-speed trains to nowhere.

Both Wisconsin’s Scott Walker and Ohio’s John Kasich had campaigned against the trains, and rightly so given passenger rail’s financial, er, track record. But the Obama Administration is bent on building mass transit whether the masses like it or not. Thanks to Mr. LaHood, Wisconsin and Ohio taxpayers will still have the privilege of paying for the new train projects even if they’re built somewhere else. Ah, federalism.

Messrs. Walker and Kasich are right on the merits, and we’re confident they’ll save their taxpayers money over time.

Consider the case of California, which is one of the states getting cash for trains that the Midwesterners didn’t want. Earlier this month its high-speed rail authority approved construction on the first 65-mile segment of a 500-mile bullet train. The first miles will connect the small towns of Borden and Corcoran in the Central Valley for a mere $4.15 billion. Yes, that’s billion.

One other detail: The segment won’t even begin operating until more of the line is completed, which on present trend could be never. Read on and weep.

In the mid-1990s, California created a high-speed rail authority to prepare a plan for an economically viable rail system. It took a decade for the authority to get legislative approval to ask voters to approve a $9.95 billion bond ballot measure to partly fund the $40 billion project. The authority said that, for a one-way $55 ticket, the system would serve 94 million passengers between Los Angeles and San Francisco and create hundreds of thousands of “sustainable” jobs. It assured taxpayers the railway would operate at a surplus and without subsidies.

Such auspicious projections earned it the support of a majority of voters in a 2008 referendum. The problem is that high-speed rail systems almost always run over budget and end up heavily subsidized. Only two segments of two such railways in the world, in France and Japan, have broken even, and they are in high-density areas—not running across sprawling California.

The Golden State rail authority’s failure to disclose the project’s significant risks are troubling. Five months before the initiative passed, the consulting firm Infrastructure Management Group told the authority that companies wouldn’t operate the railway without a revenue guarantee—a subsidy—because the ridership projections were too risky. The authority failed to produce an investment-grade business plan before the initiative was put to voters, and it still hasn’t produced a credible economic plan. Maybe they don’t have one.

The authority has presented plenty of forecasts, one shakier than the next. It now projects that ridership will reach 39 million passengers a year by its 10th year, down from that projection two years ago of 94 million. The experience of other high-speed rail systems suggests they’ll be lucky if they get a quarter of that, and five million riders is more likely.

The authority estimates a project cost of $42.6 billion, but a more realistic price tag would put the cost between $62 billion and $213 billion. It also predicts that one-way tickets for the two and a half hour ride from L.A. to San Francisco would cost $105 (up from $55), but the cost-per-mile in Europe and Japan suggests a ticket price closer to $190. Many would choose to fly.

The authority also predicted 450,000 permanent jobs; that’s twice the size of the state government’s active work force. Did they hire Joe Biden as their stimulus consultant?

Stanford economist Alain Enthoven, former World Bank analyst William Grindley and financial consultant William Warren document all of this in a study that’s been reviewed and endorsed by more than 70 business leaders. Their conclusion: Unless the federal government provides $19 billion in seed money, the railway will never achieve a positive cash flow. State taxpayers will end up subsidizing a fantastic boondoggle, even though the authorizing legislation prohibits subsidies.

A realistic concern is that the state will have to terminate the project after completing the first segment because the feds and private investors won’t pay to finish it. California doesn’t need a high-speed train it can’t afford, and we hope Republicans on Capitol Hill will pull the plug on this and other trains to insolvency next year.

Printed in The Wall Street Journal, page A14


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