What we can learn from pure flak

State Assemblymember Cathleen Galgiani, who represents Merced and parts north, recently attacked state Sen. Joe Simitian, who represents the rail SAnta Clara, San Mateo and Santa Cruz counties for attempting to steal money from the funds for the high-speed rail system. Galgiani, launching her campaign for statewide office -- Secretary of State -- is posing as the Mother of High-Speed Rail, a reputed statewide issue. Simitian appears to be trying to use $1 billion of the $9-billion fund to refurbish and improve the existing commuter trains and tracks running from San Jose to San Francisco. It has been expert researchers from his district who have pointed out the most glaring flaws in the assumptions of ridership in the high-speed flak and even its complete misstatement of the width of the right-of-way on the San Francisco peninsula.
But a girl with statewide political ambitions needs a statewide issue and high-speed rail is a lot safer than going after Simitian for his authorship of the bill for the new peripheral canal, which could get a girl with statwide political ambitions into a lot of trouble with a lot of rich and powerful people south of the San Joaquin Delta, where the vast majority of votes in California lie.
However, sometimes the flak provokes its opposite, something well enough reasoned and sufficiently complex to resemble truthful statement. Consider the two commentaries below, one by a Stanford historian of 19th-century American railroad history, the other a USC professor of engineering and public policy.
Richard White, the Stanford historian, reminds us of the incredible corruption involved  with the entire process of construction and operation of railroads -- a whiff of which has been hanging in the local atmosphere for the last couple of years.
James E. Moore II of USC focuses on railroad finance -- the famous "public/private win-win partnerships of which we are all so familiar here, particularly in the case of UC Merced. But this is an 800-mile railroad and the figures are in tens of billions rather than hundreds of millions. The question he points to is a familiar one in railroad history: privatizing the profits and socializing the debts. The California High Speed Rail Authority keeps babbling on about private investors and the investors don't seem to have shown up yet. Why do we suppose they are waiting? Perhaps for a deal in which there is absolutely not risk for the investors, all losses failing on the taxpayers.
Badlands Journal editorial board
4-29-11
Merced Sun-Star
Galgiani attacks Bay Area state senator's 'Great Train Robbery'…Sun-Star Staff
http://www.mercedsunstar.com/2011/04/29/v-print/1871922/galgiani-attacks-bay-area-state.html
SACRAMENTO - Assemblymember Cathleen Galgiani, author of California's voter-approved $10 billion high speed rail bond, today strongly condemned efforts to redirect the bond funds to non-voter-approved projects.
She specifically criticized State Sen. Joe Simitian, who represents California's 11th Senate District in Santa Clara, San Mateo, and Santa Cruz counties.
"This amounts to a bait-and-switch effort by certain interests to take money away from the high-speed rail system, and use it to cover shortfalls in funding the Caltrain commuter rail system on the San Francisco Peninsula." Galgiani said in a news release "It is highly suspect that the same few wealthy communities on the San Francisco Peninsula who want to stop the High Speed Rail project, would cynically work to divert the money to meet their existing obligations to the Caltrain system.
California was the first state in the nation to pass a high-speed rail bond, which authorizes the state to sell $9 billion dollars in bond funds to build a system that connects the major metropolitan areas of San Francisco, Sacramento, through the Central Valley, into Los Angeles, Orange County, the Inland Empire and San Diego. Unlike other states, California’s project is protected by the voter mandate of Proposition 1A, the news release said.
“Mr. Simitian is trying to syphon $1 billion of high-speed rail bond money for the Caltrain system in his district and proposes to make it legal under Proposition 1A by running one High Speed Train. This is the Great Train Robbery,” Galgiani said in the release. Californians voted for a high-speed rail system from Los Angeles to San Francisco, not a piggy bank for legislators.”
The San Mateo Transit District last year cut their contribution to Caltrain by 70 percent. San Francisco Municipal Transit Agency and the Santa Clara Valley Transportation Authority also reduced their contributions to Caltrain last year, forcing it into bankruptcy and reorganization. The communities on the peninsula want to take California high speed rail bond money to subsidize their struggling system, according to the news release. A few of California's wealthiest communities would use funds, which are intended to benefit the entire state, for their own needs, the release added.
Yesterday, in a Senate Budget and Fiscal Review Subcommittee No. 2 hearing on the bond allocation to match federal funds for the first segment of High Speed Rail, Simitian told the executive director of the High Speed Rail Authority, “I don’t want to see an EIR completed for a project that will never be built.”
“Senator Simitian has continually criticized the High-Speed Rail Authority while failing to recognize the shortcomings of the rail system in his own back yard. Simitian should fix his own system, not tell the HSRA how to build theirs,” Galgiani said in the news release.
When talking about the authority’s proposed phased system, Simitian, chair of the Subcommittee, also said, “We’re saying there is a (one) phase and then you’re done.” He added, “If we run one High Speed Train from San Jose to San Francisco, at any time of day, we will comply with Prop. 1A”
Galgiani responded in the news release, “Senator Simitian essentially put a gun to the Authority’s head and said, do it my way or no way. Well, I’ve got news for him. This is not Florida, this is California. Proposition 1A is a voter mandate, and if we have to, we’ll sue.”
  
 
4-23-11
New York Times
Op-Ed Contributor
Fast Train to Nowhere
By RICHARD WHITE
http://www.nytimes.com/2011/04/24/opinion/24white.html?_r=1&emc=eta1
IT is hard for liberals like me to find good news in the latest agreement to cut the federal budget, but there is at least one silver lining: subsidies for high-speed rail have been sharply reduced. Why is this good news?
In his State of the Union address, President Obama compared high-speed rail to the 19th-century transcontinental railroads as parallel examples of American innovation. I fear he may be right.
For the country as a whole, the Pacific Railway Act of 1864 and subsequent legislation subsidizing the transcontinental railroads — the lines that crossed the continent from the 98th meridian to the Pacific Coast — were the worst laws money could buy. By encouraging dumb growth, those laws sacrificed public good for private gain, and Americans came to regret it.
It is not that either transcontinental railroads or high-speed railroads are always bad ideas. A compelling case can be made for high-speed rail between Boston and Washington, for example, but the administration proposes building high-speed lines in places where there is no demonstrated demand. In California, construction of the new high-speed rail line from San Francisco to San Diego will begin with a line from Borden to Corcoran in California’s Central Valley. It is already being derided as the train to nowhere. The reduction of federal subsidies has not stopped the project, which now threatens to become a forlorn monument to hubris.
Proponents of the transcontinental railroads promised all kinds of benefits they did not deliver. They claimed that the railroads were needed to save the Union, but the Union was already saved before the first line was completed. The best Western farmlands would have been settled without the railroads; their impact on other lands was often environmentally disastrous. For three decades California commodities could move more cheaply, and virtually as quickly, by sea. The subsidies the railroads received enriched contractors and financiers, but nearly all the railroads went into receivership, some multiple times; the government rescued others.
As more astute members of Congress came to recognize, the subsidies were a mistake. One described the major drawback of a proposal for the government to guarantee bonds: “If there be profit, the corporations may take it; if there be loss, the government must bear it.”
After 1872, the country turned against the subsidizing of large corporations. It was a little late. Fraud and failure left a legacy that would lead to four decades of government attempts to get back what had so carelessly been given away. In the 1890s, Congress was still trying to recover money from the Pacific Railway.
Yet here we are again. The Obama administration proposed a substantial subsidy, $53 billion over six years, to induce investors to take on risk that they are otherwise unwilling to assume. Such subsidies create what the economist Robert Fogel has called “hothouse capitalism”: government assumes much of the risk, while private contractors and financiers take the profit.
As before, California has become the heartland for railroad dreams. California in the 1860s and 1870s needed a regional railway feeding the ports on San Francisco Bay, and today it needs better urban rail and improved freight systems. Instead, in the 1860s it got the Pacific Railway, and today it gets high-speed rail. And, as it did in the 1860s, California has sweetened the pot with subsidies of its own: a $9 billion bond issue. State law stipulates that the California High-Speed Rail Authority, which is planning, contracting for, and, eventually operating the system, will not get operational subsidies. It, not taxpayers, will pay its operating costs and its debts.
Those assurances are based on rosy and widely ridiculed ridership projections. Critics, the most trenchant of whom are part of the Community Coalition on High-Speed Rail, say that only two high-speed rail routes run without operating subsidies: Paris to Lyon and Osaka to Tokyo.
Without bond guarantees, private investors, which so far seem more prone to due diligence than the California High-Speed Rail Authority, have yet to put up money. The most astonishing thing is that even as financial problems force California to dismantle its social safety net, eviscerate its educational system, and watch its roads crumble, it has agreed on a plan for high-speed rail that demands substantial local subsidies and certainly will involve further concessions by the state to attract private investment.
It is as if a family, with one spouse out of work, unable to meet mortgage payments or school tuition, eagerly takes out a loan to buy an electric car after an uncle offers to share the cost. The catch is that there is no upper limit on the price, and the neighbors have to chip in. Nineteenth-century Americans would have grasped the analogy.
Richard White, a professor of history at Stanford, is the author of the forthcoming “Railroaded: The Transcontinentals and the Making of Modern America.”
4-25-11
Los Angeles Times
High-speed rail hopes are off the tracks
Federal funds are drying up for California's project, and that's a good thing.
By James E. Moore II. James E. Moore II is a professor of industrial and systems engineering, of civil and environmental engineering, and of public policy and management at USC. He is currently on sabbatical from USC at the Rand Corp.
http://www.latimes.com/news/opinion/commentary/la-oe-moore-rail-20110425,0,4725704,print.story
Congress' eleventh-hour compromise on the federal budget this month rescinds $400 million in funding for high-speed rail in fiscal year 2010, and eliminates federal funding for high-speed rail in fiscal year 2011. Yet California High-Speed Rail Authority officials remain committed to their vision of a high-speed rail link between Los Angeles and San Francisco. The agency is beginning to tilt at windmills.
The congressional action means that California will not get the $19 billion in federal grant support the authority was counting on receiving by 2016, nor (almost certainly) the $2.4 billion in grants that Florida's governor declined. Technically, Congress' agreement did not rescind roughly $3.75 billion in federal grants to California, but this commitment is also at risk. About $715 million has not been obligated and could be easily rescinded. The remainder of these funds is obligated, and rescinding them would be more difficult but not impossible.
California taxpayers would benefit greatly from rescission, because every dollar Congress finds the courage to rescind from the California rail project is a dollar the state no longer has to match. In Sacramento, some lawmakers are beginning to connect the dots. Assembly Bill 76, introduced by Diane Harkey (R-Dana Point), would have defunded the California high-speed rail project, but it was rejected in a committee vote along party lines.
Still, California officials, lawmakers and citizens now have the opportunity to step back and reconsider the inflated promises that pervade the high-speed rail program. California Proposition 1A, passed in 2008, authorizes the issuance of general obligation bonds backed by property tax revenue to provide $9.95 billion, mostly for construction of a core high-speed rail segment linking San Francisco and Los Angeles. The project requires federal matching funds, but these combined resources are far from adequate to construct such a system. The state high-speed rail authorities estimate that the total cost of the system will be under $45 billion. In 2008, the Reason Foundation and the Howard Jarvis Taxpayers Assn. issued a report estimating that the final cost could run as high as $81 billion.
Believe the higher estimate. In 2010, UC Berkeley engineering and economics professors examined the revenue and ridership forecasts the authority relied on to help make its case to the electorate and the federal government, and found the forecasts deeply flawed.
Unfortunately, the Obama administration's plans are worse. In his last State of the Union address, the president said he wanted to give 80% of Americans access to high-speed rail within 25 years, an objective he backed up with a budget proposal calling for $53 billion in federal funds over the next six years for high-speed rail projects.
This is only a tiny fraction of the resources that would be required to make high-speed rail a viable intercity transportation option. Even if we were prepared to further bankrupt ourselves doing so, we would accomplish nothing that cannot be accomplished much more cheaply by expanding airports, better maintaining and managing roads, and using conventional technology to burn gasoline and jet fuel even more cleanly.
The market for U.S air travel has been aggressively deregulated, and airfares are relatively low. As a result, U.S. airlines capture a large share of the market for short intercity trips. Even with recent increases in the price of oil, retail gasoline prices in the U.S. are about half the pump price in Europe, and the differential is even greater relative to places such as China and India. Consequently, a large share of the U.S. market for medium and long trips is accounted for by automobile travel. There is not enough room for high-speed rail to compete.
The only remotely meritorious argument for high-speed rail investments is the possible reductions in greenhouse gas emissions, but even in this respect high-speed rail is uneconomic. The state rail program's own numbers show that a high-speed system's impact on net C02 emissions would be slight, and easily as much as 100 times higher in terms of cost per ton of C02 eliminated than the goal established by the Intergovernmental Panel on Climate Change.
Railroads are a crucial component of the U.S. freight management and distribution system, but we do not need and cannot afford a high-speed rail system for passengers. Congress should rescind the high-speed rail funds granted to the states, starting with California; and the Legislature should defund the California high-speed rail project. We should cut our losses while we can still afford them.