Tag: department of transportation

High-Speed Rail and Federalism

Florida Governor Rick Scott deserves a big round of applause for dealing a major setback to the Obama administration’s costly plan for a national system of high-speed rail. As Randal O’Toole explains, the administration needed Florida to keep the $2.4 billion it was awarded to build a high-speed Orlando-to-Tampa line in order to build “momentum” for its plan. Instead, Scott put the interests of his taxpayers first and told the administration “no thanks.”

That’s the good news.

The bad news is that the administration is going to dole the money back out to 22 passenger-rail projects in other states. Florida taxpayers were spared their state’s share of maintaining the line, but they’re still going to be forced to help foot the bill for passenger-rail projects in other states.

Here’s Randal’s summary:

Instead, the Department of Transportation gave nearly $1 billion of the $2.4 billion to Amtrak and states in the Northeast Corridor to replace worn out infrastructure and slightly speed up trains in that corridor, as well as connecting routes such as New Haven to Hartford and New York to Albany. Most of the rest of the money went to Midwestern states—Illinois, Iowa, Minnesota, Michigan, and Missouri—to buy new trains, improve stations, and do engineering studies of a few corridors such as the vital Minneapolis-to-Duluth corridor. Trains going an average of 57 mph instead of 52 mph are not going to inspire the public to spend $53 billion more on high-speed rail.

The administration did give California $300 million for its high-speed rail program. But, with that grant, the state still has only about 10 percent of the $65 billion estimated cost of a San Francisco-to-Los Angeles line, and there is no more money in the till. If the $300 million is ever spent, it will be for a 220-mph train to nowhere in California’s Central Valley.

Why should Floridians be taxed by the federal government to pay for passenger-rail in the northeast? If the states in the Northeast Corridor want to pick up the subsidy tab from the federal government, go for it. (I argue in a Cato essay on Amtrak that if the Northeast Corridor possesses the population density to support passenger-rail then it should just be privatized.)

I don’t know if taxpayers in Northeast Corridor would want to pick up the federal government’s share of the subsidies, but I’m pretty sure California taxpayers wouldn’t be interested in footing the entire $65 billion for their state’s high-speed boondoggle-in-the-works. As I’ve discussed before, the agitators for a national system of high-speed rail know this:

If California’s beleaguered taxpayers were asked to bear the full cost of financing HSR in their state, they would likely reject it. High-speed rail proponents know this, which is why they agitate to foist a big chunk of the burden onto federal taxpayers. The proponents pretend that HSR rail is in “the national interest,” but as a Cato essay on high-speed rail explains, “high-speed rail would not likely capture more than about 1 percent of the nation’s market for passenger travel.”

According to the Wall Street Journal, congressional Republicans aren’t happy that the administration is taking Florida’s money and spreading it around the country:

Monday’s announcement drew criticism from House Republican leaders, who questioned both the decision to divide the money into nearly two-dozen grants around the country—instead of concentrating it into fewer major projects—and the fact that many of the projects will benefit Amtrak, the federally subsidized passenger-rail operator.

I heartily agree with the Amtrak complaint, but I’m not sure why as a federal taxpayer I should feel better about instead “concentrating [the money] into fewer major projects.” Subsidizing passenger-rail is no more a proper role of the federal government than education or housing. Unfortunately, for all the criticisms of the Obama administrations and the constant talk about spending cuts, Republicans don’t appear to possess much more desire to limit the scope of the federal government’s activities than the Democrats.

See this Cato essay for more on fiscal federalism.

The Administration Concedes Defeat

To sell his high-speed rail program, President Obama desperately needed a success story—a high-speed train operating during his administration that would awe the public and lead to a national demand for more such lines. That success story was going to be Florida’s Orlando-to-Tampa line, the only true high-speed route (as opposed to speeding up existing trains by 3 to 5 mph) that could have been completed during Obama’s term in office (assuming he is re-elected).

Anticipating that success, the administration drafted a proposal to use federal gasoline taxes and a “new energy tax” to fund $53 billion for more high-speed rail lines over the next six years. (The proposal also included $250 billion for highways, $120 billion for urban transit, $27 billion for “livability,” and $25 billion for an infrastructure bank.)

The chances of that happening died when Florida Governor Rick Scott decided to turn back the $2.4 billion in federal dollars dedicated to the Orlando-Tampa line. To maintain momentum behind high-speed rail, the administration could have given all of that money to California, the only other state proposing to build true high-speed rail.

Instead, the Department of Transportation gave nearly $1 billion of the $2.4 billion to Amtrak and states in the Northeast Corridor to replace worn out infrastructure and slightly speed up trains in that corridor, as well as connecting routes such as New Haven to Hartford and New York to Albany. Most of the rest of the money went to Midwestern states—Illinois, Iowa, Minnesota, Michigan, and Missouri—to buy new trains, improve stations, and do engineering studies of a few corridors such as the vital Minneapolis-to-Duluth corridor. Trains going an average of 57 mph instead of 52 mph are not going to inspire the public to spend $53 billion more on high-speed rail.

The administration did give California $300 million for its high-speed rail program. But, with that grant, the state still has only about 10 percent of the $65 billion estimated cost of a San Francisco-to-Los Angeles line, and there is no more money in the till. If the $300 million is ever spent, it will be for a 220-mph train to nowhere in California’s Central Valley.

In essence, the administration has given up on high-speed rail. New York Times editorial writers haven’t figured that out yet, opining that Florida Governor Scott made a dreadful mistake when he rejected the rail money. In fact, as tax activist Doug Guetzloe told a Tampa newspaper, “Federally funded rail is like being given a brand new Maserati and then you have to pick up the gas and the insurance — forever. The car looks great, but the costs will kill you.”

The Times suggested that Florida taxpayers will resent Scott’s decision whenever they are stuck in traffic. But no one seriously believes that intercity rail will ever relieve traffic congestion, most of which is in cities, not between them. In its original application for high-speed rail funds, Florida’s DOT admitted that Orlando-to-Tampa traffic grows more every five years than all the cars the trains were expected to take off the road, so at best high-speed rail was a very expensive and temporary solution to congestion.

Outside of the Times editorial offices, most transportation experts agree that the President’s high-speed rail program is over and his draft transportation bill is dead on arrival. Taxpayers throughout the country should thank Scott (as well as Ohio Governor John Kasich and Wisconsin Governor Scott Walker) for saving them the hundreds of billions of dollars that Obama’s program would have eventually cost.

Obama and Infrastructure

The President is continuing his push for the federal government to go deeper into debt in order to fund infrastructure projects. While nobody disputes that the country has infrastructure needs, the precarious nature of federal and state finances indicate that policymakers need to starting thinking outside the box. Specifically, policymakers should be looking to make it easier for the private sector to fund and operate infrastructure projects.

As my colleagues Chris Edwards and Peter Van Doren have explained, the main problem with government infrastructure spending is the lack of efficiency:

More roads and transit capacity may or may not make sense depending on whether the benefits exceed the costs. One sure way to find out is to have private provision and user charges. If users are not willing to pay the costs of extra or newer capacity, then calls for taxpayer involvement probably imply subsidy of some at the expense of others rather than efficiency.

A lot of what the the president wishes to spend taxpayer money on – for example, high-speed rail – is of questionable economic value. Unfortunately, policymakers all too often allocate resources on the basis of politics rather than economics.

For more on this topic, interested readers should check out our essays on the Department of Transportation. Also, an essay on privatization argues that “The benefits to the federal budget of privatization would be modest, but the benefits to the economy would be large as newly private businesses would innovate and improve their performance.”

Retiring Official: DOT Is Sitting on Pro-Toyota Probe Results

Damning if true: 

A new report in the WSJ strongly suggests Transportation Secretary Ray LaHood is unwilling to release a report on the agency’s investigation into charges of “sudden acceleration” in Toyotas because its findings are too favorable to the Japanese automaker’s case. The source is a high-ranking retiring NHTSA official, George Person, formerly chief of the agency’s Recall Management Division.

Department spokeswoman Olivia Alair describes the report as ongoing and not completed; she also denies that Person was “involved in” the probe but does not appear to deny that he was briefed on the resulting report and is familiar with its contents.

Person says some NHTSA officials objected to the keeping of the report under wraps; it is not known what position was taken by the Obama appointee who heads NHTSA, David Strickland, a former lobbyist for the trial lawyers’ association AAJ and a principal author of the horrendous children’s-product-safety law CPSIA. Earlier here.

“Wherever the science leads,” indeed.