Wall Street Journal
FEBRUARY 14, 2011
Runaway TrainsObama's high-speed rail plan is a fiscal pipedream.
We suppose every President is entitled to a pipedream, but President Obama's vow in hisState of the Union address that 80% of Americans should have access to high-speed railin 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 Administrationhas allocated more than $10 billion for high-speed rail projects the past two years, thenew Republican governors of Wisconsin and Ohio, Scott Walker and John Kasich, haverejected 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 alsoreconsidering his state's proposed Orlando-Tampa line.Even California, that famous incubator of pipedreams, is having second thoughts. Thestate 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, whileCentral Valley farmers complain the line will ruin their land. The greater wonder is howthe 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 thetrain, buying the pitch that it would create hundreds of thousands of jobs and attract 94million riders. The state's high-speed rail authority told voters a one-way ticket from SanFrancisco to Los Angeles would cost $55—about the price of a Southwest flight. Theysaid private equity firms were dying to invest, and that the train would operate without a public subsidy.Studies by economists and financial consultants Alain Enthoven, William Grindley andWilliam 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 costabout $190, which means more people will choose to fly.Because of uncertainty over costs and ridership forecasts, private equity firms say theywon't invest without a revenue guarantee, i.e., an operating subsidy. Even if the statesomehow manages to attract $10 billion in private equity, its business plan calls for