SACRAMENTO, Calif.—The new business plan for California's high-speed rail system shows the nation's most ambitious state rail project could cost nearly $100 billion in inflation-adjusted funding over a 20-year construction period, far above the amount originally projected.
The plan, which was shared late Monday with The Associated Press, also shows the system would be profitable even at the lowest ridership estimates and would not require public subsidies to operate.
The report estimates the actual cost at $98.5 billion if the route between San Francisco and Anaheim is completed in 2033. It assumes private investment will account for roughly 20 percent of the final cost.
The initial estimate to build the system when voters approved bond funding for it in 2008 was $43 billion in non-adjusted dollars.
Heaven help U.S. taxpayers (non-California residents are going to be on the hook for many billions of dollars) if this project ever gets off the ground. The projected costs have doubled, yet the planners still insist that the project will produce a profit. One train line is going to have enough riders to service a $100 billion debt, cover operating costs, and generate a profit to boot? The entire Amtrak system generated revenues of only $1.6 billion in FY '09, and that fell short of costs by $1 billion. I'll guess that the California line would have to at least quadruple or quintuple the current Amtrak ridership to break even. With one line?
California: where dreams can become reality, no matter how much they cost.
The coming California default is likely to bring the entire future of California into sharp focus...
ReplyDeleteI am happy to see high-speed rail not built. I think high-quality, private inter-city busses are a much better bet.
ReplyDeleteBut how we also not build $9 billion aircraft carriers, or seven fleets of easy-to-sink surface ships? Or $3 billion bombers?
How about $4 trillion for Iraqistan?
How about $1 trillion per year, and more every year. for the Defense-Homeland Security-VA megalex? That's $3,333 for every man, woman and child in the USA. $13k for a family of four. Every year. And more next year. It will never end, not in 20 years, not in 50. They are federal bureaucracies, and they never die.
Think of it: In the next 10 years, we will spend $10 trillion on defense, homeland security and the VA. Enough to wipe out the current federal debt.
This is good money management?
Benjamin,
ReplyDeleteSo you're suggesting we have no military? If not, then how much of a military "megaplex" and how much do we spend on it?
Isn't the defense budget at an all time low in relation to GDP?
What is the broader economic impact of the project? The project will require the services of planners, transportation engineers, manufacturers, heavy equipment operators, support staff, field crews, environmental assessments, etc., etc.
ReplyDeleteThose people will be earning a paycheck, which they will spend on all sorts of things.
We elected Arnold after Davis was railroaded by Bush and Enron. Seems perfectly logical with our current electorate and government system.
ReplyDeleteBob-
ReplyDeleteJudging federal outlays in relation to GDP is a federal bureaucrat's trick.
Should we always spend X percent on poverty programs? What if there is less poverty?
Our current military posture grew and then ossified in the Cold War. We faced a large, credible Soviet threat---20 years ago.
Today we face irregulars armed with homemade bombs, who have no navies, air forces, KGB, satellites etc. The Taliban do not even have tanks or armored personnel carriers.
I assume we can find people smart enough to defend the USA from invasion for about the same amount they spend in Europe, or even what they spend in Japan ---0.8 percent of GDP.
Our defense establishment today is coprolitic, and parasitic.
If, in a future time, we need to up military outlays, then we should.
Only a federal bureaucrat would suggest we maintain military outlays at a grossly inflated levels as threats might emerge someday.
After the next 10 years, and we have poured another $10 trillion down into the military federal rathole, the defense establishment will say they need even more money, the threats are large and growing, the equipment is outdated, the quality troops are leaving.
I say we do a Chris Christy: Cut the defense down to 2 percent of GDP, and tell them they will hate us now, but will respect us when in 20 years we can still afford a military.
John, you say "The project will require the services of planners, transportation engineers, manufacturers, heavy equipment operators, support staff, field crews, environmental assessments, etc., etc.
ReplyDeleteThose people will be earning a paycheck, which they will spend on all sorts of things."
Sounds an awful lot like "shovel-ready projects" to me. If we learned nothing else from the past three years it should be that if private capital will not support a project because it is not a money-maker, then government subsidies do not make it so.
Yes, some dollars will trickle down to engineers, manufacturers, etc. but ONLY AFTER a large portion of them have been siphoned off by a corrupt and inefficient bureaucracy.
Personally I have seen enough of all levels of government wasting hundreds of billions of my kids' dollars (that we will borrow from the Chinese by the way) on pet projects that wind up being a permanent sink hole.
Stop it already!
Interesting how the projected cost is $98.5B just a tad under a headline grabbing $100B.
ReplyDelete