AMC’s “Hell on Wheels” is one of my favorite new television series of the fall. It chronicles the construction of the transcontinental railroad through the American West. The pilot had one of my favorite exchanges, between Thomas Durant, a businessman and investor responsible for building the railroad, and one of his foremen responsible for planning the construction:
Durant: Why have you made my road so…straight?
What I was thinking was something more like (draws an exaggerated S-shape across the land).
Foreman: But we’re building over flat land. Why wouldn’t we make it straight?
Durant: “Let me elucidate! In case you haven’t heard, this undertaking is being subsidized by the enormous teat of the federal government. This never ending, money gushing nipple pays me 16,000 dollars per mile. Yet you build my road straight!”
It’s amazing how little things have changed in the last 150 years. Today, the government is still funding railroads, although now they are “high speed,” and private companies are still taking advantage of the taxpayer-funded subsidies, although now the price-tag is measured in the tens of billions.
In 2008, California voters approved a $9.9 billion bond issue to construct an 800-mile high-speed rail system that would run between San Francisco and Los Angeles. It was projected to be completed in 2020 for a total cost of $35.7 billion.
I don’t think it comes as any surprise to you, the reader, to find out that the plan is now over budget and behind schedule. But the extent to which those things are true is astounding. According the Mercury News:
“Faster than a speeding bullet train, the cost of the state’s massive high-speed rail project has zoomed to nearly $100 billion – triple the estimate given to voters and more than enough to run the entire state government for a year.
What’s more, bullet trains won’t be up and running until at least 2033, much later than the original estimate of 2020, though that depends on the state finding the remaining 90 percent of the funds needed to complete the plan.”
And if Asia’s and Europe’s experience is any indication, the costs won’t stop there. The state-owned Japanese National Railways has run an operating deficit every year since the opening of its first high speed line. In the late 80s, after continuous deficits led to a financial crisis, the government privatized the railway. Today, private operators are earning a “profit,” but only because rail service continues to receive generous subsidies.
Europe has faced similar problems. France, by far Europe’s number one high-speed rail carrier, has actually seen a decline in use over time. In 1980 rail accounted for 8.2 percent of passenger travel, by 2000 it had declined to 6.3 percent. University of Paris economist Remy Prud’Homme told Cato that, “Users pay about half the total cost of providing the service,” and estimates that rail service receives about $100 billion in subsidies each year.
The United State’s experience with government run rail has been even more disastrous. Amtrak lost money on 41 of its 45 train lines in 2008. The average loss per passenger was approximately $32. One train, serving the east coast from New York to Miami, had a per-passenger loss of $145.23.
Given these cost overruns and less than flattering statistics you’d think that the Obama Administration would back away from the taxpayer funded project in California. You’d be wrong.
The Los Angeles Times reports:
“We are not going to flinch on that support,” said Joseph Szabo, chief of the Federal Railroad Administration.
Szabo said that his agency had committed itself to provide $3.3 billion for a construction start next year in the Central Valley and that federal law prohibits any change of mind about where to begin building the first segment of the state’s high-speed rail system.
“The worst thing we could do is make obligations to folks and start to renege on our word,” Szabo told the House Transportation and Infrastructure Committee.
Why stop building when the project is being “subsidized by the enormous teat of the federal government” Nevermind the Transcontinental Railroad, California’s project is the real “Hell on Wheels,” if only for taxpayers.