Despite bad news after bad news after bad news, California Governor Jerry Brown doubled down this week in his commitment to spend nearly $100 billion to build a permanent legacy to match his father’s: the California High-Speed Rail. Unfortunately for the state, his desired legacy is an unaffordable white elephant — while his father provided water for the state and expanded both the UC and CSU systems.
I heard Brown on the radio Thursday, defending spending the money to build the proposed 520-mile system. Pressed by fiscal conservatives, he argued that state’s growth requires development of the Central Valley to handle the population than won’t fit in existing cities — and linking the Central Valley to these cities.
Once the price ballooned from $30 billion (1999) to $45 billion (2008) to $99 billion (in November), that should have been it. After the latest budget estimate, the project attracted editorial opposition from reliably progressive sites like the San Jose Mercury News and Huffington Post. Or as a Bay Area TV commentator put it:
Here are three things that claim to be living but are still dead:Even the California Rail Foundation now opposes the plan, arguing that it assumes ridership that exceeds comparable European bullet trains by an order of magnitude.
1. General Francisco Franco (see Chevy Case, Saturday Night Live circa 1975).
2. That dude in "Weekend at Bernie's" who was proppped up, dressed and carried as though he were alive.
3. The California high-speed rail project.
This week saw the latest attempt to breathe new life into high-speed rail. Something similar was done to the high-speed rail plan. The dead body of high-speed rail was propped up and made to look more life-like with a new business plan.
But it's still dead. … [H]igh-speed rail costs billions in a state with persistent budget deficits. Its costs exceed — by about 800% — the amount of money the state and feds have to devote to the project.
If that wasn’t bad enough, earlier this month the independent financial review board recommended that the state not issue the (voter-authorized) rail bonds, because they posed an “immense financial risk” for the state of California. The next week, two key officials of the rail authority resigned. In criticizing the plan, Washington Post columnist Charles Lane wrote:
It’s “more important than ever,” [President Obama] said, to get “recommendations not based on politics, not based on narrow interests, but based on the best evidence, based on what’s going to do the most good for the most people in this country.”Like Jerry Brown I, the latest incarnation of the would-be Jesuit is nothing if not stubborn. Still, his impassioned defense of the project was surprising. One of my former SJSU coworkers put it this way:
If only the president and his political ally, California Gov. Jerry Brown (D), would follow that advice regarding their pet project for the Golden State: high-speed rail. No matter how many times they tout the mega-project as the job-creating wave of the future, they can’t change the mountain of evidence that high-speed rail is, in fact, a boondoggle.
It’s especially odd for a Democratic president and governor to saddle California with the cost of bullet trains when the state is facing chronic deficits, tax increases and social spending cuts. Maybe this is why polls show that a majority of Californians have turned against the project. It’s still not too late to hit the brakes.
"It intrigued me that he put all his marbles behind high-speed rail and that he's willing to spend political capital on it," [Prof. Larry] Gerston said. "These big infrastructure projects do provide a whole bunch of jobs, but it would also put California back on the map. It's almost a status thing as much as it is a transportation thing, a way that Californians can say: Yes, California is back on top."Brown argued that because other big ideas proved prescient, this one would too:
“During the 1930s, the Central Valley Water Project was called a 'fantastic dream' that 'will not work. … The Master Plan for the Interstate Highway System in 1939 was derided as 'New Deal jitterbug economics.' In 1966, then Mayor Johnson of Berkeley called BART a 'billion-dollar potential fiasco.' Similarly, the Panama Canal was for years thought to be impractical and Benjamin Disraeli himself said of the Suez Canal: 'totally impossible to be carried out.' The critics were wrong then and they’re wrong now.”The former Governor Moonbeam needs a little reminder about the laws of economics, particularly the importance of substitutes in limiting pricing power.
The Interstate Highway System was the first way for many people to travel across and between states, reducing travel times by as much as 50% over the old windy US highways and serving far more of the country than rails did. The water project was the only way that parts of the state could get water — from any source — fueling growth in both farming and residential development.
By comparison, the proposed bullet train has two entrenched competitors — airplanes and private cars — which challenge both the convenience and pricing assumptions. The “bullet” train will never threaten Southwest for travel time, at least from the Bay Area to L.A. or San Diego. Even assuming that costs will come in as projected — unheard of for a public works project of this magnitude — the claimed revenues assume a pricing power that is unrealistic (absent $200/barrel oil prices).
If it’s like Amtrak — or California’s regional rail transit systems — it will require ongoing operating subsidies. Meanwhile, California would have to spend tens of billions of dollars before the system generates first revenues, and the system wouldn’t be finished until (at least) 2033.
Jerry Brown will be long-retired by then. He’s hoping that generations of Californians will agree to pay for his legacy — perhaps in perpetuity.
It’s easy to build a legacy with Other People’s Money. If Brown really believes in his legacy, he should step down in 2014 after his third term, and raise the billions in private investment needed to build this system.