A few days after editorializing against Prop 1A, the Sacramento Bee has committed themselves even more deeply to the argument that bonds are bad. Today's paper offers an article on bond funding that contains some major flaws, and provides an unbalanced and incomplete picture of the overall cost of Prop 1A to readers. The result is an article that could mislead readers about the basic facts of high speed rail and its impact on California.
The beginning sets the tone:
The dozen measures on California's Nov. 4 general election ballot would cost taxpayers – and their children and grandchildren – $78.9 billion over the next 30 years, a Bee analysis has found.
The entire article proceeds from this premise, which is unimaginably flawed. The article assumes that Californians will get nothing in return for this - that it's basically a money pit. Nowhere are the 160,000 construction jobs that Prop 1A will create discussed. Nowhere is discussed the income and sales taxes that high speed rail will generate. Nowhere discussed is the 12 million barrels of oil saved, or the 12 billion pounds of carbon emissions (which will either be taxed or subject to cap-and-trade costs before much longer).
Nowhere does the article discuss the cost of doing nothing - the article assumes it is zero. And as we know, the article assumes wrongly. The cost of expanding roads and airports to cover the same demand HSR will serve has been pegged at $80 billion. That's *four times* the cost of the bond even when interest costs are considered. The cost of upgrading Highway 99 alone is pegged at $6 billion.
Nowhere does the article discuss the Green Dividend - the savings that mass transit creates, money that can be reinvested elsewhere in the economy.
What the article does is provide merely half the story. If Prop 1A was merely a way to grab money from people and toss it to the four winds, perhaps the article would have a point. But if you are going to talk about costs - especially long-term costs - it is incumbent upon you as a journalist to provide a balanced equation. To weigh the bond cost against the tangible benefits of the project.
It is especially ironic because the article DOES describe that equation for Proposition 5, which would expand drug treatment programs:
But there is a fiscal flip side to the measure: If the rehab programs worked, they could drop California's prison costs by more than $1 billion annually, plus save more than $2.5 billion by reducing the need to build more prisons.
The same calculation must be made for Prop 1A. Otherwise the article does not do justice to its readers.
As Pete Stahl explains the cost of bonds to the general fund, as a percentage, typically declines over time as the general fund revenues increase due to inflation and population growth. This, too, is entirely absent from the article.
The article does go on to mention the political prospects of bonds at this time:
"I think with the way things are, many people are going to vote 'no' on almost everything," said Bob Stern, president of the Center for Governmental Studies in Los Angeles. "It's a bad time to be asking for money for anything."...
Mark DiCamillo, director of the Field Poll, has charted the success rate of California bond proposals since 1976.
In normal times, DiCamillo found, voters have approved a minimum of 68 percent of bond proposals.
During the economic recession of the early 1990s, however, it dropped to 23 percent.
"Voters have generally been receptive to debt financing," DiCamillo said, "but the immediacy of the current economic troubles, plus the presence of other high-cost initiatives on the ballot, may make it much more difficult to support them this time."
Stern and DiCamillo are probably right, and it seems clear that the prospects for Prop 1A are not as solid as they were a few months ago. The problem is that Californians have forgotten their own history. As we've been explaining here, bonds were used during the Great Depression to build some of California's cornerstone infrastructure projects, from the Golden Gate Bridge to Shasta Dam. Shasta Dam in particular provides ongoing benefits to Sacramento residents, from flood control to electricity to agriculture. The federal Bureau of Reclamation has estimated that Shasta Dam has provided over $300 billion in economic growth since it opened in the early 1940s.
So the Sacramento Bee is quite wrong to suggest that Prop 1A is going to cost me and my progeny billions of dollars. It is going to save billions of dollars and put more money in our pockets by providing sustainable, clean, non-oil based mass transportation for our state. It will provide immediate economic stimulus, which economists like Nouriel Roubini have been calling for as a necessary part of getting our country out of the serious economic and fiscal crisis we find ourselves in.
Californians deserve to hear about those aspects of bond funding. It's neither fair nor justifiable to only present half the story.