CHSRA Gets Its $29.1 Million

As we discussed last month, the legislature's ongoing budget standoff put the California High Speed Rail Authority on the verge of shutting down its operations as it had run out of money to pay contractors and staff. This was an especially worrisome problem for two reasons: 1) the need to continue operations to position California to get HSR stimulus funds, and 2) the need to provide up-to-date information to concerned residents along the proposed route.

Last week the state had a successful sale of bonds, and yesterday the pooled money investment board gave CHSRA the $29.1 million it needed to keep working through the end of June:

California's financially strapped high-speed rail project has received an infusion of $29 million to get it back on track through the middle of the year...

That led most of the private consultants who were performing engineering and environmental reviews to stop working because they weren't being paid, said Mehdi Morshed, the rail board's executive director.

He said the treasurer's decision to issue commercial paper to provide the $29 million was "excellent news."

"We're finally back to work again," he said.

We're probably going to have to have this fight again in June, when the state tackles an $8 billion shortfall (which could be larger if the initiatives on the May 19 ballot fail). Let's hope that we see some true political leadership this time from Sacramento in support of this project.

Republican Budget Stalemate Hurts HSR Project

At yesterday's CHSRA board meeting the effect of the state's budget crisis on HSR became clear - unless Republicans stop obstructing a budget solution, the Authority may have to suspend planning and design work, and terminate contracts with consultants and engineers whose accumulated expertise on our HSR project has become vital.

The California High Speed Rail Authority's budget for the current fiscal year, which ends in June, included $29 million from the sales of high-speed rail bonds authorized by voters in November. But because of the state budget crisis, the credit crisis and the poor market for bonds, the state treasurer has not sold any of the rail bonds.

That's left the rail authority without cash at a time when Californians are eager to see the 800-mile fast train system built. At an authority meeting Thursday, officials said they had halted payments on engineering and design contracts in progress and are holding off on awarding new contracts.

"Unfortunately, I have quite a backlog of bills that need to be paid, but no money to pay them," said Carrie Pourvahidi, deputy director for the authority.

The article is a bit misleading on this. The credit crisis and the poor market for bonds are part of the issue. But the state budget crisis is THE central issue. The crisis has led Treasurer Bill Lockyer to refuse to try and sell authorized bonds, and led the Pooled Money Investment Board to stop all infrastructure spending. To the extent that the market for California bonds isn't good because of the budget crisis, it's because the bond markets are concerned that the state may default on its debts.

And why is that a possibility? Because Republican politicians - from legislators to Arnold Schwarzenegger - continue to block a budget solution. I usually try to keep my more partisan comments to Calitics but we cannot escape the fact that it is Republican obstruction alone blocking a solution. Democrats have compromised far more than the media reports - agreeing to nearly $8 billion in spending cuts that have their labor allies VERY angry with them. Speaker Karen Bass agreed to most, but not all of Arnold's demands on cutting environmental and labor protections. But Arnold vetoed the Democrats' solution, and Republicans refuse to budge.

That won't stop HSR deniers from using this manufactured budget crisis to blame HSR. They've done it before - when the CHSRA wasn't funded as a result of the summer budget delay, pushing back the release of the 2008 Business Plan, HSR deniers said it was a sign the CHSRA was a flawed agency unfit to manage the project. It is likely we will see the HSR deniers use thus cash crunch story for the same purposes.

Arnold has proposed giving the CHSRA the funding they need:

On the other hand, the governor's early state budget proposal for the 2009-10 fiscal year includes $123.8 million for high-speed rail, just a half million dollars short of the agency's request.

But if he keeps blocking budget deals, this doesn't really matter. If consultants and engineers are let go, they may decide to take their expertise elsewhere in the country or in the world, and we will not easily replace them.

The big picture involves conservative anti-government ideologies. One reason the HSR deniers oppose the project is they refuse to accept that government can plan and implement this kind of project effectively, even though HSR has been successfully built by governments around the world. By starving government of revenue they are able to "prove" their case with a self-fulfilling prophecy. They opposed Prop 1A and HSR, so they starve the Authority of funds and then say "oh wow they can't manage money!"

California Republicans need to recall their Constitutional obligations to this state and provide it with a balanced budget that protects Constitutionally-guaranteed services - and respects the will of the millions of Californians who voted their endorsement of HSR by approving Prop 1A on November 4.

Hey Arnold

The governator has a rather hypocritical op-ed in Newsweek on the importance of infrastructure to economic stimulus and recovery. Here are some quick excerpts:

America has failed to invest in its infrastructure for the past 50 years, and the bill is coming due. The situation is reminiscent of the ancient Roman Empire, which grew strong because of its advanced aqueduct system, but which fell into decline when that feat of engineering tumbled into disrepair. We're in danger of repeating that history, but it's not too late to fix the problem if we take decisive action now....

None of this makes sense in America. It doesn't make sense that in the greatest country on Earth we still rely on trains that go the same speed as they did 100 years ago, so our shipping times and commutes are longer than other countries....

In 2008 alone in California, we've committed more than $10 billion dollars in infrastructure investment, which will create at least 200,000 jobs over the life of that investment. And when our state unemployment rate has broken 8 percent, that kind of investment has a profound effect.

That last bit is a reference to Proposition 1A and high speed rail, although it'd have been nice had Arnold actually said that openly. But that's a quibble compared to the hypocrisy of this article.

Why do I say hypocrisy? I fully agree with everything I just quoted. The problem is this is another example of our governor's penchant for greenwashing - go tell the national media how awesome you are but back at home, help destroy the state.

You see, despite Arnold's claims to be an infrastructure builder, he has instead helped create a state budget crisis so severe that earlier this week the Pooled Money Investment Board voted to halt ALL infrastructure projects in California - immediately. 200,000 workers face unemployment as early as January 1.

Arnold could have avoided this had he agreed to a Democratic budget plan sent to him by the Legislature yesterday. Instead he announced his intention to veto the solution and consign the state to another indefinite deficit.

The state's bond ratings are plummeting fast, but worse, without infrastructure projects in the works, it's going to be very difficult to attract federal matching funds in Obama's emerging stimulus package. If this budget mess - for which Arnold bears the primary responsibility right now - continues then it may become difficult for us to get HSR funds from Congress in 2009. It'll become all too easy for HSR deniers to argue we don't deserve or can't even use the matching funds.

Arnold's hypocrisy knows no bounds.

John Kerry Introduces HSR Bill

I don't have a whole lot of time to go over this today, as I'm going to be on the Coast Starlight headed back to Monterey from a quick SoCal trip. But it's important to discuss the new High Speed Rail funding proposal that Senator John Kerry and Pennsylvania Republican Senator Arlen Specter are proposing in the US Senate. It's known as the High Speed Rail for America Act of 2008 and is numbered S.3700 (full text not yet available from THOMAS) (UPDATE: see an extensive summary of the bill's provisions here (h/t to Peter in the comments) and has a number of co-sponsors, including Senate heavyweights Dianne Feinstein, Hillary Clinton, Joe Lieberman, and Charles Schumer. According to Kerry's office:

Specifically, the High-Speed Rail for America Act of 2008 provides $8 billion over a six-year period for tax-exempt bonds which finance high-speed rail projects which reach a speed of at least 110 miles per hour It creates a new category of tax-credit bonds – qualified rail bonds. There are two types of qualified rail bonds: super high-speed intercity rail facility bond and rail infrastructure bond. Super high-speed rail intercity facility bonds will encourage the development of true high-speed rail. The legislation provides $10 billion for these bonds over a ten-year period. This would help finance the California proposed corridor and make needed improvements to the Northeast corridor. The legislation provides $5.4 billion over a six-year period for rail infrastructure bonds.

The obvious question this raises is will this be enough? The entire bill looks to be around $23.4 billion, which would be enough to help finish the first phase from SF-LA-Anaheim. Obviously we're not getting all of that, and being a Congressional bill other states and other Senators are going to want a piece of the pie - note that most of the co-sponsors come from the Northeast Corridor. But our project IS the farthest along, and is the best positioned to make use of this funding. Other states have a lot more ground to cover to be able to make use of these bonds.

In fact, my only criticism of this proposal - pending the actual bill details - is that the amount is not ambitious enough. $50 billion seems like a better funding level - instead of setting states and Senators against each other, $50 billion would help substantially seed a number of HSR projects around the country and build a true national system. This recession is deepening and significant stimulus is necessary to pull us out of it. Now's the time to be ambitious, Senator Kerry. Think big, think bold. This bill is an excellent start, but let's use the opportunity to build a truly national high speed rail project.

Transbay Again

Steven T. Jones has a good article on the fight over the Transbay Terminal in today's San Francisco Bay Guardian, giving some important background details on how an all-too-familiar kind of San Francisco political spat is affecting the debate over who will fund the downtown rail extension into the Transbay Terminal.

First and foremost, the dispute is a financial dispute. As Jones writes of Quentin Kopp's basic attitude:

Kopp is more interested in stretching this $10 billion bond far enough to complete his project. So he’s bristling at efforts by the TJPA to ensure that it’s first in line for the money.

My initial take on this last week was that Kopp was trying to make it clear that the Prop 1A funds are no free for all, and Jones's article supports that interpretation. Kopp explained his reasoning in a letter he wrote to the Transbay Joint Powers Authority on November 13:

Your staff continually seek to insinuate the Transbay Joint Powers Authority in activity which pertains strictly to the consummation of the California High Speed Rail Project. Your October 17, 2008 staff report declares that the total cost ‘of [your project’s] rail component is $2.996 billion.’ It then represents that $2,349,000,000 must be obtained for your project. Please do not attempt to secure California High Speed Rail Project funds to defray the enormous costs of the 1.4 mile ‘downtown rail extension.’ Such effort will not be welcomed by me. Moreover, as far as I am concerned, and I will so state publicly, the California High Speed Rail Project can, as necessary, utilize the terminal at Fourth Street and Townsend Street in San Francisco effectively and efficiently, and at a cost less than the aforementioned cost of your moving it.

As most of us agreed when this subject came up last week, while Kopp is technically correct that HSR could utilize the 4th and King terminal, the Transbay Terminal is a vastly superior solution. Jones quotes several unnamed "sources in the transportation world" who reach the same conclusion. And as I pointed out, the CHSRA board unanimously endorsed the Transbay Terminal as the preferred San Francisco HSR terminus, Kopp included. The Transbay Terminal's consultants fully understand the importance of the downtown extension:

Adam Alberti from Singer and Associates, tells the Guardian that Kopp has his numbers wrong and that TJPA will only be seeking $700-$800 million in Prop. 1A funds for the extension (the rest would come from other sources), which is about the same amount as he said it would cost to renovate the Caltrain station to handle the millions of new passengers the trains would draw.

“The facility is being designed to be the northern terminus for high-speed rail,” Alberti told us. “Their business plan is predicated on it coming into Transbay Terminal.”

Translation: the TJPA feels confident that despite Kopp's bluster, the CHSRA cannot and will not abandon the downtown extension. Eyeball to eyeball, they're convinced Kopp will blink first.

Of course there's more to this dispute than just finances. Kopp is upset with the director of the TJPA, Maria Ayerdi-Kaplan and Singer and Associates:

The letter also mocked the expertise of “your executive director, staff or publicity agents,” something Kopp went even further with a few days later when the Chronicle’s Matier and Ross brought the private spat out into the public (although they didn’t reference the earlier letter, which even Singer and Associates didn’t know about until today).

"I am not going to pay $2.5 billion to move a track 1.4 miles," Kopp said in that article, going on to say Ayerdi-Kaplan "is annoying ... and she and her flacks need to stay out of our hair."

Jones thinks Kopp has a point:

Ayerdi-Kaplan has been inaccessible in recent years and has stumbled into unnecessary fights with the Mayor’s Office, members of the Board of Supervisors, and neighbors of the project. It’s also disconcerting that a public agency feels a need to hide behind one of the most expensive and controversial PR firms in the city. So there’s probably a bit more going on here than what Alberti labeled “a personality clash with Maria Ayerdi.”

Still, the downtown extension really is a key part of the HSR project's success. We want the best transportation system possible and while HSR could survive losing the Transbay Terminal, it is immeasurably strengthened by having it.

As I concluded the last time we discussed this, the missing link is leadership. Neither Kopp nor Ayerdi-Kaplan seem to be providing it, instead engaging in a turf war that doesn't do anyone any good. Both of them need to realize that they need each other to be successful. And it's likely going to take outside pressure to make that realization stick.

There are any number of people who could provide that leadership. A certain San Francisco mayor with gubernatorial ambitions in 2010, for example. Or Senator Dianne Feinstein, herself a possible candidate for governor, someone who has the heft and relationships to help resolve this situation. Speaker Nancy Pelosi, yet another San Franciscan, would also be well positioned to help resolve this - especially if federal money can grease the wheels of a deal between the CHSRA and the TJPA.

We "alternative transportation geeks," as Jones calls us, have a lot at stake here. The Transbay Terminal downtown extension project is too important to all of us to fall victim to such rivalries. Kopp needs to tone down the rhetoric, Ayerdi-Kaplan needs to construct better working relationships with Transbay partner agencies, and leading California politicians need to provide some leadership and not allow these folks to tear the project apart through internecine warfare. And we HSR supporters need to let everyone know that the project, and not the personalities, are what matter most.

2008 A Record Setting Year for Ridership

At least here in California, according to Caltrans and Amtrak, who partner to operate the Amtrak California intercity routes:

Californians are leaving their cars, SUVs, vans, and trucks at home and riding trains instead in unprecedented numbers. Today, Caltrans and Amtrak reported a record-setting 5.5 million passengers rode California's state-supported intercity passenger trains in federal fiscal year 2008....

In 2007-08, the Pacific Surliner carried more than 2.89 million passengers, a seven percent increase from the preceding year.

In Northern California, Capitol Corridor (Auburn to San Jose) trains carried 1.69 million riders, an impressive 16.8 percent jump from the previous 12 months. Meanwhile nearly one million passengers (949,611) rode the San Joaquins service (Bakersfield to Sacramento/Oakland). This past July, ridership shot up a whopping 32 percent over July 2007, rising above 100,000 for the first time. The Capitol Corridor and the San Joaquins ranked as the nation's third busiest and sixth busiest lines, respectively.

Amtrak ridership in federal fiscal year 2008 increased to 28,716,407, marking the sixth straight year of gains and setting a record for the most passengers using Amtrak trains since the National Railroad Passenger Corporation started operations in 1971.

Some might cluck that this is just the product of the dramatic spike in gas prices that took place earlier this year and won't last. While that did fuel some of this ridership growth, ridership on Amtrak California routes has been steadily growing since 2002. Amtrak itself has set ridership records every year since 2002. There is every reason to believe ridership will continue to rise.

That growing ridership reflects a growing awareness among Californians of the value of passenger rail, and that was reflected in last week's election where most passenger rail proposals were approved by voters (Measure B in Santa Clara County, the BART funding plan, is still too close to call). In the article Eugene Skoropowski, managing director of the Capitol Corridor, noted that Prop 1B (passed in 2006) also intended money to be spent on rail expansion. Arnold Schwarzenegger's Department of Finance delayed this, using a flawed audit to claim new cars weren't necessary, but that has been reversed and new cars have been ordered.

We need to accelerate Prop 1A and Prop 1B rail funding. While we wait on federal matching funds for HSR - which we will press for in 2009 - California needs to wait for nobody to release the bond money for the other passenger rail projects that are awaiting funds. California legislators should make it a priority to spend that money as an infrastructure stimulus, as well as part of a long-term plan to grow rail in this state.

Record ridership is an opportunity to take passenger rail to the next level. Let's make sure our legislators follow through on it.

No Rest for the Victorious

We've been rightly celebrating our victory on high speed rail and Prop 1A all week. But already there are reminders that the fight is by no means over, and that the HSR deniers who were rejected by the voters on Tuesday are regrouping in their effort to kill high speed rail.

One of them is the Contra Costa Times, which distinguished itself during the campaign by writing one of the most ridiculous anti-HSR editorials of the season. Today they have published an editorial calling on the state to delay the sale of Prop 1A bonds. This editorial is an excellent example of the strategy and framing that the HSR deniers will use to try and overturn our victory on Tuesday.

California has a huge budget deficit and a record high bonded indebtedness, which would increase by nearly $10 billion if the rail bonds are sold.

This state has far more pressing transportation needs, such as highway construction and maintenance, better metropolitan rail and bus service, and retrofitting bridges and overpasses.

Just because voters have authorized the sale of high-speed rail bonds does not require the state to sell them. At the very least a credible business plan and commitment of matching private and federal funds should be obtained before any Prop. 1A bonds are sold.

As usual the editorialists at the Contra Costa Times don't read the newspapers - if they did they'd know that federal money is on the way (unless they think Dianne Feinstein will be powerless in a Democratic Congress and with a Democratic President). The California High Speed Rail Authority has received letters of interest from over 40 private companies.

But what's really significant about this editorial is the way they set up their next line of attack. They trot out nearly every one of the zombie lies that have circulated about HSR - won't get enough riders, sure to soar in cost, not something that meets the state's transportation needs - and attached it to a political strategy of delaying the bond sale.

This flies in the face of economic reality. Numerous economists have called for the infrastructure bond sales to be accelerated in order to provide jobs and economic stimulus that the state badly needs. In particular, the $950 million in Prop 1A earmarked for non-HSR passenger rail ought to be sold immediately to provide increased passenger rail service. Gas prices will start to rise again in the spring, putting the screws to an already weak economy. Improved passenger rail provides jobs and cheaper commutes, putting more money in consumers' already stretched wallets.

Of course, it has always been the plan to spend Prop 1A money in concert with private and federal funds as they are secured. The Contra Costa Times again demonstrates its ignorance of just how this project will work when they frame it as a budget-busting boondoggle without plan or method. Unfortunately that has always been the M.O. of the HSR deniers, and this editorial should serve as a reminder that they haven't gone away, and will continue to try and derail this project at every opportunity.

Investment

We talk so much about the stock market these days - its ups, its downs, and its crashes - that we seem to forget what it's ostensibly all about - an investment. You put some money in now and you get MORE in return later. Of course there is a cost to this - that money up front. Sure, you could use it to buy something else right now, but if you commit that money to the investment - especially if it's a good investment, in something certain to bring you greater savings and new opportunities in the future - it seems like a no brainer of a move.

That's the nutshell version of the argument advanced by R. Sean Randolph in today's San Jose Mercury News. Randolph is president and CEO of the Bay Area Council Economic Institute, a consortium of leading businesses and institutions in the Bay Area. Randolph understands what we have been saying for months here at the blog - that high speed rail and Prop 1A are a smart and necessary investment for our state's future:

The project will generate nearly 50,000 long-term jobs in the Bay Area between now and 2030. Between $6.9 billion and $8.9 billion will be spent here on construction, generating 128,000 to 130,000 direct and indirect jobs during construction. By taking cars off the roads the system will enhance business productivity. Bay Area commuters lose 150,000 hours each day to congestion, at an annual cost to the economy of $2.6 billion. In-state business can also be conducted more efficiently, as travel time from San Jose to Los Angeles will be cut to a little over two hours.

That's the first effort I've seen to quantify a California version of the green dividend that has been studied in Portland - and the $2.6 billion figure here is limited to congestion (not including savings on gas) and limited to the Bay Area. We can assume that figure will be larger for the entire state and once savings on gas is included - for flights and cars - we may very well approach, yes, $10 billion.

The job creation alone is both considerable and desperately needed in a state whose unemployment rate is at 7.7% and rising fast. Do we want to wait until we're pushing 10%? Those construction jobs create other indirect jobs, and they ALL create tax income for a state that desperately needs it.

All while acting as a long-term investment that will provide clean, safe, sustainable and quality transportation that fights global warming instead of contributes to it.

High speed rail is an investment we can afford - and an investment we cannot afford to reject. Especially when you consider that not only do we not have to pay $10 billion up front, but that it will bring in even more money from the federal government, stimulus money we aren't going to get if we reject Prop 1A.

The HSR deniers don't see the purpose of investment. They instead see HSR as a threat either to their property values or political ideologies. Which is their right, of course - but Californians should think about the value of the investment, and not be swayed by those who prefer to cling to the past instead of make a smart investment to secure our future.

Their Past vs Our Future

With just over a week until the votes are counted we are about to learn whether California will embrace the 21st century or go down with the sinking 20th century ship.

Proposition 1A and high speed rail are a cornerstone of California's efforts to build prosperity for the 21st century. The infrastructure that built 20th century prosperity - including those paid for with bonds approved by voters in the depth of the Depression - has taken us as far as it can. California's 20th century prosperity was based on cheap oil, which is beginning to run out.

And yes, it is still running out. Neither the summer price spike nor the current price collapse change the underlying facts - we are reaching peak oil which means long-term supply shortages and price increases. The current decline in prices is due to demand destruction, which means that if people take advantage of lower prices by driving more...the price will again rise. And of course OPEC isn't going to take this lying down - the last time gas prices dropped dramatically, in 1999, was merely prelude to a steady, 8-year, 1300% increase in the price of oil.

Well before gas prices hit $4 this summer they had destroyed the American economy. The housing bubble burst in 2006 - at precisely the moment gas prices hit $3. And which areas have seen the steepest home value declines and the highest foreclosure rates? The car-dependent suburbs. Which areas have held their values and had the lowest foreclosure rates? City centers and neighborhoods with mass transit options.

This was clearly illustrated by a recent episode of NOW on PBS, Driven to Despair. The episode contrasted two young couples - one living in Hemet (east of Riverside) and one living in South Pasadena near the Gold Line. The family living in Hemet was facing serious financial distress and a lower standard of living owing to their dependence on oil. The family living in South Pasadena had more disposable income and a happier life because they were free from that dependence.

On a macro level we have already demonstrated the green dividend that results from building mass transit - a multibillion dollar economic shot in the arm. In the case of high speed rail this will be compounded by the significant economic stimulus of HSR - just as the Golden Gate Bridge and Shasta Dam were in the Depression. 160,000 construction jobs is nothing to sneeze at.

We also need to remember the environmental benefits of high speed rail. It seems global warming and carbon emissions have faded a bit from the public's consciousness which is a shame - pollution and carbon emissions cost money and the longer we delay in reducing them and building a sustainable alternative, the more expensive life will ultimately become here in California.

To ignore all of this and embrace the status quo is to look at a broken economy and shrug and hope we somehow magically recover, and that somehow the conditions that caused the economic downturn will magically disappear. They won't. If California wants to enjoy the kind of widely shared prosperity in the 21st century that we had in the 20th we need to reorient this state away from oil and sprawl and toward urban density and sustainable transportation. HSR will stimulate both.

It's no accident that those lined up to oppose Prop 1A are from that shrinking group that still benefits from the 20th century status quo. The right-wingers at the San Diego Union-Tribune don't want to see their anti-government, anti-transit dreams get shot down by voters. Dan Walters is one of the state's leading defenders of sprawl and small government, so it makes sense that he'd oppose Prop 1A as well.

Then there is the Reason Foundation, which is swimming in oil money. They have every reason to want to kill HSR, which would undermine their anti-government, pro-oil, pro-sprawl agenda. Sure, their arguments are riddled with factual errors and their flagship study lacks credibility. But it's all well and good in the service of defending the status quo, which has failed for America but succeeded for their oil company buddies.

It would seem to me that when a project's opponents are the far right and the oil companies, you're doing something right, you've got a winning idea.

But that's not why HSR and Prop 1A are a good idea. They are the gateway to a more secure, more prosperous California in the 21st century. I do not see why we would listen to those who helped create the current economic failure when they pontificate against Prop 1A.

Why Is Adrian Moore Lying in the LA Times?

The LA Times is running a "dust up" in its opinion pages - a weeklong discussion of high speed rail between Adrian Moore of the oil company funded Reason Foundation and Dan Tempelis, project manager for the CHSRA on the Palmdale-LA section of the route. It's something of an unfair fight, as Moore is trained to push misleading framing into the media, and Tempelis is a project engineer trained to build things. Tempelis isn't bad at this, but neither is he equipped to undermine the truthiness Moore spews.

Here's an example of Moore's misleading claims:

There are several reasons why high-speed rail does not stack up as the best infrastructure investment we can make today. Let's start with ridership. When high-speed rail systems were built in Europe and Asia, they served corridors that were already very dense and where a large share of travel was already by train -- and there was still no reduction in overall air travel in those corridors. Most riders of high-speed rail were already train riders. The California High-Speed Rail Authority's estimates for the state show that riders will not come from existing trains (there are very few of those) or much from the airlines. Rather, their plan rests on getting people to ride the train rather than drive. Given the more modest gas prices here, the lower density and car culture, to predict that the California high-speed train will get far more riders than systems in Europe and Japan is ridiculously optimistic.

This is a classic example of what Stephen Colbert called truthiniess - this "feels" true even though Moore hasn't provided any evidence. In fact Moore is passing along a huge pile of outright lies.

For example: "and there was still no reduction in overall air travel in those corridors." Um, WTF?

• Madrid-Barcelona AVE takes 30% of market from airlines in six months



• Eurostar Grabs Even More Passengers From Airlines



• Romance of Rail Jeopardizes Domestic Air Routes (Taiwan)

We could go on, but there's more Moore misinformation to correct, like "Most riders of high-speed rail were already train riders." Wrong again. As NARP's Matt Melzer pointed out in July Spain's experience proves that many HSR riders are in fact new train passengers. The images below compare the before and after the inaugural AVE line opened between Madrid and Sevilla in 1992:





Melzer's post also destroys another of Moore's claims, that California lacks the density for HSR, showing that in fact CA and Spain are very comparable on this basis:



Moore's left with lame defenses of California's "car culture" - never mind the fact that Amtrak California intercity routes are setting monthly ridership records. From here Moore moves on to equally truthy claims:

This despite that fact that every other high-speed rail line in the world, all with many advantages over a California system, are subsidized.

Wow. Just...wow. This is a bald-faced lie. In France the situation is reverse - HSR subsidizes all other trains. France alone disproves Moore's lie.

there is no doubt that the high-speed train will need to be subsidized; the Reason Foundation's middling estimate is that it will require about $3 billion per year.

The nonpartisan Legislative Analyst Office reported that in the worst-case scenario only $1 billion would be required. This isn't the end of Moore's careless numerology:

Taxpayers should expect the final bill for this train system to be closer to $80 billion.

Moore has NO evidence for this claim. He uses a discredited study to claim there are 45% cost overruns on rail - Angelenos can look to the Metro Gold Line extension to see an on-time, on-budget rail project. Further, if Moore is going to give a specific figure, he needs to explain precisely where the cost overruns will come from and why they will amount to $80 billion. Since he can't, he's merely pulling the numbers out of his ass, an effort to mimic Dr. Evil.

Much of the rest of Moore's argument comes from a discredited Reason Foundation study. It would be nice if more members of the media would challenge this study instead of allow Moore to cite it as if it were gospel.

Dan Tempelis does a good job explaining the economic stimulus benefits of high speed rail and the fiscal safeguards in Prop 1A. But it's an unfair fight, since he's up against someone who will lie to readers to make his points. Yes on 1A advocates need to do a better job pushing back against the bullshit coming out of the Reason Foundation - they are lying to the public and will kill HSR if their lies are not countered.

Sadly that is the story of the 2008 election - lies, lies, lies everywhere. We're dealing with the same problems in the presidential campaign and the fight against Proposition 8. This blog has been consistently willing to debate HSR deniers on the issues. But instead all we get are lies.

If Prop 1A is going to pass, we need to fight back hard against these lies. The official campaign would do well to take a more aggressive tone here.

Fighting Back Against the New Hoovers

Not content with denying to Californians the numerous tangible benefits of high speed rail, Prop 1A opponents have retreated into a revival of Herbert Hoover's economic policy in order to try and defeat the most important project Californians have considered in nearly 50 years. Their argument is that in an economic crisis, we should turn to austerity instead of following the tried and true path of deficit spending on infrastructure that provides short-term job relief and long-term economic value.

For a couple weeks this blog has been doing yeoman's work in fighting back against this nonsense, one of the few voices directing Californians to learn from our past successes instead of repeating our mistakes.

No longer.

Today we have numerous articles and media outlets starting to push back against the New Hoovers. From newspaper editorial pages to leading economists there is a growing consensus that we must use deficit spending - in our case, bonds - to spur economic growth through infrastructure projects.

Even conservative observers and federal deficit hawks are seeing the need for deficit spending, as the conservative Washington Times reports:

Conservative Financial Times columnist Samuel Brittan said the fears that short-term stimulus spending by governments will raise deficits miss the point. Even the $700 billion Wall Street rescue plan approved by the U.S. government — part of a more than $2 trillion international bailout of banks by governments around the world — does not change the equation.

"Maxims about debt that might be prudent for families can be the height of folly for government," he wrote.

British economist John Maynard Keynes is credited with the basic insight, arguing that the Great Depression was prolonged because Western governments insisted on balancing budgets, raising taxes and cutting spending at a time when private economic activity had ground to a halt.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan research group, said both candidates must put together a credible long-term plan to deal with the exploding deficit, but that the government should be priming the pump in the short term.

These conservatives are joined by Nobel laureate Paul Krugman, who writes in today's column:

And to provide that help, we’re going to have to put some prejudices aside. It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold....

All signs point to an economic slump that will be nasty, brutish — and long....

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

The growing unanimity of opinion on the need for deficit spending for infrastructure projects is striking. Krugman, MacGuineas and Brittan join leading economic figures like Nouriel Roubini and Lawrence Summers in calling for bold action to mitigate the deepening economic crisis.

They are joined today by the Fresno Bee editorial in favor of Prop 1A which clearly understands the need for infrastructure stimulus, and directly refutes some of the fiscal arguments against HSR:

Sadly, much opposition has come from people who say they like the idea of 220-mph trains zipping up and down the state, but don't think we can afford it right now, in a time of budget disaster and economic crisis.

That sounds prudent, even reasonable, but it ignores an important fact of American history: Many of our most important public works projects have come in times of deep economic distress -- and they have been crucial elements in our recovery in those times.

Recall the Great Depression, when voters in the Bay Area passed bonds to build the Golden Gate and Bay bridges -- projects that lightened the impact of the Depression on that region and were critical to the postwar economic boom. Shasta Dam was built during the Depression, and remains a linchpin of the state's water system.

The closing paragraph of the editorial is a powerful, stirring statement that deserves to be quoted in full:

The high-speed rail project is immense, and that can be daunting. The current economic situation is likely to get worse before it gets better. In the past, Californians have risen to such challenges with vision and determination. Voting "yes" on Proposition 1A is a declaration that we still possess those qualities, and have not surrendered them to a timid faith in a status quo that is no longer sustainable.

I've never seen it put so well. The Fresno Bee clearly understands that our state's very future is at stake and that Californians should be able to meet that challenge just as we have done in the past.

And what about the arguments that the financial crisis makes this a bad time to float bonds? The Sacramento Bee reports "unprecedented demand" for California's short-term bonds:

California has secured commitments for nearly $4 billion in short-term loans thanks to unprecedented demand from individual investors Wednesday, averting a need for federal assistance and allaying fears of a cash shortage....

California secured orders for $3.92 billion in short-term bonds from individual investors Tuesday and Wednesday, 98 percent of its original $4 billion goal, according to state Treasurer Bill Lockyer....

This week's bond sale reassured state officials that traditional lending markets would suffice.

Translation: capital markets WANT state bonds. If we float Prop 1A bonds they will be quickly gobbled up by a hungry market desperate for a safe investment.

All the HSR deniers have left is what was at the core of their belief all along - opposition to passenger rail:

"This is like losing your job and then using your credit card to put in a new swimming pool to help provide work for others," said [Kris] Vosburgh [of the Howard Jarvis Association] of the jobs argument.

Have fun with that ridiculous "swimming pool" analogy in the comments...

The Truth About Prop 1A and the State Budget

All the way back in March I opined that the biggest threat to the passage of the high speed rail bonds was the state budget. If the budget was still in deficit, folks might vote against HSR bonds even though the two are unrelated.

That may well be happening. We haven't seen new polls on Prop 1A in some time, but when we do I expect it to show a very close race.

The problem is that this thinking is deeply flawed. The state budget's problems do not - at all - mean that Prop 1A is a bad idea. Prop 1A is not the reason why the state is in deficit. It will not worsen that deficit. Instead Prop 1A is absolutely necessary to getting us OUT of deficit. Anyone telling you otherwise is simply demonstrating their ignorance of economics.

Let's look at this more closely. First, the state budget deficit. Deficits are NOT a product of natural forces but instead of bad decisions. California's current deficit stems from two major sources:

1. $12 billion in tax giveaways since 1993. This includes a $6 billion hole Arnold blew in the budget when he unilaterally cut the vehicle license fee upon coming to office in 2003. That is an annual cost of $6 billion, by the way, since Arnold has since been backfilling the revenues. Restoring that $6 billion would alone close the projected deficit. Prop 1A will create 160,000 infrastructure jobs that will pump income and sales tax revenue into the state's general fund. We badly need that revenue. We cannot afford to leave that money on the table.

(Note: California has also cut nearly $10 billion in spending since early 2007. Those who claim that this is a spending problem clearly have no knowledge of the details of the state budget.)

2. The weakening economy. As I have been arguing almost every day this month, that is an argument FOR Prop 1A. Infrastructure projects are a tried and true part of stabilizing and growing the economy during rough times. The Golden Gate Bridge, Shasta Dam, and the California Aqueduct were all built with voter-approved bonds during a recession, the first two during the deepest part of the Great Depression. Prop 1A will do the same today. We need jobs. Now. California would be crazy to turn down 160,000 jobs right now.

Further, as a recent PBS documentary explained, it was high gas prices that burst the housing bubble. Yes, gas prices have been falling - but that is only because of demand destruction. In other words, people drive less, so the price falls. The ONLY way that can be sustained over the long-term is by building alternatives to oil. If we don't, demand WILL rise - and so will gas prices.

Finally, numerous economists have argued strongly for infrastructure spending right now as both economic stimulus and a way to ease the financial crisis - which after all is happening because of underlying insolvency here in the United States. These economists include Lawrence Summers, Nouriel Roubini, Duncan Black, Dean Baker and Brad DeLong, and Nobel Laureate Paul Krugman.

Those who claim otherwise - that the state budget deficit means we must reject Prop 1A - are lying to you. They're trying to prevent a revival of the New Deal. These groups, like the oil company funded, far-right Reason Foundation, or the anti-government Howard Jarvis Association, are primarily interested in drowning government in a bathtub. Their opposition to HSR is part of a broader ideological agenda designed to prevent California from addressing its economic crisis by providing sustainable, non-oil based transportation that we badly need.

If you want to help ease our budget deficit and grow the economy, vote for Prop 1A. If you want to prolong the pain and do nothing to resolve the deficit, vote against Prop 1A. A no vote on Prop 1A is like punching the wall to cure starvation. It's only going to leave you in more pain and do nothing to solve the immediate problem.

UPDATE: Matt Yglesias calls them The New Hoovers:

This is ludicrous. You need to respond to a downturn with expansionary policies of some kind. In recent decades, we’ve preferred relying on expansionary monetary policy (Fed interest rate cuts) rather than Keynesian deficit spending. But at the moment, there’s no real room left for the Fed to cut rates. That means you need deficit spending. Among other things, the nature of state and local budgets means that a contraction in the economy will naturally lead to a contraction in state and local spending. That will lead to further contraction in the economy. If the federal government did what Scherer’s suggesting and added its own cutbacks to state government cutbacks, local government cutbacks, and private sector cutbacks that would only deepen the recession.

Again, consider the source of most HSR denier propaganda: the Reason Foundation and the Howard Jarvis Association. These people think Herbert Hoover was a good president with the right ideas.

SacBee Gets Bonds Wrong

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.