Tuesday, October 14, 2008

Is California Going to Surrender Billions in Federal Money?

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

We keep hearing from the HSR deniers that because of the financial crisis we shouldn't approve Prop 1A. For several days running we've demolished that ridiculous thinking. But as we watch what is going on in Washington, DC we can see just how self-destructive their arguments are.

Momentum is building in Congress for a new economic stimulus package. Speaker Nancy Pelosi is pushing for a new stimulus that would accomplish the following goals:

money for infrastructure projects, aid to cash-strapped states, an extension of unemployment benefits and perhaps another round of tax rebates or tax cuts to boost consumer spending.

Pelosi wants to help ease California's budget crisis, something Barack Obama has proposed as well. That should help cut down on the number of people who claim, falsely, that California's budget troubles should lead us to reject Prop 1A.

With the budget deficit out of the way we can then focus on the infrastructure stimulus aspect. We must keep in mind that the federal government no longer gives money away. Instead you have to provide a state-level match to receive transit money. No local match, no money.

California's high-speed rail project, with its detailed construction plan and with a $10 billion state match, with the potential to create 160,000 jobs over the next few years, would likely rank pretty high on the list of projects Congress would be interested in funding. The fact that the northern terminus would be in the core of the home district of the Speaker of the House, and that two of the most powerful Senators - Dianne Feinstein and Barbara Boxer - hail from California would also boost our chances.

And of course, both Barack Obama and Joe Biden have repeatedly expressed their support of high speed rail.

Finally, the US Senate has been ready to step up on high speed rail, with Republican Senator Johnny Isakson joining Democratic Senator John Kerry to propose several billion dollars be spent on high speed rail.

But if we reject Prop 1A, those billions - likely between $10 and $20 billion - will go elsewhere. Senator Isakson wants to spend it on HSR connecting Birmingham, Alabama to Washington, DC via Atlanta and Charlotte. Texas has revived its HSR plan and the Midwest has its own HSR plans. That money is NOT coming to California if we reject Prop 1A. It's just not. Without a local match there is no incentive at all for Congress to drop a dime on HSR here.

With federal HSR money committed to other states that's going to set back our own HSR project by about a decade at best. Those who claim we should vote no on Prop 1A to get a better HSR plan are either misleading you or aren't aware of the facts. For California, it really is now or never.

The choice is clear: follow the new Hoovers and reject Prop 1A, or follow the successful path FDR charted and approve Prop 1A.


Anonymous said...

Dennis Mo wrote
at 6:12pm
Obama Biden does not say it will pay for a crap HSR system. You're pulling that out of your ass and jumping to the conclusion that if elected Obama will dump federal funds into HSR. You are painting an overly optimistic picture that feds will step in to dump money into our project.

The fact is the Bay Bridge ran overbudget and was supposed to be completed LAST CENTURY. The Benicia Bridge ran 400% over budget and was LATE as well.

So now you want us to believe the records or believe the ideal picture that has been painted for every large project before? Because if you honestly think proposals always go through exactly the way they are and take a turn for the better, then you are a DREAMER with no realistic expectations.

And here comes the problem. You are all assuming the federal government will step in to dump money to us. We put in $10 billion and the feds will dump that to us no questions asked. First of all, Obama-Biden or any candidate at this point is just pure talk. They support infrastructure including HSR blah blah blah, it's all generalizations. I think you need to get a grip when you read Obama's website for what he plans on accomplishing because the same was said in 1993 and Clinton broke too many promises. The same happened with Dubya. So what gives? Obama can't even give us solid numbers how much he wants to invest in rail transportation. At least with renewable energy he tells us $15 billion for 10 years. He supports it. Does this mean Obama is going to push for it? Who knows? I can bet you this too. EVERYONE at heart supports HSR. You call us deniers for not wanting 1A but it doesn't mean we don't think HSR is good. We all recognize the benefits of HSR. That's why for those who are simply voting because "Oooh it's a 2.5 hour journey, how cool" are obviously drooling like those who flocked to Obama instead of Hillary because "change" sounded so refreshing and was so inspiring.

I don't care who takes office come January 20th but I bet you both McCain and Obama support HSR. Whether funding will come or not will unlikely be because of either candidate but because someone from CA lobbies to throw HSR spending in some bill.

It's all in the air, and it's rubbish when you act as if there's some guarantee that the federal government will provide the funds we NEED. That's the key. I don't care if they contribute. $50 million is chump change when you need $10 billion from them. Having people talk about supporting HSR and one rep going to talk to another about CA HSR is not going to cut it. I still havent seen you provide anything showing politicians pushing CA HSR on the national level yet.

Then comes the fact that there are competing HSRs around the nation. We've talked about Texas for over 10 years now and there's still nothing, but if there are so many other ones out there, even if 1A passes, where's the guarantee our HSR will get the money? It's all in the air and there's nothing even concrete out there.

Federal funding and CA HSR is going to work like this: We pass 1A and we hope the government steps in to fund us. They probably will, but we don't know how much. There's no numbers out there and in all likelihood it will be too little. So obviously money is not going to fall out of the sky, so what do we do? Hmmm lets either: a) raise taxes, b) pass another bond, or c) privately finance this. This is like going to a bar with $5 with your best friend. You hope he covers you or else ... well you'll figure the rest out later. However none of it is for certain except that you have $5.

Why do you call those against 1A as deniers? It's pathetic. It's like really you are all dreamers then, but whatever. Oh, and we're not Hoovers because we don't believe in spending money on this. I think we all learned our lesson from Hoover and that's intervention is necessary in a depression. It's something both dems and republicans don't want but it must be done. The biggest problem with Hoover was to raise taxes and to jack up protective tarrifs. Hoover was not anti-public works. He had the RFC which was small but it was the stepping stone for the New Deal acts. So first of all, I'd like to say that many of us against 1A are probably conservatives and if you haven't realized conservatives like low taxes, so please don't go calling us Hoovers.

Oh and instead of throwing out these articles about the Great Depression or how public works projects gives us jobs, throw me something more CA HSR relevant. I've already acknowledged that government projects do give us jobs and jumpstart the economy. I don't think anyone denies that. But you have to be spending the right money for the right things. The war doesn't particularly help our economy and nor does pouring billions into useless entitlement programs. $40 billion is a huge amount of money, and I guarantee you the high cost is due to the high tech involved in HSR. It's just very costly on a per mile basis. Huge projects like airport expansions cost a lot less (SJC cost $1 billion to expand).

I agree that HSR will benefit CA enormously and so do many people who vote against 1A. But now is not the time. I'm not saying just not spend this money at all. I'd rather see this money spent on other public works that we NEED.

You know what CA really needs?

1) BART needs to be upgraded to go around the Bay. LA needs its metro to cover the entire area especially the OC and Ventura county.

2) soCal freeways need to be expanded so they aren't a clusterfuck. You know it as well as I do that when you sit in LA traffic for 3 hours to drive a 20 minute leg that it's ridiculous. When the 405 is clogged even at 9:30pm and I have to consider local routes, you know something is wrong. The federal government should step in to pay for some of this because you should also know that the Port of LA is huge and an upgraded infrastructure system in SoCal can help the ENTIRE NATION in terms of products travelling. You also know that people NEED to drive in CA and the rest of the US. HSR will reduce SF to LA carflow but what we need is relief in our cities.

SF and the East Bay have terrible commutes too, and we need money desperately to widen our highways. You all claim it won't do anything, but it will, and even if you don't do it now, you still need to do it later. It's a fact. If you want to ease the commute in these areas, push for better busses, a REAL SUBWAY SYSTEM, and local transportation systems. HSR is not meant to deal with these things.

3) Vegas to LA is a bigger clusterfuck than I-5. In fact I-5 is totally fine, and it's better than any major highway in LA or the Bay. Vegas and LA are also in 2 different states and if anything a link here would boost interstate commerce. However, this is another costly thing.

4) Finish the Bay Bridge ok? This thing is a disaster waiting to happen and with major cost overruns already, this is your classic example of a public works project not finishing on time and running way overbudget.

Anonymous said...

Well..do you feel better now? I do find it funny you think 40 billion is a HUGE amount of money..after our Trillon dollar bank buyout..WE need everthing you said and more and that also means HSR..now not in 40 years

Anonymous said...

Optimism creates better people and countries, advancing both in the process. Pessimism eventually destroys them.

Now where do you think qwerasdf, Morris Brown and others alike fall.

Robert Cruickshank said...

All I see in that rant, qwerasdf, is the same old BS - we don't need HSR, we just need more freeways, who cares about economic stimulus, can't trust government.

It's the usual right-wing talking points, but lacking an editor.

Start reading what's been posted on this blog before making arguments that were refuted months ago.

Tony D. said...

Reading qwerasdf's post, and just plain LOL! Enough said. Go Prop. 1A!

Anonymous said...


Well you have out done yourself with this one Robert.

Where do you get these projections which have no basis in fact. There are no billions coming from the Feds nor will there be billions from the Feds for anyone. Don't you understand, we are in a fiscal crisis?

Even in the best of times, there would not be billions coming to HSR for California.

Robert you really should retract your editorial -- it makes no sense.

Anonymous said...

McCain and HSR? If he does not support Amtrak how can you even make that assumption? Politicians are mostly talk if you have not read a history book recently. Probably the only exception is Ron Paul since he has a big fat record to back up his positions.

Competing HSRs? Acela Express IS NOT HSR. The average speed does not go anywhere close to the German ICE or French TGV service.

1A opposers are called deniers since the technology has been proven throughout of Western World. Unless you can expose some dirty truths about the systems, perhaps you might persuade me but otherwise, it is utter failure.

Great Depression is CA HSR relative since this blog is in support of it. Therefore, what do you expect to see on a supportive blog?

Perhaps to cut costs, there could always be fixed price contracts where a certain amount of money cannot be exceeded, therefore, overbudget will not be in the vocabulary.

Kevin Gong said...

qwerasdf obviously doesn't know anything about WHY the Bay Bridge is late. qwerasdf also seems to think that putting off CAHSR will be cheaper and better for CA in the long run...

Does this guy even realise how much more expensive a project like HSR will be even if we push it back five years due to resource costs?

Does he really believe that John McSame will actually support rail of anysort (hint: look at his voting record)?

Is this guy SERIOUS about highway expansion? Really? Its this backwards thinking that we need to jettison from making any decisions about the future of our state.

As someone out in Texas right now, I can tell you TXHSR is in the embryonic stages of development, and any Fed money will go directly into studies and research. That 10 years was a non-starter as everyone knows, killed by Southwest Airlines. Does qwerasdf really believe the stuff he spouts?

If he does, then he really needs to wake up and look around, and carefully consider with his conservative intellect what CAHSR really means for the whole state (Country first and all that). If he doesn't, then he's simply another partisan blog-troll out to spout the party line.

And if there's some sort of obscure rationale that makes sense in the context of the real world we live in, and you all actually seriously support the idea of our grand project, I ask you and all HSR opponents, when would be a good time for you?

Progress in infrastructure does not wait for a balanced budget, and it doesn't wait for a rosy economy (thats why the State takes out bonds). Progress in creating jobs and starting on a track to economic revitalization shouldn't hinge on the protests of conservatives whose political leadership are in many cases hypocrites (Bridge to Nowhere anyone? Bondoggle indeed.)
And progress does not wait for people like you to stop spouting inane nonsense about a project that the state desperately needs for a better future.

Prop 1A isn't a perfect bill. But if we wait for perfection, we almost certainly doom ourselves to the indignity of sitting in traffic for ever-longer commutes, or completely disrobing at the airport security gate in a charade of safety, all for the failure to invest in a better future.

Rafael said...

IMHO, the chance of securing federal matching funds for CA HSR are now better than they have ever been. Gas prices are falling but consumers know that's a temporary blessing - they'll go up again once the global economy picks back up. Everyone's talking about reducing US dependence on oil, for energy security and/or environmental reasons.

It is quite likely that the $700 billion recapitalization of US banks (and similar measures in other countries) will keep things from getting even worse, but the sheer volume of bad loans and derivatives based on them dwarfs these efforts. Bankers will remain cautious lenders as long as the foreclosure rate remains high. Direct federal deficit spending on infrastructure projects may therefore become necessary quite soon.

If so, California will seek federal assistance for a whole slew of projects, including levees, roads, renewable electricity generation, water distribution, earthquake resilience and HSR. The latter is likely to get funding because it's sexier than the others and, because other states want to boost their own, much less mature HSR projects.

That doesn't mean federal money is guaranteed, much less that it will be thrown over the wall without any strings attached. On the contrary, I would expect significant involvement precisely because the California system would lead to new FRA rulemaking with national implications for both freight and passenger rail.

With federal matching funds, it would be much easier to secure private investment as well, though it would likely take several years of negotiations to get it at reasonable terms. I can see private companies buying or leasing rolling stock, trackage rights and various concessions to operate the service. In addition, transit-oriented developments near HSR stations will attract private investors and boost ridership.

Voting for prop 1A pumps $950 million into the state's existing passenger railroads, which are experiencing record passenger volume. It also frees up a maximum of $900 million for HSR prep work before ground is broken.

If federal and private matching funds fail to materialize, AB3034 prevents lawmakers from releasing the remaining $8.1 billion in bond authorizations. Therefore, the project risk to California taxpayers is limited to a maximum of $900 million, payable over 30 years. Considering the potential upside, that's a risk California voters should take.

Brandon in California said...

I completely agree with Rafael. There has never been a better time to think, even assume, that the Federal government will provide financial assistance on this project. To the naysayer’s on that point, you could only disagree if you have not been paying attention.

Federal representatives in Washington, especially the California ones, have been nearly outspoken in their support for the project. They have been in the press, not as headliners, but saying that they will make efforts in Congress to assist. And, there have already been efforts to advance funds for assisting states to study high speed rail. To that end, I believe the latest effort is still a bill and not yet been passed (But I bet Robert knows the latest).

Additionally, our Federal representatives are aware of the same things Californians and the rest of the nation is grappling with. They are not in a bunker without contact with the outside world. They know developing states are undergoing tremendous pressures due to urbanization, environmental issues, and quality of life issues (economic freedom / gas prices / roadway congestion).

They also know we send butt-loads of greenbacks to Middle Eastern countries for their fuel… and that they hate us for what we’ve done to their cultures and way of life… and America would be better off, and safer, if we decrease our dependency foreign oil and the parasitic relationship with them; instead, focus shoring up our foundation and viability for the future.

High-speed rail and its ability to help wean ourselves off foreign oil is a component of that. The Feds know that. It also has duplicative abilities to help fight global warming and create desperately needed jobs.

About jobs, we’ve been hearing it in the news… but I don’t think the awareness or realization has come home to roost yet. Many people dismiss this until it affects their own job. But, the fact is, people are losing their jobs right now… to the left and right of me it seems, and it’s going to get worse… making us all worse off, if we don’t do something about it. The Feds know that too… and regardless of arguments that the New Deal program of the 30’s extended the depression… if there are merits to that argument, I don’t think that will carry any weight in Washington.

Rafael said...

@ Brandon -

HR 2095 has been passed with veto-proof majorities in both the House and Senate. It now awaits the President's signature, which Rep. Mica (the bill's lead Republican sponsor) claims the WH has said will be forthcoming.

Also, not everyone in the Middle East is hostile to the United States. Several Arab nations hold vast portfolios of US dollars, US treasury bonds and US stocks, so be careful what you wish for.

The US does need to reduce its dependence on oil in general, if only because future global economic growth depends on avoiding additional armed conflicts over oil. The country currently consumes about 25% of global production, roughly twice as much per unit of GDP as Western Europe and Japan.

Robert Cruickshank said...

qwerasdf, if you want to make your points here that's fine, but you have to do so without the personal attacks on others. I've had to delete two of your posts already and will delete more if you don't knock it off.