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Tom Barrett is Wrong on High Speed Rail

Useful Preamble

high speed rail1Before I begin this response to Barrett's argument on high speed rail, I think it's important to accentuate at least two facts.  First, less than 1% of the U.S. populous ride high speed rail.  And second, more than 99% of the populous will pay for it.  Keep this in mind as you read through the rest of this article.

Brief Context

Recently, in Wisconsin, we received a government subsidy of more than $800 million from Obama's Congress to erect a high speed rail line from Milwaukee to Madison.  This money was sought out by Governor Doyle and eventually accepted by our Legislature's Joint Finance Committee.  Although the federal government has awarded us with some play money, they will not continue to fund the operational costs of our rail system once it is functional and active.  This has become the center of recent debate.

Just recently, gubernatorial candidates in Wisconsin began to debate the merits of high speed rail resulting in two editorials in the Milwaukee Journal Sentinel - one by Scott Walker and the other by Tom Barrett.  But first, let's take a look at Barrett's recent remarks in Milwaukee.

Tom Barrett Joins the High Speed Rail Debate

At Marquette University, Tom Barrett was asked where will the money come from to subsidize the operational costs of the rail line from Milwaukee to Madison.  Barrett gave a two-fold answer, one that addressed the question of funding and one that took a swipe at his two Republican opponents.  Unfortunately, we have time only for the first prong of his quote.

When asked where Barrett will get the money, Barrett said,

"Bear in mind we're talking about well over $800 million coming to this state's economy, right now, and it's going to come here and create jobs and opportunities to spend money. As a result, if you use the simple economic concept of a multiplier effect it will have a ripple effect, and it's going to create more jobs and more spending. If you take just a percentage of that $800 million, let's say it's 10%, that's $80 million.... I believe that spending [for subsidies] for years will be covered by the multiplier effect of that injection of dollars into the economy. I also think people will ride it. If it doesn't happen, it will be years down the road, and of course we're going to have to look at it."

 

Barrett's right in this respect: there will be $800 million injected into Wisconsin's economy in the form of construction jobs, if the high speed rail project were to continue.  And he's right that it would create more opportunities to spend money and produce a "multiplier-effect" that is beneficial to Wisconsin.

However, we should also note that there would be a similar multiplier effect if the federal government awarded us $1 billion to build 100 new public high-schools.  And just like the schools, after the $1 billion has been spent, Wisconsin would have to maintain the schools by hiring more teachers, janitors, maintenance personnel, security guards, buses, books, equipment, snow removal service, property taxes and many other costs not yet considered.  Needless to say, the operational costs to maintain 100 new schools would far outreach what we taxpayers could afford.

Cost Versus Benefits

Before accepting a building venture, a wise businessman should ask this question: does the benefit of creating temporary construction work of a project offset its continuing operational costs?  In the case of the 100 public schools, the answer is obviously no.  We don't have the population of taxpayers great enough to absorb such an increase in cost.  And in the case of high speed rail, the answer is the same.  The Milwaukee Journal Sentinel reported that annual costs for operating the rail line will start off at $8 million a year.  Mind you, this is just a projection.  And by 2022, the costs would increase to $28 million a year, which is another projection.

Ridership Projections

We should also keep in mind that these government estimates, which almost always give optimistic projections, are based upon a ridership of 360,000 the first year.  This is about half the ridership of the rail line travelled between Chicago and Milwaukee in 2008.  If you haven't yet noticed, there are some important assumptions being made here.

Chicago itself is a population center of 2.8 million, which is the third largest city in the United States.  It is 4.5 times larger than Milwaukee and roughly 12 times the size of Madison.  Why would the projected ridership of the Milwaukee-Madison be only half the ridership of the Chicago-Milwaukee route when Chicago is 4 times larger than Milwaukee and 12 times larger than Madison?

If their projections of ridership are too high, then Wisconsin taxpayers will be stuck with a bill larger than the $8 million a year by 2012 and larger than the 28 million a year by 2022.  In fact, there are good reasons to believe that the ridership between Milwaukee and Madison will be lower than estimated simply because the route toward Madison ends at the Dane County Airport, falling 6 miles short of the heart of Madison.

This means that passengers would have to pay a $60-$80 round-trip ticket only to grab a taxi or shuttle bus between Downtown Madison and the Dane County Airport.  It's not a very smart way of traveling, and most would rather take a car simply because it would save money and provide a greater flexibility of travel.

Economic Development

Barrett also mentions the "multiplier effect", a term used by economists to refer to an increase in national income through national spending.  Now, it's not likely that there will be a national multiplier effect by erecting high speed rail, but there would likely be one for Wisconsin since the nation is bearing the burden for our spending project.

Even so, how much economic stimulus can we expect to get from high speed rail?  Beyond the initial jobs in construction, the answer is not much.  Proponents of high speed rail argue that rail stations draw businesses in the vicinity and therefore creates sustainable jobs and stimulative spending.  However, it is more likely that those businesses would have been created without the rail, and instead chose to change their plans of relocation.  Economists call this a zero-sum game, which means that high speed rail will not increase the total income and sales tax revenues of Wisconsin through business relocation.

Conclusion

And finally, what if people don't ride it?  If this happened, then we are stuck with an ideological project that, like a cancer, will drain the life out of taxpayers what would have likely spent money into our economy.  Scott Walker puts it like this,

"Federal stimulus money for high-speed rail is not free; the government is borrowing it from future generations. Accepting this money means obligating Wisconsin taxpayers to spend millions more every year."

 

Perhaps when high speed rail proves to be profitable in other states, we can consider building one in Wisconsin.  Until then, let's stick with a more modern mode of transportation that saves money, provides more flexibility of travel, and doesn't add a new burden of debt on taxpayers.


Comments (2)
  • Tom Barrett

    What on earth is wrong with Tom Barrett....he does not make sense....is he so RICH that he thinks everyone else is also....he does the most stupid things and wow does he need to be let out from Mayor....he along with the other high mucky mucks who are running our country are all STUPID - NO SENSE....

  • Tom Barrett

    Don't bother to send....who really cares....

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