YES: Projects put Americans to work and stimulate growth along the way.
By Alexander J. Field
Would high-speed rail spending add jobs in the United States? Of course.
Even if some of the rolling stock for the trains were imported, structures and other permanent way would still have to be built in the United States. Under current conditions, any government spending — for rails, for bridges, for highways, for the military — would contribute to job creation.
Fears that government spending might displace or crowd out private-sector capital formation would be justified were we at or close to capacity. But we are not.
The unemployment rate remains near 9 percent, and this doesn’t account for those who, discouraged, have simply left the workforce.
Even more telling is the ratio of employment to population, which has fallen from its all-time high of over 64 percent in 1999 to 58 percent today. In spite of large “supply side” tax cuts tilted toward the wealthy, the record of the George W. Bush presidency on job creation was in fact quite poor.
For a variety of reasons, including the recent financial crisis, the U.S. economy remains in a serious slump. High-speed rail spending could stimulate job growth and help jump start the economy.
These projects would, of course, add to the deficit and concerns about its long term growth, particularly that attributable to health care, are merited.
Looking back over the past three decades, however, Republicans’ interests in deficit reduction seems to have waxed and waned depending upon who occupied the White House.
The deficit ballooned under Bush, due largely to tax cuts but also to increases in military spending and a new unfunded prescription drug benefit. The resulting run-up in the debt was regrettable, but the time to cut government spending is when the economy is strong, not when it is weak.
If the country is going to incur new debt, it is better to do so to acquire well-chosen infrastructure and equipment than to fund consumption.
Would high-speed rail represent well-chosen infrastructure? In other words, would it help the U.S. “win the future”? This is a more complex question. It requires us to consider not simply whether such projects would help close the output gap, but whether and how effectively they would expand the potential output of the economy.
Here there are legitimate concerns about whether the U.S. has enough high density corridors — such as that between Boston and Washington — to yield large benefits.
And building in dense areas can be costly. For example, the proposed Los Angeles to San Francisco route would go right through my backyard in Palo Alto, Calif., and the extent to which that part of the route will or will not be put underground has become a contentious political issue.
That said, state and federal governments have a long and largely successful record of supporting infrastructure development, from the Erie Canal to regional and transcontinental railroads to the Interstate Highway System and, more recently, to the Internet.
The build-out of the surface road network during the Great Depression generated large private-sector benefits, contributing to very fast productivity growth in transportation — railroads and trucking — as well as in wholesale and retail distribution.
High-speed rail projects could certainly create jobs and stimulate the economy in the short run. Whether they would generate benefits similar to those of other government funded infrastructure projects is uncertain. History suggests, however, that there’s a good chance they would.
Alexander J. Field is a professor of economics at Santa Clara University and the author of “A Great Leap Forward: 1930s Depression and U.S. Economic Growth.”
NO: Projects would benefit foreign companies, take too long, cost too much.
By Amy Ridenour
An astute journalist in the 20th century once defined public relations as “organized lying.”
Indeed, some of Washington’s largest and most ruthless public relations firms are spearheading the effort to revive rail, and no wonder.
Billions of taxpayer dollars are on the table and likely to be picked up by foreign companies like Canada’s Bombardier and Germany’s Siemens.
Unfortunately, the money they’ll pocket will come from American taxpayers at a time of record federal deficits and depressingly high unemployment.
Tea party members who consider President Barack Obama to be the ultimate spender had that view reinforced when he pledged in his State of the Union address that 80 percent of Americans will have access to bullet trains in a mere 25 years.
A few weeks later, Vice President Joe Biden, one of the few politicians who regularly rides Amtrak, proposed spending $53 billion to get high-speed rail on track.
The Obama administration already has set aside more than $10 billion for super fast rail projects, but many of its partners in state governments are dubious.
Newly elected Wisconsin Republican Gov. Scott Walker rejected $810 million for a line between Madison and Milwaukee, noting that motorists already can drive the 79-mile route on state freeways in just over an hour. Walker campaigned against the project last fall.
Walker’s GOP counterpart in Ohio, former U.S. House Budget Committee Chairman John Kasich, also campaigned against a $400-million federal grant that would have created a high-speed passenger service between Cleveland, Columbus and Cincinnati, his state’s three largest cities, wryly observing that its top speed of 79 miles per hour was far too slow to attract many passengers.
Even California, where free-spending politicians have long dreamed of an 800-mile super-line from San Francisco to San Diego, is having second thoughts.
Sober-minded legislators in Sacramento are beginning to ask how a state staring at a $28 billion deficit by the fall of 2012 can afford to shell out $43 billion for a train where a one-way ticket would cost more than $200 or nearly four times the ticket for an air flight.
Complicating matters, the California fast line ironically has attracted the wrath of normally green San Francisco Bay area residents, who are worried about property values, and Central Valley farmers, who are concerned about crop damage.
The only area in the United States with enough population to make high-speed rail feasible is the Northeast Corridor spanning Washington to Boston, where Amtrak’s Acela Express now achieves top speeds of 150 miles, but averages a slow-motion 70 miles per hour because it must share track with other trains.
Acquiring enough land through eminent domain actions and constructing the high-tech rails needed for a Northeast high-speed rail line likely would be prohibitively expensive.
Amtrak’s current estimate — which many experts consider a decidedly low-ball one — says it would take 25 years and cost $117 billion.
Unfortunately, Biden, Transportation Secretary Ray LaHood and other Obama higher-ups still view rail travel through a 1950 lens of nostalgia, when one could enjoy the overnight luxury of the 20th Century Limited — leaving Grand Central Station in the evening and disembarking the next morning in downtown Chicago.
Those days — like Alfred Hitchcock, who had Cary Grant and Eva-Marie Saint do just that in his 1959 thriller “North by Northwest” — are long gone.
Amy Ridenour is president and chairman of the National Center for Public Policy Research in Washington, D.C.
