Economics

When The Best-Case Scenario is a 16.1 Cents Per Mile Subsidy, Who Gives a Rat's Ass About The Worst-Case Scenario?

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In case you're wondering why states are broke, we've been doing our best at Reason to remind you of a simple truth: They spend too much freaking money! Recall that from 2002 through 2007[*]

combined state general-fund revenue increased twice as fast as the rate of inflation, producing an excess $600 billion. If legislatures had chosen to be responsible, they could have maintained all current state services, increased spending to compensate for inflation and population growth, and still enacted a $500 billion tax cut.

Instead, lawmakers spent the windfall. From 2002 to 2007, overall spending rose 50 percent faster than inflation. Education spending increased almost 70 percent faster than inflation, even though the relative school-age population was falling. Medicaid and salaries for state workers rose almost twice as fast as inflation.

[*]: Corrected an inaccurate gloss in earlier version. See this story for details on the states' spending bind.

But you know what's so lovable about big puppy-dog pols? They're so cute and wonderful, and dumber than than a bag of hammers (and not those smart Japanese import hammers, either). Witness the idiots running the state of Ohio, which is currently face-to-nuts with a $3.2 billion shortfall. So the obvious fix is to spend a minimum of almost $13 million a year to create and subsidize rail service from Cleveland through Columbus to Cincinnati, right? Needless to say, that's the lowball number.

The two existing Amtrak routes that go through Ohio—one that skirts Lake Erie on the way from Chicago to New York and another that passes through Cincinnati on a U-shaped route that connects the same two cities—each require subsidies equal to 25 cents per passenger mile. That figure jumps to 36 cents per passenger mile when long-term expenses, such as the cost of replacing trains, are factored in, according to the Pew Charitable Trusts, a nonprofit group that analyzed transportation subsidies across the country.

Under that scenario, Ohio's annual subsidy for rail would be $28.4 million, more than double the state's subsidy estimate….

Accurate predictions are notoriously difficult to come by. There are many variables, chief among them how many people will ride the rails, and subsidies vary considerably by route. In February, according to Amtrak figures, the Chicago-to-Indianapolis route lost $1.16 per passenger mile, more than seven times the amount Ohio officials expect to lose on the 3C route. A route connecting Chicago to St. Louis, on the other hand, lost 6.5 cents per passenger mile….

Ohio officials estimate that 478,000 people will ride the 3C route each year. The Indianapolis-Chicago route had 31,384 passengers last year, while Chicago-St. Louis had 506,235, Amtrak said.

Note one of the accessories to this crime against fiscal sanity: the stimulus.

The state will commit to operating the trains for at least 20 years as a condition of accepting $400 million in stimulus money to upgrade rail lines and buy trains to start the service. If the state backs out before that, it must refund the money on a prorated basis, according to the contract with the Federal Railroad Administration.

More here. Isn't that sweet? Spending millions and millions of dollars you don't have to reestablish rail service between "the most miserable city" in America and a city now most famous for hosting Chad Ochocinco. That Ohio somehow managed to get by with choo-choo trains running diagonally since, when, Buckeye Warren G. Harding was dying of gastric distress?

This sort of foolish waste of bad money after worse money is, doubtless, multiplying like rabbits across the rolling fields of the republic. It's tempting to blame the stimulus, which is the hook to create all sorts of manifestly foolish long-term spending decisions. But the real blame goes to the stupid, short-sighted legislators who, as the top of this post suggests, were spending like there was no tomorrow yesterday and the year before that.

For your viewing pleasure, 3 Reasons Why Obama's High-Speed Rail Will Go Nowhere Fast:

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  1. dumber than than a bag of hammer

    1. Stop! Grammar time.

    2. I did not rip off Rick James! He don’t own the notes!

      1. That dog don’t hunt bro. Yo, word to yo mothuh!

      2. We are available for weddings, bar mitzvahs and Reason fundraising cocktail parties for the benefit of Cleveland but not in Cleveland. Can’t touch that. I’m not going there either.

        1. I used to work for a guy )Mannie Jackson) who was a friend of MC Hammer’s. His voice on the phone was exactly like his rapping voice.

  2. the amount Ohio officials expect to lose

    “Well, gee whiz, nobody with any sense would ever do this; it’s up to us! We have a sacred duty, you know.”

  3. Obviously the solution is to replace the DC beltway with a high-speed rail line.

  4. Liked the start of the video.

  5. Another editor’s note: If revenues doubled inflation, and spending was 50% higher than inflation….. well, you see the problem. Perhaps you meant spending outpaced revenues by 50%?

    1. My circuits thank you, Nick.

  6. the Federal Railroad Administration.

    Good grief.

    1. Partly responsible for killing off profitable private passenger rail services with over regulation in the “safety” department. Interstate Commerce Commission had the lock on the “competitive” regulatory side of things.

  7. state general fund revenue across this great land rose twice as fast as the rate of inflation. Sadly, spending increased 50 percent faster than inflation, leaving basically all of us in the red even before the recession kicked in.

    2x > 1.5x esse

    1. Looks like I got through to this keeeed.

  8. “Recall that from 2002 through 2007, state general fund revenue across this great land rose twice as fast as the rate of inflation. Sadly, spending increased 50 percent faster than inflation, leaving basically all of us in the red even before the recession kicked in.”

    Does not compute. Brzzzt!

    1. “Recall that from 2002 through 2007, state general fund revenue across this great land rose twice as fast as the rate of inflation. Sadly, spending increased 50 percent faster than inflation, leaving basically all of us in the red even before the recession kicked in.”

  9. I predict that so many people will flee Cleveland and Cincinnati for Columbus via train that the capital city will tip over, like Guam.

    1. The vast network of intertubes will hold it in place.

    2. FUUUUUUUU

  10. But trains are cool. And Europeans use them. So, stop bitching you racist teabaggers. Or something like that.

    Need we also be reminded that we have already spent billions building roads between those cities, making the need for subsidizing rail even less compelling.

  11. You do indeed raise some very valid points. Well done.

    Lou
    http://www.anonymous-surfing.us.tc

  12. A fair price to pay with OPM in order to pick up a few thousand votes from potential riders and rail fan photographers. Meanwhile, each passenger train means one less freight train that takes a hundred or more tractor trailers off of I-71. But the inconvenience motorists will never put two and two together and blame the government.

  13. Hey, our governor is tired of all you cheerleaders for failure. How can you argue with that?

    1. You hear that, John? You fucking racist teabagger. Go spread your Kristallnacht somewhere else.

    2. OK name for a band.

  14. Tell your governor to spend his own fucking money on this bullshit.

  15. What is it with lefties and their creepy hard-on for choo choo trains? One imagines them getting home from a hard day at the regulatory agency, going down in their darkened basement, putting on a little engineer’s cap, and firing up the old Lionel. Then a little of the ol’ fap fap fap.

    1. I think it’s not so much the trains as it is public transit in general. Just like you can get them to admit that they will trade the higher rates of educational success of private schools to preserve the forced mixing of class and race, forced public transit is an assholes-and-elbows lesson in “social justice.”

      See also: Hatred of suburbs.

      1. Don’t forget the frotteurs

      2. They want forced mixing of race and class of other people not them. Liberals always say those things, but then they send their kids to the best, whitest schools and live in the whitest towns and suburbs imaginable.

      3. I like train, I hate suburbs, I don’t give a shit about race or class, and I don’t agree with subsidizing any of it (that goes for both roads and rails). Does that make me a leftie? 🙁

        1. Had we had market based transportation and land settlement all along, private profitable passenger rail transportation might have existed today.

        2. As would higher density cities and towns (suburbs don’t necessarily equal inefficient sprawl, even if they developed around personal automobile transportation).

        3. This could get complicated. How many Che T-shirts do you own?

      4. Statists like big, grand, humongeous projects that never go away and can be named after themsleves. See: dams, bridges, airports, etc.

        Problems that are solved spontaneously by market forces, especially those un-grandiose solutions named after no one, are of no use to them.

    2. I think it probably has something to do with trains being a centralized method of transportation, where everyone can only go to places the government deems the rail can go, and they have to do it on a set schedule, and they have to do it en masse, whereas a car offers independence, privacy, the ability to go from any place to any other at any time… There’s a reason cars are romanticized into being a tangible piece of freedom.

      1. Um, I think trains go where they go because there are lots of people in those places.

    3. Take from it what you will, but the first light rail people movers ran one way to Dachau.

      /Godwin!

    4. One of the ironies of history is that love for railroads and central banking have reversed polarity on the political spectrum from 125 years ago.

    5. Kidding aside, the biggest benefit of “public transportation” to the political class is the creation of another fiefdom of unionized public employees. Here in Chicago, Metra and CTA employees provide a motherlode of election day muscle.

    6. People driving cars can go wherever they want whenever they want, people riding trains can only go where and when the trains are available. It’s a measure of control over the rabble.

  16. My model training consisted almost exclusively of head-on collisions at maximum throttle. And t-boning cars at crossings.

    1. My car club holds an annual slot car smash ’em up derby, (video here). It helps me keep in touch with my inner 10 year old.

    2. Did you have an uncle named Gomez?

  17. which is currently face-to-nuts with a $3.2 billion shortfall

    Face-to-nuts? You’re blaming teabaggers for this too!?

  18. Similarly in Wisconsin, the state wants to burn $800 million to build a high speed speedy 50 mph with a tailwind choo-choo between Milwaukee and Madison.

    Let’s say instead the state agreed to reimburse every round trip car trip between Milwaukee and Madison at the generous rate of $0.40/mile, or approximately $100 per trip; put 2 people in the car. The money they want to spend on the rail would pay for 8 million round trip car journeys or 16 million round trip people journeys. Over the next 10 years, 1.6 million people journeys per year, or about 5000 people per day.

    If high speed is the issue, $800 million could also pay for 4000 brand new free Ferraris or 12,000 new government-issue Corvettes. But hey, there are plenty of creampuffs in Wheeler Dealer and Craiglist under $10k, so why not give away 80,000 free cars to needy Cheesehead commuters?

    1. The volume of passengers that would use such a service each day is equal to a couple of Megabus loads, which are easily accommodated by existing road capacity with room for a thousand more. The rail route will never see demand for more than a few daily trains, so you end up paying for facilities, equipment, and infrastructure that will sit around a significant portion of the time. For most people, traveling between cities like Milwaukee and Madison or Chicago and Indianapolis are a once in a while thing, why not just drive?

  19. I’m trying hard to think of any business case where you’d travel between the three cities (if I include Columbus), especially in a way that would lend itself to using a train.

    Still thinking.

    Yea, you’re right, this one’s a tax waster. I’m so sad I moved out of state.

    1. I could see heavy use on certain Saturdays in the fall.

    2. If you have a business that has an office in each city walking distance from the train station and has a need for frequent travel between them, this is a great deal. Come on, that has to be at least ten or twelve people right there.

  20. They ain’t called loco motives for nothing.

  21. I could see heavy use on certain Saturdays in the fall.

    It’s too bad Cleveland doesn’t have the Browns anymore. Forty or fifty people might trek north on Sundays.

    1. And don’t forget the ten or twelve that will trek up for an Indians game. With that and forty or fifty homeless drunks who live at the stadium, it should be a good crowd for Cleveland.

  22. I routinely travel between two cities with several transportation options between them: Car, Amtrak, and small ass airline. The plane is fucking expensive with an inconvenient schedule, connections to the airports at each end would add about fifty bucks, so fuck that shit. I split my travel between driving and Amtrak (standard libertarian disclaimer- Amtrak sucks, and fuck subsidized highways too, but I am paying for both either way).

    Driving is actually an almost perfectly direct, straight route, whereas if I take Amtrak, I have to transfer to a commuter train at the downtown terminal, with an hour or two wait in between. I can drive on my own schedule, but if I take Amtrak I either have to wake up fucking early for the morning train, or take the afternoon train to arrive late at night. The cost is about even, Amtrak is sometimes cheaper if I purchase tickets far enough in advance with my AAA discount. The closer to travel date, ticket rates go up and driving becomes way cheaper. If I drive with someone, it can cost me almost nothing, and there is the potential for some road head. Driving itself is a disadvantage, last time I almost died. The train does have the benefit of getting drunk and possibly high with no worries.

  23. Low Speed Rail is stupid.

    As one who lives in the Cincinnati area, I see several fatal flaws:

    I have to get a ride to the train station, which means driving to the station, arriving early to go through security BS, etc.

    Then I travel on this train at 70MPH, which is above the speed limit but slower than I drive, and sit next to some a-hole I don’t ever want to talk to again.

    Then when we finally get to Cleveland, I have to get a rental car or taxi or something when I get there, which adds another half hour onto the trip.

    My company offers to let me fly to Cleveland, which takes far less time that slow-speed rail will, and I still choose to drive. Getting to the airport 2 hours early for an anal probe, 30 minutes on the runway, and then 30 minutes wasted getting a rental car means I only save about 20 minutes overall from driving, and I don’t have to sit next to the aforementioned a-hole.

    So no; most people won’t use this train. You make it a 200MPH bullet train, and we might have a conversation. Of course, there’s nothing in Cleveland anymore except really high unemployment, so I don’t know why I would go to Cleveland, anyway.

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