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: