High Speed Rail Helps, Not Hurts, the State Budget
One of the biggest problems California faces, well beyond the issue of high speed rail, is a belief that government spending is all cost and no benefit. One only needs to look at Europe, where austerity is causing profound and insane levels of suffering from Greece to Portugal to Britain to see that government spending is actually a crucial element of economic growth as well as budget health. In places like Greece, massive cuts to public spending haven’t produced balanced budgets – all they have done is cause deficits to persist while destroying the rest of the economy in the process.
So when looking at any kind of public spending, benefits have to be considered alongside costs. That’s apparently a hard thing for many California journalists and pundits to do, as they remain committed to a highly ideological perspective that says all state spending is a cost, a drain, and a potential problem.
George Skelton’s latest LA Times column provides a classic example of the genre:
And even if the state can find the bucks, should it spend them on building a high-speed rail line, a cool choo-choo? Especially when higher education in California is such a train wreck?
Education — kindergarten through college — should be our No. 1 priority, for both moral and economic reasons. Producing an educated, skilled workforce for the increasingly competitive global economy is even more important than creating temporary track-laying jobs.
University of California student tuitions have been soaring, largely because of state funding cutbacks. The California State University system has announced it will freeze most admissions for spring 2013, sidetracking freshmen to community colleges. But community colleges have shed more than 300,000 students since 2009.
Bullet train versus book learning doesn’t have to be an either/or question, nor should it be. But first Sacramento needs to pump a lot more revenue into its treasury.
I’ll be the first in line to support more revenue. It’s desperately needed, and the state’s economy will continue to struggle until taxes are increased. California needs to spend more money on higher education, on K-12 education, on job creation, and on all kinds of transit, from buses to bullet trains.
It’s not just that those priorities shouldn’t be an either/or question. It’s that addressing and spending money to invest in them helps make everything more affordable.
One of the main reasons California got hit hard by the economic crisis, which is still not over, is because of its dependence on oil. Over the last 10 years oil prices have steadily been rising. That sucks money out of the economy, causing job losses, foreclosures, and in turn causing tax revenues to decline.
Part of the state’s economic recovery strategy, therefore, has to be the construction of cheaper alternatives to lighting oil on fire. By building high speed rail the state will reap not only the tax revenues that come from all the construction jobs, but lasting benefits from the “green dividend” it will create as money that was once spent on oil gets saved and reinvested in other, more productive uses.
In fact, studies show that the green dividend for California from high speed rail could be as much as $7.6 billion a year for LA alone, and as much as $10 billion statewide. That savings would help generate new tax revenues that would help pay for schools and other important public priorities.
If Skelton understood the way public budgets actually work – that spending helps create revenue – then he wouldn’t have written the column the way he did. Oh well.
His column also includes a very interesting quote from Senator Alan Lowenthal:
“My sense is that Republicans in Washington have been salivating at the prospect of using this in the fall campaign, saying that the Obama administration and California want to build a train to nowhere,” says state Sen. Alan Lowenthal (D-Long Beach), chairman of the Senate Committee on High-Speed Rail.
Lowenthal has been critical of plans for the bullet train but says “it’s moving in the right direction. There’s a real acknowledgment that high-speed rail and conventional rail can be part of a seamless statewide rail network. That’s a major step forward.”
Lowenthal is beginning to talk more like the member of the California Democratic Congressional delegation that he wants to be, and less like the Tea Party ally he’d been sounding like for years now. After all, Nancy Pelosi made her support of the HSR project very clear in a statement earlier this week:
“Under the superb leadership of Chairman Dan Richard, it is clear that the Rail Authority has listened to the concerns of Californians and produced a high-speed rail plan for the future that is better, faster and cheaper.
“High-speed rail will transform journeys into commutes, uniting our state and ensuring our citizens can travel as fast as our innovative ideas. In additional to the 1 million jobs created across California, this project will offer a cheaper travel choice to consumers, improve the air we breathe, and reduce our dependence on foreign oil in a time of rising gas prices. As the report demonstrates, the price of inaction is far outweighed by the cost of building for the future.
“By reducing the cost to taxpayers, speeding construction and respecting local communities with the blended system, the track is clear for California to lead the nation in development of a world-class high-speed rail system that creates jobs, promotes commerce and improves quality of life.”
I don’t know if Pelosi has gotten to Lowenthal, but his tone seems much better than in the last 2-3 years. Let’s hope the improvement continues.