L.A. Liberty

State of California = High-Speed Swindlers

Two days ago, I explained the duplicitousness of politicians who, when faced with budget shortfalls, immediately threaten those services that are most legitimate in the eyes of the public in order to agitate them to support tax increases (see “Make It Hurt”). I was specifically discussing California, which mongered fear about cuts to public safety and education instead of the mile-long list of state agencies and programs that doubtlessly have far less public support.

As if on cue, that very day the California assembly approved funding for the $68 billion boondoggle known as “high speed rail.” Last night the California senate approved the same. (As far as I can tell, the vote breakdown seems to show overwhelming support by Democrats - both houses of the state legislature have Democratic super-majority. This probably has less to do with any ideological purity on the part of Republicans and more to do with being the minority party.). This is despite the fact that most Californians have no interest in more taxes, especially when it comes to the high speed rail boondoggle - most would prefer such a project to proceed using private (see: “non-coerced”) funds. And there’s good reason: “In order to meet its virtually impossible timeline, the project will have to spend $3.5 million per day, seven days a week, over the next five years, a spending rate that will easily make California high-speed rail the costliest per-diem transportation project in the history of the United States.” Not to mention that even before these funds were approved, impropriety was well underway as those involved have been busy hiding their behind-the-scenes discussions on the specifics of the project and how the funds would be spent: “There’s nothing to be suspicious about when an agency under intense scrutiny for its unrealistic ridership and operational cost projections, currently under investigation by Congress and the Government Accountability Office and facing lawsuits from train opponents suddenly decides it’s time to purge all these silly old emails. It’s just a process!”

And, truly, it’s quite easy for California’s elected officials to ignore their constituents. For starters, the power-players’ concentrated benefits out-weigh the costs as they’re distributed among the populace. A given project is worth a lot more to a government contractor or union, for example, than it would to the average taxpayer. Therefore, the tax-consumers are more easily mobilized to support it than the taxpayers may be to stop it. In other words, if a project costs the average taxpayer $7/year but gains the tax-consumer $200,000/year - it’s easy to see that many taxpayers may not interrupt their schedules to campaign or vote against such a project if the costs outweigh the $7. The tax-consumer, on the other hand, is heavily incentivized to do what it takes to get the gravy-train, as it were, rolling.

Additionally, the Obama administration offered $3 billion dollars to California if they passed the $68 billion project:

Concerned about possible delays in state funding of high-speed rail, U.S. Transportation Secretary Ray LaHood told California leaders Thursday that the Legislature needs to send a signal that it is committed to the project by including money for it in the state budget to be approved next month.

LaHood traveled to Sacramento for meetings with Gov. Jerry Brown, legislative leaders and some lawmakers who are questioning whether to continue funding for the $68-billion project, for which the federal government has pledged $3.3 billion in matching funds.

“What I have said to them is, ‘We need a strong signal that you are committed to the money for the match, sooner rather than later. We can’t wait until the end of summer,’” LaHood recounted at a news conference following his meeting with state Senate leaders.

LaHood said he was “reassured” by Assembly Speaker John Perez (D-Los Angeles) and Senate President Darrell Steinberg (D-Sacramento) “that they are committed to high-speed rail and they are committed to making sure that California is able to provide the match that is needed.” …

LaHood’s message went beyond the leadership to the skeptics. “I wanted to be sure that I personally deliver the message that President Obama’s administration is committed to high-speed rail in California,” he added. “We have made a commitment of over $3 billion. We want to make sure that our partners here realize what is at stake.”

To a private investor, spending $68 billion you don’t have on a project that is sure to cost well above that to simply gain $3 is not very profitable (meaning, ultimately less valuable to the market/public than the costs to supply it) - but this is just a classic case of how people spend money that is not theirs. As I’ve explained, government spending is not only inefficient, but it is essentially incentivized to be so. After all, the gains to each of these legislators far out-weighs any out-of-pocket costs. To them and their cronies, it’s all up-side. So Obama’s bribe can simply be added to his long list of green energy investment success stories, alongside Solyndra, Beacon Power, Ener1, Solar Trust, Abound Solar, SoloPower, SunPower, Solar Power Project, and Nevada Geothermal Power (to be clear, those were all green energy companies you and I funder courtesy of Obama’s vision and grace, which have all subsequently failed).

California’s too broke to maintain education and public safety without more taxes, but apparently not so broke as to spend over four times the current record-breaking budget deficit on a project almost no one wants and few people will likely ever use.

This amount of money being thrown around is sure to keep countless special interests, corporate cronies, unions, bureaucrats, and politicians swimming in it. The rest of us will just be stuck with the bill.

Posted July 7, 2012 at 7:36am in California ∆ corporatism environment | comments || home