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<p>[quote user="Alan F"]</p> <p> </p> <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> <strong>oltmannd:</strong></div> <div> <p> </p> <p> </p> <blockquote> <div>Amtrak's estimate for a "replacement" true HSR NEC is $117B.  15 miles of new double track RR from Newark to NYP including bridges, tunnels and a small stub end station in Manhattan is $13B. So, what does $53B buy?  Not a whole lot.  Certainly, not a network of 220 mph trains.</div> <div></div> </blockquote> </div> </blockquote> <p> </p> <p> Amtrak's $117B proposal was for a 30 year project that included projected inflation estimates over the 30 year period. I think if it was in current year dollars, it was around a $40 to $50 billion proposal. But it was more of a rough outline "Vision" than a concrete proposal. The Amtrak "Vision" included several very expensive components: a new station in downtown Philly under Market East with a 7.5 mile tunnel running under much of Philadelphia and a 11.8 mile tunnel under NYC with deep underground stations at NYP and Grand Central. Cut those back to something more reasonable - a new HSR station at 30th Street station with a new tunnel running under the river to North Philly and stick with the new NYP Gateway project with 2 new East River tunnels rather than a new deep 11.8 mile tunnel running from NJ under Manhattan to the Bronx - and it become more reasonable.</p> <p>Other countries with much smaller GDPs than the US have built HSR without great financial difficulty. If we can keep the HSR projects from getting overly gold plated, the US can afford to build a lot of HSR corridors. [/quote]</p> <p>Financing charges, depending on how the project is funded, would cause the cost of the project to be considerably more than $117 billion.  For example, using the U.S. Treasury long term average 10 year benchmark note rate, which is 6.6%, the cost of the project would be approximately $268 billion.  If, however, the funding was secured at the current 10 year note rate, which is an abnormally low 3.74%, the cost would be approximately $194 billion.  </p> <p>These estimates assume the project comes in on time, which would be rare, and under budget, which would be a minor miracle.  They also assume that the principal would be borrowed up front.  However, in all probability, the project would be funded in phases, so the final cost could be somewhat higher or lower than my projections.  </p> <p>Most of the other countries that have built high speed rail have much higher personal income tax rates than the U.S.   Moreover, none of their high speed rail projects, according to the GAO, as well as other sources, have been paid for or are being paid for fully by the users.  They have required large infusions of government money to cover the capital costs and in many instances the operating costs.</p> <p>Whether the U.S. can afford to build a lot of HSR is debatable.  The current national debt is more than $14 trillion, which puts it near 100 per cent of GDP.  In addition, state and local government debts add another $2.4 trillion to the debt stew.  This brings the total government debt burden to 113 per cent of GDP, which has many knowledgeable financiers and economists worried, including yours truly.  On top of the current debt burden, the nation is looking at approximately $55 trillion in unfunded liabilities, e.g. Social Security, Medicare, and Medicaid, as well as unfunded federal and state government pensions. </p> <p>Some folks might argue that this is a political perspective.  It is not.  How you deal with it is, but I have not put forth a view on how the country should deal with the debt.  The debt numbers, by the way, are easy to determine and are rock solid.  The unfunded liabilities, however, are a function of statistical projections and are subject to error.  In fact, the Social Security Administration, as an example, has three unfunded liability projections.  It uses the intermediate projection as opposed to the best case or worse case scenario.  </p>
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