SOTU I: Hey, let's build a high speed rail system

July 2, 2009. CNN Reports Obama's pushing for a high speed rail investment. Is the State of the Union a rehashing of old ideas and rhetoric? You be the judge.

From CNN,

NEW YORK (CNNMoney.com) -- President Obama is pouring $13 billion into an ambitious high-speed rail project. Some say it will never make money. Some say it will. And still others say profit is not even the point.

Obama's plan is "to jump-start a potential world-class passenger rail" in 10 major corridors, linking cities within the Northeast, California, Florida and other regions with "bullet trains" that exceed 110 miles per hour. State governments are in the process of applying for the federal funds.

Sam Staley, director of urban growth and land-use policy at the Reason Foundation, a libertarian think-tank, said the project is risky, and that forecasts used to promote high-speed rail are "notoriously unreliable" because they "overestimate ridership and underestimate cost."

But the recycling speech ideas, not an Obama first last night, is not the worst of it. As the article goes on to point out, these expensive projects have NO history of profit.

It is a fact that no nationwide passenger rail system anywhere in the world is considered profitable when all costs -- including capital -- are accounted for," wrote Cole, in an e-mail to CNNMoney.com. "Like all national rail systems worldwide, Amtrak requires annual funding to support both its capital and operational needs."

High-speed rail backers, including the White House, look overseas for success stories. But Amtrak released a study in April to demonstrate that Europe's system is heavily subsidized. Germany's high-speed rail network, the most expensive in Europe, required average annual subsidies of $11.6 billion during the 10-year span that ended in 2006, according to the Amtrak study.

Japan's system is often cited as the most financially successful high-speed rail in the world, according to Ron Utt, but "that's because in the 1980s they wrote down all the debt to zero," he noted. "We're talking about several hundred billion dollars in debt."

That sucking noise is the money being vacuumed out of the real economy.