High-Speed Rail: Making Tracks at Taxpayer Expense
NTU Issue Brief 130
October 18, 2001
By Paul Gessing
In the wake of the recent terrorist attack on our nation and the disruption of our air
travel network, some leaders have emphasized greater reliance on, and investment in, our
nation’s passenger rail network. House Transportation and Infrastructure Committee
Chairman Don Young has introduced H.R. 2950, legislation authorizing $71 billion to
fund the creation of a nationwide high-speed rail system. This particular legislation has
one redeeming quality in that it would give bonding authority directly to the states instead
of Amtrak (the existing federal rail boondoggle). Regardless of the ultimate recipient,
taxpayers should be wary of spending $71 billion on a mode of transportation with an
unproven track record in the United States.
Rail Travel Requires Massive Subsidies
When discussing our nation’s transportation infrastructure and making
comparisons between various modes of travel, it is very important to clarify the role of
government and the level of subsidies. Some misguided voices both in Congress and on
newspaper editorial boards believe that airline travel, highways, and passenger rail
receive nearly equal subsidy levels. A recent Los Angeles Times editorial made the case
for increased taxpayer support of rail travel because “every year, the United States spends
billions of dollars to subsidize air and road travel. Gas taxes pay for superhighways. The
federal government pays for air traffic control. When it comes to rail travel, the penny-
pinching starts.”1 This distorted view masks the fact that airline passengers and
automobile users pay a wide range of taxes to the federal government, which in turn are
supposed to pay for things like air traffic control and highways. That is not to say that
these programs are efficient and not highly flawed, but the taxes paid have at least a
tenuous link to the programs.
Among other taxes, airline passengers pay a 7.5% ticket tax, international arrival
and departure taxes, and a passenger facility charge. Highway users as a whole tend to
pull their own weight as well through payment of gas taxes at the federal and state levels,
not to mention a vast array of state and local fees, permits, and tolls. In the end, highway
users not only pay for roads, but heavy mass-transit subsidies as well. On the other hand,
Amtrak receives its funding through an annual appropriation by Congress taken directly
from the general fund.
Amtrak, in the allegedly railroad-averse United States, has received $22.5 billion
in state and federal subsidies since its inception in 1971.2 That is a substantial level of
government support for a system that provides about 0.3 percent of annual intercity
passenger trips in the United States.3 Amtrak’s dismal track record and constant need for
subsidies suggests that rail, high-speed or not, may not be viable in the United States.
Even the highly touted Acela train that runs between Boston and Washington, DC, and is
passed off by Amtrak as “high-speed rail,” has been an unmitigated disaster. Before the
terrorist attacks of September 11th provided a ridership boost, the Acela was running at
only 37 percent of capacity.4 As Americans’ fear of flying abates and airport security
stabilizes, ridership numbers are likely to drop.
Lessons of Acela’s Failures
Problems began early on for the Acela as Amtrak was forced to delay the train’s
opening for six months due to a variety of equipment problems. Now that the train is up
and running, the train that is touted as travelling at 150 mph has an actual average speed
of only 70 mph. In fact, Acela only reaches top speed on 18 miles of the 452-mile route.5
This means that at best, Acela can only travel from Boston to New York 20 minutes
faster than a car.6 Still, the train runs behind schedule nearly 20 percent of the time.7
Acela’s failure is not entirely a problem of Amtrak’s mismanagement. Many of
the obstacles faced by Acela would pose problems in the development of any high-speed
rail project. Until now, Congressional appropriators have been justifiably leery of
spending the outrageous sums of money necessary to modernize the rails and allow Acela
to reach full speed along its entire route. Modernization between Boston and Washington
alone–where, unlike the rest of the country, Amtrak owns the rails and rights of
way–would cost over $20 billion.8 Because Chairman Young’s proposed legislation does
not apply to this expensive project, if implemented, the total cost budgeted to high-speed
rail in coming years could run to nearly $100 billion.
High-Speed Rail Around the Country
Based on Amtrak’s experience and the high price tag for proposed high-speed rail
projects, $71 billion would be enough money to create networks in no more than two or
three locations nationwide. However, if this money is spread out for use on a number of
projects that also receive substantial support from state and local governments, then
partial funding could be provided to each of the high-speed rail corridors around the
country. Regardless, realization of a truly “nationwide” high-speed rail system appears
unlikely because each region has its own idea of what type of equipment and standards to
use. If these high-speed programs do somehow become successful, the concept of
2 High-Speed Rail: Making Tracks at Taxpayer Expense
compatibility between them could be important. As it stands now, the proposed regional
components would not contribute to the formation of a fully linked system. The
following map shows high-speed rail corridors designated by the U.S. Department of
Source: U.S. Department of Transportation.
The most aggressive high-speed rail proposal in the nation originates in
California. The state has already developed a statewide high-speed rail plan with a price
tag of $25 billion for system construction alone.9 The currently planned “optimum” rail
system would provide no service to Orange County, the East Bay Area, or Los Angeles
International Airport.10 Twenty-five billion taxpayer dollars is a high price to pay for a
limited system that would leave most areas of the state without service and serve only
approximately twenty-five percent of California residents.11 If the trains do in fact reach
their projected top speeds of 220 mph, high-speed rail advocates believe that travel times
will be competitive with air travel in a handful of California markets. For example:
although still a bit longer than an airplane ride of 1-_ hours from Los Angeles to San
Francisco, some passengers might be willing to take a 2-_ hour rail trip in a more
With years of practice and cutthroat competition to back up their prices and
service, the airlines will be a tough option to beat for harried travelers on trips of over
300 miles. Instead of using market rates as a legitimate pricing indicator, rail backers use
fantasyland price estimates to undercut the airlines. The estimated $48 roundtrip ticket
aboard the proposed high-speed rail system from Los Angeles to San Francisco is a
perfect example.12 These fare numbers look very suspicious when compared with the
fare for a ride of similar length on Acela from Washington, DC to Boston costing $300
for a round-trip ticket.13 With roundtrip airline fares between Los Angeles and San
Francisco running as low as $118 and roundtrip airline fares from Washington National
National Taxpayers Union 3
Airport to Boston running between $158 and $200, the proposed $48 fare becomes
absurd.14 Amtrak is run poorly, but it must operate within the realities of the
marketplace. Even if the proposed $25 billion high-speed rail system materializes in
California, these lowball fare estimates will only cover a fraction of the system’s costs.
The airlines beat Amtrak’s fares in the Northeast Corridor by nearly one-half; they are
likely to fare just as well against an untested, $25 billion high-speed rail system.
A second concrete proposal that illustrates the problems with large-scale
investment in high-speed rail is in the so-called “Southeast Corridor” that stretches from
Washington, DC all the way to Jacksonville, FL. This proposal differs from California’s
in that it would only improve train speeds from the current 75 mph achieved by most
Amtrak trains to 110 mph. It may not be eligible for any of the $71 billion high-speed
rail money because according to the legislation in its current form, “the bonds are for the
purpose of financing…projects with a cruising speed of 125 mph.”15 Rest assured,
however, if the legislation is passed and it still contains the 125-mph provision, the
“Southeast Corridor” plan will be “updated” to fit the speed requirements.
Because it is less ambitious than the California proposal and slower than even the
Acela’s relatively slow top speed of 150 mph, this project is unlikely to entice travelers
out of their automobiles and airplane seats. Upon completion, the current plan would
produce a train that would still take more than 7 hours to go from Charlotte, NC to
Washington, DC. Even so, the proposal would carry a price tag of $3 billion, not
including extension of the project south from Charlotte to Jacksonville.16 Obviously any
further enhancements designed to make the project fit the legislative requirements of
high-speed rail could add millions or even a billion dollars to the price tag.
A third high-speed rail proposal that could be in line for Chairman Young’s $71
billion largesse is under development in Florida. Unlike many other rail proposals,
Florida’s is the result of a state ballot initiative in which the state’s voters directed it to
develop a rail system with speeds above 120 mph that connects Florida’s five largest
cities.17 Aware of the high costs associated with high-speed rail, this measure received
strong opposition from Governor Jeb Bush, the Florida Chamber of Commerce, and the
editorial pages of the state's major newspapers. Nonetheless, the constitutional
amendment passed and under the law, construction is set to begin by November of 2003.
The first leg of the proposed system will run between Orlando and St. Petersburg. High-
speed rail backers estimate a price tag of $3.7 billion for the 190-mph train.18
Independent estimates of the ultimate cost of connecting all five major cities run to $23
The three proposals outlined above are only a few of the many currently being
developed by state and local governments that believe the federal government will largely
foot the bill for high-speed rail boondoggles. With $71 billion on the table and billions of
additional dollars requested by Amtrak, it is no wonder politicians are on the prowl for
some pork to fatten the passenger-rail lobby. Midwestern states have lined up for $4.1
billion in federal subsidies to raise speeds to 110 mph while the Gulf Coast and New
England regions are also clamoring to join the party.20 In addition to all of this, Amtrak
4 High-Speed Rail: Making Tracks at Taxpayer Expense
claims it needs $20 billion in improvements to allow its 150-mph Acela train to travel at
top speeds along its route.21 Travel times aboard Acela more closely rival those of the
steam engines of 100 years ago than the modern bullet trains of Japan.22
The experience with Amtrak’s Acela and most research on high-speed rail in the
United States indicates that rail projects here do not achieve ridership levels worthy of
their costs. The fact that government has been forced to take the lead on these programs
while businesses and other profit-driven enterprises have sat on the sidelines should be
enough to send up warning flags. After all, if the proposed project were such a great
idea, the private sector would probably have taken the risk a long time ago. Just a few
examples of public projects that turned into big-budget boondoggles are Denver’s
International Airport which cost 300 percent more than expected, the English Channel
Tunnel which cost 140 percent more than expected, and Boston’s Central Artery/Tunnel
which has more than doubled in cost.23 Experience with these debacles should make
taxpayers wary about believing current price estimates.
Inaccurate Estimates Based on European and Japanese Models
In addition to spiraling costs inherent in high-speed rail projects, ridership
estimates are frequently based on mistaken assumptions. Europe and Japan both have
extensive high-speed rail systems that are viewed as models by American many high-
speed advocates. In fact, advocates frequently base their U.S. projections on foreign
statistics that do not take into account very different conditions that exist abroad. Both
France and Japan have a greater number of large and densely populated cities than the
United States and they both have more extensive urban rail networks that directly feed
their inter-city rail systems. In addition, autos and air travel tend to be more heavily
restricted in these countries than in the U.S. In Japan, gas costs $3.40 per gallon and
drivers face tolls between Tokyo and Nagoya of nearly $75.00.24 France does much the
same thing by taxing gasoline at approximately 400 percent and levying tolls in the Paris-
Lyon corridor of $30. In order to affirm the monopoly held by their rail systems,
domestic air markets in both nations face heavy regulations.
Although Americans have grown used to a subsidizing a nationwide, poorly-run
train system, they should not be fooled into thinking that additional subsidies will
transform the United States into France or Japan when it comes to high-speed rail. The
passage of $71 billion for such projects will be a terrible investment in a mode of
transportation that, as experience has proven, does not work here. While there may be a
market for rail systems in certain areas of the country, the federal government should not
use terrorist attacks on our nation’s aviation system as a justification for more spending.
If Amtrak or a private entity are able to turn a profit in the Northeast Corridor where
conditions are relatively favorable to rail, then private investors and industry will get
involved and begin to build rail systems elsewhere. Until that day, many Americans may
reminisce about the “glory days” of the iron horse, but few will actually use one to get to
National Taxpayers Union 5
Paul Gessing is a Policy Associate with the National Taxpayers Union.
Raphael Lewis, “Despite Rail’s Revival, Amtrak Faces Uncertain Future,” The Boston Globe, October 2,
Joseph Vranich, “Replacing Amtrak: A Blueprint for Sustainable Passenger Rail Service,” Reason Public
Policy Institute Policy Study 235, October 1997, http://www.rppi.org/transportation/ps235.html.
Stephen J. Thompson, “Amtrak: Background and Selected Public Policy Issues,” Congressional Research
Service, March 2, 1999, http://www.cnie.org/nle/trans-4.html#_1_4.
“Rail Line’s Track Record is Poor,” The Indianapolis Star, September 4, 2001.
Paul Weinstein, Jr., “The Right Way to Approach High-Speed Rail,” The Boston Globe, October 3, 2001.
California High-Speed Rail Authority, “Final High-Speed Train Plan,”
Data taken from U.S. Census Bureau Reports http://www.census.gov/ and California High-Speed Rail
Business Plan. The author used Census numbers on inhabitants of all the cities planned for service by high-
Fare information taken from Amtrak.com web site on October 10, 2001.
Fare information taken from travelocity.com web site on October 10, 2001.
HR 2950, Rail Infrastructure Development and Expansion Act for the 21st Century,
Southeast High Speed Rail Corridor, “Frequently Asked Questions,” http://www.sehsr.org/faq.html.
Amendment to the Florida Constitution, Article X, Section 19, High-Speed Ground Transportation
Florida Department of Transportation, “Coast to Coast Feasibility Study,” p. ES-11,
Daryl Lease, “All Aboard For High-Speed Rail,” Sarasota Herald-Tribune, January 8, 2001.
Midwest Regional Rail Coalition, “Midwest Regional Rail Initiative,”
Paul Weinstein, Jr., “The Right Way to Build High-Speed Rail,” The Boston Globe, October 3, 2001.
David Carr, “Slower Than a Speeding Bullet,” The Washington Monthly, October 2001,
Wendell Cox, “Evaluation of the FDOT-FOX Miami-Orlando-Tampa High-Speed Rail Proposal,” The
James Madison Institute, April 1997, http://www.publicpurpose.com/ff-inet.htm.
6 High-Speed Rail: Making Tracks at Taxpayer Expense