Why the feds should stay out of high-speed rail (and most transportation)

Set aside for a minute whether high-speed rail (HSR) makes sense or not on a cost-benefit basis. Regardless of whether it does or not (and some smart people are arguing not), I'd like to make the argument that federal funding has no place in HSR. Instead, it should be left to individual states or regional state coalitions.

The federally-funded interstate system was originally conceived for defense purposes - rapid mobilization - after Ike saw the German autobahns. Freight and people movement were obvious beneficiaries, over short, medium, and long distances. It is a comprehensive network that crosses state lines, which argues for federal involvement. The government made the minimal investment it had to make - road beds - and people/companies paid for vehicles and fuel. Fuel was taxed to pay for it all. If EZ-tag technology had been available at the time, I suspect they would have tolled it all instead to pay for it.

Airports followed a similar arrangement: government provides the landing strips and terminals while private companies provide the vehicles and fuel. Passenger ticket taxes pay for the infrastructure. As airports are a local decision, they are (mostly) paid for locally, although regulated federally for standardization and safety.

HSR is targeted at medium distances only, making it more of a state/regional decision (i.e. a small collection of states). It also requires huge subsidies, as the government provides the track, cars, and energy. There is nothing directly related that can be taxed to pay for it (like fuel taxes for roads and passenger ticket taxes for airports). You could try to tax the rail tickets, but if they were fully priced they would not attract nearly enough riders. So no matter how you slice it, in the end the government (i.e. taxpayers) will be paying the majority of the cost of moving each passenger. The infrastructure cost cannot be covered by direct user fees, as demonstrated in other countries.

Rather than compare HSR to the interstate highway system, the better analogy would be airports. Imagine if California said, "Feds, give us money to build a few airports in key CA cities and provide a subsidized government-run airline to provide frequent intra-state service where tickets are priced way below cost." Put that way, people would recognize the idea as absurd, and tell California to do it themselves if they think it's such a good idea.

The problem is that a simple program that made sense at the time - a federal gas tax to build an interstate highway system - has evolved into a Frankenstein monster of massive federal involvement in enlarged urban freeways, local rail transit, and now high-speed rail - areas where they simply do not belong. Local transportation planners have shifted decision making from "What are the best cost-benefit investments we can make to move people in our area?" to "How to do we grab our 'fair' share of the federal pie, regardless of whether or not the project is something we would consider with our own money?" And that is leading to a lot of boondoggles being built around the country, culminating recently in the famous Bridge to Nowhere in Alaska.

The answer? The feds need to get out of the transportation business beyond minimal maintenance of the interstate highway system (the basic four lanes - not the expanded urban freeways). Let local entities make local decisions on transportation investments, including funding, and a whole lot of waste will magically disappear.

This post originally appeared at Houston Strategies.