NY Times Misses the Point

New York Times poor reporting and short term thinking on infrastructure projects ignores realities of infrastructure spending.

"Don't believe the New York Times or the train haters who cite it: High-speed rail is not an $11-billion failure," That is Michael Grunwald in an article in Time magazine.  His ire is prompted by poor reporting of the facts, as the article claims that $11 billion has been spent while actually only $2.4 billion has been spent -- and that mostly for planning, design and other pre-construction work according to Mr. Grunwald. The remainder is scheduled to be spent by 2017.

The reality is that large projects, such as high speed rail, take time and planning.  As this magazine reported, a bid responding to an RFP for rail cars can take a year to compile, and cost the bidding company upwards of a million dollars.  According to the State of Washington Office of Management, 23% for planning public works projects is low.  The current approach is not an example of President Barack Obama’s high-speed rail failure, but a reasoned approach to something that will cost billions but will push the US into the 21st Century.  

The article in the NY Times also mentions the money spent on the Northeast Corridor from Boston to Washington.  That route, the most heavily traveled in the US, is a victim of its success. Having carried billions of passengers, Amtrak is now trying to send high speed trains over a route that was built between the 1830's and 1917. That route is both too curvy and too old to allow Amtrak Acela trains to go at top speed.  Fixing this track isn't going to happen quickly, but must be done to connect the major cities along its route.  Using funds to upgrade the existing route in the long run is likely to be more economical than trying to put a build a new pathway from DC to Boston. 

The recent failure of the grid in Detroit highlights the reality that the problem faced by rail is similar to that faced by our aging electric grid, as well as our telecommunications and crumbling water infrastructure. The question is, how can a Congress that faces elections every two years, and a Senate facing them every six, plan for projects that will take decades?  The stop and starting of programs such as tax credits, renewable portfolio and cafe standards have hurt the renewable industry, which has time horizons in years not decades. Infrastructure financing ironically received a boost from the Great Recession, which has lead more investors to the reliable long term cash flows from such projects.  Yet much more work must be done as many remain in the thrall of the potential for fast gains in internet startups.  

At a time when China is aggressively bidding on Mexico's $3.7 Billion high speed rail project, the US cannot afford to walk away from projects that take time, take money and take planning. The thinking that once it is said, it must be done, is a major stumbling block to much of the innovation that will drive the economy in years to come.  Major upgrades and  changes will all take time.  And planning. But without them, the US will be a twentieth Century economy struggling to compete with the emerging nation powerhouses like China, India and Brazil.