TIME Transportation

The Truth About Obama’s High-Speed Rail Program

Don't believe the New York Times or the train haters who cite it: High-speed rail is not an $11-billion failure.

The New York Times has declared President Barack Obama’s high-speed rail program a failure. “Despite the administration spending nearly $11 billion since 2009 to develop faster passenger trains, the projects have gone mostly nowhere,” America’s paper of record reported Aug. 6—in its news pages, not its opinion section. The story quickly rocketed into Republican talking points and conservative op-eds as fresh evidence of presidential haplessness.

But it’s wrong. The administration hasn’t spent anywhere near $11 billion. The projects haven’t gone mostly nowhere. There are legitimate questions about the high-speed rail initiative—and the administration’s hype has outstripped its ability to deliver in an era of divided government—but the public debate over the program has been almost completely detached from the reality on the ground.

Here’s the real story.

First of all, while Congress has appropriated $10.5 billion (not $11 billion) for high-speed rail, only $2.4 billion (definitely not $11 billion) of it has been spent to date, much of it on planning, design and other pre-construction work. The big construction spending has just started, and will continue through September 2017. Yet the Times and other critics are judging the program as if it had already blown through all its cash. The new meme on the right is that Obama has poured $11 billion into high-speed rail with nothing to show for it. In fact, less than one-fourth of the money has gone out the door. Just because funds have been appropriated and even “obligated” does not mean they’ve been spent, much less “poured.”

That fundamental mistake alone is enough to refute the basic thesis of the Times‘ gotcha story. But it also fuels other widespread public misperceptions about what the program has already achieved, what it’s supposed to achieve, and why it’s unlikely to achieve Obama’s grand vision for high-speed rail. The first sentence of the Times article noted U.S. passenger rail “still lags far behind Europe and China,” but that’s an absurd and annoyingly common straw man to use to slag the program.

Really, the initiative that Obama launched with his 2009 stimulus bill should have been called “higher-speed rail.” As I wrote a few years ago in TIME, it was partly about creating new routes for 200-mile-per-hour bullet trains like the ones already zipping around Europe and Asia, but it was mostly about improving slower-speed Amtrak routes so they would be incrementally faster and more reliable. America’s freight rail system is the envy of the world, but our passenger rail system is awful; the goal of the program was to make it less awful—a more realistic alternative to long drives and short flights.

So where did the Administration send the money? The big winners in the initial state-by-state competition were Florida and California, which had ambitious plans for new bullet trains. But after Rick Scott, a Tea Party Republican, was elected governor of Florida in 2010, he killed the Sunshine State’s Tampa-to-Orlando-to-Miami train and sent $2.4 billion back to Washington. That meant the far more daunting and less shovel-ready San Francisco-to-Los Angeles line would be America’s only new bullet-train project. After years of legal and political warfare, California is just now preparing to start laying track in the Central Valley.

The rest of the high-speed money is going to lower-speed projects where Amtrak trains share tracks with lumbering freight trains. But that doesn’t mean they’re bad projects. “They’re not as sexy, and maybe they don’t look like much, but they’re providing tangible benefits,” Federal Railroad Administrator Joe Szabo said in an interview. Bridge and tunnel repairs, projects to upgrade and straighten tracks, sidings and double-tracking to help passenger trains pass freight cars, and other incremental improvements can all make rail travel more attractive.

And it’s happening. By 2017, the program will reduce trip times from Chicago to St. Louis by nearly an hour through upgrades that will increase top speeds from 79 to 110 miles per hour; Chicago to Detroit will get a similar boost. The Department of Transportation says it has already sliced off a half-hour between Springfield, Mass., and St. Albans, Vt., while completing projects to reduce delays around San Jose, San Diego, Fort Worth and Oklahoma City. It has extended Amtrak service for the first time to Brunswick, Maine, anchoring a thriving downtown revitalization program, and it’s bringing trains to the Illinois towns of Geneseo and Moline for the first time since 1978. It has renovated stations in St. Paul, Minn., and Portland, Ore, and it’s expanding service between Raleigh and Charlotte, where ridership has nearly tripled since 2005.

You need a pretty crimped sense of “somewhere” to argue that the money is going “mostly nowhere.”

One can certainly argue the money should have gone elsewhere. It’s nice that a new bridge and other Missouri projects have improved on-time performance between Kansas City and St. Louis from about 20 percent to 80 percent, but that’s still not a popular train route. Florida’s Scott and Wisconsin’s Republican governor, Scott Walker, both scuttled solid projects—the $45 million their states spent beforehand was the only inarguably wasted high-speed rail money—but Ohio’s Republican governor, John Kasich, had a strong case for scuttling an absurdly slow-speed project in his state. Many critics have suggested Obama should have focused on the Northeast Corridor between Boston and Washington, which is wildly popular—and profitable—even though it’s much slower than it should be.

In fact, the Administration has steered about $850 million to the Northeast Corridor. Szabo was in Trenton last week to tout a massive upgrade to an 80-year-old electrical system that will reduce delays and increase top speeds to 160 m.p.h. on America’s most traveled 23-mile stretch of track. The work will be a prototype for projects along the rest of the corridor, where rail has already replaced air as the dominant form of travel, even though logjams keep average speeds at 70 m.p.h.

Still, it’s true that the bullet-train rhetoric from Obama and the White House’s main train buff, Vice President Joe Biden, has not lived up to the bullet-train reality. It’s also true that the Administration’s spread-it-thin strategy, featuring incremental improvements in 32 states, is hard to justify in a vacuum. You need to walk before you can run, but it doesn’t make much sense to upgrade trains from slow speeds to semi-slow speeds if they’re never going to be able to compete with cars or planes. That’s why in 2011, Biden announced a new six-year, $53 billion plan to expand high-speed rail beyond the initial stimulus investments, a plan that would have built much more groundwork for a truly competitive national passenger rail network.

That plan, however, really has gone nowhere. Once Republicans took over the House, Congress stopped appropriating money for high-speed rail. Period. There was never any chance that bullet trains would be whizzing all over America by now, but the reason there’s no realistic prospect of that happening anytime soon has nothing to do with executive incompetence and everything to do with politics. And while I love the New York Times—even when it publishes ludicrous essays slagging my hometown—its validation of the “mostly nowhere” nonsense will help make sure America’s passenger rail system remains a global joke.

TIME Economy

Wall Street Didn’t Win—Financial Reform Is Working

Stocks Continue Two Day Slide Downward After Federal Reserve Comments
A pedestrian passes the New York Stock Exchange on June 20, 2013 in New York City. Spencer Platt—Getty Images

The political system made the financial system more resilient—though not immune—to crises

For some critics, it’s an article of faith that the Obama Administration’s financial reforms were a sham, that the Too-Big-To-Fail banks that shredded the system in 2008 are riskier than ever, that “Wall Street Won,” as my favorite magazine declared last year. But there’s a mountain of evidence that reform is working. And the mountain grew last week, despite the denials of the critics.

The strongest new evidence came from a July 31 General Accountability Office report, a report commissioned by congressional critics who expected it to show that bailouts of megabanks were likelier than ever. The report did not show that at all. It showed that expectations of government support for the biggest banks had declined significantly, along with the funding advantages created by those expectations. The report clearly suggested that thanks to the Dodd-Frank financial reforms, the Too-Big-To-Fail problem is becoming less of a problem.

Now the critics are scrambling to spin the GAO’s inconvenient findings. New York Times columnist Gretchen Morgenson, a reliable geyser of outrage about Wall Street’s purported control of Washington, quickly dismissed the report as a “muddle” and a “mishmash.” Senators Sherrod Brown of Ohio and David Vitter of Louisiana, the critics who requested that GAO investigate the Too-Big-To-Fail phenomenon, emphasized that the report did not conclude that the phenomenon had disappeared. Salon headlined its story: “America’s Recurring Nightmare – Big Banks Are Still Too Big To Fail.”

The critics claimed another victory August 5 when the Federal Reserve and the FDIC declared the so-called “living wills” for 11 megabanks—blueprints suggesting how they could be wound down safely if they got into trouble—were deeply inadequate. “Banks Are STILL Too Big To Fail,” complained the Daily Mail. Perhaps I’m biased–I helped former Treasury Secretary Timothy Geithner, the main architect of financial reform, with his recent book–but federal regulators cracking down on megabanks doesn’t sound to me like evidence that reform is failing. It sounds like evidence that reform is working. If the big banks don’t improve their living wills, they could face serious consequences.

Speaking of consequences: Bank of America just agreed to pay $16 billion to settle federal investigations into sales of sketchy mortgage securities, the largest corporate settlement in U.S. history. Overall, BofA has paid more than $50 billion to the government in fines and settlements, much of it related to bad behavior at Countrywide Financial and Merrill Lynch before it purchased them during the crisis. JP Morgan, Goldman Sachs, and other megabanks have also paid megafines. The critics have complained about the lack of executives in handcuffs—and there are legitimate questions about the design of some of the settlements—but the notion that Wall Street paid no price for the shenanigans that created the crisis is ludicrous.

After all, the worst financial firms either collapsed (Lehman Brothers), collapsed into the arms of a stronger partner (Bear Stearns, Washington Mutual, Countrywide, Merrill, Wachovia), or collapsed into the arms of the government (Fannie Mae, Freddie Mac, AIG). The shareholders of all those firms took baths. And since Americans are still furious about the Wall Street bailouts, it can’t be repeated enough: The banks paid for their extraordinary support. Taxpayers got all their money back, and will end up making more than $100 billion on their investments. It’s silly to argue that Wall Street got off scot-free just because the surviving Wall Street banks are making a lot of money. That’s what Wall Street banks do.

It’s even sillier to argue that the system is no safer than it was before the crisis. Long before the events of the last week, it was clear the problems that made the crisis so damaging have become less problematic. The big banks are no longer so overleveraged. They hold much more capital against potential losses. They’re much less dependent on precarious short-term funding. Large financial institutions like AIG and Goldman Sachs that once operated in the shadows because they weren’t technically “banks” have been subjected to much stricter regulation. And there’s a powerful new Consumer Financial Protection Agency looking out for Americans who were once at the mercy of payday lenders, mortgage brokers, and big banks. Even Paul Krugman–no fan of Secretary Geithner–now admits that reform “has actually done considerable good.”

In other words: Washington won. The political system made the financial system more resilient—though not immune—to crises. Government rarely makes things perfect. But in this case government made things better.

TIME

Andrew Cuomo Meddled With His First ‘Independent’ Commission, Too

Andrew Cuomo
New York Gov. Andrew Cuomo speaks during an economic development news conference at GE Global Research in Niskayuna, N.Y. on July 15, 2014. Mike Groll—AP

The New York Governor pressured members of a utility commission to vote for privatization of the Long Island Power Authority, sources say

Before New York Governor Andrew Cuomo set up a supposedly independent commission to investigate political corruption in Albany—a commission he later shut down after it began poking around his own operations, a commission that is now causing him serious political headaches that could become legal headaches—he set up a supposedly independent commission to investigate the state’s electric utilities.

Mark Green, Cuomo’s fellow Democrat and onetime political opponent, says he was surprised when Cuomo tapped him to serve on the utility commission in November 2012. He says he was less surprised when Cuomo’s aides quickly began pushing the commission to propose privatizing the dysfunctional Long Island Power Authority, which was still struggling to get the lights back on after Superstorm Sandy. Several sources confirm the governor’s office pressured the commission to issue a report recommending privatization less than two months after its creation, and that Green threatened to resign when a Cuomo press release incorrectly suggested the recommendation had been unanimous.

“Independent?” Green said. “They tried to ram privatization down our throats. I told them I wasn’t going to be a fig leaf for Andrew.”

A spokesperson for Cuomo declined to comment.

Green, who lost to Cuomo in a Democratic primary for attorney general in 2006, was the commission’s most strident opponent of gubernatorial interference. But sources say members with no axe to grind—notably Peter Bradford, who had led the state Public Service Commission under Cuomo’s father Mario, and former attorney general Robert Abrams, a co-chair of the commission—objected as well.

“Several of us felt we needed to get further into our investigation before settling on one particular recommendation,” Bradford said. “There was definitely back-and-forth with the governor’s office about that. They had a viewpoint, and they wanted us to endorse it so quickly, we risked being perceived as a rubber stamp.”

Still, Bradford believes that Cuomo’s first Moreland Commission—the name comes from the state’s century-old Moreland Act—did good work without too much meddling. “It’s fair to say the governor didn’t have a truly independent process in mind,” Bradford said. “But nobody stopped us from issuing subpoenas. Nobody shut us down. The interference wasn’t as heavy-handed as it seems to have been later.”

Bradford was referring to Cuomo’s second Moreland Commission, the one that was supposed to root out corruption in state politics, the one that Cuomo disbanded in April. The New York Times reported this week that Cuomo’s aides forced it to withdraw a subpoena issued to the governor’s media-buying firm, and “objected whenever the commission focused on groups with ties to Mr. Cuomo.” Federal prosecutors are now investigating what happened with the commission.

The response from Cuomo’s office, laid out in this 13-page letter to the Times, has been rather novel: The commission was never intended to be truly independent, because it was a creature of the executive branch. “You know that’s f-cking ridiculous, right?” Jon Stewart asked on The Daily Show.

In fact, Cuomo, who’s running for reelection, aired a campaign ad bragging about the “Independent Commission” he established to fight corruption, but apparently, independence is a matter of degree. The letter to the Times argued that a commission created by the governor that reported to the governor and had the power to investigate the governor “would not pass the laugh test.” In fact, Cuomo said last August that the commission would investigate “anything they want to look at—me, the lieutenant governor, the attorney general,” and so on.

It’s an awkward position for Cuomo, but he’s still an overwhelming favorite to beat his Republican challenger, Rob Astorino, who recently lashed out at Republican Governors Association chairman Chris Christie for suggesting the race was a lost cause, as well as a liberal Democratic challenger, Zephyr Teachout. Cuomo has governed from the center on economic issues, working with Republicans to cut spending and cap property taxes, while tacking left on social issues, passing gay marriage and gun control laws. He lacks his father’s flair for rhetoric, but he’s seen as a more effective political operator, transactional rather than inspirational, pursuing the possible rather than the ideal. Albany has seemed a bit less dysfunctional during his tenure; politicians are still getting hauled off to jail but they’re at least finally passing budgets on time. Cuomo is often talked about as a potential presidential candidate—presumably not unless Hillary Clinton passes on the race in 2016, but quite possibly in 2020 or beyond.

The corruption commission could put a serious dent in that talk. It plays into the dark side of Cuomo’s reputation, persistent since he served as his father’s top aide, as a control freak and a bully. Several sources who declined to talk on the record cited fear of retribution. “I don’t want to poke that bear,” one official said.

On the other hand, Cuomo’s defenders say his aggressive approach has helped him break through the usual chaos of Albany to get things done—including, incidentally, the privatization of LIPA. Bradford said he was uncomfortable with the idea at first, and with Cuomo’s efforts to claim phantom unanimity. But by the time the commission finished its work, Bradford no longer felt uncomfortable.

“In the end, privatization seemed like the best way to shake things up,” he said. “Things worked out.”

TIME republicans

Governor Rick Scott Shows What a Real Scandal Looks Like

Rick Scott, Will Weayherford
Gov. Rick Scott, left, and house speaker Will Weatherford speak at a news conference after session on Thursday, May 1, 2014, in Tallahassee, Fla. Steve Cannon—AP

The Florida governor has been questioned about his investment in a natural gas company and his aide's involvement in a rail project.

A few months ago, I wrote about an epidemic of fake Republican scandals that Democrats were hyping for 2014, starting with a nothingburger of a whatever-gate involving Florida Governor Rick Scott. My point was that political scandals rarely get traction, and shouldn’t get traction, without a semi-plausible link to significant public policies. Let me put it a different way: Damaging scandals look more like the two latest messes involving Governor Scott.

The first involves Scott’s support for a controversial Miami-to-Orlando rail project known as All Aboard Florida, when the company pushing it had financial ties to his chief of staff. The second involves Scott’s support for a controversial natural gas pipeline to North Florida, when he owned a stake in the company building it. You probably haven’t heard about these messes, because they’re pretty obscure. They’re also mini-messes, especially for Scott, who was once CEO of a hospital chain that paid a record $1.7 billion fine for fraud committed on his watch.

What could turn these messes into scandals is their potential link to public policies—in particular, to lame and unpopular policies that could look even worse if Scott’s probable opponent, Republican-turned-Independent-turned-Democrat Charlie Crist, can frame them as corrupt policies. There’s nothing inherently wrong with government support for a train linking Miami and Orlando—though my pal Carl Hiaasen is not an All Aboard Florida fan—but it looks pretty sketchy after Governor Scott (at the urging of his conflicted chief of staff) rejected $2.4 billion in federal money for a high-speed rail project that would have eventually linked Miami, Orlando and Tampa. Similarly, there’s a case to be made for a natural gas pipeline to Florida, but it’s hard to square with Scott’s support for utilities waging an outrageous war to prevent homeowners from going solar in the Sunshine State.

Asking questions about an opponent’s record can be good politics, but answering them can be even better politics. It’s one thing to ask why Scott rejected federal money for a shovel-ready high-speed train that promised 27,000 jobs and enjoyed strong support from Florida’s business community; it’s another thing to suggest that Scott was clearing the way for his crony’s speculative slow-speed train. It’s one thing to ask why the Sunshine State is intentionally skipping a nationwide solar revolution that is reducing carbon emissions while saving ratepayers money; it’s another thing to suggest that Scott has a personal interest in pushing gas instead.

Scott will have a dramatic financial advantage in the fall, and it’s not clear whether voters will accept Crist’s latest political change of clothes, especially in what’s shaping up as a Republican year. But Scott is unpopular—he’s still best known as the Medicare fraud guy—and so are his policies. The challenge for Democrats is to link the personal to the political. Real scandals can do that.

 

TIME Budget

Lower Health Care Costs Brighten America’s Debt Outlook

Senate Deal on U.S. Debt Limit Emerging as Time Runs Short
A police officer rides a motorcycle past the United States Capitol building at sunrise in Washington, D.C., U.S., on Tuesday, Oct. 15, 2013. Pete Marovich—Bloomberg/Getty Images

Fiscal doom will be delayed thanks to lower health care inflation in recent years. But will Congress take notice?

For years, America’s health care costs grew at an unsustainable rate. That was the main reason America’s long-term fiscal position looked unsustainable as well; Medicare, Medicaid, and other health programs were spiraling out of control. But our health care cost inflation is no longer unsustainable. That’s huge news, because it means our long-term deficits should be manageable, too.

Louise Sheiner and Brendan Mochoruck of the Brookings Institution compared the Congressional Budget Office’s latest fiscal outlook with its projections from five years ago, and the shift is striking. In 2009, the CBO expected Medicare spending to skyrocket from 3% to 6% of GDP by 2030; it now expects much more modest growth to less than 4% of GDP. Overall, former CBO director Peter Orszag, President Obama’s first budget director, calculated the projected savings in federal health spending since the 2009 report at $7.9 trillion.

Those numbers, like all long-term budget estimates, could change radically. And while Obamacare’s cost controls contributed to the cost slowdown, it’s not clear how much they contributed. Policy wonks and political hacks will have plenty of time to argue about why the cost curve is bending. But the trend itself, as Orszag argues, is the most important trend in fiscal policy in decades. It’s the difference between a deficit crisis and a phantom deficit crisis. In 2009, graphs of projected federal health spending looked like ski slopes; graphs of all other spending looked like sidewalks. The long-term deficit problem was basically a medical problem.

Now it’s not such a problem. The question is whether Washington will notice.

Republicans have spent the last five-and-a-half years griping about the budget deficit, and most of their gripes have been absurd. They were wrong to accuse President Obama of creating a record trillion-dollar deficit, which he actually inherited from President Bush. They were wrong to criticize Obama for increasing the deficit with his 2009 stimulus bill, which was an amazingly effective Keynesian response to an economic crisis; the budget-balancing austerity approach the GOP was advocating led to much slower recoveries and double-dip recessions in Europe. And they were wrong to accuse Obama of turning the U.S. into Greece; the deficit has shrunk by more than half during his presidency, dropping from 10 percent of GDP to less than 4 percent as the recovery has progressed.

We still have a big national debt, and the CBO expects it to grow from 74% of GDP today to 106% in 25 years. We’ll spend trillions of dollars servicing that debt, and we should remember how Bush squandered President Clinton’s surpluses with unpaid-for tax cuts and unpaid-for wars every time we cut the check. But we are not Greece. Our finances are looking better in every way.

TIME climate change

Global Warming Is Coming, but Climate Hysteria Doesn’t Help Anyone

The Guardian's dire report of a climate-change catastrophe unfolding in Miami is a case of premature evacuation

Help us! We’re drowning! It’s a catastrophe! DO SOMETHING!

Well, we’re not actually drowning. We do get damp every now and then, but it’s hard to see how some modest sunny-day flooding in my neighborhood at high tide justifies the Guardian headline that’s been generating so much buzz: “Miami, the great world city, is drowning while the powers that be look away.” I’ve described South Beach as the canary in America’s coal mine for climate change, and the canary has started coughing a bit, but it isn’t dead or even very sick. I’m sorry to spoil the climate porn, but while the periodic puddles in my Whole Foods parking lot are harbingers of a potentially catastrophic future, they are not currently catastrophic. They are annoying. And so is this kind of yellow climate journalism.

The Guardian article — by Robin McKie, the science editor (!) — begins a block from my home, on Alton Road, which is “hemmed in by bollards, road-closed signs, diggers, trucks, workmen, stacks of giant concrete cylinders and mounds of grey, foul-smelling earth.” That’s a pretty ominous description of a basic construction project. The state is rebuilding the street, in part (not entirely) because Biscayne Bay is backing up through storm drains at high tide, in part (not entirely) because global warming has helped increase the sea level around South Florida by about 10 in. over a century. McKie describes this gentle backwater flooding with absurdly apocalyptic prose: “Tidal surges are turned into walls of seawater that batter Miami Beach’s west coast and sweep into the resort’s storm drains.” He also claims that the water then “surges across the rest of the island,” which simply isn’t true.

“The effect is calamitous,” McKie writes. Calamitous!

“City life is paralyzed,” he continues. Paralyzed!

Well, it does get hard to park at Whole Foods. Puddles form in front of Walgreens. A few cars have been damaged — or, as McKie described it, “ruined” by “surging seawaters that corrode and rot their innards.” McKie was apparently too lazy to talk to any actual victims of our ongoing calamity, but he did rip off a quote from a laundromat owner who told the New York Times that Alton Road flooding once blocked the entrance to his front door. What’s happening in the Middle East right now is calamitous. A blocked entrance is inconvenient.

Hey, it’s been inconvenient for all of us. I’m bummed that my favorite Alton Road burger joint just closed, although its downfall was the construction mess, not the flooding. But let’s get real. The Pacific island of Kiribati is drowning; Miami Beach is not yet drowning, and the Guardian’s persistent adjective inflation (“calamitous,” “astonishing,” “devastating”) can’t change that. We should fight global warming — and the powers that be, including Senator Marco Rubio and Governor Rick Scott, should stop looking away — because it’s a potential disaster for Miami and the rest of this very nice planet. But we shouldn’t pretend it’s a disaster now.

I get why the Obama Administration wants to emphasize that global warming is a today issue, not a someday issue. I understand that stories about how climate change is already affecting our cities and our farms and our lives — even our wine — can make the issue feel more pressing to ordinary Americans. But fortunately, the effects are not yet calamitous; the reason we ought to DO SOMETHING is that they’ll get calamitous if we don’t. If we think once-a-month ankle-deep water is drowning, then why should Americans care whether we drown?

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