WASHINGTON — Two leading Republicans have urged the Obama administration to reject a $5.5 billion loan to build a high-speed rail between Las Vegas and Southern California, saying the deal is a bad gamble.
“The risks to the taxpayers from financing this project are untenable,” Rep. Paul Ryan of Wisconsin and Sen. Jeff Sessions of Alabama wrote to Transportation Secretary Ray LaHood in a March 6 letter.
Ryan is chairman of the House Budget Committee, and Sessions is the ranking GOP member on the Senate Budget Committee. Their argument was based in part on a 70-page report, released in August by the libertarian Reason Foundation, critical of the project being advanced by XpressWest.
The Federal Railroad Administration has been evaluating an XpressWest application to finance most of the 185-mile rail line between Las Vegas and Victorville, Calif. The total cost of the project is $6.9 billion.
The Reason Foundation challenged XpressWest’s ridership and revenue projections, stating “there appears to be little or no prospect for the Victorville-to-Las Vegas train to generate sufficient fares and commercial revenues” to repay a federal loan.
Ryan and Sessions also cited a June 2012 Congressional Research Service report that said “few if any HSR (high- speed rail) lines anywhere in the world have earned enough revenue to cover both their construction and operating costs, even where population density is far greater than anywhere in the United States.”
The Republicans said they have directed the Government Accountability Office to evaluate the XpressWest proposal, the Reason Foundation analysis, and the Railroad Rehabilitation and Improvement Financing program that would provide the loan if granted.
“These loans are incredibly generous to the borrower,” with repayment up to 35 years at interest rates that match the cost of the government’s borrowing, the Republicans noted.
“For these reasons, we are deeply troubled by the prospects of subsidizing another costly, wasteful and risky high speed rail project, particularly when our nation is facing a debt crisis that threatens the well-being of the current and future generations of Americans,” they said.
The XpressWest loan would be the largest ever granted through the program.
Sen. Harry Reid, D-Nev., who has promoted the XpressWest project, defended it against the criticism and said it was worth the federal investment.
“High-speed rail has the ability to transform America,” Reid said in a statement. “We shouldn’t allow Tea Party-driven ideology to limit much-needed investments in our infrastructure that create thousands of direct and indirect jobs.”
In a response Monday to the GOP lawmakers, XpressWest Chief Executive Officer Tony Marnell said the Reason Foundation report was written “using outdated information and faulty data from an organization with a clear bias.”
Marnell said the high-speed project “has met every federal permitting requirement and stands ready to begin construction immediately upon financing approval.” He said XpressWest “is the only high-speed rail project in the United States positioned to jump-start a new industry that will have lasting public benefits.”
Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760. Follow him on Twitter @STetreaultDC.