Lawmakers question 'risky' $5.5B loan for high-speed Vegas train amid sequester cutbacks

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While the Transportation Department warns that the sequester will lead to cutbacks causing snarled lines at airports across America, the agency is still considering a massive $5.5 billion government gamble on a high-speed train from suburban California to Vegas.

The total cost of the XpressWest project is $6.9 billion, with 80 percent potentially being fronted by the federal government. It would create a train that runs from Victorville, Calif., to Las Vegas and, if green-lighted, would be the largest loan of its type issued in America.

But there are severe roadblocks, which skeptical lawmakers are once again drawing attention to at a time when the government is supposed to be looking for savings.

"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," Sen. Jeff Sessions, R-Ala., and House Budget Committee Chairman Rep. Paul Ryan, R-Wis., wrote in a letter to Transportation Secretary Ray LaHood on March 6.

The so-called train-of-the-future's success depends on sunny ridership projections, which would be four times the ridership of Amtrak's Northeast Corridor Acela, says Heritage Foundation visiting fellow Wendell Cox.  The chances of that ridership being achieved aren't likely. Last year, Amtrak clocked its best year ever with more than 11.4 million passengers on that route.

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"Promoters expect people to drive 50 to 100 miles to get to the station and then get off on the freeway, park and board the train for the final 175 miles to Las Vegas," Cox said in an email to

In their letter, Sessions and Ryan asked LaHood to reject the $5.5 billion loan through the Federal Railroad Administration's Railroad Rehabilitation and Improvement Financing (RRIF) program. In their letter, they argued it was too much of a financial risk for taxpayers to take on.

"A nation that is borrowing 40 cents for every dollar it spends cannot afford to risk billions in taxpayer dollars of risky projects like XpressWest," they wrote.

According to a 70-page report issued by Reason Foundation last summer, such projects have been "plagued by optimistic ridership and revenue forecasts, financial losses and capital cost overruns."

The Foundation described the project as one with "enormous risks for taxpayers" with "little or no prospect for (this) train to generate sufficient fares and commercial revenues to repay a federal loan of between $5.5 billion and $6.5 billion."

The DOT has not said much publicly about the project, though Ryan and Sessions claimed in their letter that a decision is expected "soon." But two of the project's top backers -- Nevada Sens. Harry Reid and Dean Heller -- this week rebutted the criticism. Heller described the project as a "real opportunity for a real infrastructure program" in the region, according to the Las Vegas Review-Journal.

According to the project's website, the XpressWest is a 185-mile, double-tracked passenger rail line. It's being billed as "the most advanced and fastest in the United States." Travel time between Southern California and Vegas would be about 80 minutes at an average cost of $89 for a round trip.

Yet the project is being considered when programs at every agency are on the chopping block. During the walk-up to the sequester cuts, which took effect March 1, LaHood repeatedly said the sequestration would force the Federal Aviation Administration to furlough employees. This, along with cuts to the TSA, are expected to contribute to long lines at airports and waits on the runways.

LaHood specifically said the spending cuts would affect travel times to major cities like New York and San Francisco. The Obama administration has said the sequestration would force the FAA to cut $600 million from its budget.

The Department of Transportation has not responded to a request for comment for this article.

On Monday, XpressWest CEO Anthony Marnell responded to the congressional criticism over his high-speed venture.

"The Federal Railroad Administration has the benefit of current, factual information and analysis with which to make an informed decision on XpressWest," Marnell said in a letter to DOT, which also outlined the benefits of the XpressWest project, from relieving traffic on Interstate 15 to providing 80,000 direct and indirect jobs.