Daily Archives: March 25, 2012
Michael Blood, AP | Mar. 25, 2012, 4:14 PM
VICTORVILLE, Calif. (AP) — On a dusty, rock-strewn expanse at the edge of the Mojave Desert, a company linked to Senate Majority Leader Harry Reid wants to build a bullet train that would rocket tourists from the middle of nowhere to the gambling palaces of Las Vegas.
Privately held DesertXpress is on the verge of landing a $4.9 billion loan from the Obama administration to build the 150 mph train, which could be a lifeline for a region devastated by the housing crash or a crap shoot for taxpayers weary of Washington spending.
The vast park-and-ride project hinges on the untested idea that car-loving Californians will drive about 100 miles from the Los Angeles area, pull off busy Interstate 15 and board a train for the final leg to the famous Strip.
Planners imagine that millions of travelers a year will one day flock to a station outside down-on-its-luck Victorville, a small city where shuttered storefronts pock the historic downtown.
An alliance of business and political rainmakers from The Strip to Capitol Hill is backing the project that could become the first high-speed system to break ground under President Barack Obama’s push to modernize the U.S. rail network – and give the Democratic president’s re-election prospects a lift in battleground Nevada.
Transportation Secretary Ray LaHood has publicly blessed the train – it means jobs, he says – and it’s cleared several regulatory hurdles in Washington.
Yet even as the Federal Railroad Administration considers awarding what would be, by far, the largest loan of its type, its own research warns it’s difficult to predict how many people will ride the train, a critical measure of financial survival, an Associated Press review found.
There are other skeptics, as well.
“It’s insanity,” says Thomas Finkbiner of the Intermodal Transportation Institute at the University of Denver. “People won’t drive to a train to go someplace. If you are going to drive, why not drive all the way and leave when you want?”
Construction cost projections have soared to as much as $6.5 billion, not including interest on the loan. Some fear taxpayer subsidies are inevitable.
Reid and other supporters point to research that shows 80,000 new jobs, but FRA documents show virtually all those would be temporary – no more than 722 would be permanent.
Victorville Mayor Ryan McEachron envisions a bustling transportation oasis with a hotel, restaurants, maybe even homes, on the proposed station site. He believes drivers can be enticed out of their cars, even in a region where the notion of rail travel can seem as distant as a New York subway.
The company is “going to have to market and market hard in order to get the ridership they need to support paying back the loan,” the mayor says. “I think you can change the thinking.”
Along with Reid, the president’s most influential Democratic ally in Congress, the plan is being advanced by casino developer and contractor Anthony Marnell II, whose credits include building the Bellagio and Wynn Las Vegas and who heads Marnell Companies, the majority shareholder in DesertXpress; project consultant Sig Rogich, a Republican adviser to two presidential campaigns who founded Nevada’s most influential lobbying and advertising company; and Canadian transportation giant Bombardier, a DesertXpress strategic adviser that wants to supply its rail cars.
A decision on the loan is not expected until mid-year, but the company has spent some $30 million sharpening its plan and refining ridership projections. Rising gas prices and increasing traffic congestion could help ticket sales, and the company is touting reduced air pollution from fewer cars on the road.
“It’s Victorville that makes the project work,” says chief executive Andrew Mack.
Far from being a train from nowhere, company planners see the struggling city of 115,000, once a stop on storied Route 66, as a collection point for millions of drivers heading north to Las Vegas. Bringing the line deeper into the populous Los Angeles area would raise formidable challenges, Mack said, from crossing numerous freeways to finding space for track.
The lot now stippled with spindly creosote bushes has room for 15,000 parking spaces. Bags would be checked through to hotel rooms. At peak hours, trains would depart every 20 minutes. Mack says an average round-trip fare could be as low as $75, though documents estimate $100.
Mack says the train will deliver convenience – and for a price, luxury – that studies show passengers want.
DesertXpress officials once boasted they would build the line with private dollars, but they now plan to rely on FRA financing to cover the bulk of the cost. Mack didn’t directly answer if the company turned to the FRA because private investors were unwilling to take the risk, but said the loan terms are attractive.
“When somebody comes and tells me I will build a system that pays for itself, I’m suspicious,” said Hasan Ikhrata, executive director of the Southern California Association of Governments, which questioned ridership potential in a report last year. “There is no high-speed rail system in the world that operates without subsidies.”
The company is still arranging as much as $1.6 billion needed to cover its share of the construction bill for the roughly 200-mile line. Investments could hinge on the loan approval, which requires the company to convince the FRA that taxpayers won’t get stiffed. In a worst-case scenario, the train would become government property if the company fails.
The low-interest loan would be about three times the combined amount the FRA loaned 32 other projects through the Railroad Rehabilitation & Improvement Financing program since its inception in 2002.
If successful, the train could be a forerunner in a national high-speed rail network, while bringing a rich return for investors and delivering visitors to Vegas. It would also give Nevada residents an option to Southern California, albeit many miles from tourist hotspots like Hollywood or the beaches.
The company is seeking funds at a time when a proposed high-speed train running from San Francisco to Southern California has been questioned because of ballooning costs and fear it will sap taxpayer dollars.
Early company research projected the train would lure away nearly one in four car, bus and airline travelers, initially about 4 million people annually. The company now pegs first-year ridership at about 3 million, but that projection was trimmed to 2.5 million by government analysts who urged more study.
The risks are summarized in a 2007 study commissioned by ACS Infrastructure North America, a division of a global construction company that DesertXpress says is seeking a role in the project, that found most travelers were “broadly happy” going to Las Vegas by car or airline. While most travelers would be open to riding a train, the report warned the company would need to lure riders with pampering.
On clear roads, the 270-mile drive from downtown Los Angeles to Las Vegas takes about four hours. Planners say the train ride from Victorville to Las Vegas would take about 80 minutes, but it’s debatable how much time would be saved after parking, boarding the train and reaching a Las Vegas hotel.
Round-trip flights from Los Angeles to Las Vegas can be booked for under $100.
The dream of uniting Southern California and Las Vegas by high-speed rail has been discussed for decades. In the mid-1980s, Las Vegas officials predicted a line would be running by 2000. DesertXpress, which would roughly parallel Interstate-15 on a pair of new tracks, has predicted for several years that it would soon break ground.
Reid initially backed a rival project that planned to use magnetic power to reach Orange County, but he jumped trains shortly after Rogich became co-chair of Republicans for Reid, a Nevada group with ties to the gambling industry that helped Reid win re-election in 2010.
The senator’s office disputes any connection between his flip and Rogich’s involvement in the campaign. Spokeswoman Kristen Orthman says Reid’s decision was based on the viability of DesertXpress, while the magnetically powered project languished.
Marnell, another member of Republicans for Reid, is president of one of several companies under the DesertXpress corporate banner. He and his son, M Resort, Spa and Casino President Anthony Marnell III, are also investors.
Federal records show the elder Marnell has donated at least $15,000 to political committees connected to Reid since 2010, including a $5,000 donation in May to the senator’s Searchlight Leadership Fund.
According to federal records, the company has spent at least $270,000 since 2006 lobbying at the House, Senate and federal offices.
Other investors include North Dakota businessman Gary Tharaldson, who donated $10,000 to a Reid committee in March, and transportation expert Tom Stone, who organized DesertXpress with partner Mack in 2005.
Nevada records show DesertXpress HRS Corp., headed by the elder Marnell with his son as a director, was authorized to issue 25,000 shares of stock. DesertXpress declined to say who held those shares, if issued, and in what amounts.
Not everyone in the high desert is on board with the project.
Thirty miles northeast of Victorville on I-15, officials in Barstow fear they’ll lose 2,300 jobs. The impact will be “unsustainable,” Mayor Joe Gomez wrote to LaHood in October 2010, according to a letter released under a public records request.
To appease those concerns, McEachron said the station’s proposed location was moved about halfway to Barstow. The patch of vacant land is so remote the city would have to annex it.
U.S. Department of Transportation – Countdown to DesertXpress begins
- Now Obama Wants To Build A $5 Billion Bullet Train From Las Vegas To Nowhere (businessinsider.com)
- Last stop Sin City: Plans for $4.9 billion California bullet train straight into heart of Las Vegas (dailymail.co.uk)
- AP Enterprise: Vegas rail: a gamble or good thing? (sfgate.com)
- Amanda Carpenter destroys Harry Reid’s “Rail Solyndra” – in 140 character chunks (erickbrockway.com)
When it comes to the business community, the White House may feel like an abused partner in a bad marriage. President Obama likely believes that he keeps giving business what it wants yet gets nothing but complaints and unemployed Americans in return.
His gift giving began with the stimulus package, full of goodies for the preferred businesses. It continued with the auto bailout, payroll tax holidays, accelerated depreciation, “cash for clunkers,” first-time homebuyers credit, and even the extension of the Bush tax cuts.
In fact, Obama even created an Economic Advisory Recovery Board chaired by GE’s Jeff Immelt whose purpose is to report to the White House on ways to improve the economy. The board was created in 2009, nearly three years ago.
The president speaks passionately about entrepreneurs and innovation all the time. He continually addresses the need for economic-friendly policies, like more spectrum for wireless broadband. On the surface, the relationship between major business leaders and the White House seems quite cozy and comfortable.
Yet, the economy continues to stagnate and unemployment remains above nine percent. Adding salt to the wound, business owners and executives, including many former Obama supporters, seem likely to support the Republican candidate next November.
Indeed, more and more business leaders are speaking out against the president. The dam broke in mid-2010 when then-Business Roundtable Chairman and Verizon CEO Ivan Seidenberg said that the Obama administration was creating “an increasingly hostile environment for investment and job creation.”
Earlier this year, Steve Wynn, the billionaire head of Wynn Resorts and a Democrat, said that “the business community in this country is frightened to death of the weird political philosophy of the President of the United States.”
Now public criticism is common. Just this month a poll in Chief Executive magazine concluded that 85 percent of CEOs rank Obama’s performance as “weak” or “poor,” with one CEO saying, “The current administration is so anti-business, we don’t plan on any expansion until we have a new president. We just hope we’ll be around to see that day.”
Why the disconnect?
Business is not just big companies. Smaller companies dominate America. Entrepreneurs create almost all the new jobs. As I recount in my book, “The Comeback: How Innovation Will Restore the American Dream,” a 2010 Kauffman Foundation study found that “without startups, there would be no net job growth in the U.S. economy.”
Yet small businesses have gotten little access or attention in this White House. The White House appears oblivious to the psychological impact of GE heading the committee that advises the president on how to create jobs. GE is so big and reliant on government contracts that its problems and challenges are not shared by most American businesses.
Moreover, the federal government is hurting business and job creation as it increases the regulatory burden.
Making a payroll means dealing with new taxes, health care mandates and the cost of new regulations. To compensate for the added burden, businesses must hire scores of accountants and lawyers to decipher and follow all the new rules. Washington has shifted from occasionally helpful to downright destructive of business interests.
Anti-business actions, proposals and rhetoric make it worse. Frequent talk of “spreading the wealth around,” “corporate greed” and new tax proposals all discourage investment and job creation.
Closing Boeing’s new South Carolina factory, raiding Gibson Guitars for violating an ambiguous law in another country, and changing unionization rules to allow sudden union formation all force companies to invest and hire overseas. Encouraging hostility to business by embracing the Occupy Wall Street protesters only makes matters worse.
Results must match rhetoric. President Obama excited the business community when he promised to double exports in five years. Yet it took almost three years to simply get three Bush-era trade deals signed and no other deals have been made to promote exports and trade.
Nothing has been done on repatriation of corporate profits, lowering our absurdly high corporate taxes or shifting our educational system to train Americans for the 3.4 million jobs that are open. While college-educated, liberal arts majors protest in American cities, jobs for engineers, technicians and skilled machine operators go unfilled.
President Obama and his advisors have scant business, managerial or leadership experience. The president has relied on personality and oratory and the Democrats in Congress to lead. He created a Deficit Reduction Commission and ignored its bipartisan recommendations, which led directly to a Congressional stalemate over our debt ceiling. Obama also blew off Rep. Paul Ryan’s good faith effort to address skyrocketing Medicare costs and tried to make it an election issue.
It might be a big mystery to the president and his advisers why business spurns their advances. But it isn’t a mystery to anyone in business. Businesses are not hiring and this anti-business government is at least partially responsible.
Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times bestselling book, “The Comeback: How Innovation Will Restore the American Dream.”
- GE CEO sours on Obama despite green energy subsidies (junkscience.com)
- White House Turns Over 432 Pages of Documents in Solyndra Case (blippitt.com)
The Obama administration did it again. Last week while Americans fumed over the fast rising gas prizes at the pump, the Obama administration told Congress that it will release up to $1.5 billion dollars in aid to Egypt. The announcement even upset stalwart Democrats like Sen. Patrick Leahy who was quick to publicly register his disappointment with the Obama decision.
Back in December, federal aid to Egypt’s military machine was contingent to a determination that the government would support the will of the people’s desire to transition from a military to a civilian government. In fact, Egypt did hold elections. However, the people elected the Muslim Brotherhood which has been laughingly described by many liberals as ‘moderate.’
Once in power, the leaders of the newly elected Muslim Brotherhood made it clear to Washington that “what was acceptable before the revolution is no longer.” That was diplomatic shorthand telegraphing that Egypt’s peace treaty with Israel was a thing of the past. Yet, this was hardly a surprise to the Obama administration which was well aware of the Brotherhood’s hostility towards the Jewish state. Despite Mubarak’s 30 years of staunch support for the peace pact with Israel, Obama turned against him. Perhaps Mubarak should have known better. When Obama delivered his famous Cairo speech in 2009, he actually invited the then outlawed Muslim Brotherhood to attend.
By supporting the rioters, Obama jeopardized the security of our srongest Arabic ally in the Middle East. Since the election, the military has been slow to grant full power to the newly elected Muslim Brotherhood. This places the United States in a no-win situation. Supporting the military is akin to sustaining a dictatorship. Supporting the Muslim Brotherhood represents a step backwards for any legitimate hope for peace.
The Muslim Brotherhood has long insisted that it really is a moderate political party. Nevertheless, it also makes the argument that while it differs with the more extremist Salafi-oriented Nour Party over the way Islamic Sharia law is applied, there is common agreement that it should be applied. The imposition of Sharia law in Egypt would pose a threat to women as well as to peace with Israel. The alleged “war on women” doesn’t register for a Democratic administration looking the other way as millions of Egyptian women lose fundamental rights.
The more serious question is this. Does the Barack Obama administration have any idea of what it’s doing? Or is this a process of just hoping for the best?
It is now clear that we are heading for a showdown in Egypt. Despite the power of the military, the only force inside the country that can mobilize a million people at the drop of the hat is the Muslim Brotherhood. In the face of popular support, the military has always backed down. This means that, like it or not, an eventual relationship between the civilian government and the military powers favors the eventual dominance of the civilian government. Indeed, while the thing that united rioters was opposition to Hosni Mubarak, only the Muslim Brotherhood had the organization and the leaders in place to take control of the government.
Sending $1.5 billion dollars of American money to retain the allegiance of the military generals may be an argument that makes sense on the short term, but sooner or later the Muslim Brotherhood will gain control of the armed forces as well as of the money we just gave them.
This is why Congress was determined to carefully monitor ties between Cairo and Washington before transferring aid. Congress wanted assurances that the pact with Israel would be maintained, that civilian government would come to power in a cooperative arrangement with the military.
Obama-style diplomacy hasn’t worked very well in the past. There are too many conflicting intersts in the Middle East with too many separate agendas. We can only hope that Obama’s tendency to confuse Cairo with Chicago doesn’t present unintended negative consequences.
Frank Mazzaglia can be reached at Frankwrote@aol.com
Source: Mazzaglia: Obama still lost in Egypt
- ‘Muslim Brotherhood plotting against GCC states’ (mb50.wordpress.com)
- U.S. making nice with the Muslim Brotherhood? (mb50.wordpress.com)
- Obama to bypass Congress, Give $1.5B of your taxes to Muslim Brotherhood (creepingsharia.wordpress.com)
- President Asshat Bypasses Congress, Gives $1.5 Billion To Muslim Brotherhood (thedaleygator.wordpress.com)
- Egypt military lashes out (moroccotomorrow.org)
- Obama’s Disastrous Islamist Outreach (creepingsharia.wordpress.com)
- Egypt Designates Israel Its Top Enemy – Obama Restores Military Aid (genomega1.wordpress.com)