In his state of the union address, President Obama proposed to build a high-speed rail network reaching 80 percent of Americans within 25 years. But he also proposed to freeze domestic spending for five years. These two goals are incompatible. We can build that rail network, but it will not lead to the economic revival Obama envisions; it will only make it harder to reign in government spending.
More than three-fourths of federal revenues go for just four things: social security, medicare, medicaid, and interest on the national debt. By 2020, those four things will consume more than 90 percent of federal revenues. By 2030, they will consume all of those revenues.
At least, that’s the projection made by a November 15, 2010 report from the Government Accountability Office. It has apparently become news now because the national debt exceeded $14 trillion for the first time on January 20.
One possible lesson from this is that, if you want to build an expensive high-speed rail network or some other costly project, you better do it now while the federal government is still solvent. A more responsible lesson should be that we shouldn’t expect the federal government to things for us that the market can do better (and at no cost to taxpayers). If private investors won’t build high-speed rail, maybe we don’t really need high-speed rail.
