Obama delivers $8 billion in rail grants

WASHINGTON (BestGrowthStock) – The Obama administration on Thursday made a down payment on an ambitious plan to develop high-speed rail as a way to boost regional economies and provide transportation alternatives to cars and air travel in fast-growing areas.

President Barack Obama headed to Florida to announce awards of $8 billion in grants to 31 states and the District of Columbia.

“That investment is how we can break ground across the country, putting people to work building high-speed rail lines, because there’s no reason why Europe or China should have the fastest trains when we can build them right here in America,” he said in a statement.

Obama underscored his desire to create jobs through capital works in his State of the Union address on Wednesday. The U.S. unemployment rate currently stands at 10 percent.

More than 30 manufacturers and suppliers have committed to expanding or establishing operations in the United States if their projects are selected to help build passenger lines, officials said.

Many of the companies are based overseas since the United States virtually abandoned passenger rail development in the 20th century to focus on road and highway development.

The largest of the $8 billion in rail grants, which originated in last year’s economic stimulus package, will go to major transit corridors, with more than one-quarter of the funds dedicated to California.

The state will get $2.25 billion for a 400-mile connector between Los Angeles and San Francisco, with trains designed to travel up to 220 miles per hour, U.S. transportation officials said.

Florida will receive $1.25 billion to develop an 84-mile link between Tampa, Orlando and Miami. Trains there could reach 168 mph.

But politics have influenced the project allocations, said Rep. John Mica of Florida, the highest ranking Republican on the House of Representatives Transportation Committee.

He said the program will not accomplish “true high-speed rail,” akin to systems such as the TGV in France, where trains reach upward of 175 miles per hour.

“Even the first leg of the Orlando-Tampa route will be a slow-speed, short-stop line,” he said. “The Midwest routes chosen will only achieve a top speed of 110 miles per hour and were selected more for political reasons than for high-speed service.”

Illinois will receive $1.1 billion for the Chicago Hub Network connecting Chicago to Midwestern cities from Detroit to St. Louis.


Experts say developing high-speed rail in the U.S. will likely take years, with costs in the tens of billions of dollars.

In April, Obama proposed dedicating $1 billion per year over five years to high-speed rail and Congress recently passed a spending bill that includes $2.5 billion for such projects.

The rail investments will also decrease the country’s reliance on fossil fuels and help the environment, said Transportation Secretary Ray LaHood.

The U.S. long-haul passenger rail system is generally limited to Amtrak, a federally-subsidized railroad corporation created from the remnants of private passenger service nearly four decades ago.

Amtrak’s Acela Express service in the Northeast, the closest thing to U.S. high-speed service, carried 3 million passengers in the fiscal year ended last September 30, pulling in $409 million in ticket sales.

That corridor was granted $112 million in stimulus money and Rep. James Oberstar, the Minnesota Democrat who chairs the Transportation Committee, said some of the grants will also help Amtrak improve its tracks and facilities.

Transportation officials say companies with potential commitments on the table include: General Electric Co’s transportation unit; Canada’s Bombardier Inc; French consortium Alstom; Germany’s Siemens; Lockheed Martin Corp; Korea’s Hyundai Rotem Co, Hyundai Motor Co’s heavy industry unit, and Japan’s Nippon Sharyo Ltd.

Freight rails, which own much of the infrastructure, could also factor into high-speed development.

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Obama delivers $8 billion in rail grants