Rumors of California’s Bankruptcy are Greatly Exaggerated

Someone needs to give Carolyn Lochhead a clue. In her post on Republicans targeting high speed rail funding, she writes:

Bankrupt California has already collected nearly $4 billion in federal money for a project that is expected to cost at least $42 billion (critics predict that will double). Approved by voters in 2008, the project would link San Francisco and Sacramento with Los Angeles and San Diego via the Central Valley. The first link between Bakersfield and Fresno is supposed to break ground in 2012.

Ahem. California is not bankrupt. The state has enough money to pay its bills, and more than enough money to pay its creditors. In fact, the same day that Lochhead was popping off about bankruptcy, California Treasurer Bill Lockyer was busy explaining to the media that California isn’t in danger of bankruptcy and that the Republican fantasy of forcing state bankruptcies is “ludicrous”:

“It’s a cynical proposal, intended to incite a panic in response to a phony crisis,” Mr. Lockyer said on a conference call with journalists. “Killer bees, space aliens, and now it’s the invasion of the bankrupt states.”…

Mr. Lockyer, a Democrat, said he thought this “ludicrous” idea had been cooked up by politically ambitious Republicans. “Their allies,” he said, naming them as big insurance companies, banks and hedge funds, would torpedo the idea, because “even the faint odor of bankruptcy hurts the values of the bonds that they hold.”

In that sense, Lochhead’s article reminds me of another time a prominent member of the media sided with the space aliens against the human race.

Lochhead also screws up when she calls rail a “big bet” in her article. Um, if it’s a bet, it’s one that California is guaranteed to win. Every HSR line in the world, including Amtrak’s Acela on the Northeast Corridor, has generated profits and high ridership.


10 thoughts on “Rumors of California’s Bankruptcy are Greatly Exaggerated”

  1. Did you spend even 10 seconds checking with Mr. Google before making that statement?

    I’m far from an expert, but here’s just one on-point quote from a 2009 NY Time story (link:

    “High-speed rail is good for society and it’s good for the environment, but it’s not a profitable business,” said Mr. Barrón of the International Union of Railways. He reckons that only two routes in the world – between Tokyo and Osaka, and between Paris and Lyon, France – have broken even.

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