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“The California High-Speed Rail Authority expects that millions among the traveling public will want to ride its sleek, 220-mph bullet trains between the Bay Area and the Los Angeles Basin when the system starts running in the early 2020s,” explains Tim Sheehan in the Fresno Bee. But when the project, launched with a 2008 bond measure, finally broke ground on January 6, no eager travelers showed up, and that was by design. The groundbreaking was “an invitation-only affair for about 1,200 dignitaries and guests,” including governor Jerry Brown, a day after he was sworn in for his, count ‘em, fourth term. This arrangement makes perfect sense, given the dynamics of the project.

As Sheehan noted, politicians peddled it as a fast new route from the San Francisco Bay Area to Los Angeles, California’s major population centers. But the groundbreaking took place in Fresno, not a major population center. That is a confession that the bullet train is more about spending money to shore up the fortunes of politicians than any attempt to provide modern transportation. That explains the “more than $3 billion in federal stimulus and transportation money” noted by Sheehan. The state rail authority must spend its federal money by September 30, 2017. The rail authority has some $6 billion, which amounts to only 20 percent of the $31 billion for the first operational segment between Merced and Burbank, and less than 10 percent of the $68 billion for the San Francisco to Los Angeles route. So much more spending is in store. As Sheehan also observes, rail bosses only own 101 of 525 pieces of property for the first segment, and still need 539 parcels for the second. As we noted, federal agencies such as the U.S. Surface Transportation Board are helping the cause by ruling that the bullet train trumps California’s Environmental Quality Act (CEQA).

This confirms that environmental concerns count for nothing when politicians want to spend money, particularly on a project like this. If built, the bullet train will provide slower service at higher cost than air travel. Not many Californians are panting for that. So it’s only right that no eager commuters attended the groundbreaking, only “dignitaries and guests.” This project is the ruling class playing with its train set.

Now that the U.S. Senate is under new management, Congress is in a position to begin reining in the federal government’s spending to a greater degree than was possible in its previous session. Writing at RealClearMarkets, Jeffrey Dorfman offers three easy and painless ways that the new Congress might first exercise greater fiscal discipline:

First, Republicans should go for the low-hanging fruit, the easiest spending to eliminate: unspent balances. There are still $80 billion in unspent stimulus funds and another $20 billion in unspent funds that Congress appropriated at least three years ago for other purposes. While some of these funds will likely never be spent, they are still authorized by Congress so the money could walk out the door at any time. Repealing the authorization would save somewhere between the full $100 billion and nothing, but it also has added symbolism even if the true savings is small. Plus, it is hard to see too much opposition to this cut.

Second, Republicans should begin a process of selling vacant federal office buildings. Right now, we are spending $25 billion per year on maintenance and upkeep for buildings the government is not even using. Selling them would save that $25 billion plus bring in revenue equal to whatever the sale price is. It might take a little while, and some buildings are probably worth keeping, but let’s get started. Again, this seems like an easy early victory toward downsizing government, increasing efficiency, and saving money to reduce the deficit. Local governments could even start to collect property taxes on the buildings once the federal government sells them. Everyone wins.

After those easy fiscal boosts, Congress should begin to eliminate all the federal programs that play favorites in our economy instead of working to help all sectors and people. This would include both industry- and place-specific programs. Examples would be programs such as the Rural Business Program Account which subsidizes rural small businesses. We have a Small Business Administration already, we don’t need a duplicate agency that does the same thing but only in rural areas (where the SBA also operates).

The infamous earmarks would also fall into this category as they are the ultimate example of federal spending designed to benefit only a targeted beneficiary. Green energy loans and subsidies would be prime examples of programs trying to pick winners that should be eliminated. The more such special interest programs are cut, the more we could save.

Dorfman goes on to offer other candidates for restraining spending, but these are the easy ones that might be described as “no-brainers“, which means that we could find out soon just how much intelligence is actually at work in the new congressional leadership compared to the previous one that completely refused to consider even these simple reforms.

As part of his $25 billion plan for California’s water system, governor Jerry Brown wants to build two tunnels under the Sacramento-San Joaquin River Delta. Each tunnel would be 40 feet high, 35 miles long, and together they would cost nearly $17 billion. Backers of the plan would do well to consider the pitfalls of a smaller tunnel underneath downtown Seattle. According to the Washington State department of transportation, the dig will allow replacement of the State Route 99 Alaskan Way Viaduct, move two miles of the highway underground, and “clear the way for new public space along Seattle’s downtown waterfront.” New public space sounds good, but Reid Wilson of the Washington Post outlines some of the pitfalls.

Launched in 2009 at a cost of $2.8 billion, the Seattle project was slated for completion in 2015, but that is not going to happen. For one thing, “Bertha,” a 2,000-ton boring machine created specifically for the project, hasn’t worked for an entire year. The machine, Wilson notes, “isn’t able to reverse itself” and will have to be hauled out for repairs by tunneling down from above. This could push the completion date to 2017, but local officials estimate that 70 percent of the money has already been spent.

According to Wilson, even backers of the project are comparing it to Boston’s Central Artery/Tunnel project, also known as the Big Dig, “that took two decades to build at a cost nearly 10 times initial projections.” That cost would be $14.8 billion and the project spanned, count’ em, six U.S. presidents and seven Massachusetts governors. That massive waste caused no hesitation to the Seattle diggers, and neither project appears to have given governor Brown any second thoughts on his far more extensive tunnels. If subject to the same cost overruns as the Boston Big Dig, they would saddle taxpayers with $170 billion. Closer to home, the new span of the Bay Bridge came in $5 billion over cost and ten years late, but raised no caution with the governor.

Government tunnel vision remains blind to massive waste, fraud, incompetence, and even environmental objections, which abound with Brown’s Big Dig. Government tunnel vision sees only the prospects of spending, the rewarding of political backers, and a glowing legacy down the road. Government tunnel vision is like Bertha, the boring machine that “can’t reverse itself.” So more grandiose and wasteful government is in store for 2015 and beyond.

At the end of 2014, the Committee for a Responsible Federal Budget (CRFB) put together 14 charts to describe the budget of the U.S. government. We’re just going to look at the first two, in reverse order, since they tell the big story about the consequences of federal overspending the way it needs to be told.

The first chart shows each of the federal government’s annual budget deficits from 2002 through 2014, with projections to 2025:

In just 10 years time, even if there are no major fiscal crises or recessions that could unpredictably inflate the federal government’s annual budget deficits above projected levels, it is very likely that they will increase to exceed the all-time record deficit recorded during 2009.

As you might expect, those deficits will add up each year, with the result having major consequences for the growth of the national debt.

The nice thing about the way the CFRB visualizes the Congressional Budget Office’s projected data is that it shows both the CBO’s “extended baseline” projection, which is based on how the federal government would spend money under the law as it currently stands (the way U.S. politicians have “promised” they will), and the “alternative fiscal scenario”, which represents how much the federal government’s annual deficits and the growth of the national debt will be if U.S. politicians actually spend money they way they actually do.

And that doesn’t even include new spending, such as President Obama’s proposal to make the first two years’ worth of community-college class tuition “free” to high school graduates. That particular proposal carries a price tag of at least $60 billion and amounts to little more than a bailout of failed K-12 government education programs, since the typical classes that a community college student takes in his or her first two years amounts to little more than a remedial education program of subjects that they failed to learn in high school but were allowed to graduate anyway.

In the end, it’s the sort of poorly considered spending by politicians seeking to boost their personal popularity that will only crank up the nation’s budget deficits and national debt with very little benefit to show in return.

Which coincidentally, is how we got the growing problems of annual federal budget deficits and national debt that we have in the first place!

Water is supposed to flow under a bridge, not into it, but as we noted last year, that is not the case for the stylish new eastern span of the San Francisco–Oakland Bay Bridge, which cost $6.4 billion, $5 billion more than the original estimate, and came in ten years late. All that time and money could not prevent hundreds of leaks during the first winter storm. The leaks occurred in a supposedly watertight steel chamber supporting the bridge’s roadbed, and possibly in guardrail holes for lights and service panels. Caltrans bosses had no answer and no solution, and as investigative journalist Charles Piller points out in the Sacramento Bee, that is still the case.

Holes in the bridge “continued to leak water inside the structure during recent storms.” Andrew Fremier of the Bay Area Toll Authority told Piller that efforts to caulk about 900 bolt holes for guard rails had been only partly successful and water was again collecting inside the splay chambers, the supposedly sealed rooms where the main bridge cable is secured to the new span. Fremier said that these chambers are supposed to be bone dry to prevent corrosion in the main cables and anchor rods. Piller cited independent experts who last year found corrosion and rust on strands of the main cable and anchor rods, which were also coated with salt. The experts warned that rust could make the rods and cable strands vulnerable to cracking, particularly the strands, which vibrate thousands of times a day from trucks passing over the bridge. Fremier blamed a “design error” but described the problem as a “nuisance.” Caltrans engineer Ken Brown declined to speak with Piller, but there’s more to it than rust.

Problems with the bridge’s welds and bolts prompted governor Jerry Brown to say, “I mean, look, shit happens.” Whistleblowers also thought so, and in Sacramento hearings called for a criminal investigation. That never took place, and Caltrans bosses testified that the bridge was more than twice as safe as the old span. With water still inside the bridge, not just under it, that might well be doubted. But it does remain clear that $5 billion in cost overruns and a ten-year delay cannot guarantee safety. As we noted, UC Berkeley structural engineering professor Abolhassan Astaneh-Asi believes the bridge is unsafe and declines to use it.

We took a stab at answering the following question at Quora:

How serious of a problem is the US debt of over 18 trillion dollars and what do economists say about this?

Here’s how we responded:

Having the U.S. national debt be so large is a serious problem for three main reasons:

1. With interest rates currently at all time lows, because of how the U.S. national debt is structured, with over 72% maturing in less than five-years time, that means that if interest rates rise as projected over the next five years, the amount of interest that the U.S. government will have to pay to its creditors will dramatically rise because virtually all of that debt will be rolled over.

Rising Interest Rates and the National Debt

That massive amount of debt will be rolled over because the U.S. government’s spending and revenues are such that it cannot meaningfully pay down its liabilities. Instead, rising payments on just the interest owed by the U.S. government will force the U.S. government to significantly restrain its other spending (it is actually projected to be the fastest rising component of government spending during the next 10 years). Since that other spending represents how elected officials would rather spend money, it has the potential to dramatically increase political tensions within the U.S.

CBO Updates Budget and Economic Outlook: 2014 to 2024

2. The second reason is because having already run up such a large amount of debt, especially in such a very short period of time (it’s gone from roughly $10 trillion to over $18 trillion in just 6-7 years), the very large U.S. national debt will limit the ability of the U.S. government to respond to a future crisis, or given how the world works, future crises. Kind of like how depleting an emergency reservoir to put out a fire renders it useless for putting out new fires.

The Emergency Reservoir

3. There’s a third aspect of the U.S. national debt situation that has international ramifications. Because many foreign banks and institutions perceive U.S. government-issued debt as a safe asset, they will often seek to loan money to the U.S. government when the risks of lending or investing in their own nations are high. That “flight to safety” creates increased demand for U.S. government-issued debt, which helps to drive down the interest rates that the U.S. government has to pay on the money it borrows. That in turn creates a perverse incentive for the U.S. government to increase instability in other parts of the world, which might perhaps go a long way toward explaining American foreign policy under President Barack Obama.

How Obama’s destabilizing the world

Since each of these things makes things worse for ordinary people, having such a large national debt in the U.S. really does represent a serious problem — and not just for Americans.

“Program That Backed Solyndra Now Showing Successes,” proclaims a December 29 article by Henry C. Jackson of the Associated Press. He finds an example of success in Hugoton, Kansas, site of a new cellulosic ethanol refinery funded in part by a loan guarantee from the U.S. Department of Energy. The same program, Mr. Jackson notes, “funded high-profile flops like Solyndra.” In May, 2010, President Obama claimed Solyndra would make enough solar panels each year to generate 500 megawatts of electricity. The next year Solyndra went bankrupt.

Besides Solyndra, Mr. Jackson explains, “three other subsidized companies went bust at a cost of $780 million.” The others include Evergreen Solar Inc. and SpectraWatt. Mr. Jackson does not name them, but taxpayers can get details of their bankruptcy, and Solyndra’s, from Matt Hopkins and William Lazonick of the UMass Center for Industrial Competitiveness. They note that Solyndra “was the poster child of the Obama administration’s American Recovery and Reinvestment Act (ARRA),” and the first company to receive federal loan guarantees under the Energy Policy Act of 2005.

The cellulosic ethanol refinery in Hugoton, meanwhile, was built by the Spanish company Abengoa and cost $500 million. U.S. federal loan guarantees kicked in $132 million of the cost. The plant has a workforce of 75 and an annual payroll of $5 million, producing up to 25 million gallons of ethanol from non-edible waste. Champions of the plant include Senator Pat Roberts and former Senator Sam Brownback, both Republicans who voted against the stimulus.

Mr. Jackson describes development in Hugoton as “booming,” with grocery stores and motels going up, and many new people in town. He cites the Cogentrix plant in Colorado as another success and recycles Department of Energy claims that the loan program “has created or saved roughly 35,000 permanent jobs” and overall will generate “a profit of between $5 billion and $6 billion over the next 20 to 25 years.”

Based on Solyndra, which wound up as fodder for an art exhibit in Berkeley, California, taxpayers have good reason to wonder. In August 2012, a year after Solyndra shut down, its website still proclaimed: “Solyndra’s power solutions offer strong return on investment and make great business sense.”

What’s wrong with giving government employees every single dollar they ask for in pensions and benefits?

After having seen the role of out-of-control public employee pensions in helping drive the city of Detroit into bankruptcy, which the city was only just able to exit in November 2014 after the city’s public pensioners finally agreed to cut their overly generous pensions and benefits to levels that are more affordable for the city’s taxpayers, we wondered which local government in the U.S. is most like Detroit in the disconnect it has between the size of its debts and its ability to make good on those liabilities.

We didn’t have to spend much time researching the topic. America’s next Detroit is Illinois. At least, according to The Economist, which being international in scope, directly compares the fiscal state of Illinois with its most similarly dysfunctional European equivalent: Greece….

Illinois is like Greece in one obvious way: it overpromised and underdelivered on pensions and has little appetite for dealing with the problem, says Hal Weitzman of the University of Chicago Booth School of Business. This large Midwestern state, with a population of 13m (Greece has 11m, though a far smaller GDP than Illinois), has the most underfunded retirement system of any state and the largest pension burden relative to state revenue. It also has the highest number of public-pension funds close to insolvency, such as the one looking after Chicago’s police and firemen. According to the Civic Federation, a budget watchdog, Illinois has piled up a whopping $111 billion in unfunded pension liabilities (see chart), in addition to $56 billion in debt for health benefits for pensioners. The state devotes one in four of its tax dollars to pensions, which is more than it spends on primary and secondary education.

Mainly as a result of this gargantuan pension debt, Illinois’s bond rating is the lowest of all the states, which means dramatically higher borrowing costs. When the state government failed to address pension underfunding in its budget for 2014, two credit-rating agencies, Fitch and Moody’s, cut the state’s bond rating, which in Moody’s case put Illinois on a par with Botswana. (An incensed editorial in the Chicago Tribune asked what Botswana had done to be so insulted.)

The main reason for the pension debacle is decades of underfunding. “Everything was always done with a short-term view,” says Laurence Msall, head of the Civic Federation. “Unique to Illinois is the idea that you don’t have to pay for pensions and you don’t have to follow actuarial recommendations.”

Unlike Detroit, however, Illinois has an extra barrier that is preventing desperately needed reforms for making its public employee pensions sustainable by reducing promised pension payments and benefits to affordable levels: the State of Illinois’ Constitution.

Here, the state’s top law prevents lawmakers from even being able to address its worsening public employee pension crisis by diminishing or impairing pension benefits to retired government employees at all. The state’s only way out is a “long shot” attempt to amend its Constitution, but that would require that the people responsible for creating the crisis in the first place, public employee unions and the large number of officials they helped put into power, go against their own greedy interests in favor of the public’s best interest.

Unfortunately, with such a stacked deck, it’s in their greedy interest to push Illinois to the very edge of insolvency. And all indications are that they will fight reform rather than give up their guaranteed gravy train.

That’s the sort of thing that doesn’t even fly in communist China, which has implemented real public employee pension reforms to meet the public’s interest! If only Illinois’ elected officials would show similar public spirit.

This column alerts taxpayers to government waste, fraud and abuse, which abound at all levels. On those rare occasions when government bodies do the same, it’s certainly worth a look.

As Jon Ortiz notes in the Sacramento Bee, “Nearly two-thirds of California state government data systems checked by auditors over two years contained unreliable information or were impossible to scrutinize for accuracy.” That comes in a report by California’s State Auditor Elaine Howle that cites areas “where important data are not always reliable.” In fact, 17 of 53 systems were “not sufficiently reliable.” These include a State Water Resources Control Board database, which government staffers claimed was “out of date” and clogged with data entries. The financial program of the California State University System, auditors found, declined to trace data back to individual transactions on the ground that this would be “cost-prohibitive.” Another CSU system lacked any hard copy, so these were among 17 systems with “undetermined reliability.” All told, that is a dismal record, but no reform measures were announced, and nobody held to account, demoted, or dismissed. So the state auditor doesn’t really want to know what’s going on.

For other government lapses, consider the plight of Bay Area state senator Ellen Corbett. She was pulling down $97,315 a year as Senate Majority Leader before being termed out of the legislature in November. Not to worry, however, because as Josh Richman notes in the San Jose Mercury News, the Hayward Unified School District created a special position, just for Ellen Corbett. She is now the district’s “executive director of institutional advancement, communications and government relations,” at salary of $167,822, an increase of more than 66 percent.

Just so you know, this is a sinecure. California’s government K-12 school system does a poor job educating students, but the system works well as posh safety net for politicians. Education bureaucrats are always screaming for more money, but there’s always enough funds to feather the bed of a termed-out legislator. The ruling class is number one. Taxpayers aren’t even number two, and that won’t change in 2015. So Happy New Year, everybody.

How long does it take to pay off a nation’s debt?

It would seem that once a nation racks up loads of national debt, it can take hundreds of years to actually pay off and settle the bonds it issued when it originally racked up the debt!

Or rather, it can take hundreds of years for a government to finally get interest rates low enough to make it worthwhile to close out those old debts by rolling them over into newly minted government-issued debt, restarting the clock. The New York Times explains:

Now, prompted by record low interest rates, the British government is planning to pay off some of the debts it racked up over hundreds of years, dating as far back as the South Sea Bubble.

George Osborne, the chancellor of the Exchequer, said this month that in 2015 Britain would repay part of the country’s debt from World War I, and that he wanted to pay off other bonds for debt incurred in the 18th and 19th centuries.

That includes borrowing that may have been used to compensate slave owners when slavery was abolished, to relieve the famine in 19th-century Ireland and to bail out the infamous South Sea Company, which caused the bubble in 1720.

It’s funny that the reasons why governments accumulate such large national debts today are so little changed from what they were centuries ago. If Britain’s example is any indication, the United States will be refinancing the massive increase in national debt that it has incurred since 2008 trying to bail out its infamously failed government-sponsored enterprises (Fannie Mae, Freddie Mac) while greatly expanding its welfare programs (Obamacare, food stamps) for untold decades to come.