First, major infrastructure projects might be a good thing in a down economy. Just think about the Bay Area's signature bridges, both completed during the Great Depression. Next, take a look at some existing high-speed rail networks.
As reported in the Economist magazine, the French national railroad made a net profit in 2006 of 695 million euros after paying fees to the track owner, and the TGV (France's high-speed trains) had the highest profit margins. In 2007 the French national railroad had a record profit of 1 billion euros.
Spain, which has a smaller economy than California, already has 310 miles of high-speed rail between Madrid and Barcelona, and has ambitious plans for another 5,500 miles of track. To quote from the Economist, "The aim is to create Europe's most extensive high-speed network, with 90 percent of Spaniards living within 50 kilometers of a station."
What really bothers me about all the hand-wringing regarding high-speed rail is the implication that we are somehow not as smart or as capable as those Europeans. The French (and the Japanese, too) did a lot of engineering work advancing the technology of trains and track to allow travel at much higher speeds, in greater comfort. Anybody who has enjoyed the French TGVs knows what I mean.
It should be much easier for us. It's all been invented before, just not here. Maybe we should just hire a French or Spanish engineering firm to do it for us. One more quote from the Economist concerning high-speed rail: "Carbon emissions per passenger are one-sixth as big as for air travelers."
Marmona Drive, Menlo Park