Railroads made Chicago, and now a Chicago-rich White House wants to return the favor. | REUTERS Obama plots huge railroad expansion

Railroads made Chicago, and now a Chicago-rich White House wants to return the favor: remaking rail with a huge new federal investment in high-speed passenger trains.

The $787.2 billion economic recovery bill — to be signed by President Barack Obama on Tuesday — dedicates $8 billion to high-speed rail, most of which was added in the final closed-door bargaining at the instigation of White House chief of staff Rahm Emanuel.


It’s a sum that far surpasses anything before attempted in the United States — and more is coming. Administration officials told Politico that when Obama outlines his 2010 budget next week, it will ask for $1 billion more for high-speed rail in each of the next five years.

Yet for all the high stakes, the pieces didn’t fall into place until the end of deliberations on the recovery bill. And the way in which they did is revealing of the often late-breaking decisions — and politics — that shaped the final package.

As a candidate for president, Obama spoke of high-speed rail as part of his vision of “rebuilding America.” Campaigning in Indiana, he talked of revitalizing the Midwest by connecting cities with faster rail service to relieve congestion and improve energy conservation.

“The time is right now for us to start thinking about high-speed rail as an alternative to air transportation connecting all these cities,” he said. “And think about what a great project that would be in terms of rebuilding America.”

But the administration never emphasized high-speed rail when the House Appropriations Committee was writing its bill in January, so no money was included. The first real request came only days before the Senate Appropriations panel marked up, and the committee had to scramble to find room for $2 billion — in part by cutting other Obama priorities.

Last week, Emanuel greatly upped the ante, asking House-Senate negotiators for $10 billion for high-speed rail — far more than either bill provided.

“I put it in there for the president,” Emanuel said in an interview. “The president wanted to have a signature issue in the bill, his commitment for the future.”

Emanuel himself was excited by the idea, but the decision to wager so much on high-speed rail reflected the fact that other candidates for a signature Obama issue were fading.

Moderate Senate Republicans, whose votes were needed, were resisting the president’s school construction initiative. Modernizing the nation’s electric grid, another White House favorite, seemed to have lost some of its cachet.

High-speed rail sailed through with surprisingly little attention paid to the president’s role.

The same Maine and Pennsylvania Republican moderates who had criticized Obama’s school construction initiative were more accepting of the rail funds, since the Northeast corridor has a major stake in more improvements. To help pay for the added cost, a business tax break — providing a five-year carry back for net operating losses — was narrowed to keep the focus more on smaller firms with receipts of less than $15 million.

At the same time, conservative Republicans seemed almost blind to Obama’s role. Instead, in their campaign to find pork barrel projects in the stimulus bill, they painted the whole funding as a scheme by Senate Majority Leader Harry Reid on behalf of Las Vegas interests seeking a rail link to Los Angeles. “Sin City to Tomorrow Land” was one description.

Here is Rep. Candice S. Miller (R-Mich.) explaining her vote against the bill Friday despite the benefits to her home state: “Michigan is a state of about 10 million people, and we are the hardest hit, as I said, by this economy. And yet we are expected to get approximately $7 billion from this bill. And apparently the Senate majority leader has earmarked $8 billion for a rail system from Las Vegas to Los Angeles? You have got to be kidding. You have got to be kidding.”

In fact, there’s little evidence that Reid had a decisive role, although he was happy to see his name mentioned for the sake of voters at home.

“It’s amazing. I’m stunned,” he said in an interview Friday, hours before the bill passed Congress. “I’m glad I get the credit in Nevada, but this is Obama’s No. 1 priority. This is his legacy issue out of this bill, because we need these high-speed corridors. ... I’ll take credit but frankly didn’t have much to do with it other than carry forward with what Obama wanted.”

Big hurdles remain. Critics already argue that the money is misplaced in a stimulus bill since it will be hard to spend quickly. Much depends on winning the cooperation of Class 1 freight lines that control many of the rights of way outside the Northeast.

But it is a landmark transportation investment with regional effects in almost every corner of the nation. Just last October, former President George W. Bush signed a bill authorizing up to $1.5 billion for high-speed rail through 2013. Obama’s commitment in the same period will be eight times that.

Transportation Secretary Ray LaHood is given 60 days to come up with a strategic plan for the funds. The combination of large capital upfront — followed by annual appropriations — fits the prototype for the infrastructure bank once considered for, but never included in, the recovery bill.

“High-speed rail is the infrastructure bank,” said Emanuel, and the legislation gives LaHood discretion to assign “priority to projects that support the development of intercity high-speed rail service.”

There is some precedent. At the height of the New Deal, FDR’s Public Works Administration played a role in persuading the Pennsylvania Railroad to complete the electrification of its Washington-New York line and finish Philadelphia’s 30th Street Station. Today, the government could make capital investments that both benefit freight operations and facilitate high-speed passenger service. With the drop in freight traffic, the railroads might be more cooperative, although they are sure to want some liability protection for accidents.