I'm all in support of trains, however starting them off this shadily (the last minute act of an outgoing governor) is not very good for building goodwill. On the bright side, it is done.
As for trains in general, we should be encouraging them. Of course trains initially cost a lot of money--trains are a network good. How great and useful were the first telephones or radios or airplane rides?
If we didn't put so much money into securing oil reserves via military engagements, building and maintaining highways, subsiding car companies, subsiding airlines directly and by building them airports, then the costs of passenger trains would be on par with the other modes of transportation. Check this out: Chicago is spending at least $3.2 billion to improve just one airport!
Airplanes and cars are old technology and highly dependent on petroleum. As the cost of petroleum rises, we'll have spent serious amounts of wealth for lightly traveled 4-6 lane freeways and gigantic airports that few people will be able to afford to fly in and out of. What energy source is small and light enough to fit in an airplane? There's a reason there aren't coal-fired steam airplanes. And batteries are awful heavy.
Talking about energy, trains are fantastic! At 200 mph (which is slower than Euro trains), NY and Chicago are 4 hours apart. I estimate a train has a frontal area of 9 sq. meters and a drag coefficient of 0.25 (cars are about 0.3). Only counting the wind resistance, so this isn't the energy it takes to roll up and down hills or the wheel friction, the amount of electricity needed for one trip is 3859 kW-hr. I just looked at my electricity bill from July and the neighboring unit and mine used 477 kW-hr for $68. So the cost of electricity to move a high speed train between NY and Chicago is about $536!
The French TGV conveys about 400 passengers, so that NY-C trip would be about $1.355 in electricity per passenger. Assuming a coach bus seats 55 and gets 5 miles per gallon, the same trip takes 2.9 gallons of gas per passenger, so about $9 at $3/gal, not to mention it takes easily 3-4 times as long.
For comparison, it takes 12755 gallons of fuel to fly a 747 the 2560 miles between LA and Hawaii. I'll give them the benefit of the doubt and use the high value for passengers, 524. Doing the same math, it'll take 7.6 gallons of fuel per passenger (~$23) to fly the 800 miles.
But that's not the entire picture. With high speed trains nearly the entire cost is in the track. In France it costs about $12m per mile to build high speed rail--so $9.3b for Chicago to NY (which is how much per month we spend in Iraq.) [$810m for 90 miles between MKE and MSN is $9m per mile, but this isn't true high speed.] At the same time, airplanes cost hundreds of millions and require dozens of billion+ dollar airports. I think it's worth repeating:
Every month for the amount of money we spend in Iraq we probably could build a high speed rail line between NYC and Chicago.
I hadn't taken the calculation this far before and now am saddened. With 800 miles of track every month for a few years, we could have connected all the major cities from Boston to Austin to Miami to Minneapolis probably as well as up and down the west coast and said goodbye to a significant amount of oil and our unfortunate dependency on it.
Penultimately, trains are a breeze to ride. I happily rode them in Europe. They're so casual--show up at the station 5 minutes before the time on the ticket, walk right in off the street, the train rolls up, and climb aboard. Then you've got a seat with actual space and windows, not to mention you can get up and walk around, heck, there are areas designed for standing up! By the way, I've ridden Amtrak once and Chicago's Metra a dozen times or so.
Finally, the economy's in a slump and the government can stimulate the economy either by building up the military or building infrastructure. I'd much rather have infrastructure than flirt with WWIII.
Addendum, 11:15 am: SNCF, the French railroad which operates the TGV, submitted a proposal for building high speed rail in the US a year ago and Chicago and the Midwest are particularly big. They estimate a Midwest system based around Chicago would cost $65.8 billion total.