As for their reasons, Walker & Company are trying their damnedest to get rid of equipment that would work well between Milwaukee and Madison, not because of the financial issues, but simply because they hate Madison.
Through the whole Wisconsin fiasco, this is the first explanation I've heard that rings true. It obvious that the financial issue was a hoax. There isn't any question in my mind that the Madison service would be one of the most successful train start ups ever. After all, cheese head aren't that different culturally from Illinoisans. And all of the Illinois trains are very successful, some of which have only a small fraction of the population along the line, compared to Madison - Milwaukee.
There were other reasons to believe in the start-up, and that is presumably why the Feds gave WI the money, in the face of stiff competition.
- Connectivity (to Chicago, with ongoing connections across the midwest and the nation)
- Urban cores at both ends (whether one takes the eastern end to be CHI or Milwaukee) with strong public transit networks (relatively speaking): important for passenger distribution.
- State capital, which always produces higher ridership figures than an equivalent city of the same size (so do university towns, and Madison is both)
- Meaningful possibility of a western extension (to Minneapolis)
I don't know that many people think Walker's decision was based on cold economic analysis. By the time he was elected, the decision to pursue the project would have been expense-neutral for WI at worst (though perhaps not for the nation). Lots of Fed money, construction jobs, economic development benefits... all bringing increased tax revenue, would have offset operating losses for the next 20 years (time lines are tough beyond that). And it wasn't sure that there would even be any operating losses: depended on who you believed. Plus, WI would have wound up with a piece of infrastructure that would have significantly improved the lives of its citizens, saved not a few Wisconsin lives / avoided permanent maimings, and lessened carbon-based environmental damage.
In the days following the election, many, many people, including many Walker supporters / Republican business leaders (who also stood to benefit — you would not have had to show a party registration to get a construction contract or to ride the train), made these points, more or less quietly, to the incoming administration. Walker stood firm, on the avowed grounds that he had made a campaign promise, and was not about to start his new administration by going back on it. But I doubt that that was the whole story.
So, why did he cancel the deal? Because he "hates Madison?" Maybe, if that is a code word. Perhaps because the type of transformation that the train would have brought, mostly of benefit to people unlikely to vote his way, is not one that he can approve of. It densifies and supports the economic vitality of urban cores, channels passenger flows into a heavily-used corridor, helps mobility (and thus opportunity) for the poor and for young people... who are then empowered to go out and vote in an informed manner. Note that Walker's other great crusade was against... public education.
Republican governance is good for an extremely wealthy top fringe of the population willing to isolate itself from the rest of us, and for defenders of individual liberty who are willing to sacrifice economic and physical well-being (including their own) to hold on to that liberty. These two populations represent, say, 2% + 25% of the total. And they rationally vote for the Walkers of the world: 1%ers who promise to the 25% that they will "stay out of their lives," and keep other people out.
But you have to get to 50% (well, 48% if you play your cards right ;-) to win elections. And the remaining 23% have to come from people too dumb to understand what is being done to them. Neither education, nor mobility and opportunity shared with the poor, can be on your wish list if your survival depends on keeping 23% of the population dumb as posts....
