On-time performance has long been Amtrak’s principal strength … not the trains, but the financial crises.
Little seems more predictable than Amtrak’s periodic budget crises and calls for more money from those naïve enough to believe that nostalgia should be publicly financed, like defense or welfare. The latest chapter is a new U.S. Department of Transportation Inspector General report indicating Amtrak is experiencing unsustainably large losses and is deferring needed investment.
Amtrak has been less than persistent about spending wisely or undertaking serious cost control. Taxpayer subsidies to Amtrak are higher than the total cost per passenger mile of buses or airlines or driving. On some of Amtrak’s routes, it would cost taxpayers less to purchase airline tickets for passengers. Amtrak’s problem is not funding, it is spending.
Efforts to control costs have come and gone. In 1997, Congress passed the Amtrak Reform and Accountability Act, which established an objective of an operating subsidy-free (self-sufficient) Amtrak by 2002. The act established the Amtrak Reform Council (ARC) to monitor Amtrak’s performance toward that goal and to warn Congress if it appeared Amtrak would not achieve the target.
Until the summer of 2001, Amtrak officials assured Congress and the ARC the objective would be reached. They even found the money to establish a service from Chicago to Janesville, Wisconsin that was so poorly patronized NBC News embarrassed Amtrak into cancelling it.
In the best tradition of Enron and Worldcom, Amtrak leadership, now mercifully replaced, misled the public and fell hundreds of millions short. The ARC notified Congress that Amtrak would not achieve self-sufficiency and prepared a legislatively required report outlining ways to improve Amtrak’s performance.
Now, nearly three years later, none of the reforms has been implemented, and Amtrak is in deep trouble.
With a new lease on life, the Bush administration and Congress should return to the fundamental questions that led to the 1997 act: Just why are U.S. taxpayers subsidizing intercity passenger rail?
Is Amtrak subsidized because without it, large numbers of people would be without transportation? Not at all. The nation’s airline and bus systems serve more destinations, and they do so with little or no subsidy per passenger mile. Even the highly publicized airline subsidies and loan guarantees arising out of the September 11 terrorist attacks have been comparatively small. And where buses and airplanes don’t go, cars do. There is little or no subsidy to intercity car travel. The nation’s airports and its intercity roadways are paid for by taxes on users–gasoline taxes on drivers and ticket taxes on people who fly.
Is Amtrak subsidized because trains serve some inherent public purpose? Again, the answer is no. For the most part train subsidies are subsidies to a yesterday that will never return. Pretending it is 1920 does not make it 1920. Cars, airplanes, and buses are here to stay, and they are far less costly than Amtrak.
Is Amtrak subsidized because it is crucial to transportation in the Northeast Corridor, from Washington, DC to New York and Boston? Only in the Northeast Corridor is there more than a trickle of demand for train service. This is because the area is so highly populated.
The Northeast Corridor could become profitable if it were operated on commercial principles. There have been expressions of interest from the private sector, including at least one that would have paid the federal government to purchase the system. The Northeast Corridor should be preserved if it can be profitable, and the process of conversion ought to start without delay.
But as for the rest of the system–the cruise trains that take vacationers from the Midwest to the West Coast, the once-daily trains stopping at Thurmond, West Virginia, or the politically inspired Meridian, Mississippi to Dallas train from which taxpayers were saved only by Amtrak’s 2002 fiscal collapse–all of these should either pay for themselves or be discontinued.
It is time to stop subsidizing yesterday.
Wendell Cox ([email protected]) is principal of Wendell Cox Consultancy (St. Louis), senior fellow at The Heartland Institute (Chicago), and visiting professor at the Conservatoire National des Arts et Metiers (Paris). He was a member of the Amtrak Reform Council from 1999 to 2002.