Politics & Policy

Money Train

Another subsidy, no real reforms for Amtrak.

It was the winter of 1999 when my train arrived at Penn Station about 24 hours late. All flights had been grounded because of a major blizzard, and so I figured that an overnight train ride from South Bend, Ind., would be easier than an eleven-hour drive through the ice and snow.

Boy, oh boy — was I ever wrong.

I cannot blame Amtrak for all of that delay, but I absolutely blame them for refusing repeatedly to inform us on how late that train was going to be. I waited with the other passengers in the seedy old train station on Orange Street for something like twelve hours, during which I could not even make the trip to a nearby McDonalds, out of fear that my train would show up when I was gone.

That is my own little reason for hating Amtrak. American taxpayers have more than 40 billion reasons more, for all of the subsidy money Amtrak has squandered over 37 years without ever turning a profit. The U.S. Senate continued this folly on Tuesday with its 70-22 vote to keep subsidizing the rail corporation’s abject failure to provide Americans with a reasonable or efficient transportation alternative. Senators laid the groundwork for an $11.4 billion handout to Amtrak over six years, fending off even the most modest reform proposals. The House has yet to act.

When you think of Amtrak, don’t think of that sleek, silver train in the commercials. Think instead of a passenger rail car with children sitting in every seat, each of them throwing quarters and dimes out the window at every mile-marker. This would approximate the rate at which most of Amtrak’s trains lose money.

Ronald Utt of the Heritage Foundation notes that in 2006, Amtrak lost enough money per passenger on at least three of their long-distance routes — Orlando to L.A., ($436 per passenger), Seattle to L.A. ($227), and New York to Florida ($132) — that they could have easily come out ahead by collecting passengers’ fares and handing them round-trip airline tickets. As of August, Amtrak had lost approximately $845 million for the year.

Amtrak’s routes in the Northeast Corridor, many will argue, make money. This claim is actually false, the result only of Amtrak’s shady bookkeeping (turn to section C). The northeast routes have made $272 million this year, but only if you completely exclude $414 million in depreciation losses, $88 million in debt service, and $211 million in nationwide losses, none of which Amtrak allocates by route. If the company actually kept honest books, we would likely see that Amtrak loses some money even in the Northeast Corridor.

Another false claim is that Amtrak does not get its “fair share” of transportation subsidies. Airline passengers pay taxes and fees at every turn and receive a subsidy less than one-thirtieth of Amtrak’s per-passenger mile. Motorists receive no subsidy at all, once they have paid tolls and gasoline taxes.

The fact that Amtrak hemorrhages money is not the only thing that makes it so awful. There’s also the maddening inefficiency of a system that has no competition and practically no accountability.

Amtrak may be the only commercial enterprise on earth that actually loses money selling beer. Its food and beverage service requires an $80 million subsidy from Congress each year, and this despite the fact that the food and drink are not cheap. Airlines, facing hard times, have already cut back on free food and beverages. By contrast, starting today, Amtrak is offering some frequent riders a $100 booze credit on certain long trips.

An attempt by Sen. Tom Coburn to require that food service on each route break even or else be cancelled was crushed in a 67-24 vote on Tuesday. Part of the problem is that Amtrak’s workers are ridiculously overpaid. Amtrak’s food-service workers make $54,000 per year plus tips, according to congressional testimony from June 2005 — comparably skilled food-service workers make less than half that amount.

Rail transportation is certainly not faster, nor is it usually cheaper (even with the huge subsidies), and so it is little wonder that trains are more than half-empty on average. Nor is rail travel especially environmentally friendly. If you are traveling more than 75 miles, the Congressional Research Service found in 1999 that Amtrak is slightly less fuel-efficient per passenger-mile than driving, and far less efficient than taking a bus. That study was conducted before the introduction of hybrid cars and better gas mileage.

It could not be clearer that inter-city passenger rail has lost its raison d’etre. Rail is a good way to move cows, logs, grain, and cars. It is not a good way to move people, except the ones who are willing to pay far too much (even after the subsidy) for a trip that takes far too long. Other industrialized nations are already privatizing — it is about time Congress gave someone else a chance to improve the margins on the most cost-efficient routes (in the northeast), and stop running the ones that lose the most money.

Unfortunately, this proposal makes too much sense, Utt explains. Some congressman, tears in eyes, will tell a story about the man who absolutely depends on Amtrak to get him from Helena to St. Louis for his monthly kidney dialysis.

Well, we could give every such man in America a free automobile — with chauffeur — and still save billions of dollars if we were to stop subsidizing Amtrak. For $54,000 a year plus tips, I might even consider making myself available to drive.

— David Freddoso is an NRO staff reporter.


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