Put Amtrak Out of Business

by | Jul 11, 2002

Q: I sure hope Amtrak will get all the money it needs to keep operating, don’t you? I can’t believe there are people who would be willing to let the nation’s rail system grind to a halt. A: And I can’t believe that David Gunn, Amtrak’s president, had the gall to threaten a shutdown in […]

Q: I sure hope Amtrak will get all the money it needs to keep operating, don’t you? I can’t believe there are people who would be willing to let the nation’s rail system grind to a halt.

A: And I can’t believe that David Gunn, Amtrak’s president, had the gall to threaten a shutdown in the first place.

Q: What do you mean? How are the trains supposed to run if Amtrak goes broke?

A: Let me understand you. Amtrak is in danger of going broke, so you think it should shut down the few routes on which it actually makes money?

Q: Huh? No, I —

A: Look: Gunn wants to stampede Congress into forking over a couple hundred million dollars, and he’s not going to get it by dwelling on unprofitable routes like the Sunset Limited.

Q: The what?

A: The Orlando-Los Angeles run. It loses nearly $300 for every passenger it carries. That dog should have been put out of its misery years ago and everybody knows it. So instead Gunn decides to raise a panic by threatening trains like the Metroliner, which carries more passengers between New York and Washington than the two airline shuttles combined. He got his panic, all right. But who in their right mind would pull the plug on routes that turn a profit?

Q: I think you’re reading too much into this.

A: Yeah? Well, read this: Amtrak also said that if there was no bailout, it might even have to shut down the commuter trains it operates — like Metrolink in Southern California, Metra in Chicago, and the MBTA Commuter Rail in Boston. What kind of craziness is that? Those commuter contracts earn Amtrak hundreds of millions of dollars a year!

Q: Okay, so Gunn is playing hardball in order to get more money. Can you blame him? After all, Amtrak has always been treated like an unwanted stepchild. Other forms of transportation — buses, cars, airlines — get huge public subsidies. If Amtrak were treated fairly, its bottom line would be a lot stronger.

A: I’ve got news for you: For all the moaning and groaning about how Amtrak gets the short end of the stick, the truth is that in the subsidy sweepstakes, it cleans up big time.

Q: No way! Amtrak only got $500 million in federal funds last year. Highways got $33.5 billion and air travel got $12.6 billion. Amtrak doesn’t “clean up” — it gets shafted!

A: Sure, if you just look at raw dollars, roads and planes receive more money than Amtrak does. But they could hardly do otherwise — they account for almost 99 percent of intercity transportation. You know what Amtrak’s share of the intercity market is? One-half of 1 percent! It’s not the dollars that count, it’s the dollars *per passenger mile.* According to a Congressional Budget Office analysis, Amtrak is subsidized to the tune of 23 cents per passenger-mile, while airlines get two-10ths of a penny and highways get one-10th of a penny. Talk about a great train robbery!

Q: But don’t you think that a national passenger rail system is a vital national priority — especially after Sept. 11?

A: You sound like Fritz Hollings, the North Carolina senator. He’s pushing a bill to dump another $4.6 billion down the Amtrak rathole, and he’s trying to convince everyone that trains are crucial to national defense. He even calls it the National Defense Rail Act, and talks about how Amtrak came to the rescue when the planes were grounded after Sept. 11.

Q: Well, didn’t it?

A: Hardly. Ridership was up for a few days, but overall, Amtrak did 6 percent *less* business in September 2001 than it had in September 2000. As one member of the Amtrak Reform Council, a federal watchdog panel, put it, “If they couldn’t get a spike in ridership when the airlines were shut down, when thousands of people were afraid to fly, when are they going to get it?”

Q: But that doesn’t mean rail isn’t important. Don’t you think the government has an obligation to maintain a viable system of passenger trains?

A: No, I don’t. Outside of the heavily-traveled Northeast Corridor, passenger trains are largely irrelevant in this country. America is a huge place with vast distances between cities, and for the vast majority of trips, trains simply don’t cut it.

Q: So Congress should just let Amtrak twist in the wind?

A: No. It should put Amtrak out of business.

Q: What?! But how about all the passengers who need it? How about all those people in New York and Washington ? What are they supposed to do, fly Delta? Drive? Hitchhike?

A: I didn’t say Congress should put passenger trains out of business. I said it should put *Amtrak* out of business.

Q: What’s the difference?

A: The difference is that Amtrak is a wasteful, mismanaged, government monopoly that has never turned a profit and is currently losing more than $1 billion a year. We would never let federal bureaucrats run the nation’s airlines or intercity bus lines. It was folly to put the government in charge of running the railroads.

Q: So what should we do?

A: First off, Congress should order Amtrak to shut down its weakest routes, the underused long-distance runs that lose so much money.

Q: And then?

A: Then we should do what so many other countries have done: Let the private sector step in and take over the routes that make economic sense, either by purchasing them outright or running them as franchises. There are plenty of qualified railroad operators, you know. Joseph Vranich, an expert on train systems and a past president of the High-Speed Rail Association, listed a slew of them in The Wall Street Journal the other day. Besides, it wouldn’t be the first time we’ve privatized train service.

Q: What do you mean?

A: Remember Conrail, the government-owned freight railroad? In 1987, the feds sold it to private investors for $1.9 billion. That led to such an improvement in management that by the time it was sold to CSX and Norfolk Southern in 1998, its value had soared to $10.3 billion.

Q: Privatization. Hmm. You really think it could work?

A: Sure. It works in Australia, Canada, Britain, Argentina, and Japan. It works for cars, buses, and airplanes. What *doesn’t* work is Amtrak. It’s time we derailed it, and let a better rail system get on track.

Jeff Jacoby is a columnist for The Boston Globe. This is an excerpt from his weekly newsletter, Arguable, and is reprinted with permission. To subscribe to Arguable at no charge, click here.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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