The congressional choo-choo
By Staff
Feb. 10, 2002
In 1971, with the railroad companies getting out of that side of the business as fast as they could, Congress created Amtrak to keep rail passenger service alive. And Amtrak has succeeded in keeping the service alive, although at considerable public cost.
Congress has always entertained the illusion that Amtrak could somehow make money or at least break even. In 1997, it decreed that Amtrak should find a way to cover its operating costs by December 2002. It won't happen. While ridership is up, and Amtrak established that it could serve a limited backup function to the airlines post-Sept. 11, it still lost $1.1 billion last year.
While Amtrak has its faults, it is caught in a political dilemma. It hemorrhages money on long-distance passenger service. On its worst-performing route, the Sunset Limited, from Los Angeles to Orlando, Fla., it loses $347 per passenger, meaning it would be cheaper just to buy the passengers airline tickets. But those long-distance routes are essential to its political support in Congress; Amtrak serves 500 stations and all but three states.
In terms of pure economics, the most sensible course would be to liquidate Amtrak and let the private sector run the pieces worth keeping. But that's not going to happen. Amtrak has powerful friends; the nation's mayors not only want Amtrak kept intact but Congress to invest heavily in high-speed intercity rail. And Americans are sentimental about train travel, enough so that even though most of them don't ride the trains, they don't strenuously object to their taxes subsidizing those who do.
Also in 1997, Congress created the Amtrak Reform Council to ponder the railroad's future. The council issued its report Thursday and basically recommended a slow-motion privatization over two to five years. The plan deserves serious consideration but it leaves key questions unresolved and assumes that there are private companies both willing and capable of running passenger trains.
Certainly there would be bidders for the profitable Washington-New York-Boston corridor, where Amtrak has a profit of almost $20 a passenger. But the problem facing that corridor is not operating the trains but the multi-billion-dollar investment required to upgrade the roadbed to handle European- and Japanese-style high-speed trains. Demand for the service is there but the investment would almost inevitably have to be public money.
Acknowledging political reality, the reform plan would continue to subsidize long-distance trains but franchise them to private companies whose bids called for the lowest subsidy. But the reform plan calls for retaining Amtrak's generous wage structure, its best-paid employees and its onerous work rules. Exactly where then will the private operator make its economies and efficiencies?
This time around, Congress may not be able to play for time as it did in 1997 with its five-year plan. Amtrak says if it doesn't get $1.2 billion to operate next year it will have to slash long-distance service. The Bush administration is offering $521 million. And, Amtrak says, it has a $5.8 billion backlog in maintenance and repair.
Congress might not be the ideal organization to run a railroad, but there it is.
