Amtrak – Another Government-Run Disaster
I am the casualty of a model train collector gone wild. Sorry, Dad, but it’s true.
Many a Christmas morning, my brother and I would find underneath the tree a bow-adorned brand new shiny O-gauge electric train set. I would smile and watch my father smile even brighter as he carried the box, still unopened, up to the attic for “safekeeping.”
Much as I disliked Dad’s “Look, but don’t touch” approach to holiday gift-giving, it gave trains a sense of mystery. I find them wondrous to this day, and have ridden them all around the world.
But I find economic liberty wondrous too. Which is why I was horrified the other day by the banners promoting Amtrak that I saw hanging at Washington, D.C.’s historic, architecturally magnificent Union Station.
“An engine so incredible it turns one dollar into three.” How? Supposedly by “bring[ing] buyers to sellers, sellers to market, and return[ing] nearly three dollars to local communities for every federal dollar invested.” Maybe we should just relocate the Federal Reserve closer to the railroad tracks. Boom.
Amtrak, officially the National Railroad Passenger Corporation, was created by Congress in 1970 following the bankruptcy of the Penn Central Railroad—the largest bankruptcy in history before Enron.
When Amtrak service began the following year, it was under an understanding between the railroad industry and President Nixon that it would be temporary and passenger rail operations would revert to the private sector in short order—perhaps before bellbottoms fell out of fashion, even. But as Milton Friedman aptly put it, “Nothing is so permanent as a temporary government program.”
The income tax? Just a temporary thing to fund the Civil War. Telephone excise tax? Spanish-American War, then done. Social Security’s Lump Sum Death Benefit program? You guessed it. More recently, holdovers from the 2009 Obama stimulus bill: Build America Bonds, the Supplemental Nutrition Assistance Program (SNAP), and the Recovery Accountability and Transparency Board.
Today, Amtrak survives on federal subsidies—some $40 billion over the past four decades. In 2012, it received $1.2 billion in federal subsidies, with its long-distance routes losing nearly $600 million. How did it do this? Through a mix of expensive labor contracts and unprofitable routes operated for no other reason than politics.
As The Washington Post’s Brad Plumer notes, many of Amtrak’s long-distance routes “were originally put in place to placate members of Congress all over the country, and they span dozens of states.”
And a contract finalized in 2010 between Amtrak and three unions representing its on-board employees raised wages generally by 15 percent, capped health care contributions, and froze co-pays and deductibles.
Amtrak even loses money on food service, around $70 million in 2012—selling to a captive audience.
But wait, you say, the airlines get subsidies too? Yes, and they shouldn’t, but they receive a relative trifle compared to what Amtrak scoops up at the public trough. Before they grew by 50 percent between 2007 and 2011, subsidies to airlines accounted for $6 per 100 passenger miles, compared to $186 for Amtrak. According to the Bureau of Transportation Statistics, Amtrak’s share of total U.S. passenger-miles is about 1/10th of 1 percent.
To put this in perspective, in 2011 the average American rode a mere 21 miles on Amtrak, compared to 1,800 flying and 15,000 driving. Even in the densely populated Northeast Corridor, where more than a third of all Amtrak trips take place, that average merely doubles to a still measly 42 miles.
Not bad for a transportation service that represents a third of one percent of U.S. intercity passenger traffic.
So what should be done? I say we demand our real dollar back and let Amtrak keep its imaginary three. Playing with model trains was never supposed to be this expensive.