Amtrak: Congress's Toy Trains
Like papas at Christmas time, the members of Congress love to give their district trains. The price tag? A cool billion dollars a year in taxpayers' money.
I am sitting in the Springfield, Massachusetts, train station at two in the morning, waiting for the scheduled arrival of Amtrak's Montrealer train, a daily long-distance run from Washington, D.C., through New England, to Montreal. The station is small, sterile, and dull, with cheap plastic chairs and nothing on the walls save one or two "America's Getting into Training" posters provided by Amtrak. I imagine that, even if crammed with people, this station would be small, sterile, and dull, not like modern airport terminals and not like the grand old railroad stations of the past that must have brimmed over with energy and excitement (or so I'm told—I'm too young to remember).
The crew that will take over the train here is waiting in the station also. Mostly they're old railroaders, and they're talking about last night's wash-out. The Montrealer's passengers were transferred to buses because the train couldn't make it through a flood on the track, and the crew is critical of the way the transfer was handled. But three and a half hours from now, after they pull into the station at White River Junction, Vermont, they'll be relieved by another crew and go home with a full day's wages for their work—courtesy of you, the US taxpayer. Perhaps this is why their criticism is muted. I ask them their opinions about Amtrak management; they tell me the subject is off-limits to outsiders.
About 2:30 the train pulls in, 15 minutes late. I board and note that less than half the seats of this six-coach train are occupied. It seems a waste.
One coach is hotter than the rest. I choose to sit there because the early morning Springfield weather has chilled me. There are only four other people in the entire car—a young family sleeping up front, probably on vacation.
My peace is interrupted only by a conductor taking tickets and by an electrician who flicks a switch somewhere, turning on full-blast a blower that transforms my toasty car into an icebox in a matter of minutes. I switch cars. The young family sleeps on.
Passengers seem generally content with the 40-mile per hour pace of the train and with the service offered by the numerous attendants and crew members. Not many dress wealthy, although very few appear poor. There are occasional trips to the café car to purchase tax-subsidized hot dogs, Coke, or beer.
As we pull into Montreal's central station, it occurs to me that this is one of the few times I have gotten something for the taxes I pay to the government. You, the taxpayer, pick up an average 60 percent of the tab for Amtrak passengers' travel. The Montrealer alone is a $12-million-a-year loser of taxpayers' money, and it's just one among many in the Amtrak system.
In 1970, when Congress and the Nixon administration agreed to continue passenger rail travel in the face of growing public preference for auto, bus, and plane, a modest $40 million was put up to get Amtrak rolling. In 1981 Amtrak is still rolling, and the taxpayers now are laying down nearly $900 million a year for it. Amtrak officials enthusiastically predict that the system will soon achieve "a permanent and ever more crucial role in our national transportation system." More realistically, the Interstate Commerce Commission notes that "Amtrak seems to have stabilized into a position of permanently subsidized operations."
Amtrak—formally, the National Railroad Passenger Corporation—was created from the remains of a heavily subsidized, overregulated industry. Prior to 1940, government aid to railroad construction totaled $1.4 billion, in many forms and from every level of government. Cities, towns, and states went into debt to purchase stock, guarantee railroad bonds, and make outright donations. States added eminent domain powers, monopoly privileges, and tax exemptions. Creative North Carolina turned over gangs of convicts so that local railroaders could build their roads cheaply! The federal government chipped in with remissions of duties on railroad iron, grants of oversized rights of way, direct loans, and land grants—in all, totaling 1.3 million acres—an expanse of land equal in size to Michigan, Wisconsin, Illinois, Indiana, and nearly half of Ohio.
Though this aid to railroads contributed to the opening of America's frontiers and speeded commercial growth, it also had unfortunate consequences. Government largess lured speculators and swindlers into the rail industry. Early rail builders quickly learned that nearby communities that desired rail service could be played off one another to maximize handouts. The price of a rail connection could be high—in 1880 Superior, Wisconsin, granted one-third of all the city's property to the Northern Pacific for such a connection.
And subsidies bred corruption. During the scandal-ridden Grant administration the federal government heavily subsidized the building of the Union Pacific's link in the nation's first transcontinental railroad. Corrupt congressmen and rail leaders formed the Credit Mobilier construction company to milk the government for all it was worth. Charles Francis Adams, president of the Union Pacific, described Credit Mobilier's operations: "The members of it are in Congress, they are trustees for the bondholders, they are directors, they are stockholders, they are contractors; in Washington they vote the subsidies, in New York they receive them, and in the Credit Mobilier they divide them."
Government aid contributed also to the overbuilding of the railroads. A route map of the eastern and Midwestern United States in 1920 looks like the web of a spider gone mad. As might be expected in an overbuilt industry, competition was intense. One result: whenever a recession struck, many weaker companies went under, leaving small investors and local governments holding worthless pieces of paper. The depression beginning in 1893, for instance, wiped out 67,000 miles of track. Public dismay over this recurrent problem led states to erect constitutional limits to the power to aid railroads by going into debt.
Though many railroaders, such as James J. Hill and the Vanderbilts, were builders and bold risk takers, the swindles and bankruptcies created resentment against the railroad industry as a whole. Further, the common railroad practice of granting more favorable rates to larger shippers and for longer hauls angered small shippers and farmers. They saw the railroader as a "robber baron" and demanded government regulation. In the late 19th and early 20th centuries, consumers, too—some of them victims of local railroad monopolies, others simply caught up in the general antibusiness sentiment of the day—took up the cry for regulation of the rail "monopoly."
Rail executives and their bankers couldn't have agreed more: their industry needed government regulation—although they saw competition, not monopoly, as the disease to be cured. Wrote Aldace Walker, chairman of the board of the Atchison, Topeka and Santa Fe, in 1891: "The phrase 'free competition' sounds well enough as a universal regulator, but it regulates by the knife. Unless the weapon in turn itself is held in check it is too dangerous an agency to be endured."
This strange overlapping of interests between consumers and railroaders culminated in the creation in 1887 of the Interstate Commerce Commission (ICC), which, through amending legislation passed in the early 1900s, was given the power to govern railroads' rates and routes. Richard Olney, counsel for the Boston & Maine Railroad in 1887 but later to be US attorney general, expressed the widespread railroad sentiment:
The Commission, as its functions have now been limited by the courts, is, or can be made, of great use to the railroads. It satisfies the public clamor for a government supervision of the railroads, at the same time that that supervision is almost entirely nominal. Further, the older such a commission gets to be, the more inclined it will be to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests.
Unfortunately for the railroads, however, the regulatory body they were so willing to embrace went on to sap their industry of the flexibility and capital needed to adapt to new challenges.
In the passenger-carrying business, the biggest challenge to the railroads came rolling off Detroit's assembly lines. The car, cheaper and more convenient than the train, rapidly gained popularity in America. Between 1915 and 1929, car registrations soared from 548,000 to 4.5 million and surfaced road mileage increased from 256,000 to 662,000. Conversely, between 1920 and 1929, the number of passengers carried by rail declined from 1.3 billion in 1920 to 786 million in 1929. Nevertheless, until 1929 railroad passenger operations as a whole remained profitable.
Then the Depression struck, and railroading fell upon hard times. During the '30s, railroads representing 72 percent of the nation's mileage failed to cover their fixed charges.
Railroads suffered a 45 percent slump in ridership between 1929 and 1933, and passenger service went into the red. Improvement in the economy in the second half of the '30s and during the war reversed the trend, but only temporarily. Once the economy returned to a peacetime footing, meaning more cars and more gasoline, the passenger business again became a loser.
"We lost the rail passenger business at a time when we were providing the finest service in the world," claims a former rail executive. And he's right. In the late '40s railroads, buoyed by wartime profits, optimistically introduced new equipment into passenger service and completed a dieselization program begun in the late '30s. Passengers, however, continued to desert the trains. Between 1946 and 1957 rail passenger miles declined again by more than half, and railroad losses skyrocketed (see table below).
The car was king, and by the early 1950s it was clear to railroad leaders that the jig was up as far as railroad passenger business was concerned. The addition of the jet plane to the nation's airways later in the decade was simply another blow to an already reeling industry.
The railroads, however were trapped in a regulatory bind. It was not up to them, but up to state railroad commissions, whether unprofitable passenger routes could be abandoned. And the commissions wouldn't budge. To make matters worse, the ICC, which regulated rates, refused to allow the railroads to raise their rates in order to reduce their passenger service deficits. The result was a forced subsidy of the losing passenger service by the profitable freight service.
Railroad executives took the only avenue left open to them: they cut costs. Passenger service was allowed to deteriorate. Sleeping and dining cars were left off many trains. Advertising budgets were slashed. Where they continued to be served, meals became perfunctory; it was said of the Southern Pacific's steaks: "The only thing tougher than that steak is the heart of a Southern Pacific ticket agent."
In 1958 Congress granted the ICC exclusive power to regulate the abandonment of interstate passenger routes. Some railroads proceeded to discourage passengers from riding the trains, knowing that the ICC frequently allowed abandonment if the railroad could demonstrate that its services were unsupported by the public. Railroads no longer gave travel agents commissions for selling train tickets. The Southern Pacific, the most notorious of the passenger-discouraging railroads, eliminated mention of two of its trains from its published schedules, instructed ticket agents to deny that the trains existed, closed the ticket office two and a half hours before the time of departure, and sometimes forced passengers to ride in cabooses. The railroads achieved the desired results. In 1920, 20,000 passenger trains were operated in America; by 1967, only 500 remained.
By 1967 it was clear that railroads would abandon passenger service as quickly as the ICC would allow. The ICC, however, unwilling to bite the bullet, called a virtual halt to abandonment. At the same time, influential rail advocates—including Sens. Claiborne Pell (D-R.I.) and Winston Prouty (R-Vt.) and the National Association of Rail Passengers, a lobbying group—began making plans for an Amtrak-like corporation. In October 1970, in the wake of the bankruptcy of the Penn Central and other northeastern railroads, Amtrak was born.
Nobody, it seemed, wanted to be responsible for the end of US rail passenger service, though there were disagreements initially about how best to save it. I checked through a 1970 congressional report and found that the railroad industry favored private operation of passenger trains, with all operating losses covered by the government. Unions favored a virtual nationalization plan, with government assuming ownership of the rail infrastructure and private railroads contracting for the use of it. It was a compromise between these two that passed overwhelmingly.
Amtrak calls itself a quasi-public corporation; it could just as well call itself quasi-nationalized. It is managed by a president and a 13-person board of directors. All but four of the directors are appointed by the president; the remaining four represent Amtrak's stockholders (the railroad companies that joined the system). Except in the Northeast Corridor, where it bought in in 1976 from Penn Central through the Federal Railroad Administration, Amtrak owns no track or rights-of-way. Nor does Amtrak have its own operating crews. What Amtrak does own is cars, locomotives, and maintenance facilities. It also employs its own service attendants and maintenance employees.
Amtrak contracts with private railroads for trackage rights and for train crews, and its original equipment came from the railroads that joined the system in 1971. Congress permitted such railroads to discontinue their own passenger services, while those refusing to join the system were required to continue their then-existing passenger trains until 1975. Facing such an extortionate penalty, most railroads joined. The last holdout, the Southern Railway, capitulated in 1979.
Originally, Congress expected and empowered Amtrak to issue stock. Railroads that joined were given the option of becoming common stockholders or taking tax write-offs on the equipment they subscribed to Amtrak. Not sanguine about Amtrak's prospects, all but four of the joining railroads chose the tax write-off. For those four, the value of an additional tax write-off on top of those they already had was minimal. Amtrak was empowered also to issue preferred stock to the general public, but plans for such as issue were quickly scrapped when it became apparent that Amtrak would be in no shape to grant dividends.
Amtrak's route structure was to be designated by the secretary of transportation, in consultation with Congress, the ICC, rail labor organizations, the National Association of Railroad Passengers (NARP), and others. As the route designation process ground slowly on, with each group wanting more and more trains added to the minimal system originally proposed by Transportation Secretary Volpe, it became clear that one of Amtrak's major problems would be to operate a successful railroad over a politicized route structure.
Though rail executives and others had long maintained that rail passenger service could be most successful in corridor-type operations between heavy population centers—the only person I talked to who didn't agree with this analysis was Ross Capor, head of NARP—politicians prefer long-distance trains. The reason, of course, is that they traverse relatively more congressional districts than the shorter, corridor-type operations; thus, they attract the support of more members of Congress. My calculations show that the Montrealer, for example, on its trip from Washington to Montreal, services at least 46 nearby congressional (House) districts and passes through 9 states, picking up the support of 18 senators.
As a result of the politicization of the route structure, Amtrak has ended up with a system far too large for it to handle effectively with the available equipment. Marginal routes were added to ensure the support of key politicians. Senate Majority Leader Mike Mansfield saw to it that scarcely populated Montana was provided with service. The "Harley Staggers Special" was the unofficial name for a train running through the House Commerce Committee chairman's home district in West Virginia. Indianapolis became a major Amtrak stop largely because it was the home state of Staggers's counterpart in the Senate, Vance Hartke.
Though the legislation that created Amtrak empowered the corporation to discontinue unsuccessful routes, Congress twice postponed exercise of this authority and in fact required Amtrak to add new routes, such as the Montrealer in 1972. Even Amtrak became protective about its route structure. In 1975, when the Ford administration attempted a route-mileage cutback, a politically savvy Amtrak retaliated by threatening to cut off 19 trains, far more than proposed, including many through key congressional districts. The administration quickly backed down.
In 1979 the Carter administration, this time with the backing of an overhauled Amtrak management with former Secretary of Transportation Alan Boyd as president, proposed to cut back Amtrak's route mileage by 43 percent. The "energy crisis," however, intervened just in the nick of time. Travelers without gasoline took to the trains as never before—I remember standing in the aisle of an Amtrak train all the way from Boston to New York—and Amtrak was saved. Route mileage was reduced a mere 15 percent; and although Congress set certain performance goals and discontinuance criteria, Amtrak appropriations continued to grow. NARP and other rail advocates rightly claimed victory. Only a few, like Reps. Samuel Devine (R-Oh.) and James Collins (R-Tex.), had the courage to speak the truth about Amtrak:
While Amtrak has been a noble experiment—born as a desperate attempt to keep passenger service from dragging all the nation's railroads into bankruptcy—eight years of effort have failed to demonstrate a real need for the service. We cannot afford to keep Amtrak going simply because it permits Congressmen to have a toy railroad and labor unions to have institutionalized featherbedding.
Not surprisingly, the politicization of Amtrak has taken its toll on performance. Between 1972 and 1980, ridership went up by 28 percent, passenger miles by 53 percent, and operating revenue by 174 percent. During the same period, however, operating expense rose by 266 percent and the operating deficit by 357 percent. In 1972, Amtrak's revenues amounted to but 50 percent of costs. Far from improving, however, by 1980 that figure had fallen to 37 percent. (See table, p. 25.) Even in Amtrak's relatively heavily traveled Northeast Corridor—Washington, D.C., to Boston—which accounts for half of all Amtrak passengers, the ratio is only about 50 percent.
In 1979, in exchange for agreeing to cut the system's route mileage by only 15 percent, Congress set revenue-to-cost ratio goals for Amtrak: 44 percent by 1982 and 50 percent by 1985. In his economic program made public in February, President Reagan proposed a new timetable: Amtrak passengers should pay 50 percent of the cost of their trips by 1982, not 1985; and that figure should be increased each year so that, by 1985, taxpayers would be picking up the tab for only 20 percent rather than 50 or 60 percent of Amtrak passengers' trips. The total savings? $3.5 billion, by Reagan's calculations.
Amtrak, however, to judge by history, has more friends on Capitol Hill than does the taxpayer, which goes a long way toward explaining its poor input/output ratio. Members of Congress who vote for Amtrak obviously do not judge its success by bottom-line loss figures. Instead, their eyes are on popularity, and they seize upon ridership figures as a popularity surrogate.
Amtrak caters to this political view of things in press releases highlighting ridership growth, never mentioning that, as of 1978, even if every seat on every Amtrak train were full on every run, Amtrak would still lose nearly $100 million per year, according to a study by Frank Mulvey, economist and Amtrak expert at Northeastern University. That best-case loss figure is probably even larger now. However, when I tried to get a confirmation or denial of this from Amtrak I was stonewalled, despite repeated assurances from an Amtrak official that the requested information would be coming shortly. REASON reporters are apparently not popular among Washington bureaucrats. "Amtrak has had little incentive to be economically efficient," Dr. Mulvey told a congressional committee in 1979, "and considerable impetus to increase service and show ridership growth regardless of cost."
Indeed, even abstract popularity is enough to convince politicians to support Amtrak. For example, when the Carter administration threatened the Montrealer with extinction in 1979, Rep. James Jeffords (R-Vt.) circulated a petition to save the train and trumpeted his success in gathering 20,000 signatures. It is quite unlikely, of course, that 20,000 Vermonters have boarded the Montrealer since it commenced operating in 1972.
Similarly, Louis Harris surveys showing that a majority of Americans favor subsidies to Amtrak are frequently quoted in Congress, as if they are meaningful in discussing the merits of additional appropriations for a corporation established as "for profit." (Incidentally, in 1978 Congress faced reality and changed Amtrak's description from "for profit" to "managed and operated as a for profit corporation," thus giving Amtrak rebirth as a licensed loser of the public's money.) What the polls and petitions belie is that Amtrak accounts for less than one-third of one percent of all intercity travel in the United States each year, according to the Department of Transportation. What accounts for Amtrak's appeal to Americans then? It is a form of "kinetic art," says a former railroad executive.
Ignorance about the extent of Amtrak's subsidy must play a part too, though. I did a survey of Montrealer passengers, asking what percentage of the cost of their travel the passengers thought the government picked up. Of the 100 respondents, only 12 placed the subsidy between 40 and 60 percent; 86 guessed that it is less than 40 percent; and 58 supposed that it is lower than 20 percent. Several were appalled when I told them that the subsidy actually comes to 60 percent.
What this means for a trip from Washington, D.C., to Montreal is that the Amtrak passenger, paying a $58 fare, has $87 of the cost of his travel paid for out of taxes. If the same passenger paid the same $58 to board a Delta Airlines Washington-Montreal flight, the government would have to pay Delta only $35 to cover the remainder of the passenger's economy fare. The passenger would arrive at Montreal in only two and a half hours, as opposed to the 17 hours required by the train, and the government would save $52 of the taxpayers' money! With the money left over the government could, if it chose, give another passenger to Montreal exactly the same deal and still have $17 at the end.
The comparative payoff from the government's capital grants to Amtrak show the same disparity. Since 1974 Amtrak's capital outlays for new cars and equipment have increased sharply. Though the benefits are tangible—a new, efficient computerized reservation system and many new, more reliable cars and locomotives—the costs are huge. One bilevel domed Superliner coach, for example, currently being used in Western service, costs a million dollars and seats up to 78 passengers, according to figures given to me by Amtrak. To compare, the same million dollars could purchase nine Greyhound-style bus coaches with a combined seating capacity of nearly 400. Despite all this, in 1979 Congress authorized a further $701 million in capital for Amtrak over the next three years.
Can Amtrak's subsidy be justified? Not on the grounds put forward by its advocates.
"Amtrak's subsidy is minuscule in comparison to government subsidies of competing travel modes. It's time government stopped fostering the American love affair with the automobile."
It is true that government moneys going to highway and air travel are far larger than the subsidy given to Amtrak. Federal aid alone to highway development between 1971 and 1977 was more than $41 billion. The comparable figure for federal aid to air travel was nearly $14 billion. Add on local and state assistance, and the amount of government aid to Amtrak's competitors more than doubles.
Much of the government "aid" to highway and air transport, however, comes from trust funds financed by user fees. Trust funds account for 85 percent of federal aid to commercial air transport; the figure is probably much smaller at the state and local level. The Congressional Budget Office estimates that 50-60 percent of all aid to highway travel at all levels of government comes from trust funds; others say the proportion is higher. Of the federal government's aid to highways, at least 80-90 percent is provided by the Highway Trust Fund.
The return per unit of actual subsidy is far higher for air and highway travel than for rail travel. In 1978, for example, the federal government laid out 12.9 cents in operating grants for each passenger mile delivered by Amtrak. In comparison, net of trust fund monies the bus industry required only 0.03 cents and commercial airlines only 0.09 cents to perform the same task. A CBO analyst estimates the subsidy per passenger mile to car users at a scant one-third of a cent for all levels of government combined. Other estimates suggest the figure may be slightly higher, but in no case, the experts agree, is the figure anywhere near Amtrak's. The conclusion is clear: subsidizing Amtrak is by far the least efficient means of aiding American travelers.
"Amtrak saves energy, and in a crisis it can be used to transport people who would otherwise be stranded."
Amtrak itself revels in this faddish argument. When I called to make a reservation aboard the Montrealer I was greeted by a propagandizing recorded voice thanking me for calling "Amtrak, the energy-efficient transportation."
So how much energy does Amtrak really save, and at what cost? In 1976 it delivered 44.4 passenger miles per gallon of fuel consumed. The plane delivered less, 26.7; the car nearly the same, 44.0; the bus far more, 129.1. A 1979 CBO study concluded that Amtrak saves some energy in the Northeast Corridor but loses even more in its other services. Mulvey's thorough 1978 study of Amtrak's performance estimated Amtrak's annual energy savings at $40 million, far below Amtrak's cost. The Federal Railroad Administration predicts that by 1990 the Northeast Corridor Improvement Project, a program to upgrade and modernize the Washington-Boston route to allow for high-speed service, will yield an annual saving of 171,000 barrels of oil—but that represents only 0.0027 percent of all the oil consumed in the United States each year.
Many variables enter into any calculation of Amtrak's energy impact—passenger load, what alternative mode of transport passengers would choose, circuity (how far one diverges from the shortest straight-line route; this factor is particularly important in many of Amtrak's long-distance runs, which twist and turn all over in order to hit major population centers), and access energy (the amount of energy required to get to a travel terminal before embarking on one's trip). So a firm resolution of the energy-saving debate is nearly impossible.
What is clear, however, is that investment in Amtrak is a costly way of saving energy. For example, while General Motors is well on its way to developing an electric car slated to appear in showrooms in the mid-'80s, the electrification component of the Northeast Corridor Improvement Project may or may not be ready by the time GM's electric car is ready and will probably cost taxpayers between $3 and $5 billion by the time it is completed. For another example, NARP estimates that Amtrak's current energy efficiency can be improved by 185 percent but neglects to calculate the costs involved—for upgrading almost all track over which Amtrak runs and for replacing almost all of Amtrak's current equipment. The cost, several billion at the very least, would be staggering. Compare Department of Transportation estimates in 1979 that a slight improvement—0.01 miles per gallon—in the fuel economy of the US highway fleet would save in one year the equivalent of all the petroleum that Amtrak uses in a year.
The argument that Amtrak is necessary in case of an energy emergency can hardly be serious. As I noted before, Amtrak accounts for less than one-third of one percent of all US intercity transportation; even if, in a short-term crisis, Amtrak carried passengers in the aisles and in baggage cars, it still could absorb no more than one percent of intercity travel. And in any long-term energy crisis it would make far more sense to resort to greater use of the bus, which scores nearly three times as high as Amtrak (or the car) in the energy-efficiency game.
"Amtrak saves lives."
Amtrak's safety advantage is uncontested. Fatalities per 10 billion passenger miles are 140 by car, 6 by plane, 3 by bus, yet only 1 by Amtrak. Mulvey calculates, roughly, that Amtrak saves 33 lives annually. Whether this benefit is worth the $900 million it costs is a matter of personal opinion. I suspect that, supposing that government should be in the life-saving business in the first place, $900 million spent in other ways—perhaps disease research?—could save far more than 33 lives.
"Amtrak reduces pollution."
The facts show that Amtrak's environmental impact consists of a tradeoff between carbon oxides emitted at muffler level by cars and sulfuric and nitrous oxides emitted several feet higher by trains. But even the total carbon monoxide reduction attributable to Amtrak is only 0.05 percent of the total amount produced in the United States per year, and much of the reduction occurs outside urban areas where the carbon monoxide problem is centered.
"Amtrak provides a needed service. Without it, many people would be stranded."
In 1979 Amtrak served 571 stations over 27,000 route miles in the United States. By contrast, the bus industry served 15,000 towns and cities over 280,000 route miles. Of those 15,000 stops, at least 14,000 were without any other form of public transportation. Amtrak's stops, on the other hand, include only a handful where some other form of public transportation is not available. When some members of Congress expressed concern in 1979 that an Amtrak cut-back would strand many of their constituents, the bus industry offered to inaugurate service to any cities and towns that would be left without public transportation. The challenge went unheeded.
Amtrak's existence may even cause more towns to be without common carrier transportation than Amtrak itself services. When bus lines are forced to cut marginal routes because of competition from Amtrak, intermediate towns on major routes lose service. The president of Vermont Transit Bus Lines, for one, told me that competition from the Montrealer forced his company to eliminate a route between New York City and Newport, Vermont. Intermediate stops not served by Amtrak were thus left with reduced service.
Ironically, in our energy-conscious times, the bus industry is probably the competing private mode of travel most hurt by Amtrak. Amtrak's fares have increased at a rate only two-thirds that of inflation. The result is a narrowing gap between bus and train fares. Between 1972 and 1978 Amtrak's one-way fares fell from 25.9 percent to only 1.1 percent above one-way bus fares, and its excursion fares often undercut those offered by its bus competition. Greyhound estimates that Amtrak's existence costs the bus industry at least $50 million a year in lost revenues. Early last year Greyhound went to the ICC charging Amtrak with predatory pricing. The ICC, however, is not empowered to enforce rate decisions against Amtrak, as it is against other common carriers. The bus industry—a declining, marginally profitable, but very efficient private business—will continue to suffer from Amtrak's subsidized competition. Many rational consumers will continue to ride the train because it is more comfortable than the bus, without being significantly, if at all, more expensive—except to the taxpayers.
Despite Amtrak's dismal record of mounting subsidies and inconsequential benefits, the politicians continue to vote for it. Perhaps because of the wide consensus in Congress that Amtrak is a good thing, debate on the subject is impoverished. When the northern portion of the Montrealer, one of Amtrak's highest-cost trains, appeared on the Department of Transportation's "hit list" in 1979, Sen. Patrick Leahy (D-Vt.) accused DOT of attempting "one of the biggest political fast shuffles I have witnessed in years." Later he declared that he could "no longer afford the luxury of appealing to DOT on the basis of evidence, logic, and justice." His Republican counterpart from Vermont, Robert Stafford, joined in with the claim that DOT'S plan was "a kick in the teeth to New Englanders and Vermonters in general." Rep. Jeffords's fury approached the poetic: "The Nation's railway system is being forced into a Procrustean bed where its body and limbs will be truncated to satisfy…the faceless bureaucrats with green eye shades."
Politicians use statistics, the story goes, the way drunkards use light poles—not for illumination. The Montrealer debate was a classic of statistical demagoguery. Members of Vermont's congressional delegation claimed that the portion of the Montrealer's route north of Springfield, Massachusetts—the portion DOT proposed to eliminate—actually made a profit! I examined the figures they used to reach that conclusion, however, and found that they must have attributed passenger miles traveled south of Springfield, and the revenue therefrom, to the contested route north of Springfield. According to their figures, the average distance traveled per passenger north of Springfield was about one-third greater than the total distance from Springfield to Montreal! Another time, Jeffords claimed that the Montrealer is twice as efficient as the car, citing a study by the Vermont Energy Office. The Vermont Energy Office, however, told me that it has no record of any such study.
To most politicians, Amtrak is just another pork barrel. Rep. Silvio Conte (R-Mass.), contesting DOT's methodology in choosing to eliminate the Montrealer, demonstrated that Vermont pols have no monopoly on protecting their own turf. Confronted with evidence that the Montrealer, unlike other routes, could not expect great boosts in ridership because Amtrak's best equipment is already in use on this route, Conte, ranking minority member of the Senate Foreign Relations Committee responded: "If they can cut my Montrealer out, I can cut a few little trains out of that Foreign Aid bill." Jeffords, confident of victory, explained to a Vermont paper that "no one is going to get excited about five million bucks." And a Leahy aide said it all: "If Leahy can't pass $5 million of pork barrel for his own state he's not worth his salt."
Passenger rail service in the United States suffers from three basic problems. First, population density in America is, with few exceptions, trivial compared with that in Europe and Japan, where trains are more popular and successful (though still subsidized). In France the population density is 260 persons per square mile; in Japan, 780; in the United States, only 63. Even heavily populated California has only 140 persons per square mile.
Population density affects train travel in two ways. Most obviously, any American train is competing for a much smaller population market per unit of distance covered than is true in Japan or Europe. Additionally, the abundance of land in America makes highway development—a relatively land-intensive means of travel—relatively cheaper. The American highway system is the best and most thorough in the world. Congestion and delay are hardly problems, except at peak hours near large urban centers. That is one reason—scarcity of parking spaces is another—why, during those hours, proportionately more people take to commuter trains. Heavy population density in the Northeast also explains why Amtrak's Northeast Corridor service is its most heavily traveled.
Second, passenger rail is a relatively capital-intensive means of travel. This, by itself, would cause no problems, except that trains also have low capital-utilization rates. A single Amfleet car, Amtrak's modern coach car, weighs 157,000 pounds and costs a million dollars. Yet it can seat only 84 passengers and usually makes only one trip in any direction per day. On long-distance trains, Amtrak adds dining cars and lounge cars, with a zero increase in seating capacity.
George Hilton, a UCLA economist, compared the productivity of the train and the plane and found that "a single stretched DC-8 of 250-passenger seating capacity assigned to a long-distance route, such as Atlanta-Los Angeles, could turn in more passenger miles per year than the entire Atlantic Coast Line Railroad, the dominant railroad in East Coast-Florida operations." GAO economist Herb McClure explained to me that passenger rail could never break even unless humans were stuffed into low-cost cattle cars as tightly as cattle themselves are packed in. This "packing in" approach is, in essence, the way subways and commuter trains operate.
Finally, passenger rail is the most labor-intensive means of travel. In 1978, 65 percent of Amtrak's costs were for labor, largely because, when Amtrak was created, Congress agreed to a union demand that Amtrak adopt the work rules in force prior to its existence. So it must abide by the rules of its contracting railroads, most of which have been in effect since the days of the steam locomotive.
The most famous of these work rules is the 100-mile rule: "One hundred miles or less (straight-away or turn-around)…shall constitute a day's work; miles in excess of one-hundred will be paid for at the mileage rate provided." Though modified by some agreements, this rule still governs the work days and pay of most engine crews. Its effect is to guarantee a crew member who works any time at all a full day's pay. The Montrealer, for example, is run by a Conrail crew between Washington and New York City, a 270-minute trip. For their evening's work, Amtrak gives that crew two days' pay. Why? Because that's what the Pennsylvania Railroad agreed years ago to pay their crews for the Washington-NYC run. The Penn Central inherited those rules, and they were later passed on to Conrail, which has been unable to change them. Between New York and Montreal, five more crews take their turns in the engine car. For work lasting from 105 minutes to 200 minutes, each member of each of these crews is paid a day's wages.
Work rules also cover the size of the crews—for the Montrealer, a five-man operating crew of conductor, engineer, brakeman, flagman, and fireman. A bus, on the other hand, requires only one driver; a jet plane, only a pilot, copilot, and flight engineer. And the intensity of use of rail labor is also less than for the competing modes. From New York City to Montreal, the Montrealer requires approximately 60 man-hours of labor (although Amtrak pays for much more than that because of the 100-mile rule). A similar trip on Vermont Transit Bus Lines requires only 12 man-hours; and Eastern Airlines can make the trip with only 3.5 man-hours.
Both Amtrak and the airlines also have service attendants. Eastern Airlines employs four attendants for an average passenger load of 129 on a one-hour flight. The Montrealer, however, requires a minimum of six service attendants on a 17-hour trip for an average passenger load of 170. The result, of course, is far higher labor costs per passenger for the train than for the bus or plane.
It would be unfair to Amtrak to suggest that it can do nothing right. Within the constraints imposed upon it by Congress, it has succeeded in improving the service it provides. Most of the cars it operates now are new or refurbished, its reservation system is excellent, and most passengers seem pleased with the on-board service. Furthermore, the bulk of Amtrak's increased costs are either necessary—maintenance costs account for nearly one-third of its total operating budget—or required by Congress.
And it is Congress, of course, that has forced Amtrak ever since its inception to add expensive new routes to its basic system.
The politicians love to think they know trains. They grew up with them, and they itch to tinker. Even more, they love to play Santa Claus to their constituents. Unfortunately, however, they don't pay the bills, and with an annual price tag approaching a billion dollars a year, Amtrak is a toy that the taxpayers can ill afford to unwrap and enjoy.
Jeffrey Shedd is a law student at Boston University.