"No one wants to see Amtrak die," U.S. Secretary of Transportation Norman Mineta declared Tuesday. "We're very, very close to coming to a solution to help Amtrak."
That statement reveals a bureaucrat very out of touch with America. Plenty of people want to see Amtrak die, even if they want to see some of its routes survive. And forget about Mineta, Congress, or anyone else actually solving Amtrak's myriad problems of low ridership, deteriorating physical plant, uneven service, and an unbroken record of annual losses. The best he'll come up with is a way to take $200 million more from taxpayers and hand it to the railroad so that it can pay its bills until it gets its next big subsidy in October.
Mineta's save-Amtrak-at-any-cost mentality is exactly what David Gunn, the recently installed chief at Amtrak, is counting on. Shortly after taking the controls, Gunn discovered $160 million in covered-up losses. The railroad's lenders are refusing to give it any more money. Last year, it had to mortgage parts of New York's Pennsylvania Station for $300 million to cover operating losses. Out of money and with nothing left to pawn, Gunn says he'll be forced to shut Amtrak down if Congress or the Bush administration don't come up with $200 million before members head home for July 4th cook outs.
Gunn promises to make the shutdown hurt. The Northeast Corridor from D.C. to New York to Boston is heavily traveled. Amtrak carries more people from D.C. to New York each day than all of the airlines combined. Idle trains mean congested airports and clogged highways, especially at the numerous tollbooths that make I-95 so special.
Gunn is intent on maximizing the pain in other ways. Shutting down Amtrak means shutting down the rails it owns and manages. This will halt service on MARC's Penn line, which runs from Baltimore to Washington and transports many a congressional staffer and federal bureaucrat to work. It'll shut down the Virginia Railway Express and hobble commuter systems in Philadelphia, New Jersey, New York, Boston, and Chicago.
Gunn can't be blamed for demanding action from Congress, which shares much of the blame for Amtrak's sorry state. Its members ask the impossible. They insist that Amtrak maintain a profitable national route structure, and they heap buckets of grief on any executive who tries to shut down routes. If Congress wants a national railroad, that means subsidizing it forever. Congress and members of the administration must acknowledge this. Fortunately for future taxpayers, we don't need a national railroad.
This being the case, Congress ought to thank Gunn for his candor and call his bluff by throwing the railroad into bankruptcy, a more effective version of a restructuring plan that Mineta himself proposed last week. Companies in bankruptcy don't disappear; either they operate while they reorganize or they sell their assets to companies that can put them to productive use. Liquidation is the ideal fate for Amtrak. Long-distance lines will be a thing of the past, unless some entrepreneur or a consortium of state governments figure there's a buck to be made offering land cruises. Amtrak loses money on 41 of its 43 routes. The largest dogs are horrendous. It loses $347 per passenger on the Sunset Limited, which runs from Orlando, Florida, through New Orleans en route to Los Angeles, and $292 per passenger on the Pennsylvanian, which runs from Philadelphia to Chicago.
But there's at least one population corridor—D.C. to New York—where private companies, or decently managed public rail lines, could operate in the black. Even Amtrak claims to make $17 a head on its flagship Acela Express route. Finding a private buyer of these assets, even while the government gives Amtrak the money or loan guarantees necessary to keep trains running while the deal is put together, is doable. And there are other assets that companies are eager to take over. Amtrak recently rebuffed a Virginia Railway Express offer to take over the expense of running some tracks in the capital area. Amtrak has said no to numerous offers from other organizations to take over East Coast routes.
Gunn dismisses these approaches. He ridicules the notion that anyone would want to purchase Amtrak's assets. And he refuses to cut any long-distance routes, figuring that would only make him more enemies on the Hill. That's a decision based on politics, not business. Such decision making has brought Amtrak to its current state, a $1-billion-a-year loser. And it's exactly the reason why many of us will be happy to see Amtrak die.