Running Off the Amtrak

Once again Amtrak might lose its federal subsidy. The Boston Globe reports on the Bush administration's hope that a visit to bankruptcy court could end up reorganizing Amtrak's assets in more valuable ways--more valuable than continuing its $25 billion drain on the federal purse since 1970.

See former Reason magazine editor and current Reason Public Policy Institute transportation analyst Robert Poole Jr. musing on why we should just let Amtrak derail here.

Comments

[Gary Gunnels]

Amtrak will never die.

[kwais]

Why?

[Gary Gunnels]

kwais,

It signed a pact with the devil. 🙂

[SR]

Of course the total subsidies to Amtrak over its entire lifetime have been less than what the FedGov has paid out in subsid... Oops, sorry, "loan assistance" and "grants", to the airlines just since 9/11.

[kwais]

SR,
That doesn't make it not wrong.

[c]

Right SR, but airlines don't have the sort of lefty flavor trains do, so it's hard for conserv ... oops, sorry, "libertarians" to get into any sort of high dudgeon about them.

[Rhywun]

That doesn't make it not wrong.

No, but that also doesn't justify a reckless "let it die to save it" solution, either.

[Jason Ligon]

If people want to ride trains, we will have trains. If people want to fly, we will have airplanes. See how easy that is?

Let them all die if they can't earn their own keep.

[Stevo Darkly]

Amtrak will never die.

Strange, though, how that portrait of Amtrak over on the wall there seems to get older and older ...

[sage]

"No, but that also doesn't justify a reckless "let it die to save it" solution, either."

Why is it reckless to allow a business to fail?

[KipEsquire]

Did you folks not see Transportation Secretary Mineta's op-ed in today's NYT backtracking (pun intended) on exactly what the Administration plans for that billion-a-year subsidy? (Hint: Think "federal-state partnerships" -- lovely.)

[Gary Gunnels]

Stevo Darkly,

Oh that was good!!! 🙂

[Poustman]

Comment by: Jason Ligon at February 23, 2005 05:07 PM

Let them all die if they can't earn their own keep.

Exactly! Corporations have pros and cons, and their own life cycles. Why on earth would we treat them as we might treat people when they're dying (intervention, rescue, etc.), if we don't treat them that way when they're living (tax 'em before expenses)?

(Btw I am not coroporation bashing here.)

[M1EK]

The subsidies to our network of highways in this country are higher per day than Amtrak gets per year. Probably even per hour.

We're the laughingstock of the civilized world. And when oil gets up to $70 a barrel, it's not like we can magically shift to using the rails again overnight.

[Dynamist]

If Amtrak is taken off life support, we clear the way for inventive genius to meet the actual demand for rail service. If we must subsidize, let's fund ideas with the potential to be self-sustaining. Amtrak is not Metra or CTA; the country can continue functioning while passenger rail is revolutionized (or embargoed).

[Rhywun]

Why is it reckless to allow a business to fail?

You might as well ask why we don't immediately eliminate funds to constuct roads and bridges. Sure it can done, but it will take time. I'm all for privatization -- hell, train service can only *improve* here in the Northeast as a result -- but causing unnecessary disruption in the local economies of areas that depend on the service is uncalled for.

[Peter James Bond]

c has a point. And it probably doesn't help Amtrak that its only profitable routes are in the Northeast corridor, particularly DC-NY-MA, where flying can be too expensive but Greyhound too nasty.

I know many people at this site have a legitimate problem with any government subsidy, but methinks that given the prejudices of this administration, this is just another way to tweak Northeast liberals. I haven't seen any other subsidies that were in serious risk of getting the ax.

[combustable]

Automobiles are greatly subsidized, if we had tolls on all roads to finance them and had automobile users pay for the environmental damage they cause, then we would have an equal playing field for Amtrack to compete on. Why should an environmentally friendly and safer mode of transportation get no subsidy when autos are so heavily subsidized because of the oil and auto industry's clout. If we want to put everyone on an equal playing field fine, I would support it, but don't cut a very modest sum for a valuable method of transportation while subsidizing airlines, auto, farms and others. $25 billion over 25 years is a real bargin, compared to these other subsidies and the $300 billion and counting over 2 years to invade Iraq on false pretenses and nation build that many of you "libertarians" don't seem to mind.

[Super Prole]

"We're the laughingstock of the civilized world."

Well, if the Belgians are laughing at us then it must be a real scandal.

"And when oil gets up to $70 a barrel, it's not like we can magically shift to using the rails again overnight."

Some of us will still drive and the rest will take the bus until passenger trains are scheduled again. Unless less you live in Phoenix, where, as I understand it, it is impossible to take a passanger train anywhere.

My ilk is not too proud to drive a cheap, used, fuel-efficient car (and we like cars, too, because the bus is so damn inconvenient). We'll be all right but I almost feel sorry for the highly-leveraged, middle-class strivers who will have to give up their leased Ford Expeditions. Can't wait to see you on the bus.

Free Minds and Free Labor

SP

[Jason Ligon]

"We're the laughingstock of the civilized world. And when oil gets up to $70 a barrel, it's not like we can magically shift to using the rails again overnight"

I don't know. It seems that most of the rest of the world is trying to figure out how to compete with the US. The US economy is the most significant economic force ever to exist on this planet. When gas gets expensive, people will demand an alternative and someone will provide it. My guess is nuclear production and combustion or some such. I seriously doubt that coal production to run trains would make anyone who is laughing now take us more seriously.

[Isaac Bartram]

The subsidies to our network of highways in this country are higher per day than Amtrak gets per year.

Highways are not "subsidized" in the same sense as Amtrak. The gas tax operates as a crude user fee in that it is only paid by highway users.

So, let's see what can we tax that only rail passengers use to raise revenue to fund Amtrak?

(lightbulb on)I've got it let's tax...train tickets.

[Isaac Bartram]

We're the laughingstock of the civilized world.

I have friends and aquaintances in Australia, Canada, England, France, Germany and Italy. They drive every chance they get (including downtown Paris, Frankfurt and Rome).

If anything they are envious of not laughing at the US.

[thoreau]

I realize that ideally all roads should be private, yadda yadda yadda, but the gas tax at least functions as a crude user fee. It isn't perfect, in an ideal world it wouldn't exist, and it isn't exactly what the market would bring about, but the amount you pay is proportional the time and distance that you drive (i.e. how much you use the road) and the weight of your car (i.e. how much load you place on the road).

I know, I know, gasoline taxes are also paid by the handful of people who use gasoline for other purposes, and not all of the gasoline tax revenue goes to roads, nor is the revenue distributed amongst roads in proportion to how much tax was paid by users of those roads.

Still, all things considered, the gasoline tax is probably about as close as you'll get to a user fee in the current system. All things considered, it's the last tax that I'd touch.

[kwais]

"All things considered, it's the last tax that I'd touch."

Untill of course we have privately owned and maintained roads. I agree.

SP,
"Free Minds and Free Labor"
Amen

[matt]

combustable:

Somehow I get the crazy notion that your idea of an "equal playing field" is increasing amtrak's subsidies as opposed to eliminating all government subsidies and allowing a free market in transportation to arise.

[thoreau]

kwais-

As long as we have publicly-owned roads I'd say that the gasoline tax needs only one modification: A stipulation that all money spent on roads must come from gasoline and diesel taxes, and that excess money cannot be spent on anything else. Instead it must be put toward any bonds that were issued for road construction, or be compensated for by a temporary cut in the gasoline tax (with a small amount kept in reserve, perhaps).

Then the gasoline tax would be even closer to a user fee.

[kwais]

Thoreau,
I'll buy that.

So it's settled, lets implement it. Oh wait, we're nobody.

Cool idea though. If I get an audience with the President I'll suggest it. I mean like if I get to be the guy that capps Osama, and the president comes to shake my hand (God that would be cool), I will try to remember to make that suggestion.

[Rhywun]

They drive every chance they get

I feel sorry for anyone driving in those places. But if they enjoy the frustration and the traffic, well, to each his own. When I lived in Europe, the people certainly drove when it was convenient, or they could rely on trains and busses when it wasn't. In every case, the state of the infrastructure (including roads) was far better than in the US.

[Trooper Jones]

Kwais,

I thought you were working in a CP. Did they let you out of there or is your security so bad the OBL is likely to come traipsing in?

Dragoon?

[goboard]

I know this is going to sound cold, but . . .

I think they ought to let Amtrak die. I say this, having used Amtrak and having also worked for railroads.

Once this happens, the freight railroads should no longer be shielded from any future responsibility for providing their own passenger service. The reason for Amtrak in the first place was the money-losing service provided by the freights.

Amtrak is their insurance policy against having to coordinate passenger service, which is much more difficult than rerouting a freight car. It could be argued that the competition between railroads was what subsidized Amtrak in the first place: those RR's with political clout saw the opportunity to divest themselves at government expense, and to pressure their competitors. This was similar to the establishment of the ICC, originally manipulated as a device to hinder one's competition, as is the theory behind antitrust legislation as a device to hinder more efficient competitors.

All of this hides the fact that freight RR's are capital-intensive and that there has been traditionally strong aversion to federal govt. capitalization of freight ROWs. The geographical benefits certain RRs have disproportionate to others makes it unlikely that a separation of infrastructure and operations will ever happen. The specialization to understand the logistics of moving heavy freight is localized and cannot be easily standardized, especially in difficult terrain.

If it does, expect to see major liability issues: Amtrak currently pushes liability onto the freights. With no infrastructure of their own, the freights could push liabilty onto the gvt., causing massive infrastructure funding issues to arise.

The lesson of Amtrak's long-distance operations over the freight RRs is that even though they are political pork by some estimates, they are the shield that the RRs need, to avoid govt involvement in route-setting freight trains. This is already happening with hazmat shipments, e.g. CSX rerouting in DC. If you decrease efficiency, you ultimately decrease security, since rail cars sitting around or being redirected takes more money away from the profit margin necessary to support infrastructure reliability (including security).

The fact is, the RRs are undercapitalized. Amtrak is the distraction hiding the problem. If the RRs think they will squeeze efficiency gains with no long-distance Amtrak, they are probably right. But this merely forestalls the inevitable, and delays solving the problem of how to fund long-term improvements with slow-return market investments that disincline shareholders.

The RRs no longer have redundancy built-into their route miles. The expansion of double and triple-tracking mainlines is what is necessary to keep passenger rail afloat and ontime, if it hopes to get through bottlenecks with freight. This is the result of years of disproportionate spending between transportation modes.

The yearly Congressional Amtrak "patch" just hides the bigger problem. Even if people want to ride trains, they can't do it if they don't get there efficiently, and they can't because the RRs they run on (with exception to regional services) are undercapitalized.

The argument against Amtrak about large passenger subsidies fails to consider that the subsidies are due to inefficencies of piggybacking passenger service on top of the freight rail network, which can be traced to problems with the network itself that no amount of corporate consolidation will solve.

Without the govt paying the freight RRs to run passenger service as part of a rail-expansion program, there is no way to get the kind of capital needed to revitalize the freight RRs.

All of the hiring and supposed expansion that you see on the RRs is really the beginning of the meltdown. They can't move trains without crews and track, and are simply responding to the maximization of the network which was caused by downsizing it below critical levels. There may be more business for the RRs, only because trucking companies cannot keep up with turnover rates. As for actually growing rail business overall, I contend that you can't grow it without having passenger service.

The public exposure and handling requirements for having passengers is such that it reinforces necessary freight network redundancy.

Amtrak's demise puts more pressure on the freight RRs to operate passenger service over govt owned NEC if they hope to increase their chances for seeing any money elsewhere for capitalization like they got from the land-grants when they were first chartered. The private operators and state-cooperation agreements will have to be channeled and absorbed through the freight RRs.

Let Amtrak die, create an irrevocable crisis, prove rail supporters right, and then get the funding to where it needs to go: the freight railroads. As the population ages and the babyboomers retire, the need for regional highspeed mass-transit will increase dramatically. This is inevitable.

[M1EK]

thoreau:

You're fooling yourself if you think a strict funding regimen based on the gas tax would result in a DECREASE in the gas tax.

All over the country, localities and states fund major roadways (NOT the little street your driveway connects to, talking about ARTERIALS) out of a variety of sources, and over the last 3 decades the proportion paid by gas taxes has been shrinking steadily, with the gaps made up for by sales and property taxes (mostly).

This fund transfer dwarfs that from gas taxes to transit by at least an order of magnitude.

[Rhywun]

Well goboard, it's a good thing we turned all those "rails to trails" that we knew with absolute certainty would never be needed again, eh?

[Isaac Bartram]

Why should an environmentally friendly and safer mode of transportation get no subsidy ....

Rail is nowhere near as "environmentally friendly" and safe as its proponents make it out to be.

I've been reading Reason for nearly 25 yrs and all that time they've been calling for the elimination or reduction of all subsidies.

[Dynamist]

goboard: I wonder if the limit on freight capacity comes more from legacy union work rules than from equipment and ROW undercapitalization? Not only does highway transport get a huge subsidy for ROW (well beyond fuel taxes, etc.), but also the drivers are allowed more hours and more efficient trucking firms are not forced to compensate their competitors for freight the inefficient firms "should have" handled.

[goboard]

@ Rhywun:

I prefer to call them "railbanks." 🙂
It would be interesting to see some of these converted ROWs reconverted back to rails. Some of them are multiuse utility corridors anyway.
The conflict between the enviromentalists and the industrialists would be fun to watch--
"What?! The trains are back? You mean I can't go hiking here or an energy-efficient, 4500 ton, 50 mph freight train will cream me? I'll sue!"

@ Dynamist:

Union work rules are complicated, but generally speaking a Train & Engine employee has a maximum 12 hour shift under the CFR. Anything more and you are operating illegally. The RRs are only required to give a minimum 8 hours off, from the time you check out until the time you check in.

Two hours before your next job, you get a crew wakeup call assigning you your train. If you're lucky, you get 4 hours of sleep. Low seniority on the extra board means you can swing 7 days a week, 80 hours, no holidays. Of course, you get compensated well, but once you figure in all your hidden costs, it's rough. Due to all the things that can go wrong, many T&E have job insurance against lawsuits, disputes over company disciplinary action, and personal operating fines handed out by the FRA which can be upwards of $10,000.

There are contract exceptions which give bonuses for various train delays and workplace inconveniences, but most of these are split between vested employess and new hires, making the wage claim form as complicated as doing your taxes.

I remember being trained for a job and having to sit on a bucket in the cab, while the crew got a paid exception for not enough seats and I got nothing. Believe me, a seat is nice to have when you're really tired of walking and coupling freight cars.

Your job depends upon how you interpret an inch-thick rules manual which you must carry at all times, including a Hazmat book, a timetable, a signal chart, general orders paperwork on line conditions, waybills for hazardous loads, a manifest list, and a switchlist. These provide safety instructions which are sometimes vaguely written or somewhat contradictory which gives the company leverage to hold you culpable for operating errors.

So the short answer is "no," it is not generally union work rules that cost money since these are established on a contractual basis. Rather, it is the strict compliance issues, combined with the fact that RRs still pay property taxes on their ROWS, and until recently were paying federal diesel fuel taxes which were being reapportioned to highways. Before deregulation, they had to to file to abandon business or change rates. RRs still cannot backhaul loads very easily.

There is already a computerized interchange system to handle rates and tariffs between RRs.

Truckers have their own set of problems, such as fudging their logs, speeding, less oversight. Much of the freight hauled by trucks is hauled illegally b/c of the difficulty of enforcement.

RRs are clocked with event recorders and you can't alter records, or speed inordinately without risking a derailment. Trains have to be highly coordinated with dispatcher control (like airplanes).

The fact that RRs can still gain a certain amount of business and do well with intermodal shipments is a testament to the fact that they are extraordinarily efficient with fuel per ton/mile, operating through weather that would stall a semi, and technologically advanced (surprise!) even though they use durable and failsafe equipment which in many cases is expected to last 50 years or more.

If you want to know where the economy is headed, watch the transport stocks. They are cutthroat and are always on the cusp of rationing their resources well ahead of other companies.

[Dynamist]

goboard: Thanks for the detailed reply. I'm a railfan who grew up with a family trucking business. It's not so much the money cost of RR work rules I see as troublesome, it is time cost. It has always seemed goofy that a team on a highway will get the load across country far more quickly than rail (even without cheating on their logs). Solve that and more perishable or JIT could move by more efficient rail. Passengers are the ultimate perishable/JIT freight.

I do follow transport stocks, and since all modes are at capacity, I'm optimistic. But, with impending regs, we're looking at a huge squeeze in trucking labor (the days of The Bandit are over). If RRs can't find a way to move the freight, the American economy will be stuck on the dock.

[goboard]

@ Dynamist:

I know there are honest guys out there on trucks, but I also know about the cutting corners. The regs are coming, I know. Agreed, if the railroads don't have the means, the U.S. is in trouble.

The basic problem is that things are heavy, and people want stuff now. 🙂 They look at shipping like they would a magical time-machine. There is no public connection between what happen to their stuff from when it is sent to when it is received. The illusion people have is that it's mostly seamless. I'm sure you know that this is WRONG and hopelessly naive (even of libertarians).

A railcar can hold the equivalent of several truckloads worth of stuff, and tonnage is unique when it comes to bulk commodities or hazmat. As far as Just-In-Time, there is some of that now. The RRs are trying to schedule trains, instead of running strictly on a capacity basis. You're probably aware of UPS, Hunt, etc. who contract for shipments with the RRs.

The crew arrangements are such that they must be tested on "territory" per rail division, and get regular licensing, operational testing, and field-testing gotchas.

Because of weight-handling characteristics, trains must be handled by a person experienced with the ROW, since the trains themselves can run the length of several grades and curves at once, or combine a variety of different railcars (each with their own idiosyncracies and load restrictions). The engineer has to be aware of the handling characteristics. It can get quite complicated.

The standardization of the Interstate Highway system linked into local roads was a great innovation. Of course, it was subsidized as a Defense Department project during the cold war (for city evacuation and army mobility). Eisenhower supposedly got his inspiration sitting on a WWII troop train headed for California. At the time, the railroads were capable of priority military shipments in a 72-96 hour turnaround. Eisenhower wanted something better, so in the event of a war they could easily move armament around the country, or have ready-made landing strips for bombers (this was before ICBMs).

I'm not sure we could do any of what Eisenhower wanted, today. The much-vaunted mobility the some transport-libertarians support came at the expense of minority and lower-income property-rights, exacerbating the welfare state. The much-vaunted automated, private toll-road ideas come at the expense of privacy-rights.