Amtrak

Amtrak Has Problems, But a Lack of Federal Funding Is Not One of Them

The railroad's problems are political, not operational.

|

After the recent Amtrak train crash in Philadelphia, some politicians and pundits used the terrible tragedy to perpetuate the misleading claim that the federal government's passenger rail operation suffers from a lack of taxpayer assistance. This rush to judgment was unsurprising, given that misfortune is sometimes synonymous with opportunity in the eyes of the political class.

Amtrak has a lot of problems, but a lack of federal funding isn't one of them.

It was established in 1970 to help the struggling railroad industry by placing its unprofitable private passenger rail lines under federal control. Amtrak's creators believed that a unified rail network with Uncle Sam in charge would be successful enough that federal funds wouldn't be needed. Its first chairman, David W. Kendall, claimed, "This new system can and will succeed because it unifies for the first time the operation and promotion of the nation's rail passenger service." More than four decades and $44 billion in taxpayer subsidies later ($70 billion when adjusted for inflation), however, Amtrak has yet to deliver a single year of profitability.

While this continued faith in government's ability to heal most wounds with funding is par for the course in Washington, it's time to set the record straight. The reasons for Amtrak's struggles have more to do with its history of poor management than they do with its lack of cash. One need only peruse reports from the Government Accountability Office and Amtrak's own inspector general to see what can go wrong when the discipline of the market is absent. As the IG noted last year, Amtrak "has not consistently used sound business practices in each phase of the capital planning process, including developing sound project proposals with performance measures, learning from the execution and outcome of projects, and controlling unauthorized expenditures."

Amtrak's fundamental problem, however, is the same one that afflicts all government endeavors: Operational decisions are often made on the basis of political concerns rather than sound economic and financial reasoning. The clearest examples of this are Amtrak's money-losing long-distance passenger routes, which are kept on life support with federal funds because politicians generally prefer to waste other people's money than confront the tiny but vocal minority of people who benefit.

Also, consider this: As reports revealed that the recent crash was caused by the train's going too fast rather than by poor maintenance, everyone's attention shifted to an available technology—positive train control—that would have automatically slowed the ill-fated train down. As it turns out, a 2008 law required that Amtrak and other railroads install PTC by 2015. But whatever the reasons for Amtrak's not having fully met the deadline, the failure to implement the technology shouldn't be blamed on a lack of additional money allocated by Congress for Amtrak. Instead, it should be blamed on Congress' being more interested in funding the next shiny object than it is in funding boring lifesaving technology.

Shortly after the law was enacted, the Obama administration and its congressional allies allocated $8 billion of so-called "stimulus" funds for a nationwide system of high-speed rail. The next year, Congress gave another $2 billion for the endeavor. Never mind the multitude of articles written about the waste of money such investments represent because they have proved to be systematically costlier than officials expect and are generally little-used. It's too bad none of that money went to pay for PTC. Yet many of the people who are now decrying a lack of funding for rail safety are the same people who thought that high-speed rail would be a smart use of other people's money.

In Washington, squandering money and then bemoaning a lack of it is how the game is played. If there is a lesson to be learned from the recent train wreck, it's that too much taxpayer money has been spent on rail, not too little.

© Copyright 2015 by Creators Syndicate Inc.

NEXT: A.M. Links: FIFA President Refuses to Retire, New Clinton Foundation Ties to Sidney Blumenthal Unearthed, Nebraska Abolished the Death Penalty

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. When I was eight my mom took me on a train ride from the West coast to the East coast.

    I puked the entire trip.

    There’s a wonderful memory. Thanks, Mom.

    1. I have the opposite problem – car- and bussick but not trainsick.

      1. I outgrew it, thankfully. Now I just sleep.

        1. I just fly and beat you there by like a day

          1. I hate flying. Being stuck in an uncomfortable chair next to smelly strangers is not my idea of a good time. At least on a bus or train you can move around.

            1. Yeah, but at least on a plane it’s only for a couple of hours instead of for days.

          2. Anything under 500 miles or so I would much rather train. At least until Fedgov makes train travel as unpleasant as flying.

  2. Its first chairman, David W. Kendall, claimed, “This new system can and will succeed because it unifies for the first time the operation and promotion of the nation’s rail passenger service.”

    Ah, that persistent proggie fantasy that everything can be centralized and run by Top.Men.

  3. Amtrak has a lot of problems, but a lack of federal funding isn’t one of them.

    Perhaps, but more money is always the solution.

  4. Never ceases to amaze me when progressives (D & R) continue to double down despite the wealth of empirical data showing their approach to be a failure. Sure, high speed rail will fix ALL our problems. Is there 1 well run government agency? Can anyone name 1? The last time anyone heard “the IRS, boy, what an efficient, service oriented organization”? Is “throwing good money after bad” not a known phenomenon in utopia land?

    1. Is there 1 well run government agency? Can anyone name 1?

      That’s not the point. You see, it’s a moral issue, not one of efficiency. Businesses exist to make profits, and profits are theft from workers and customers. Government doesn’t waste money on profits to rich people, and that makes it better. Even if it is poorly run and inefficient, it’s better than profits going to rich people.

      1. If that’s the case then it shouldn’t matter how much money is funneled into the offending agencies. They’re going to be shitty no matter what their budget is.

        But they seem to believe they can have the “best” of both worlds, in which government could be like Apple, without the requisite profit motive/tax evasion, if only us stingy taxpayers forked over a few more dimes. As evidenced by the Obamacare rollout. When everyone was “shocked” the government couldn’t produce a website with anything resembling functionality despite spending a buttload more money than a comparable private sector service would cost.

        1. Thing about government is that decisions are generally made by committee. That means the dumbest common denominator runs the show. Not only that, but they’ve got no skin in the game. If they fuck up it doesn’t hurt them. But lots of people feel that this is a good thing. If they’ve got a stake in the outcome, then they’re going to maximize profits, which is immoral because that means stealing from customers and workers. Yet the entire basis of how government collects funds is coercion. But somehow that’s morally superior to profiting from voluntary workers and customers.

          1. Indeed. Though it’s not coercion from their perspective. Your income doesn’t represent your labor, but rather what the government in their magnanimousness , decided to let you keep. This is how they can claim tax cuts are at fault for deficits instead of spending, unlike any other organization that bases their budget on their revenue. Imagine a CEO telling shareholders, “No profit this quarter, but that’s only because our evil customers didn’t but enough of our products as is their patriotic duty”.

            1. Not taking is giving, and not giving is taking.

              So a tax cut is a gift, while a cut in benefits is theft.

              That’s how they really feel (I don’t use the word “think” because that gives them too much credit).

    2. Just understanding that the metrics the government uses to measure whether an agency is good or not are parsecs away from what us common folk use.

      1. Agreed, but what about the rank and file prog? The ones that keep voting for these people. They have to have been on the receiving end of some terrible bureaucracy at some point in their life. Direct evidence apparently doesn’t outweigh politico spin.

        1. Doublethink for the win, I think.

        2. Look at it from their point of view: employers withhold taxes so the employees don’t get used to the idea that their paycheck is their own money – it never goes near their pockets.

          Then, at the end of the year, they take their W-2 to HR Block and in a few weeks get a refund.

          The government just gave them free money!

          Don’t underestimate the psychological impact that this system has on the average worker: Government is their friend because it gives them free money every year!

            1. But, it’s a model that has been successful for progressives.

              How do you think the average worker would feel about taxes and the size of government if he had to write a great big old check on April 14?

            2. But, it’s a model that has been successful for progressives.

              How do you think the average worker would feel about taxes and the size of government if he had to write a great big old check on April 14?

              1. You can say that again. I hated that character btw.

              2. Oh, yes, it works. Evil sometimes does.

          1. Yeah. Similar to healthcare. Demanding everyone have aromatherapy coverage as a “basic human right” isn’t an issue if you don’t consider that your paycheck might be bigger without it. It’s all free! I’m sure some rich guy is getting soaked for all of my completely unnecessary, yet mandated coverage and not the millennial in the cubicle next door living in his parents basement. Gotcha rich guy!

    3. DoD is closest but there is still a ton of waste. Pure guess here but we could probably have similar capability with 1/2 – 2/3’s of the budget. I think we could randomly fire 1/2 of all the civilians with no negative impact to the system. That is probably a gov wide truism though.

      1. As a former employee of said agency I can guaruntee that the fact that it’s an actual Constitutionally valid function of government doesn’t spare it from the waste fraud and abuse that the rest of the bunch suffers from.

        It benefits by not having any comparable private sector service with which to compare it to. If you take a segment of it though, say shipbuilding, you’ll see it gets its clock cleaned by the private sector.

      2. DoD isn’t close.

        The best run agency in the US government is the freaking USPS – and that’s only because it actually has competitive pressure.

        Hell, it would be even better if Congress could get the fuck out of the way and let them close unprofitable offices, eliminate rural home delivery (USPS doesn’t deliver to the home in my town – we all have to go to the local PO to pick up mail – mainly junk mail), and eliminate Saturday deliveries.

        1. That explains all the UPS stores in my town.

        2. And they even still have a monopoly on certain services like passport renewals to give them advantages over UPS, FedEx et al. Which is the only reason I’ve been inside a post office in the past decade. And the lady behind the counter acted like she was doing me a favor since I was a “walk-in”. Despite there being no one else in the building and her performing an essential government service for which one would assume my income taxes would cover without an additional fee. But alas. What were we talking about again?

      3. The history of hiring private military is a dismal one, though. They tend to go looking for suppomentary sources of cash.

        1. Yes. I think the killing foreign populations industry is the one area in which a profit motive isn’t beneficial.

    4. Most Progs I know will point to the FDA, CDC or FCC as “well run government agencies,” and you cannot convince them otherwise, despite factual data. Then, because of this, they magically deduce that it must be having the right people in charge, etc, for other agencies.

      1. Yes. Though I’d venture that those organizations are named because they have almost zero interaction or visible impact on people’s day to day lives. They only crack down on the evil pharm/ag/service providers, who likely deserve it.

        People only get outraged at the insane FDA approval timeline when it’s their loved one that can’t access a potentially life-saving drug pending the results of the 13th round of human trials. When they see the price of that brand name script they need, they get outraged at big pharma allowing the FDA to avoid the negative feedback for tacking on upwards of 50% in overhead.

    5. Well, apparently “high speed rail” wasn’t the solution in Philly…

    6. There are some agencies where efficiency would be serious menace.

      1. True. We’d probably be in an Orson Welles novel by now if they had 25% of the efficiency of your Apple, etc. Our saving grace.

  5. What annoys me most about the whole Amtrak thing is double standard.

    Think BP. They screwed up, and killed a bunch of people on that offshore rig. Was anybody asking if they were underfunded? No. It was fines and punishments.

    When government company screws up, the first question is ‘would you like more money?’. Did anybody offer more money to BP CEO? I’m sure he would happily take it.

    1. This is a really good point. Imagine the outrage if a company blamed an accident on not getting enough revenue or its taxes being too high.

      1. They should blame it on high taxes. Fucking government.

    2. Damn it, I came here just to post a comment that the Deepwater Horizon accident was caused by a lack of subsidies or tax breaks or something.

    3. Progs treat screw-ups by companies and government/quasi-government differently because they believe that government is there to serve the people and companies are there to make a profit. And for some reason it never seen occurs to them that making a profit only happens when you serve the people (customers). And it never occurs to them that those running government have a lot less incentive to actually serve the people than companies have to serve customers.

  6. Besides, I’m tired of subsidizing the commuting habits of the folks in the northeast corridor. Make those mooching motherfuckers pay for their own crap.

    1. Actually, the DC to Boston corridor is the only Amtrak line that actually runs at a profit. All the other lines that are not as heavily-used are the real money-holes.

      1. yeah, its the NE corridor that is the only place it pays for itself.

        You should be bitching about the retirees taking their train rides on the Coast Starlight.

        1. Do we actually believe this? I mean, who says it runs at a profit? What other trains anywhere do that?

          1. The NE corridor also has several other *privately* run trains that turn profits. Its not only the only place Amtrak makes money on but its dense enough to support competitors.

            http://www.slate.com/blogs/mon…..money.html

            The Boston, New York, Philadelphia, Baltimore, and Washington metropolitan areas, for example, account for about 44 percent of total boardings and departures in the whole system.

            http://www.brookings.edu/~/med…..2013/03/01 passenger rail puentes tomer/passenger rail puentes tomer.pdf

          2. What other trains anywhere do that?

            Probably Japan.

            Common sense says that trains should run a profit when deployed in the right place and IF they’re not bogged down by useless regulations and expensive union bullshit.

            1. My point is that it’s hard to unravel subsidies and hidden costs sometimes with government meddled-in affairs. I’m highly dubious of profit claims from such entities.

              1. Oh I agree. When I say “not bogged down by useless regulations and expensive union bullshit” I was implying privatization.

            2. Why is it common sense that railroads should make money if you eliminated the BS? The industry is capital intensive and has a lot of competition. I don’t know whether any rail systems make money (I suspect most don’t) but there’s nothing magical about being in an unencumbered market that guarantees you’ll have enough demand and pricing power to make your business profitable.

          3. Yeah, I’ve heard it only runs a profit if you don’t subtract the subsidies.

    2. But anyway, you are right that taxpayers shouldn’t be subsidizing this shit. If it isn’t profitable to run privately, then obviously there is insufficient demand to justify its existence.

    3. Yeah, you’re subsidizing Montana and North Dakota way more than the NE, at least on a per person basis.

      1. But I don’t really care, NE is just part of the whole giant unwieldy system. If they could make more profit as a private entity, then there is still waste in the NorthEast that I am paying for but do not use. So fuck off NE commuters, get a car or an airplane or go live somewhere else.

        1. NE is just part of the whole giant unwieldy system

          And that is the problem. Before fucking off, I would rather see if the NE can go it alone without being tied to those regions that are obviously not profitable.

          1. Well OK, I suppose I don’t want them ALL to fuck off.

  7. Only the nitwits of Central Planning & Control can have an outright monopoly and still loose money. Amtrak “has not consistently used sound business practices…” Wow, what a shocker.

    1. Hell, we have historical proof (in the form of one of the Navada brothels) that the government can’t run a WHOREHOUSE ay a profit.

  8. “the recent crash was caused by the train’s going too fast…”

    Because Bostian was probably too busy posting pictures of cawks to social media to notice he was driving (“piloting”?) too fast.

      1. Imagineering.

  9. When I was 14, I went on a train trip with my dad from Harpers Ferry, WV to Flagstaff, AZ. It took three days, but we had a blast. Then we drove around the 4 corners area for a while before taking the train back. I recall being a bit bored in Kansas, but I enjoyed being able to walk around whenever. The best part is when the conductor made an announcement on the PA that, due to circumstances beyond their control, the train would arrive on time and they apologized for any inconvenience this would cause.

    1. Which just goes to show that even the conductor understands that trains are not a form of transportation but a form of *entertainment*.

      1. Yeah. Same guy sang a really good parody of It’s a Wonderful World called It’s a Wonderful Meal about the dining car. His Louis Armstrong impression was perfect. That guy had a fun job.

      2. Amtrak has never denied that some runs are “entertainment” – in fact, they promote it.

        1. The Canadian/American border trains used to be so popular they spawned a series of very cool lodges/hotels along the route. That I might use someday, so I would be ok paying a bit of tax to subsidize my entertainment. Though if it were truly popular enough some private company could run it at a profit. I would prefer that.

  10. My last pay check was $9500 working 12 hours a week online. My neighbour’s sister has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out.
    =============================
    try this site ????? http://www.workweb40.com

  11. The National Assoc. of Railroad Passengers has a staff of six in D.C. whose job is to scare the crap out of any congressman who votes to cut off a passenger train in his or her (or his or her friends) district. Where’s the taxpayers’ lobby whose sole target is to axe Amtrak?

    1. That is a good point. If nobody is riding that train that stops at every tiny little town in northern Montana, why are politicians afraid to kill it? It doesn’t make sense.

  12. It’s too bad none of that money went to pay for PTC.

    Actually, it’s a good thing. PTC is extremely expensive to build and maintain. The Federal grants that go to install it don’t cover maintenance, which then comes from the railroads’ general maintenance funds. That means that they have to cut back on other maintenance that has a much stronger correlation with safety. PTC sounds good in principle, but in practice it doesn’t do much for safety. It’s an especially bad investment outside the densely settled areas of the Eastern Seaboard because it involves running utilities into areas that don’t already have them. It becomes a big boondoggle.

    1. In addition, the Federal mandates for these systems involve full redundancy and failsafes, positive control and tracking for all signals and grade crossings, etc.. Sounds good, but it drives the cost through the roof for little benefit over what a simple GPS tracking system with remote speed control on the engine could deliver for a fraction of the cost. Their data-rich requirements are also tough because U.S. diesel locomotives are diesel-eletric hybrids that generate a buttload of RF interference. (Euro locomotives use mechanical transmissions that were originally developed for German U-Boats between the wars that are tough as nails and quiet as a mouse.)

      My father was designing a PTC system for a railroad in the early 90s for a railroad in some of the worst conditions there are for railroads. He had the system down to about $150K per engine plus the base control systems, but then Federal money and contractors came in and the cost exploded (and of course the money ran out and his railroad ended up with no PTC and is hoping for a grant that *might* finally deploy something in 2016). My father left soon after, totally disgusted with the waste. And what was done where he was a pilot for what the Feds are now demanding.

    2. Similar sort of thing: Federal law demands certain capabilities for drag detectors (which identify equipment dragging on the track behind trains) and to meet them the detectors cost several thousands of dollars. My father made his own ones from off-the-shelf components for about $100 each, and they worked just fine, but they didn’t have the service life that the Feds mandates, so he couldn’t use them, even though he could have simply replaced them every year and saved a bunch of money over what was required.

      So PTC isn’t really all it is claimed to be, but it does manage to funnel a lot of money to Federal contractors who know how to drive costs up.

      (sorry for three-part comment, but the server doesn’t like long comments.)

    3. PTC is extremely expensive to build and maintain.

      ^ This. And correct me if I’m wrong but aren’t there already far cheaper solutions to this problem? I think the NYC subway has a simple trip that puts on the breaks if the train is going too fast. Like, early 20th century technology. No opportunity for boondoggle, though.

      And very good points about the complete idiocy of American regulations in this area. Another NYC example: today’s subway cars are double the weight from 100 years ago and yet they run on the same elevated tracks that steam trains used in the outer boroughs 125 years ago. Because regulations.

  13. I stay off Amtrak because the DEA keeps harassing passengers. They also demand a ton of unnecessary personal information to buy tickets online.

  14. Maybe Amtrak would be more competitive if their competitors weren’t so heavily subsidized. What is the net-profit on the road system in this country?

  15. One of the worst is Oklahoma’s Heartland Flyer. They list annual ridership to Dallas at 83,000 a year. There is just one problem. The train holds 200 people and if you divide 83,000 by 365 you get 227. So I guess it’s totally full every day. The state department of transportation even has a slush fund box at the office to handle problems. A bus ticket to Dallas is $9 and you can come back back the same day. With the train you are stuck until the next day for $38.

  16. Why is it that the railway system has to show a profit, but the highway system doesn’t? We easily spend ten times ‘subsidizing’ car travel compared to train travel. If anything, those using trains are subsidizing those using private cars.

Please to post comments

Comments are closed.