Liberty MavenPick an Agency, Any Agency: Amtrak
July 28th, 2010 9:35 pm | by Matt Malkus | Published in Big Government, Constitution, government spending, Liberty | 21 Responses
As fiscal conservatives continue to seek avenues through which to derail the federal gravy train, it helps from time to time to take a look at the mind-numbingly long list of federal departments and agencies that are on board. Of course, this list is hardly exhaustive – just one that is publicly available – but it can certainly give us some concrete ideas on how and where to cut the spending.
Today: The National Railroad Passenger Corporation (Amtrak)
About: “The National Railroad Passenger Corporation, doing business as Amtrak (reporting mark AMTK), is a government-owned corporation that was organized on May 1, 1971, to provide intercity passenger train service in the United States.”
FY 2010 Budget: $2.02 billion (Source)
As I recently contemplated a trip in several weeks from New York City to visit friends in Washington, DC, I considered my options. Being on a tight budget as a college student, a flight was out of the question – besides, the trip isn’t so far, and I’d rather not subject myself to whatever the airport security standards happen to be in a few weeks. Fortunately, I turned to one of the many privately-run bus lines that operates on a 24/7 basis for a great deal: at only $17 round-trip, a 4-and-a-half hour bus ride would be a breeze, especially with the wireless internet.
I never so much as considered Amtrak – who, at the time of this writing, are offering $98 round-trip tickets for the same weekend. It’s true that passenger rail services can’t compete along such a frequently traveled route, and it has been for years: Amtrak was created in 1971 due to the declining number of rail passengers. Rather than allowing the free market to work, however, the all-knowing bureaucrats in Washington were convinced that passenger rail was essential to America, and that Amtrak would break a profit in a mere 4 years. Indeed, the only thing more unreliable than government projections are the experts who tout them.
At an annual cost of $2.02 billion, the recent reports of increased ridership for Amtrak are laughable. Even with its record of 28.7 million passengers in 2008, the taxpayer’s cost per passenger averages out to over $70 per passenger – you’re pretty much paying for someone to take a ride on Amtrak this year. Yet, despite the many statements by presidents of the failed enterprise, the federal government is under no false pretense that Amtrak will make money, in the near future or ever. The Amtrak Improvement Act of 1978 removed the entity’s “for-profit” status, and Congress has never had any hesitation in expanding and increasing the funding, whether under Republican or Democratic administrations.
According to its Wikipedia page, the causes of decline in passenger rail were: (1) Government regulation and labor issues; (2) Taxation; (3) Subsidized competition; and (4) Loss of U.S. Mail contracts. All four are based on government intervention in the transportation market. Predictably (as with so many of the government’s failures, such as the sub-prime housing meltdown), the solution to these government failures was to get the government involved to an even greater extent through nationalization. Predictably, the National Railroad Passenger Corporation has failed miserably to revive the industry, and now serves only as a fiscal drain which is more outflanked by private sector competition than ever before.
As for the constitutionality of a government-owned and operated business, what can really be said? There is clearly no authorization for the federal government to start a national corporation for the purpose of…well…what is the purpose of this again? Has anyone ever asked any official or representative where the Constitution grants the federal government the power to run a failing rail system? I’m sure it has something to do with “regulating interstate commerce” for some contrived reason.
Did I mention that the Obama administration’s stimulus bill contained an additional $1 billion for Amtrak? Apparently railroad passengers are the lifeblood of the modern economy.
Results
Constitutionality: None
Visibility: Fairly high
Ease of Abolishing: Moderate
Taxpayer Expense: High
Priority: High
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July 29th, 2010 at 2:52 am (#)
Hey Matt:
So how much was the federal subsidy for the highway you used? Or for the airports that you use?
July 29th, 2010 at 2:53 am (#)
The Amtrak fare is worth it just to avoid the riff-raff who ride the bus.
July 29th, 2010 at 3:41 am (#)
Guest –
The layouts for the Federal Highway Administration totaled $41.8 billion in 2010. http://www.dot.gov/budget/2010/bib2010.htm#fhwa
However, federal revenue on gasoline taxes have been just about equivalent to highway expenditures in each year – the federal government collected $37.9 billion in 2007, and that number has likely increased along with most of the other numbers in the budget due to inflation. http://www.taxpolicycenter.org/taxfacts/displayaf…
Ultimately, I think that highways are something that can also be handled by state/local governments or by private companies – although I don't address that here, since my format is one agency per article.
July 29th, 2010 at 3:47 am (#)
I don't know about New York but, my town still depends on the Amtrak train. I'm not saying there aren't better ways to run the organization but, I think there are "bigger fish to fry" as far as government waste is concerned. We could run Amtrak for over 5 CENTURIES with just ONE year's entitlement budget.
July 29th, 2010 at 4:04 am (#)
Guest –
Sure, but the point of this series is to examine where we can cut and how quickly we can do it. It's pretty easy to suspend Amtrak quickly. It's VERY hard to privatize Social Security quickly, or to end social welfare quickly. Many have become dependent on these huge social programs over many years.
While I'll be the first to demand reform, that is beyond the scope of this series.
July 29th, 2010 at 12:04 am (#)
Guest –
Sure, but the point of this series is to examine where we can cut and how quickly we can do it. It's pretty easy to suspend Amtrak quickly. It's VERY hard to privatize Social Security quickly, or to end social welfare quickly. Many have become dependent on these huge social programs over many years. We owe it to those who have paid into these programs to make sure that they are there for those who need them in the short-term.
While I'll be the first to demand reform, that is beyond the scope of this series.
July 29th, 2010 at 4:01 pm (#)
Bring the troops home from Vietnam in the desert and quit giving money to nations who have no respect for America, but always have there hands out. THAT in its self will fund Amtrak for the next 100 years. And to the wag who penned this article. Do us all a favor…start riding the bus.
July 29th, 2010 at 4:21 pm (#)
Sure, it makes sense to abandon a foreign failure (Vietnam) but why use the money saved to further fund a domestic failure?
July 29th, 2010 at 4:25 pm (#)
oh please, what a low and inaccurate blow.
The author lacks credibility from the third paragraph when he talks about the NYC-DC route on Amtrak. If you combine all classes and service on this route which is called the north east corridor, Amtrak actually makes money. Enough people prefer the trains, its called consumer choice.
Most of the Amtrak subsidy is on long distance routes which service rural areas with poor flight connections. They also help people who are unable to fly, disabled, or simply want to see our great country travel in a convenient and dignified manner.
Again I wish the person who wrote this actually bothered to do some research the cost of "shutting down amtrak." It would cost tens of billions of dollars and would be greatly resisted by the representatives of the communities it services. There is nothing that would be easy or cheap about it.
The only reason people talk about cutting Amtrak is because if its visibility, not because an extra two billion causes a serious impact. The federal government gives more money in AIDS aid (not counting other aid) to Africa than it spends on passenger rail. At least this subsidy helps Americans.
July 29th, 2010 at 4:56 pm (#)
So did you actually ride the bus and if so how was the trip? Have you ever ridden Amtrak so that you have a comparison?
July 29th, 2010 at 3:18 pm (#)
Amtrak is a public service, like the military or the air traffic control system. Money spent on Amtrak is an investment in the future of America. It may be "easy" to shut it down, but it would be nearly impossible to start it up again in a time of national emergency (anyone remember the oil embargoes of the 1970s or the post-9/11 days?). Our country needs an expanded passenger rail network as part of a comprehensive, balance transportation system that includes all modes.
July 29th, 2010 at 8:49 pm (#)
I think you're missing the larger point that things (like this) run by the government are universally mismanaged and it's always a better choice for them to be privately owned and managed.
And that's before going down the road of discussion where it's pointed out that most any "public service" is usually unconstitutional and must be funded with money extorted/stolen from us in the form of taxes. (Yes, that's opening up a larger can of worms, but important nonetheless).
July 30th, 2010 at 4:52 am (#)
Usual ideological nonsense. ALL forms of public transportation are subsidized, from airlines to sidewalks. Stop subsidies to Amtrak and we have no national pasenger rail system within 90 days. Then there will be total and complete gridlock on thousands of roads and highways, and you will still bitch that it's all government's fault. Go a-way!
July 30th, 2010 at 1:20 pm (#)
Wow, did Amtrak start hiring an internet PR team to manage their public image on articles like this? I had no idea.
Yes, most forms of transportations are subsidized, but not at the national level. Roads are paid for by state budgets, with the exception of interstate highways. Also, while "subsidized," roads are DIRECTLY paid for by an excise tax on gasoline. There are those, like my parents, who have never taken an Amtrak train in their lives, and have been forced to bear the burden of paying for it.
As for Clark's comment, that the NYC-to-DC route on Amtrak makes money – good! Why not privatize it? I'll be willing to bet that it makes more money as a private entity than it does under the government's management. And yes, I understand that there are bigger fish to fry in the budget.
The problem I've found with many big-government types is that they decry conservatives for not having any specifics on where to cut, and for simply being the "Party of NO." Then, when a conservative begins to list details, they are up in arms about some indirect affect that the cut may or may not have. It can't be both things.
July 30th, 2010 at 1:28 pm (#)
Shutting down passenger rail doesn't mean shutting down railroads. I'm fine with the government having a plan in place to facilitate transportation in a time of emergency. I'm NOT fine with the government running an enterprise that hemorrhages money.
You may have also missed one of my criteria: namely, the constitutionality of Amtrak or any agency that I write about. The federal government has the authority to run the mail system, but that's about the only business venture they were authorized to engage in. If you think that a federally-run passenger rail system is vital to our national security or to interstate commerce, get the Constitution changed. At least then we will have the discussion out in the open, rather than our current process of having Congress pass new bureaucracies in fly-by-night, 2,000-page bills.
July 30th, 2010 at 4:19 pm (#)
We subsidize oil companies, airlines, roads. Why not subsidize trains? The reason why Europe and the rest of the modern world have such good train systems is because they are government subsidized.
Travelling from North Carolina to Boston, for every ton that a train weighs, only _ONE_ gallon of gasoline is used.
July 30th, 2010 at 4:49 pm (#)
I'd give up government subsidized trains and many other government programs if it meant I did not have to ever pay income taxes again. Wouldn't you?
Then I could spend all my extra money on services that I actually use and give to charities that are in accordance with my own views.
Just because the government subsidizes something doesn't mean it will cease to exist if there weren't subsidies.
If the consumer has a demand for a high speed train from NC to Boston or wherever then it should be the entrepreneur's job to make it happen and make it profitable while meeting that demand and pleasing the customer. The government should just get the hell out of the way.
The government keeps touching me everywhere. And it's starting to make me uncomfortable. Maybe I should sue for sexual harassment? Oh nevermind… given their track record they probably exempt themselves from such lawsuits.
July 30th, 2010 at 10:33 pm (#)
This is complete farce, maybe if the govt got out of the business of subisizing roads and other forms of transportation it would be a lot cheaper to move man and material. Look at all the waste in the Boston Digg or even around my own community where it takes them 10 years to finish a project that would only take a private company 2 (or the road to nowhere in Alaska).
July 30th, 2010 at 11:01 pm (#)
If amtrak was a good consumer choice it wouldn't have had to be nationalized in the first place. There are probably many routes that are profitable, but many that aren't. It is not fair to the American people who have to subsidize a route at sometimes 400 to 500 dollars per ticket.
What we should do is try to sell Amtrak to investors who will make it profitable. We could split it up to add competition. If there is competition prices will go down and more people will ride. I would take the train from San Francisco to Milwaukee if it didn't take 70 hours in some cases. That is ridiculous.
Allow trains to go whatever speed they want, and the rails will improve.
July 31st, 2010 at 3:27 am (#)
If something is not profitable, it either should not exist (as the market does not support it), or it needs to be run by more capable hands and should be sold. (And the government is NEVER more capable to run a company). So nationalization is never an appropriate answer — it only continues to give life to a losing venture, the exact opposite of what needs to happen.
November 29th, 2011 at 8:15 pm (#)
Mike – - I'm wary of the knowledge that folks bring to this game when they use terms like 'universally' and 'always' to describe programs. There are many government programs that, when given to the private sector to run under A-76 guidelines, are wracked with fraud and are managed with less success than when the government ran the program. NASA is one – - the large consortia that run the majority of NASA's missions do so at a greater expense and with less focus and efficiency than when NASA ran the programs themselves. LOGCAP is another – - the fraud and inefficiency of having Dyncorp & KBR run support functions that our military used to handle is an extraordinary burden on the taxpayer. Not all functions provided by government can be money-making propositions, and any corporation running an inherently governmental program adds at least 50% to the cost of running the program within the government w/o the need to generate profits. No argument that the government needs better managers and better guidance from Congress, but private sector management is not the answer for every government shortfall.