It costs billions but roads are used by millions on a daily basis along with buses and trucks to move products.
The National Railroad Passenger Corporation, or Amtrak, is the federal organization that operates passenger rail service in the United States. It was created by the Rail Passenger Service Act of 1970. Amtrak is structured as a corporation, but its board members are appointed by the president of the United States and virtually all its stock is owned by the federal government. Amtrak has about 19,000 employees, and its annual revenues were $2.4 billion in 2009.
Amtrak has been providing second-rate train service for almost four decades, while consuming almost $40 billion in federal subsidies. The system has never earned a profit and most of its routes lose money. Amtrak's on-time record is very poor, and the system as a whole only accounts for 0.1 percent of America's passenger travel. Another problem is that Amtrak's infrastructure is in bad shape. Most of the blame for Amtrak's woes should be pinned on Congress, which insists on supporting an extensive, nationwide system of passenger rail that doesn't make economic sense.
The solution is to privatize and deregulate passenger rail. Varying degrees of private involvement in passenger rail have been pursued abroad, such as in Australia, Britain, Germany, Japan, and New Zealand. Privatization would allow Amtrak greater flexibility in its finances, in capital investment, and in the operation of its services—free from costly meddling by Congress.
Amtrak has lost money every year of its existence. The Sunset Limited, which runs from New Orleans to Los Angeles, lost an astounding $462 per passenger.
In 2001, Amtrak's deteriorating financial situation triggered a legal requirement that it develop a liquidation plan. Instead, then-senators Joe Biden (D-DE) and Ernest Hollings (D-SC) attached an amendment to a defense appropriations bill that prohibited Amtrak from spending funds to prepare the plan.
It makes no sense to continue subsidizing money-losing routes, but Congress essentially demands that Amtrak keep wasting money by maintaining a national system of intercity rail. The result is that Amtrak's nationwide network looks much as it did almost 40 years ago, despite the fact the nation's population distribution and other factors have changed dramatically. The only way to solve these problems is full privatization to get the politicians out of the decisionmaking process for passenger rail.
With a rail system plagued by late trains and endless operating losses, Amtrak's management has been subject to a constant stream of criticism, much of which is warranted. A comprehensive report by the GAO found serious deficiencies, including a lack of strategic planning, inefficient procurement policies and procedures, weak financial management, as well as insufficient accountability, transparency, and oversight. Amtrak's inspector general recently acknowledged that "a number of its key information systems and the underlying technological infrastructure are outdated and increasingly prone to failure."
All that said, the ultimate blame for Amtrak's long record of red ink and poor performance lies with Congress. As a consequence of congressional mandates, Amtrak spends a huge amount of money maintaining money-losing routes at the expense of routes with heavier traffic like the Northeast Corridor. Corridors that do need more investment are starved because Amtrak is wasting money elsewhere.
Another problem that Amtrak management deals with is an expensive and inflexible workforce. Amtrak has about 19,000 employees, about 86 percent of whom are covered by collective bargaining. Compensation represents almost half of Amtrak's total operating costs. The average Amtrak employee earns more than $91,000 a year in wages and benefits.
Read more: http://www.downsizinggovernment.org/transportation/amtrak/subsidies In August 2009, the Congressional Budget Office considered the option of reducing Amtrak’s federal subsidy by about $200 million a year for five years. Amtrak officials and passenger rail advocates say this is impractical, noting that no passenger rail service in the world is profitable and arguing that Amtrak would cease to exist without the federal money. . http://subsidyscope.org/transportation/amtrak/
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