Amtrak financing nearly eliminated in proposed Bush budget

Trains.com ^ | Feb 8, 2005 | proprietary

[Sam Cree]

- Amtrak financing nearly eliminated in proposed Bush budget; Amtrak president reacts in message to employees

WASHINGTON – Highway financing would rise slightly while almost all spending for Amtrak would be eliminated under the Bush Administration’s proposed Transportation Dept. budget, according to a story in today’s New York Times. The budget provides no money for Amtrak itself, but does include $360 million to maintain commuter service that uses Amtrak right-of-way in the Northeast Corridor if the passenger carrier goes bankrupt.

Transportation Secretary Norman Y. Mineta said federal subsidies for Amtrak had almost doubled in the last four years, to $1.2 billion in 2005 from $520 million in 2001. "After 34 years of Amtrak operating losses and $29 billion in taxpayer subsidies, it is clear that the current model of passenger rail service is flawed and unsustainable," Mineta said.

Amtrak, however, has always survived because of supporters in Congress, and they rallied to its defense on Monday. Senator Charles E. Schumer (D - NY), said, "Eliminating Amtrak wouldn't just cost us billions of dollars in operating funds for the trains and the business people and tourists they bring here, it also shreds the safety net we'll need in case - God forbid - our airspace is shut down again like it was after 9/11."

The Administration’s proposal is seen by some as basically flawed because of the length of time, and money, that would be required to actually shut down Amtrak.

Amtrak President David Gunn issued a statement of support to Amtrak employees on the proposed Bush budget.

Dear Amtrak Co-Workers,

“Earlier today, President Bush sent to Congress his proposed budget for FY '06. It provides no funding for Amtrak. In contrast, this year we are spending $1.4 billion, of which $1.2 billion is from a federal appropriation to support our operations and capital programs across the country.

“The President's proposal does provide $360 million to the Surface Transportation Board for continued commuter and freight operations on the NEC [Northeast Corridor] only after forcing an Amtrak bankruptcy. It also isn't accompanied by any kind of plan for how Amtrak could continue operations. In a word, they have no plan for Amtrak other than bankruptcy.

“Obviously, the proposal is irresponsible and a surprising disappointment. It doesn't acknowledge all the hard work you've done over the past two years to run a tighter and better ship. Our costs are more under control than ever before - that's quite an accomplishment.

“It is critical that reforms and improvements must continue, however. Amtrak's management is engaged with its board, the Department of Transportation, and others for this purpose. That work continues. We are committed to an efficient and productive rail passenger system. The plan to force us into bankruptcy would be counterproductive to this goal.

“The President's proposal is only the start of a long legislative process, and we are taking it very seriously. This process has a lot of twists and turns, and it always takes six to nine months to sort out. It won't have any impact through the 2005 fiscal year, but there's going to be very little cash left at the end of this year. Rest assured that after all we have been through, I am committed to doing everything I can to secure adequate funding for FY '06.

“We have strong support in Congress and a lot of support across the country.

“The best thing that all employees can do is to do their jobs professionally, delivering the highest quality passenger service we know how. If we really care about our passengers, others will care about us. As I travel in the Midwest this week, you can bet that I'm going to be looking at service standards. Stay safe out there, and keep your heads up.

Sincerely, David L. Gunn”

[Sam Cree]

My personal opinion is that government has no business giving money at all to a railroad service, these things ought to live or die by market forces.

But considering other things that our government gives money to, Amtrak is as deserving or more deserving than many.

And there are other considerations: Amtrak can never make a profit, not even given another 34 years, since equipment purchases and maintenance, track maintenance and fees, and labor are all so expensive as to drive its service beyond market price. If union and government rules did not arbitrarily set wages and expenses arbitrarily, with no regard to the market, then perhaps this would not be so, but, IMO, there is little chance that these things will ever change.

[hubbubhubbub]

Auction off its assets and let the private sector takeover.

[hubbubhubbub]

Auction off its assets and let the private sector takeover.

[muawiyah]

It's not the salaries that are the problem ~ it's the technology itself. All other methods are less costly, even if not a single employee worked for Amtrak.

(I do not want to hear about the co-efficient of friction of steel on steel versus rubber on concrete ~ at the end of the trick you still have to get home from the station).

(Besides, I rode Metro-rail in the DC area for many, many years, still my hitch-hike operation in Springfield was much more efficient for it's users in that 5,000 people per day got free transportation to and from designated commuter pick-up operations in DC.)

(Others have coined the term "slug line" for this activity).

[politicalwit]

Lets drop the financial assistance to the airline industry also. Screw them...if they can't manage their finances they have no business in the industry.

[sinkspur]

Amtrak will survive, and get at least the $1.2 billion it got this year. There are too many Congressmen who are committed to it.

Does anybody think airports and airlines would survive without federal subsidies?

[Sam Cree]

Agreed about the private sector, but as long as industry wages are arbitrarily set according to what some bureaucrat or union boss thinks RR jobs (and jobs in industries on which railroads are dependent, like equipment manufacturing) are worth as opposed to what the market thinks they are worth, then the private sector is hobbled.

I'd like to be proven wrong, though.

Please note also, that highways and airports are not run by the private sector.

[Eric in the Ozarks]

Amtrack's got to go over the cliff. Only then will it reflect its real needs. I believe the interurban concept makes sense in its NE environment. Elsewhere, its a loser.

[BobL]

"Auction off its assets and let the private sector takeover."

Why bother - who would want them.

Aside from the Northeast Corridor, where it has some economic value, Amtrak is just a toy for rich people with a lot of time on their hands. It does not even come close to competing with air travel in the real world.

I haven't run the numbers, but my bet is that if you simply bought everyone who wanted to ride Amtrak an airline ticket, it would be cheaper.

[Sam Cree]

"It's not the salaries that are the problem ~ it's the technology itself. All other methods are less costly, even if not a single employee worked for Amtrak."

I'd like you to explain this to me in a little more detail, since I don't exactly know what you are talking about.

[El Oviedo]

The Japanese are experts in running railroads. Why don't we just invite them to run Amtrak?

[muawiyah]

I don't have all the statistics on the matter, but a tremendous percentage of government payments to support the airline industry come directly from special taxes levied on users.

Direct subsidies were ended before Richard Nixon's resignation.

[PackardClipper]

If the stage coach industry was socialized we'd still be subsidizing it.

[muawiyah]

THe Japanese have a territory about the size of California populated by 1/3 the population of the United States.

Their expertise would fall into the trashcan if someone said "Gee, besides all of that, go serve Siberia".

Our people do not lack the expertise of how to run a railroad ~ they simply lack a market for what they are selling.

[Mr. Lucky]

Bingo!

[hubbubhubbub]

Amtrak (one single enterprise) gets 30 times the subsidy per passenger mile than the entire airline industry gets.

[sandbar]

Why should the government prop up a business that has no need in the market place anymore?

[patton]

Transportation Secretary Norman Y. Mineta said federal subsidies for Amtrak had almost doubled in the last four years...

Senator Charles E. Schumer (D - NY), said, "Eliminating Amtrak wouldn't just cost us billions of dollars in operating funds for the trains and the business people and tourists they bring here, it also shreds the safety net we'll need in case - God forbid - our airspace is shut down again like it was after 9/11."

The Administration’s proposal is seen by some as basically flawed because of the length of time, and money, that would be required to actually shut down Amtrak.

“Earlier today, President Bush sent to Congress his proposed budget for FY '06. It provides no funding for Amtrak. In contrast, this year we are spending $1.4 billion, of which $1.2 billion is from a federal appropriation to support our operations and capital programs across the country."

Not one freeper read between the lines? All but $200M of their budget was stolen? ...Six/sevenths of their budget...stolen.

[politicalwit]

"Amtrak (one single enterprise) gets 30 times the subsidy per passenger mile than the entire airline industry gets."

Subsidies are subsidies...do away with all of them.

[muawiyah]

That's one way to think about it. On the other hand, 100% of the budget for the Department of Education is "stolen", as is nearly all of that managed by the Department of Commerce.

And then there's the question of all the benefits that should be flowing back into the Department of Defense coffers given all the new imperial territories recently opened up for looting (/sarcasm /cynicism).

Amtrak user fees (fares) provide a greater percentage of their agency costs than just about every other agency of government in this country.

[patton]

If you travel on Amtrack, you pay 1/7th of the price, the taxpayers get stiffed for the rest. According to this article.

I don't think that is true on an airline.

[Nick Danger]

I think we can safely say that there is no way in Hell that the Amtrak budget will get out of Congress in the state where Bush put it.

Whether that ought to be the case is an interesting debate, but political reality is that it won't happen.

In all fairness, the airline industry that sets "the market price" for intercity travel receives huge subsidies from the federal government, including the air traffic control system, the security-weenies at the airports, and most of the FAA bureaucracy. According to the USDOT, between 1982 and 1989, only 57% of all federal funding for aviation came from the Airport and Airways Trust Fund, a revenue account supported by various aviation user fees and charges. The rest (43%) came from the General Fund of the U.S. Treasury.

So the reality is, our intercity transportation system is subsidized up the wazoo. Again, we could debate whether that is good or bad, but yanking it to zero in one fell swoop is not a realistic proposal. It's a PR stunt.

[patton]

Are you on drugs, or just bad at math? Buy a ticket on Amtrack, you pay 1/7th of the cost - I pay the rest?

This is the best ROI you can find?

[Fester Chugabrew]

Our costs are more under control than ever before - that's quite an accomplishment.

A dumbed-down way of relating the reality.

Meanwhile, roads can hardly be said to operate strictly on a "free market" basis since the rights of way are maintained via taxation. Railroads might be better served to amplify the free market avenue, since they are apparently so ineffecient from a cost perspective.

Or, to look at it another way, what if the government funds currently spent on roadways were diverted to railroads and vice versa?

[Eric in the Ozarks]

The Canadians run great freight RRs. They own big pieces of the US system. Too bad we can't put Amtrak up for bids.

[Mr. Jeeves]

"Eliminating Amtrak wouldn't just cost us billions of dollars in operating funds for the trains and the business people and tourists they bring here, it also shreds the safety net we'll need in case - God forbid - our airspace is shut down again like it was after 9/11."

Um, Chuckie? That safety net is called the "private passenger automobile". Just like the other safety net you don't like called the "privately owned handgun". ;)

[muawiyah]

I'm not on drugs but you show every sign of being on them yourself.

Here you have Amtrak recovering 1/7 of the cost of it's service from those who use it.

Now, please turn your attention to Department of Commerce. They spend billions of dollars. How much of that is recovered directly from those who benefit from the work of this department?

I think the answer is ZERO ZERO ZERO ZERO ZERO.

Amtrak is actually doing better than Commerce.

If you wanted to argue the case along the lines of ROI, profits, etc., fine, but you wanted to argue the case along the lines of "theft", with taxes identified as the quantity stolen.

I'm happy enough to go along with that, but if you want to evaluate Amtrak that way, please evaluate all the other agencies the same way. We might even consider that the White House itself (distinct from the President) recovered absolutely nothing from it's users except when Bill Clinton was loaning out the bedrooms.

[austinmark]

It is time to take AmTrak OFF "life Support". Let it die.

IF, there is a Need and someone from the private sector can make a go of it, then it will happen, Just as a few entrepreneurs in the airline industry, (Virgin, Jet Blue) have been successful.
Most all of the Major Airlines can't survive on their own, (exception: SouthWest Airlines) so let them Die on the vine as well. ONLY the competitive should survive.

Corporate Welfare has become "business as usual" and is now viewed as an "entitlement", it kill's industry's "incentive" to operate within it's means.
The Problem is systemic across the board and in all sectors.

Then Again ...... They learned well from the Federal Government.

[dr_who_2]

Right on.

[gathersnomoss]

Has Bush forgotten about NPR?

[Wiz]

Lets drop the financial assistance to the airline industry also. Screw them...if they can't manage their finances they have no business in the industry.

Shall support toward Boeing be eliminated also, with European Airbus attempting to dominate the market and those Airbus flying in the US? How many more "Made in USA" symbols would be threaten for such problems?

[dr_who_2]

Yes. Both might even thrive more with less regulation, fewer subsidies, and fewer dumb laws.

[El Oviedo]

Have you ever been to Japan? I lived there for 27 years - went there in 1945. I don't think it's the territory - it's how you market the product - which the Japanese are very good.

Also look at the airlines - Our taxes are keeping them afloat. There's no problem in territory concerning the airlines. Yet you see one by one going into BK.

Remember when MGM was the No. 1 movie producer? Now it's called SONY.

[Edmund Burke]

The government needs to get out of the highway business as well. Private investors can build and operate highways more efficiently. Look at the Pennsylvania, Ohio, Indiana, and Illinois turnpike system. It carries most of the essentials of industry through the heart of the industrial midwest.

[mad_as_he$$]

Agree with both points. How can Jetblue and Southwest turn profits when the bloated carriers bleed red like and ocean?

Let the market decide. Amtrak is a sloppy third rate operation.

[Edmund Burke]

Thousands of miles of the US railroad network is owned by the Canadian government's crown corporation, Canadian National Railway.

[ReignOfError]

Subsidies are subsidies...do away with all of them.

Fine. But only if you do away with all of them. That would be a revolution, and would interupt commerce as revolutions do.

There simply isn't a mode of transportation that does not enjoy some form of government subsidy. Bicycle paths, hiking trails, Amtrak, airlines, highways, sidewalks, surface streets, river routes. Even walking in the park has a government-funded ad campaign to recommend it. Government subsidies are so thoroughly woven into the system that you can't just cut those cords without the net collapsing.

And it's not just getting yourself from A to B -- the costs of transport are built into the cost of everything you buy. It all got to your local supermarket by train, truck, ship or air, and often by some or all of the above. Yank subsidies, and you're talking about a more drastic realignment than the transcontinental railroad, because it will happen far more quickly.

End all subsidies tomorrow, and be ready for the hell of a thousand paper cuts next week. That kind of mainline addiction can't be cut off cold turkey.

[Fester Chugabrew]

That safety net is called the "private passenger automobile".

I see your point and heartily concur to a degree. But the "private passenger automobile" runs on roads. Can you name a road that operates today on a free market basis, i.e. someone is profiting from the road itself? Even toll roads are out of the hands of private entrepeneurs.

[Sam Cree]

"That safety net is called the "private passenger automobile."

Which travels on government owned right of ways. Under government supervision.

[Cicero]

One of the main reasons the railroads are having a tough time is the government's decision to develop an enormous highway network instead, beginning toward the end of the Second World War and taken to a new level with Eisenhower's interestate highway program. Behind these decisions there was a great deal of lobbying (and bribing) on the part of General Motors and others.

I agree. There's no form of transportation that isn't subsidized, and the railroads are far from getting the lion's share.

[paul51]

Lets drop the financial assistance to the airline industry also. Screw them...if they can't manage their finances they have no business in the industry

Add the US postal service to that list of subsidized money eaters

[struggle]

>>The Japanese are experts in running railroads. Why don't we just invite them to run Amtrak?

The big issue is to do as the Japanese did in '85, privatize and decentralize a huge public trans. service.

Japan has dozens of small, local area trains, and one decentralized national train split in to several branches. If Amtrack were to be sold off, I'm sure quite a few companies could make money off a Los Angeles, Las Vegas, San Fran link up, and the South could link up for cheap as well. Private train companies in Japan make LOADS of cash, and own baseball teams, malls, and advertising companies.

Once people resign Amtrack to actually making money, the money making will begin.

[politicalwit]

"Fine. But only if you do away with all of them. That would be a revolution, and would interupt commerce as revolutions do."

That is my exact point. People don't seem to realize the amount of money our government pours into business. Personally, I'd much rather take the train than fly.

[Sam Cree]

Without reference to the merit or lack thereof, agreed that Congress doesn't have the cojones to kill Amtrak. At least I don't think so.

[BurbankKarl]

Good...let them walk, they will get there quicker.

[balrog666]

- Amtrak financing nearly eliminated in proposed Bush budget; Amtrak president reacts in message to employees

Nearly? Not nearly enough.

[Ciexyz]

I disagree with President Bush's budget on this issue. I use Amtrak and believe that the federal government should continue to support the Amtrak rail system.

[Sam Cree]

I use Amtrak too. Granted, it would be better run privately, and should be run privately, but the government and the public are so far away from even thinking of allowing market forces to determine how our transportation systems are run that I think there is nearly no hope of it.

[Ciexyz]

They've already cut back on the trains passing thru Pittsburgh to points east, Harrisburg and Philly. How much more are they gonna cut? Do they want me to take a disgusting Greyhound bus? Sheesh, find the money somewhere to keep our trains running. Just do it. I'm a taxpayer and I have spoken!

[SoCal Pubbie]

Sony bought Columbia Pictures. MGM is owned by financier Kirk
Kervorkian.