Patrick Therriault, Columnist
…And on the subject of government-sponsored agencies (see THERRIAULT: Freddie and Fannie Still in Business, But No One Wants Them to Be, May 15), Amtrak has resurfaced as a source of contention between lawmakers in Washington. Just as Amtrak is planning festivities to mark its 40th year of service, House Transportation and Infrastructure Committee Chairman John Mica (FL-R) has recently proposed a plan that would partially-privatize the federally subsidized national rail service.
Mr Mica’s plan would strip Amtrak of the Boston-to-Washington Northeast Corridor – the system’s most profitable route by far – and turn over its operations over to private investors to finally implement bonafide high-speed rail service along the densely-populated eastern seaboard. The Chairman, a longtime Amtrak opponent, has stated that, though Amtrak has received billions in federal subsidies over its 40-year existence, it has failed to develop meaningful intercity rail service – high-speed or else. Currently, Amtrak’s fastest trains average just 83 mph between New York and Washington.
Last year, Amtrak announced it would upgrade the Northeast corridor to reduce New York-to-Washington travel times to just 96 minutes, but that improvement would come at a $117 billion cost to taxpayers over a planned 30 years of implementation. Mr Mica, among many others, has determined this is unacceptable, as Americans watch hundreds of miles of high-speed rail built per year in developing nations around the world.
Amtrak: A Corporation Kept in Limbo
The Chairman’s plan represents just the latest attempt by Congress to privatize or eliminate Amtrak over the controversial corporation’s tumultuous history. It also comes after nearly two years of Republican pushback against the Democratic Administration’s high-speed rail initiative was kicked off in early 2009 by the American Recovery and Reinvestment Act.
Numerous times over the past four decades, politicians ranging from Richard Nixon to John McCain and George W Bush have attempted to shutter Amtrak and sell its assets to private investors for a revamp of the national rail system. However, even its current haphazard form, ridership has grown significantly over the past decade as service has improved as other forms of transportation have become more expensive.
This surprising improvement led the Obama Administration, at the behest of Joe “Amtrak” Biden, to spearhead the introduction of federally funded high-speed rail upgrades across the US. In turn, austerity-minded Republicans coming out of a painful recession have balked at using taxpayer dollars to implement pie-in-the-sky bullet trains between Disneyland and Las Vegas, or Tampa and Orlando. Economists who have studied the US’ rail system have made one consistent and concise point about Amtrak: government-sponsored or not, how can a corporation succeed when its capital funding has been in jeopardy for four decades, constantly fluctuating with the political tides? Whether a solution lies in privatization or not seems to remain up for debate.
A Little Amtrak Lore
The idea of the US Government enthusiastically funding Amtrak runs against historical precedent (yes, a link to Wikipedia, but only because it is one of the most interesting Wiki articles I have ever read). Amtrak has always been an anomaly and, in fact, its creation in 1971 was viewed as a “bailout” measure to rehabilitate financially insolvent passenger rail corporations that could not remain competitive with the automobile and commercial aviation. For decades, politicians pushed Amtrak executives to return the unified national firm to financial independence, but legacy debt, expensive deferred maintenance on its inherited infrastructure, and a general lack of interest from the publish kept the federal government’s arm around its operations. Therefore the current administration’s plans for Amtrak lack historical perspective, and presume that the federally-subsidized mess that is Amtrak can become a legitimate, efficient passenger rail service provider, a la Europe’s Eurostar train service.
At the same time, the Republican Party has a long history of trying to shut Amtrak down, but has had relatively little success. Prior to 2009, the most recent attempt was made by John McCain and President George W Bush back in 2002 when Amtrak, teetering on the brink of insolvency, requested over a billion dollars to be allocated to rail service over just one federal fiscal year. The annual federal Amtrak outlay has remained above $1.0 billion ever since. Therefore, Mr Mica’s plan is somewhat surprising, as, though it is adamantly anti-Amtrak, it endorses the idea of developing high-speed rail within the US. This unique plan seemingly cuts both opponents of Amtrak and privatization of passenger rail service off at the pass.
At this point in any conversation about privatizing Amtrak, a nod to the UK’s 1990’s effort to privatize its own national rail network seems natural. That nation divided its assets among 30 private operators in the early 1990s, much like the plan envisioned by Senator McCain early last decade, with individual corporations operating compartmentalized elements of its national rail system. The experiment succeeded at first, but government regulation began to seep back in after the individual rail entities suffered financially and serious accidents began to occur. Lessons may be used from the British experience, surely, but they should not snuff out any attempts for sensible efficiencies to be realized on this side of the Atlantic.
In the End, Status Quo
The Chairman’s plan will be included in a long-term transportation spending bill that his committee will introduce by the end of June to the House floor; the Wall Street Journal quotes Senator Frank Lautenberg (NJ-D) as stating that Mr Mica’s plan is likely to pass the House, but stall like many other Republican-originated bills in the Senate. Unfortunately, the bill also contains spending provisions for other modes of transportation, the funding of which could also suffer if it fails to pass.
Mr Mica’s plan, though well-intended, is still misguided and will do well being relegated to the annals of Amtrak history. Mr Mica seems to be overlooking that, though severing Amtrak’s Northeast Corridor cash cow from the rest of its operations may deliver high-speed rail faster and more efficiently, it will still leave taxpayers footing the bill for the rest of the less-profitable network. What Amtrak needs is a comprehensive plan that would rely on objective economics. Perhaps a public-private partnership, which functions beyond the federal-fund infusion scheme Amtrak has operated under until now, would be the best vehicle to combine the services Amtrak is supposedly providing. Learning from the British experiment, and employing a dream-big vision of the type that originally led to the creation of a nationwide rail network in the first place more than a century ago, passenger rail service should once again become a part of Americans’ transport consciousness.