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Taxes picking up tab for Amtrak losses
An Amtrak Acela high-speed train at South Station in Boston.
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Kai Ryssdal: If you've taken Amtrak lately -- and I realize that doesn't apply to a whole lot of people outside the Northeast corridor -- but if you've ridden the train recently from, let's say, New York to Boston, you paid $62 for that trip. We, as in we the taxpaying public, kicked in another 5 bucks. That's the taxpayer subsidy that Amtrak gets on that ticket according to a new report from the Pew Charitable Trusts. Marketplace's Mitchell Hartman reports.
MITCHELL HARTMAN: The Pew report says taxpayers provide a $32 subsidy per Amtrak ticket, on average. Amtrak puts the subsidy at just $8.
The difference is Pew includes all the costs of running a railroad, like depreciation -- that's wear-and-tear on tracks and trains -- and overhead, like the legal and HR departments. Taxpayers pick up those costs too. Amtrak got $1.3 billion in funding last year.
MARCUS PEACOCK: The Northeast regional line, which has lots of passengers, flips from being a profitable line using Amtrak's figures, to one that actually loses money.
Marcus Peacock runs Pew's Subsidyscope project. He says Amtrak's high-speed, high-priced Acela line along the Northeast Corridor makes money. The Sunset Limited from New Orleans to Los Angeles loses the most -- $462 per passenger.
PEACOCK: Some of the longer routes have some of the fewest passengers, and I think that combination results in some of these very high costs.
The report is fodder for critics who say Amtrak should shut down unprofitable routes.
Randal O'Toole of the conservative Cato Institute says, don't throw more taxpayer money at a system that can't get enough riders to break even.
RANDAL O'TOOLE: Best thing we can do for mass transportation would be to privatize it, let the private operators respond to the market, and then we'll have a more efficient system that might be attractive to more people.
Amtrak's supporters, though, argue that every public transportation mode in the U.S. gets subsidies from highways to airports. They're calling for additional public subsidies for Amtrak to upgrade service and attract more riders.
I'm Mitchell Hartman for Marketplace.
Of course, any comment on what Amtrack costs the taxpayer, MUST include a comparison to what commerical air travel and highways--which are Amtrack's competitors--cost the American taxpayer.
What does it cost to maintain highways? What does it cost to maintain air traffic systems to avoid collisions? What do taxpayers pay for vehicle insurance, upkeep, property taxes on their cars?
Once those figures are tallied, then the cost of Amtrack can be figured out in relation.
It would be interesting to know what composite depreciation rate Pew used.
Still, what I take away from this is that we should avoid "poor-boy" semi-high speed systems presently proposed for the Midwest. The real deal costs as much as a new divided highway maybe $35 million per mile in my area counting the high cost downtown parts.
We can pay for it by NOT passing the proposal to raise the deduction on the estate tax to $5 million. That's $20 billion a year, more than enough to build a first class Chicago-Milwaukee-Minneapolis line.
I find Martin's point pretty strong; a private operator model has worked well for the airlines with airports and trucking companies on the interstates. However, it should be pointed out that with rail, there are other problems involved such as dispatching trains. How do you ensure some trains from one company aren't arbitrarily favored over others (i.e. the current situation with Amtrak on freight lines)? Also, why is Randall O'Toole still a credible source? Several of his essays, including one he wrote for the CATO Institute, were riddled with factual and historical errors. He has been intellectually dishonest in the past, which is a big no-no.
This is very old news. Amtrak has always been into kingdom building. There are many management people there who "side" into infalted jobs year after year. A new president comes a new president gose, but the same old managers stay in power to build their kingdoms, and soak our money quickly down the drain. Nothing changes, cost keep going up, and the service continues to worsen. Year after year after year, the same managers deplete and destroy Amtrak just to satisfy their own ego's and pocket books...
Randal O'Toole opined that the way to make rail travel profitable is to privatize it. The reason Amtrack exists is that in 1971 the private carriers abandoned passenger service - because they couldn't make a profit at it. There is no reason to believe that privitization would make it any more profitable than it was then. No passenger rail service in the world makes a profit, which does not make it a valuable form of transportation. Most countries realize this and heavily subsidize rail transportation because is provides a valuable service to the public.
The same is true of interstate highways. They do not make a profit, and would not even if privatized. They are provided only through government subsidy, because they provide a valuable service, just as passenger rail transportation does.
