M.D. Harmon: Derail federal spending by ending Amtrak subsidies



By M.D. Harmon

Maine Wire columnist

Among the continual questions being asked of us squeeze-the-federal-government-until-its-beady-little-eyes-bug-out-fiscal-responsibility types is the big-spenders’ supposed clincher:

“Well, tell us exactly where you’d start cutting all the valuable and important things that the Big Money Spigot in Washington showers down on us.”

Okay, here’s one (but just one). There was an Associated Press story this week that gave us a good place to start chopping (right after repealing Obamacare, which has to be the utmost, highest, most immediate top priority for a Romney administration):


If it weren’t for political influence, it’s hard to see why there would be publicly subsidized passenger trains operating anywhere in the nation —but most especially in the thickly populated Northeast Corridor, where the road network is extremely dense and airports abound.

Anybody who wants to get anywhere has lots of transportation options, so if railroads are such great alternatives, you’d think people would be happy to pay whatever it took to use them.

But you would be wrong. The fact that Amtrak (the National Railroad Passenger Corp., to give it its full name) has anyone at all riding it is that it gets $562 million in ridership subsidies, plus $650 million in capital costs (tracks, trains, etc.)—and it still managed to lose $450 million last year, even though it had 30 million riders.

That $1.7 billion amounts to a government pay-in of more than $50 on every ticket, which brings us to this stunning fact, as reported by the AP: Vice President Joe Biden says he has traveled on Amtrak from his home in Delaware to Washington about 7,900 times.

Which means American taxpayers have given him an incredible $395,000 personal subsidy to get to work and back during the time he was a “public servant” in Washington.

The utterly weird thing about this form of taxpayer abuse on the part of a multimillionaire is that he thinks this is an argument to keep on subsidizing Amtrak! “I’m the biggest railroad guy you’ve ever known,” said Biden, whose hometown Amtrak station was named after him last year, the AP reported.

As well it might have been, because he personally intervened to save Amtrak’s subsidies during a previous privatization effort.

Freight trains are not the issue here. The money-losing government freight system, Conrail, was privatized in 1987 and lines specializing in moving raw materials and manufactured goods have long since operated profitably in a deregulated environment. It’s the people who see a so-called “public good” in passenger rail who keep the money flowing.

Why? As the AP put it, proponents say “it’s in the public interest to keep tens of millions of cars off already congested roads and from polluting the environment.”

But do trains really do that? More to the point, do they do it in a way that is fiscally responsible, considering that the emissions controls on modern cars have reduced pollution to minimal levels and road congestion can be better controlled by such means as time-of-day pricing?

People who point to the jobs that would be lost by ending subsidies are simply saying that the subsidies are a form of welfare. Privatization advocates are equally entitled to ask, “If trains keep people from buying cars, how many jobs are they eliminating in the automobile industry?”

But, of course, it’s primarily neither about jobs nor the environment. It’s much more about the preference of those on the political left for big-scale government projects that group people together in collective projects, rather than maximizing their ability to make individual choices on their own.

After all, in the post-Second World War period, 55 nations have either privatized their rail lines or devolved them to their regional governments. Most such moves have been successful (England, where all the parties are big-government boosters, seems to be an exception).

Still, even though the Republican Party platform approved in Tampa last month calls for ending Amtrak subsidies, bills financing its continuation continue to pass Congress, even when Republicans control one or both of its chambers.

If it is true that passenger rail has “sweet spots”—runs of 250 miles or so, too far to conveniently drive and too short to take a plane—then the BosWash corridor is its home turf. (Though it’s hard to believe that buses couldn’t meet whatever need existed at those distances, and a combination of buses and planes could serve the few rural areas now dependent on Amtrak, whose rural runs require the largest subsidies.)

Nevertheless, there is a reluctance, for the reason noted above, to eliminate the longer-range routes that in planners’ minds make the system “complete” and concentrate on an area where it might—repeat, might—be possible to have some profitable runs.

Still, as a June 2010 report by the libertarian Cato Institute pointed out, “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.”

But, Amtrak’s defenders say, other forms of transportation are subsidized, too. Cato responds: “In 2004, the Department of Transportation published a report on the cost of federal subsidies for automobiles, buses, airplanes, transit and passenger rail per thousand passenger miles. The survey covered 1990 to 2002.

“In every year except one,” the study continued, “passenger rail was the most subsidized mode of transportation. For example, in 2002 Amtrak subsidies per 1,000 passenger miles were $210.31. By contrast, the subsidy for automobiles was minus $1.79, which means that drivers more than supported themselves through federal fuel taxes. The findings embarrassed Amtrak supporters in Congress, and as a result, the government stopped producing the report.”

Newer private surveys repeated the results, even as gas prices were rising, but that’s not something rail advocates ever point out—particularly here in Maine, where the Downeaster train from Portland to Boston is being expanded to Brunswick.

It depends on $6 million in subsidies, about 40 percent of its annual cost, to carry 528,000 passengers that buses could serve equally well at lower cost.

The Cato report sees clearly that the future of intercity passenger rail depends on its as-yet-unproved ability to make money:

“If Amtrak is privatized, passenger rail will be in a much better position to compete with resurgent intercity bus services. The rapid growth in bus services in recent years illustrates how private markets can solve our mobility needs if left reasonably unregulated and unsubsidized. A Washington Post reporter detailed her experiences with today’s low-cost intercity buses: ‘This new species offers curbside pickup and drop-offs, cheap fares, clean restrooms, express service, online reservations, free wi-fi and loyalty programs. The bus fares undercut Amtrak and, depending on the number of passengers, personal vehicles.’ ”

If Mitt Romney and his party win control of the White House and Congress in November, whether things change for the better appears to depend on how many real fiscal conservatives are present to fend off the depredations not only of their Democratic opponents, but of the “big-government Republicans” who have cooperated with liberal wastefulness for far too long.

M.D. Harmon, a retired journalist and military officer, is a free-lance writer and speaker. He can be contacted at: mdharmoncol@yahoo.com.


  1. With just a little research you will find That Warren Buffet has been buying up all the rails across the country for over a year.???makes you wonder why a smart guy would buy up losers??

  2. So he can transport oil. That is why Obama fights the Keystone pipeline, without a pipeline there is only one way to transport the oil, via Buffets railroads.

  3. You can’t argue with the rise in ridership; yet expenses seem to be rising faster than revenue. and you still can’t get to Logan easily by train; nor is there an express from Maine to New York.

  4. Right of Way is where the money is….it’s also the cheapest way to move natural gas from place to place.


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