When Amtrak -- the United States' government-owned rail passenger line -- was created in 1970, the idea was to shift unprofitable passenger trains from private railroads to a new corporation that with a small amount of federal help would become profitable. It was a huge blunder, admits Joe Vranich, the former executive director of the National Association of Railroad Passengers.

Amtrak is drifting toward bankruptcy say observers:

• In fiscal 1997, it covered daily expenses only by supplementing subsidies with $83 million in bank loans.

• It's ridership --16.6 million in 1972, its first full year of operation, was only 19.7 million in 1996; meanwhile airline passenger trips tripled from 191 million to 581 million.

• Amtrak has received $19 billion in federal subsidies, rising to $800 million a year.

• In 1987 Amtrak's average passenger car was 15.6 years old, says the Government Accounting Office; by 1996 its average rail car was 20.7 years old.

Now it is threatened with a strike by 2,300 maintenance workers wanting an 18.5 percent wage increase over five years -- which would cost $440 million in increased wages from 1997 to 2000. But instead of shutting Amtrak down, letting private commuter lines operate the profitable routes, Congress is considering an Amtrak "reform" that would give it $2.3 billion more in subsidies.

Vranich agrees that outside dense corridors like the Northeast, passenger train service makes no sense. Furthermore, Amtrak has opposed private proposals for high-speed trains in the few corridors where they might thrive -- for instance, it fought to preserve its monopoly against a proposed high speed Dallas-to-Houston train, although it later discontinued its own service.

It is "an example of government's inability to abandon the old, the stupid and the failed," contends Newsweek columnist Robert J. Samuelson.

Source: Robert J. Samuelson, "The Parable of Amtrak," Newsweek, November 3, 1997.