Amtrak: The Bottomless Pit

January 23, 2013

In the world of Amtrak, the year you lose the least money is considered your most successful year, says Daniel Hanson of the American Enterprise Institute.

  • Amtrak posted a $361 million operating loss in 2012, its smallest operating loss since 1975.
  • The company has received more than $4.4 billion dollars in direct aid and loans during the past three years alone from the federal government.

Proponents of Amtrak argue that it provides an indispensable public service and that Americans should start to mimic Europeans in their use of passenger rail as their main mode of transportation.

  • Passengers took about 30 million trips on Amtrak with more than 10 million of these trips on the Northeast Corridor, which runs between Washington, D.C., and Boston.
  • Tickets range from $49 to $300. Most riders pay about $150 to travel from D.C. to Boston. This is only $25 more expensive than in 1997.
  • The federal government contributes almost $50 for each ticket purchased through its subsidies.

Despite massive federal subsidies over the last 40 years -- totaling $50 billion -- Amtrak's railway service along it Northeast Corridor is actually 15 minutes slower than a Penn Central train in 1969. The railroad also incurs inordinately vast expenses maintaining its tracks. While the construction of the Transcontinental Railroad only cost $1.2 million per mile and the entire interstate system that carries 60 times as many people cost $10 million per mile to build, Amtrak has received $6.1 million for each of the 730 miles it maintains.

Amtrak funding accounts for only a tiny fraction of the annual deficit (0.001 percent) and the federal budget (0.0004 percent), however, it has nothing to show for the federal funds it has received. It has not innovated, lowered prices, provided faster service or moved toward self-sufficiency as a normal company competing in the economy would. Given its track record, federal subsidies for Amtrak should be eliminated and the free market's prevailing forces should be left to their own accord.

Source: Daniel Hanson, "End the Amtrak Experiment," Washington Examiner, January 15, 2013.

 

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