NCPA - National Center for Policy Analysis


October 19, 2005

Amtrak's board has decided to remove the Northeast corridor that runs from Washington to Boston from the rest of the system by January 2006 -- pending congressional approval -- and turn in over to a government consortium, says Investor's Business Daily (IBD).

Amtrak -- a government corporation created because private rail systems could no longer make money on passenger routes -- will still operate the trains but will not have to spend the billions that are needed to build and repair bridges, rails and power systems up and down the corridor; those costs will be paid by the federal government and the states the rail runs through, says IBD.

But, Amtrak is already heavily subsidized by taxpayers, says IBD:

  • Washington budgeted $1.2 billion for the so-called private company last year.
  • The Senate is ready to give it $1.4 billion next year.
  • Since 1971, when it began service, it has sucked down $30 billion in taxpayer dollars; each year, it's a money loser.

Moreover, Amtrak has been in the red because it moves passengers along unprofitable routes, says IBD:

  • The Transportation Department says the Sunset Limited from Los Angeles to Orlando loses $466 on each passenger.
  • Amtrak spends $3 for every $1 in ticket revenue on some routes.
  • During the first year of the Reagan administration, Amtrak could only generate enough cash to pay for 40 percent of its operating budget; by the first year Reagan was out of office, it was doing better, but its revenue was less than three-fourths of what it spent.

Instead of reshuffling, the White House should consider selling off the Northeast corridor, thus making the first move in a full privatization of the entire system, says IBD.

Source: Editorial, "Amtrak Off The Rails," Investor's Business Daily, October 14, 2005.


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