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.


Browse more articles on Tax and Spending Issues