NCPA - National Center for Policy Analysis

Panel to Propose Railroad Privatization

January 11, 2002

Amtrak, the federally-owned, money-losing national rail system, initially reported a sharp upsurge in ridership after the Sept. 11 attacks, but when the final figures came out, ridership was shown to have declined 6 percent in September, and about 1 percent in October and November.

Not surprisingly, the Amtrak Reform Council will announce today a plan to break up the railroad, reports the New York Times, with the government taking ownership of the tracks and competing companies taking over some or all of the most popular train routes.

The reform council was created by Congress to come up with a restructuring plan if Amtrak failed to become self-sufficient. Amtrak has not made a profit since the government took over passenger service from bankrupt railroads in 1971. Amtrak has never made a profit, and by 1997 had gone through $22 billion in government subsidies.

The Council determined in November that Amtrak, which lost $340 million last year, had no chance of weaning itself from operating subsidies by the Dec. 2, 2002, deadline set by Congress. After the November finding, the council's federal budget was cut in half due to the efforts of some members of Congress, and it will probably have to close in the spring.

"This committee is pro-rail," said Mayor John O. Norquist of Milwaukee, who is a council member. "What we want to do is set up a system where what the customers want is what the railroad delivers."

As the Feb. 7 deadline approaches, the debate over what a national passenger railroad system should look like is expected to intensify. The council is expected to offer three proposals that after a two- to five-year transition, would open all intercity rail markets to competition, with Amtrak eventually being completely privatized.

Source: Anthony Depalma, "Panel Is to Propose Breaking Up Amtrak," New York Times, January 11, 2002.

 

Browse more articles on Tax and Spending Issues