Tag: Amtrak

This Is Why Amtrak Should Get More of Your Money?

An Amtrak locomotive caught fire yesterday on its way from Chicago to Milwaukee. Fortunately, all 51 passengers were safely evacuated from the six-car train.

At about the time the locomotive was burning, a reporter was telling me that “everyone” in Washington was saying that the Philadelphia accident proves that Amtrak needs more money. No doubt the Wisconsin incident will add to those calls for more funding.

But go back and read the first paragraph: There were only 51 passengers on that train. All of them could have fit on one motorcoach, many of which have 52 or more seats. The Horizon coaches used on this train typically have 60 seats, which means the train was less than one-sixth full. According to Amtrak’s performance report for fiscal year 2014, the Chicago-Milwaukee Hiawatha trains filled an average of 36 percent of their seats in 2014, or about two-and-one-half buses worth.

Amtrak fares for its seven daily trains each way between Chicago and Milwaukee start at $24. According to Busbud, Greyhound and Megabus together offer 13 trips per day each way between Chicago and Milwaukee, and their fares are often as low as $7 and never higher than $10.

While intercity bus operators pay a discounted fuel tax, the buses otherwise operate without subsidy. Amtrak’s Hiawatha trains produced $16.8 million in ticket revenues in 2014 against $24.5 million in operating costs, for a net loss of $5.7 million (not counting amortized capital costs). The trains carried slightly less than 800,000 riders, for an average subsidy of slightly more than $7 per trip.

In other words, the subsidy alone would have been enough to give every single Hiawatha rider a free trip on Greyhound or Megabus (at the low cost of $7 per trip).

Amtrak’s Budget

In the wake of the terrible train crash near Philadelphia, people are asking whether Amtrak budget cuts could have been a contributing factor. The short answer is that federal rail spending has not been cut. The longer answer is that rail spending has been greatly misallocated by Congress. Rather than being spent on maintenance along heavily used corridors (particularly in the Northeast), the federal rail budget has been frittered away on uneconomical rural routes and high-speed rail schemes.

In the federal budget, Amtrak is within the Federal Railroad Administration (FRA). The president estimated that fiscal 2015 outlays on the FRA would be $3.6 billion. Of that, $250 million is for Amtrak operating subsidies, $1.1 billion is for Amtrak capital grants, $1.8 billion is for high-speed rail grants, and the rest is for safety, research, and other rail activities.  

The chart shows total FRA outlays from 1990 to 2015 in current dollars (not adjusting for inflation). Outlays have soared in recent years, partly due to rising high-speed rail spending. During 2009 to 2015, high-speed rail grants were $2 million, $16 million, $304 million, $513 million, $768 million, $1.1 billion, and $1.8 billion. But even aside from that spending, FRA outlays were up modestly over the past decade.

 

Too Much Money Going to the Wrong Places

It appears that the Amtrak crash that killed seven people Tuesday resulted from speeding, but big-government advocates are already using this accident to make their case for more infrastructure spending. In fact, the problem is not too little money, but too much money going to the wrong places.

In 2008, President George Bush signed a law mandating that most railroads, including Amtrak, install positive train control (PTC) by December of 2015. PTC would force trains to slow or stop if the operator ignored signals or speed limits.

In 2009 and 2010, President Obama asked a Democratic Congress to give him $10 billion to spend on high-speed trains, and Congress agreed. Not one cent of that money went to installing PTC in Amtrak’s Northeast Corridor.

PTC would have prevented this accident. There was plenty of money available to install it, but the Obama administration, in its infinite wisdom, chose to spend it elsewhere. Two days ago, it would have been embarrassing to think that the government-run Amtrak hadn’t yet completed installation of PTC on its highest-speed corridor. Today, it’s a tragedy. But how is it the fault of fiscal conservatives?

This accident is just one more example of a political fact of life: Politicians are more likely to put dollars into new construction, such as high-speed rail, than to spend them on safety and maintenance of existing infrastructure. As John Nolte says on Breitbart, “Amtrak is not underfunded; it is criminally mismanaged.”

Transportation journalist Don Phillips presents one example of Amtrak mismanagement in the June issue of Trains magazine: instead of promoting a culture of safety, Amtrak has a culture of don’t care. Phillips points to a February report from Amtrak’s Inspector General that found that Amtrak has the least-safe working environment of any major railroad. Amtrak employees are more than three times as likely to be injured or killed on the job as employees of BNSF, CSX, Norfolk Southern, or Union Pacific.

This poor record, says the report, is a direct result of a lack of accountability “at all levels.” Employee injuries in 2013 were only one-twelfth as likely to result in disciplinary action as in 2009, resulting in employees who believe today that they “can ignore rules and safe practices with impunity.” Safety is of so little importance in the organization that three out of four of the employees interviewed by the inspector general believed that Amtrak’s safety record was better, not worse, than other railroads.

One reason why Amtrak has a poor safety culture may be that Congress has legally limited Amtrak’s liability for any single crash to $200 million. Imagine the outrage if Congress limited the liability of oil companies, pipeline companies, Monsanto, or other private corporations. Yet the progressives who wrote Amtrak legislation considered such a liability limit perfectly acceptable.

If Congress were to respond to this crash by increasing federal infrastructure spending, it is all too likely that much if not most of that money would go for useless new projects such as new high-speed rail lines, light rail, and bridges to nowhere. We don’t need intercity trains that cost several times as much but go less than half as fast as flying; we don’t need urban trains that cost 50 times as much but can’t carry as many people per hour as buses; we don’t need new bridges if bridge users themselves aren’t willing to pay for them.

As I’ve documented elsewhere, infrastructure that is funded out of user fees tends to be better maintained than infrastructure that is funded out of tax dollars. User fees also give transportation managers signals for where new infrastructure is really needed; if people won’t pay for it out of user fees, it probably isn’t necessary.

Before 1970, America’s transportation system was almost entirely funded out of user fees and it was the best in the world. Since then, funding decisions have increasingly been made by politicians who are more interested in getting their pictures taken cutting ribbons than in making sure our transportation systems run safely and smoothly.

This country doesn’t need more infrastructure that it can’t afford to maintain. Instead, it needs a more reliable system of transport funding, and that means one based on user fees and not tax subsidies or federal deficit spending.

Why Can’t We Have Great Trains? Because We Don’t Want Them

Why can’t America have great trains?” asks East Coast writer Simon Van Zuylen-Wood in the National Journal. The simple answer is, “Because we don’t want them.” The slightly longer answer is, “because the fastest trains are slower than flying; the most frequent trains are less convenient than driving; and trains are almost always more expensive than either flying or driving.”

Van Zuylen-Wood’s article contains familiar pro-passenger-train hype: praise for European and Asian trains; selective statistics about Amtrak ridership; and a search for villains in the federal government who are trying to kill the trains. The other side of the story is quite different.

Amtrak Shouldn’t Get to Write Its Own Ticket

Article One, Section One of the Constitution vests “all legislative powers” in Congress. The sovereign power to make laws comes from the people, so their representatives—Congress—should make those laws.

It sounds simple enough, but once the federal government started ballooning in size and regulating everything under the sun, that simple understanding had to go. There was too much governing for Congress to handle on its own, so the courts adjusted, allowing a proliferation of government agencies to exercise lawmaking power, within certain guidelines.&

We’ve now apparently gotten to the point, however, that there’s so much governing to do that it’s too much for the government to handle on its own. In a case now before the Supreme Court, Amtrak—the for-profit, quasi-public entity that the federal government has deemed private for these purposes—has been given a part to play in making laws to regulate its competitors in the rail transportation industry.

Brookings Glosses Over Amtrak’s Failings

Intercity passenger trains are experiencing a “renaissance” with Amtrak ridership growing “faster than other major travel modes,” says a new report from the Brookings Institution. Indeed, the report continues, Amtrak’s short-distance trains (generally, routes of around 200 to 600 miles) have, on average, a “positive operating balance,” so more such short-distance routes should be added.

As a long-time lover of passenger trains, I wish the report’s statements were true, but they are not. To reach these conclusions, Brookings scholars have selectively used data; ignored one of the major travel modes; and relied on Amtrak accounting tricks to disguise losses.

The rapid growth of rail passenger travel that they report is from 1997 to 2012, but 1997 was near the bottom of a trough in Amtrak ridership. If they had gone back to 1991, which was Amtrak’s peak before 2010, the would have revealed a very different story.

From 1991 to 2012, Amtrak passenger miles grew by a paltry 8 percent (compared with 32 percent between 1997 and 2012), while airline passenger miles grew by 68 percent (vs. 26 percent from 1997 to 2012). Let’s see: air travel grew 68 percent; Amtrak 8 percent. Not much of a rail renaissance, is there?

Of course, using 1991 instead of 1997 makes me just as selective as Brookings. So the chart above just compares the trends from 1990 to 2012. The important thing to note about the chart: Amtrak is insigificant, carrying in recent years little more than 1 percent as many passenger miles as the airlines. Amtrak would appear even more insignificant if the vertical scale were raised to show intercity driving of personal vehicles (as opposed to trucks and buses), which moves about 200 times as many passenger miles as Amtrak.

Amtrak’s performance looks even more dismal on a per capita basis. Amtrak may have posted record ridership in 2012, but the nation’s population was also 25 percent greater than in 1991 when Amtrak per capita ridership peaked at a mere 25 miles per person. Today, it is 13 percent less.  

When Brookings compares Amtrak with “other major travel modes,” it implies that Amtrak itself is a major travel mode. In fact, Amtrak’s 22 miles per person in 2012 compares with more than 1,800 miles in air travel and 4,200 miles in intercity auto travel. As a result, Amtrak carries only about 0.36 percent of intercity passenger travel in the U.S. That’s up from 1997, when it was 0.32 percent, but down from 1991, when it was 0.45 percent. Fluctuating between a third and a half percent does not make Amtrak a “major travel mode.”

Amtrak Shrugged

Watching one of the first showings of Part II of Atlas Shrugged was a surrealistic experience for me after testifying earlier in the day (September 20) to the House Transportation Committee about Amtrak. In the movie, government officials piously argue that for the “greater good” they need to provide “guidance” to the nation’s capitalists—and the more guidance they give, the more capitalism fails, which naturally justifies even more guidance.

In the hearing, I testified that Amtrak can’t be reformed because, as a government entity, it will still be controlled by politics, and the only solution was privatization. This led Peter DeFazio, my own former congressman (I moved to an adjacent district four years ago) to reem me out for not having faith in government.

“You don’t believe government should run our air traffic control? You don’t believe government should run our highways? You don’t believe government should subsidize the Port of Los Angeles?” Before I could fully answer each question, he would roll his eyes and interrupt me with incredulous moans. Fortunately, one of the other committee members rescued me and gave me a chance to answer.

Ironically, one of DeFazio’s own questions should have been his undoing. Somehow, he didn’t think Americans could manage to buy cheap goods from Asia unless the federal government subsidized the Port of Los Angeles. Aside from the fact that he probably bemoans the import of cheap goods from Asia, why subsidize the Port of Los Angeles when there are so many other suitable West Coast ports—and in particular, the heavily underutilized Port of Coos Bay in DeFazio’s own district?

Of course, DeFazio also thinks the feds should subsidize the Port of Coos Bay. But given that the Los Angeles metro area has 12 million people and therefore some two dozen representatives in Congress, while the Coos Bay area has about 60,000 people and therefore a fraction of one representative, subsidies are mainly going to go to the former and not the latter even though the latter is a much better natural harbor.

But it was not just DeFazio who supported government control of the economy. Republicans and Democrats at the hearing were equally guilty of thinking that they, the enlightened representatives of the people, should decide where “investments” should be made in transportation, how much people should get paid, and who should produce what “for the greater good.”

“Everyone here believes in creating jobs,” said one Republican. I wanted to raise my hand and say, “No, I believe in creating wealth, not jobs. Your idea of ‘creating jobs’ destroys wealth by taking from some people the wealth they created and giving to others who aren’t creating it.” But I realized that by “everybody here,” the Member meant “every elected official in the room,” not us non-entities who were there to testify or witness the hearing.

Later, another Republican who had been critical of Amtrak’s losses said, “No one here wants to destroy Amtrak; we just want it to run more efficiently.” Once again, I wanted to raise my hand and say, “I want to destroy Amtrak, because Amtrak is spending phenomenal amounts of money running crappy trains.” But again, I restrained myself.

Rather than privatize Amtrak, at least some Republicans propose to contract out Amtrak’s trains to private operators. Congress would still decide where those trains should run. The Republicans who support this proposal would also require the private operators to honor Amtrak’s contracts with workers. Those two requirements would destroy most of the benefits of contracting out.

In Atlas Shrugged, a man named John Galt convinces all the smart people in the country to “go on strike” until the government fails from mediocrity. Fortunately, such a strike won’t be necessary in real life as the mediocre results of government control will lead to failure all by itself. We just have to hope that there is enough wealth left in the country that we can put it back together.