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No. 419

November 1, 2001

Help Passenger Rail by

Privatizing Amtrak

by Joseph Vranich and Edward L. Hudgins

Executive Summary

all intercity passengers. Its on-time performance

The airport shutdowns and fear of flying that

on most routes is terrible, and it covers up this

followed the September 11 terrorist attacks gave

fact by measuring punctuality at a limited num

-

Amtrak a boost in ridership. But the government-

ber of stops and building in lots of extra time

owned and government-operated passenger rail-

before those stops.

road, established by Congress three decades ago,

Many of Amtrak's trains run much more

will not likely be able to take advantage of a pub-

slowly today than did trains on the same routes

lic demand for alternatives to air travel. Since its

earlier this century. Moreover, Amtrak uses cre-

creation Amtrak has received nearly $25 billion in

ative accounting to disguise its financial prob-

taxpayer funding, and there is no prospect that it

lems. For example, Amtrak receives many subsi-

will ever break even. Unfortunately, Congress is

dies from government agencies and has recently

now proposing to throw billions of dollars in new

abandoned standard accounting practices to

subsidies at Amtrak.

hide operating expenses as capital costs.

In the Amtrak Reform and Accountability Act

Congress established an Amtrak Reform

of 1997 Congress mandated that if Amtrak is not

Council to monitor Amtrak's financial perfor-

financially self-sufficient by December 2002 it

mance and decide whether the railroad can meet

must be restructured and liquidated. Secretary of

its deadline for becoming operationally self-suf-

Transportation Norman Mineta recently said

ficient. Amtrak clearly will not meet that goal. It

that Amtrak would not meet that deadline.

is time for the council to make this finding offi-

Amtrak has failed to secure an increasing por-

cial and begin the mandated process of restruc-

tion of America's growing transportation market.

turing and liquidation.

It carries only about three-tenths of 1 percent of

_____________________________________________________________________________________________________

Joseph Vranich served on the Amtrak Reform Council from February 1998 to July 2000. He has also served as pres-

ident and CEO of the High Speed Rail Association and executive director of the National Association of Railroad

Passengers. Edward L. Hudgins is director of regulatory studies at the Cato Institute.