transportation market that have resulted
railroad that is unable to control expendi-
from the September 11 attacks, the future of
tures or generate adequate revenues. Reports
Amtrak must be considered in light of its his-
from the 199499 period are replete with
tory and current operational problems.
such warnings, including one that said
Amtrak was borrowing money to pay for
operating expenses, "including those for pay-
Amtrak's Current
roll, fuel, ticket stock, and food."3 4 In
Financial Crisis
September 2000 the General Accounting
Office warned, "While Amtrak has `spent
money to make money,' it has realized little
Aviation crisis or no, Amtrak is doomed to
benefit from the expenditures it has made."3 5
perpetual failure. In recent years Amtrak has
received a record level of public subsidies to
In March 2001 a GAO representative told
improve service, boost efficiency, and set the
Congress, "Amtrak has made minimal
stage to be free of federal operating hand-
progress in reducing its budget gap in order
to reach operational self-sufficiency."3 6 But
outs. But the railroad continues to provide
inadequate service to many of its passengers,
on July 25 the GAO admitted: "It is very
has become less efficient, and shows little
unlikely that Amtrak can operate a national
Congress passed
sign that it can survive without substantial
intercity passenger rail system as currently
the Amtrak
federal operating funds.
structured without substantial federal oper-
Amtrak's legacy of failure dates back to
ating support. The outlook for it achieving
Reform and
operational self-sufficiency is dim."3 7
May 1, 1971, when it was established by
Accountability
Congress as a federally owned and operated
The Department of Transportation,
Act of 1997 in an
passenger railroad. At that time policymak-
Office of the Inspector General, had warned
ers believed that passenger rail service was
in March 2001: "Amtrak's overall financial
attempt once and
important enough to necessitate the govern-
results have not improved significantly since
for all to deal
ment running such a system. Nixon adminis-
1999. . . . Our assessment of Amtrak's 2000
tration correspondence on Amtrak stated, "It
business plan identified a number of ele-
with Amtrak's
is expected that the corporation would expe-
ments that are unlikely to perform as Amtrak
three-decades-old
rience financial losses for about three years
had expected. If no corrective action were
problems.
and then become a self-sustaining enter-
taken to compensate for them, Amtrak's cash
prise."3 1 In fact, since its creation the system
loss would be about $1.4 billion more than it
projected over the four-year period 2001
has always run at a loss, requiring substantial
through 2004."38
subsidies to keep it afloat.
Infusions of $3.91 billion in federal subsidies
A principal problem is that costs are rising
from 1998 through 2000 provided Amtrak with
faster than revenues, according to congres-
more taxpayer funding than in any other 3-year
sional testimony given in July by the DOT
period in its 30-year history. But it seems that the
Inspector General (DOT IG):
more Amtrak receives, the greater its financial dif-
ficulties. According to recent congressional testi-
Amtrak's fiscal year 2000 operating
mony by the inspector general of the U.S.
loss of $944 million, including
Department of Transportation, "Four years into
depreciation, was $28 million more
its mandate for operating self-sufficiency, Amtrak
than its 1999 loss and the largest in
should be showing signs of significant improve-
Amtrak's history. . . . The picture
ment, not standing in place or, worse, moving
remains bleak into 2001, where in
backwards."3 2
the first eight months revenues grew
by $15 million over the same period
Amtrak's credibility has suffered as execu-
a year earlier but cash expenses grew
tives have repeatedly issued glowing reports
about recent revenue increases.3 3 But a string
by $53 million. Moreover, as of
September 2000, Amtrak's long-
of reports in recent years paints a picture of a
6