House Transportation Committee chairman John Mica (R-FL) and Rail Subcommittee Chairman Bill Shuster (R-PA) announced that they will draw up legislation that would kill Amtrak’s desire to develop and operate high-speed rail in the Northeast Corridor:
We plan introduce legislation to separate the Northeast Corridor from Amtrak, transfer it to a separate entity, and begin a competitive bidding process that would allow for a public-private partnership to design, build, operate, maintain, and finance high-speed service. Our plan would do so in a dramatically shorter time, in closer to 10 rather than 30 years, and at a fraction of the $117 billion cost proposed by Amtrak, while creating new jobs.
Randal O’Toole says that “Rail fans feel threatened by the proposal because they know that, if the Northeast Corridor is ever spun off as a private operation, support for Amtrak subsidies in the rest of the nation will dwindle.” Not surprisingly, Amtrak booster Sen. Frank Lautenberg (D-NJ) thinks that “privatizing” the Northeast Corridor is a bad idea:
Let’s not forget: Congress created Amtrak in 1970 because the private railroads could no longer sustain inter-city passenger service on their own,” he said. “When I was building my business, I learned firsthand — if you want to be successful tomorrow, you must begin laying the foundation today. The same principle applies here. If we want to leave our children and grandchildren a better country, we must make smart investments on their behalf — and that means investing in Amtrak.
Dumping more taxpayer dollars into Amtrak will “leave our children and grandchildren” with more debt – not a better country as Lautenberg absurdly claims. And as a Cato essay on Amtrak subsidies explains, it was decades of taxes and burdensome government regulations that sped the demise of private passenger rail:
Decades of taxes and burdensome government regulations sped the demise of private passenger rail. Railway companies pay income taxes and substantial property taxes, costs that are not borne by government-owned highways. And during World War II, the federal government imposed a special 15 percent excise tax on train tickets, which was not repealed until 1962.
The railroads were rapidly losing customers in the mid-20th century, but government regulators created hurdles to letting them shed services as quickly as demand was falling. Most state governments imposed regulatory restrictions on the discontinuance of train routes. And beginning in 1958, Congress handed the ICC nationwide power to restrict the discontinuance of train routes. Attempts by the railroads to eliminate unprofitable passenger routes were met with political resistance in Congress.
The ICC’s micromanagement of the railroads was damaging. It took the ICC a decade to approve the merger of the struggling Pennsylvania and New York Central railroads into the ill-fated Penn Central. By the 1960s, the railroads’ crucial freight operations were losing ground to trucks and needed to adjust their shipping rates in order to remain competitive. However, the ICC insisted on maintaining a suffocating regulatory rate structure, which reduced the ability of the railroads to adapt to market conditions.
The railroads were also burdened with unionized workforces, which raised labor costs and reduced the management flexibility of companies to respond to the rapidly changing marketplace. For example, even though the job of stoking the old steam engines had been eliminated, railroad unions fought for 35 years to keep firemen in diesel locomotives.
After a number of major railroads, including Penn Central, went bankrupt in the 1960s, Congress and President Richard Nixon stepped in to take unprofitable passenger rail off the hands of the struggling railroads by creating a new federal rail corporation, Amtrak. Pressure from passenger rail advocacy groups and labor unions also led to Amtrak’s creation.
I’m not ready to hop on board Mica and Shuster’s plans for a federal “public-private partnership,” especially since they can only say that their eventual plan will “reduce” and “potentially eliminate” the need for federal subsidies. I’d prefer true privatization and a “bottom-up” approach to transportation. Regardless, halting Amtrak’s high-speed rail dreams would be a step in the right direction.