Help Passenger Rail by Privatizing Amtrak

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The airport shutdowns and fear of flying thatfollowed the September 11 terrorist attacks gaveAmtrak a boost in ridership. But the government‐​ownedand government‐​operated passenger railroad,established by Congress three decades ago,will not likely be able to take advantage of a publicdemand for alternatives to air travel. Since itscreation Amtrak has received nearly $25 billion intaxpayer funding, and there is no prospect that itwill ever break even. Unfortunately, Congress isnow proposing to throw billions of dollars in newsubsidies at Amtrak.

In the Amtrak Reform and Accountability Actof 1997 Congress mandated that if Amtrak is notfinancially self‐​sufficient by December 2002 itmust be restructured and liquidated. Secretary ofTransportation Norman Mineta recently saidthat Amtrak would not meet that deadline.

Amtrak has failed to secure an increasing portionof Americas growing transportation mar​ket​.It carries only about three‐​tenths of 1 percent ofall intercity passengers. Its on‐​time performanceon most routes is terrible, and it covers up thisfact by measuring punctuality at a limited numberof stops and building in lots of extra timebefore those stops.

Many of Amtrak’s trains run much moreslowly today than did trains on the same routesearlier this century. Moreover, Amtrak uses creativeaccounting to disguise its financial problems.For example, Amtrak receives many subsidiesfrom government agencies and has recentlyabandoned standard accounting practices tohide operating expenses as capital costs.

Congress established an Amtrak ReformCouncil to monitor Amtraks financial performanceand decide whether the railroad can meetits deadline for becoming operationally self-sufficient.Amtrak clearly will not meet that goal. Itis time for the council to make this finding officialand begin the mandated process of restructuringand liquidation.

Joseph Vranich

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