Amtrak has kicked off a “ready-to-build” campaign, making it clear that the money-losing company faces close to $30 billion in major infrastructure projects in the Northeast Corridor on top of the corridor’s $11 billion “basic infrastructure backlog,” meaning tracks, signals, and power facilities. In addition to the $20 billion Hudson River tunnels project, Amtrak wants to spend $5 billion on a new tunnel under Baltimore, $1.7 billion on a new Susquehanna River bridge, $1.5 billion on another new bridge in New Jersey, and unspecified billions more for building or rebuilding train stations in New York (which alone is costing more than $2 billion), Philadelphia, Baltimore, and Washington.
In short, taxpayers are looking at a bill of well over $40 billion just to keep the supposedly profitable Northeast Corridor running. Amtrak must believe that “ready to build” sounds like a more positive message than “we need at least $40 billion just to keep the wheels turning.” No doubt Amtrak is relying on the image it has create that its Northeast Corridor trains make money, when in fact they merely cover operating costs, not the costs of maintenance or depreciation. Adding maintenance and depreciation not only eliminates profits, it brings subsidies to at least 10 cents per passenger mile–and that’s before counting the $40 billion or so needed to bring the corridor up to a state of good repair.
Amtrak divides its operations into three categories: the Northeast Corridor, state-supported day trains, and overnight long-distance trains. In addition to claiming that the Northeast Corridor makes money, Amtrak strongly implies that subsidies to the day trains are entirely covered by the states, leaving only the long-distance trains requiring federal subsidies. In fact, before adding depreciation and maintenance, federal taxpayers fund more than 20 percent of the subsidies to the day trains, and after depreciation and maintenance, it is more than half.
Perhaps because it believed Amtrak’s hype about Northeast Corridor and state-supported trains, the Trump administration proposed to end funding to Amtrak’s overnight trains. This was a mistake, but not for the reasons presented by the National Association of Railroad Passengers (NARP). Operating those long-distance trains cost taxpayers close to half a billion dollars a year (see p. C-1), and this doesn’t count depreciation on capital costs or maintenance.
NARP argues that, if the trains stopped running, “144 million American taxpayers — that’s 45% of our population — living in 220 communities would lose access to passenger rail service.” Transportation Today interprets this to mean that “cutting Amtrak would negatively affect nearly half of all Americans.” But how can people be negatively affected by cutting a service they don’t use? In Amtrak’s fiscal year 2016, long-distance trains carried fewer than 4.7 million trips (p. A-3.4). Assuming the average rider rode at least two legs (either a round trip or a one-way trip on two trains), that’s much less than 1 percent of all Americans, not “nearly half.”
NARP claims that Amtrak’s overnight trains produce all sorts of benefits that, in fact, are largely imaginary. Supposedly, employers and Millennials are more likely to locate in cities with Amtrak service. Yet Havre, Montana has had Amtrak service since the company began in 1971, yet its population has declined in every census since 1980. Meanwhile, Missoula and Bozeman, both of which lost Amtrak service in 1979, have seen their populations double since then. Their populations didn’t double because they lost Amtrak service, but the loss of service didn’t hurt them any.
NARP also points out that Amtrak provides jobs, employing more than 20,000 people. But jobs are a cost, not a benefit: the benefit is the income produced by those jobs. If nearly half of that income is the result of subsidies, as in Amtrak’s case, then it is a transfer payment, not a net social benefit.
NARP insists that all transportation is subsidized, so we should ignore the subsidies to Amtrak. “There is no transportation system in the world of any kind that pays for itself out of the fare box,” NARP quotes the former Amtrak board chair as saying. Tell that to America’s freight railroads, which get very little subsidy from anyone. For passenger service, consider the Atlantic City Jitneys, New York Waterway, Puerto Rico’s Carros Públicos (which returned to service before the public transit after Hurricane Maria), all of which are private, unsubsidized operations in the United States.
In the United States, NARP correctly points out that highways and airlines are subsidized, but measured per passenger mile those subsidies are tiny compared with Amtrak’s. Federal, state, and local highway and airline subsidies average between 1 to 2 cents per passenger mile, while Amtrak’s state and federal subsidies average around 25 cents. Moreover, most highway and airline subsidies go to local roads and smaller airports; people driving on interstate highways or flying between major cities actually pay more highway or air travel taxes than the systems they use cost.
The Trump administration’s mistake was in targeting the long-distance trains to the exclusion of Amtrak’s other money-losing trains, which is all of them. By focusing on the overnight trains, the administration was as much engaged in as much central planning as those who propose to build high-speed rail in selected corridors at everyone else’s expense.
What the administration should have done, as the Antiplanner has suggested before, is to simply offer to pay Amtrak a fixed amount for every passenger mile it carries. Federal subsidies to Amtrak currently average more than 20 cents per passenger mile. Trump should propose to pay Amtrak 10 cents for each passenger mile it carries, which Amtrak could spend on capital and operating costs of any route. This would give Amtrak incentives to cut costs and emphasize trains that carry the most passenger miles, while giving states incentives to increase their subsidies if they believe Amtrak service is so vital to their economies. After taking those steps, it should be up to Amtrak, not politicians, to decide what routes to keep and which ones were not viable.
Politically, offering Amtrak a fixed subsidy per passenger mile also changes the debate. The proposal to cut long-distance trains would eliminate service from about half the states that have Amtrak service, potentially raising the ire of 46 senators and 180 representatives. A proposal to offer a specific subsidy turns the debate from “where should Amtrak trains go?” to “how big a subsidy should Amtrak riders get?” That could potentially expand the debate to subsidies to other forms of travel as well.
Ultimately, the federal government should phase out subsidies to all forms of transportation. As the most heavily subsidized, transit is the place to start, followed by Amtrak. For fiscal year 2019, Trump should propose a fixed subsidy to both kinds of transportation. If passed, that subsidy could be gradually reduced over time along with subsidies to roads and airports.