What a Surprise, Amtrak Lies

The Washington Times has uncovered a nearly decade-old accounting scandal in which Amtrak employees deliberately falsified financial statements to make it appear that the government-owned company was more financially solvent than it really was. The employees were eventually terminated, but not until they had spent $150,000 of taxpayers’ money defending themselves from charges of fraud and misrepresentation.

Amtrak needs work.
Flickr photo by JFeister.

But Amtrak deceptions go back much further than just to 2001, the year in which the fraud was supposed to have taken place. In the 1980s, Graham Claytor — who many rail fans still regard as the best president Amtrak ever had, largely because Claytor had supported passenger trains and steam locomotives when he was president of the Southern Railway in the 1970s — responded to the Reagan White House by repeatedly promising that Amtrak would be able to cover all of its operating expense out of passenger fares.

Almost as soon as Claytor retired, his replacement, Thomas Downs, repudiated those claims and said that Claytor had been misleading people and deferring maintenance to make trains appear more cost effective. Of course, Downs took office when Clinton was president and he probably thought he could get a windfall from a Democratic White House and Congress. By 1995, when Republicans had swept Congress, Downs too began claiming that Amtrak could run without operating subsidies by 2002.

As late as 2003, Amtrak was still telling Congress that it was on its way to self-sufficiency. In fact, it was mortgaging the properties it owned, such as New York’s Penn Station, in order to stay afloat.

The Democratic takeover of the White House and Congress in 2009 allowed Amtrak to give up any pretense that it will ever become operationally self-sufficient. Instead, Amtrak officials like to tell you that Amtrak ridership is on its way up. What they mean is, it is on its way down (see p. A-2.1). Or, to be more precise, it went up in 2008 when gas prices reached record levels, and it has declined since then.

Here’s how good Amtrak is doing: In 2008, Amtrak carried almost exactly the same number of passenger miles as the private railroads carried in 1970, the year before Amtrak took over passenger trains. So after 38 years of government ownership — years in which the nation’s population more than doubled grew by more than 50 percent — intercity rail patronage is right where it was in 1970 (but declining). By comparison, over the same period driving increased by 125 percent and transit ridership grew by 43 percent — anemic compared with driving (or almost anything else) but huge compared with Amtrak. Doesn’t that make you want to blow a few hundred billion dollars on moderate-speed rail?

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11 thoughts on “What a Surprise, Amtrak Lies

  1. C. P. Zilliacus

    The Antiplanner wrote:

    > As late as 2003, Amtrak was still telling Congress that it
    > was on its way to self-sufficiency. In fact, it was
    > mortgaging the properties it owned, such as New York’s
    > Penn Station, in order to stay afloat.

    The “source” of the self-sufficiency was supposed to be the shiny new Acela trains. Did not happen. Of course, it did not help that the entire Acela fleet was put out of service due to defective brakes back in 2005.

  2. Scott

    Hey, if speed is increased, by about 20 mph, to make the trains medium speed rail, then ridership will really take off, just like the few people who ride the Acela line.

  3. Hugh Jardonn

    What do you expect from an organization that, after paying a New York-based “design consultancy” big bucks, adopted a most insipid name for its new high speed trains? “Acela” is a meaningless string of letters concocted by an overpriced, mediocre consultant. Perhaps the experience of UAL Inc., United Airlines’ holding company, in the late 1980s would be illustrative. UAL acquired Hertz Rent-A-Car and Western International hotels and attempted to reposition itself as a “total travel conglomerate”. The name selected by UAL, “Allegis” was universally ridiculed and ultimately dropped. Donald Trump was widely quoted in the press as saying “Allegis” sounded like the next world class disease. “Acela” sounds like the HMO that treats cases of “Allegis”. Other wags have commented that it’s an acronym for “Amtrak Customers Experience Late Arrivals.”

  4. the highwayman

    Hugh Jardonn said:
    What do you expect from an organization that, after paying a New York-based “design consultancy” big bucks, adopted a most insipid name for its new high speed trains? “Acela” is a meaningless string of letters concocted by an overpriced, mediocre consultant. Perhaps the experience of UAL Inc., United Airlines’ holding company, in the late 1980s would be illustrative. UAL acquired Hertz Rent-A-Car and Western International hotels and attempted to reposition itself as a “total travel conglomerate”. The name selected by UAL, “Allegis” was universally ridiculed and ultimately dropped. Donald Trump was widely quoted in the press as saying “Allegis” sounded like the next world class disease. “Acela” sounds like the HMO that treats cases of “Allegis”. Other wags have commented that it’s an acronym for “Amtrak Customers Experience Late Arrivals.”

    THWM: American Flyer did sound better, also it was a more iconic name too.

  5. prk166

    “years in which the nation’s population more than doubled ”

    @Antiplanner, not sure which nation you’re speaking of. The US’s population has grown by roughly 50% since 1970.

  6. chrismullinaxcm

    So why should rail be the only mode of transportation that’s self sufficient? Who do you think pays for the roads that we, trucks, and buses use? Have y’all also forgotten the near $12 billion that go to airlines compared Amtrak’s measly $1 billion? You also forgot to mention what Claytor said to Reagan when Reagan spoke of a $35 cost per Amtrak passenger. He pointed out each airline passenger cost the tax payer $42. Research your stuff before you whine about it.

  7. chrismullinaxcm

    So why should rail be the only mode of transportation that’s self sufficient? Who do you think pays for the roads that we, trucks, and buses use? Have y’all also forgotten the near $12 billion that go to airlines compared Amtrak’s measly $1 billion? You also forgot to mention what Claytor said to Reagan when Reagan spoke of a $35 cost per Amtrak passenger. He pointed out each airline passenger cost the tax payer $42. In a true free market view, you would have to defund all modes of transportation to make Amtrak self sufficient. Neither defunding one mode or all modes make any practical sense.

  8. chrismullinaxcm

    Thank you for your response,
    What you fail to mention is that Amtrak’s subsidy has only had a max of about 1.8 billion a year depending on the politics of that particular budget year. You also fail to mention that event though airlines have received much larger subsidies, they still have to have the FAA and airline retirements paid for separately, while tax payers build the airports. With Amtrak’s $1.6 billion, operations, security, and right-of-way is paid for.
    What I conclude in your argument that makes the least amount of sense is that the Government pays for the construction and the operations of airlines, pays for the roads that commercial and personal vehicles use, yet Amtrak should be self sufficient (or is especially heinous) when it’s infrastructure is not subsidized nor owned by the government and has to pay a fee to borrow it’s trackage. Again, former Amtrak CEO Claytor matched Reagan’s statement by pointing out that Amtrak vs Airlines is $35 vs. $42. To put things in perspective Amtrak makes up less than 2% of the transportation budget, and has had a total of about $40 billion in it’s lifetime. .That’s about as much as highways get every year. Another study also suggests that funding for a passenger service across half of Alabama would cost less than a two mile road widening project You also incorrectly imply that Amtrak is a government overreach, when it’s actually because of heavy subsidization in roads and airports, but lagging funding in rail that put the passenger rail industry out of business.
    As far as your argument against funding any mode of transportation, I can only say it makes no sense because if there was private interest in our highways or airways alone they would have done it much sooner. With the exception of initial building of rail lines, rail, along with boats, have been the only form of transportation that ever had been self sufficient in passenger service, until the creation of the interstate and airports. So for your article to single passenger rail out alone is a backwards notion.
    Also, I forgot to add that ridership has increased to all-time records for Amtrak, while services continue to grow. This is a strong indication that service has actually gotten better since 1971. Amtrak added several new services in Michigan, North Carolina, and Virginia. Ask yourself, has our roads and airports gotten better?

  9. chrismullinaxcm

    How have Amtrak costs skyrocketed, when the general cost to subsidize Amtrak has remained within the $1 billion-$2billion category, while Amtrak’s growth is the only thing skyrocketing, going from about 15 million passengers to 30 million in that same span? You also neglect the fact that technically buses require subsidy through highway maintenance and Amtrak’s intercity/commuter trains are actually much cheaper than both modes. The fact that we spend so much on highways and airports, yet get poor results yield that we do need passenger rail. According to the FAA commuter airlines loose approximately $300 million, while Amtrak only loses $100 million on any given commuter route.
    You also fail to account for, in your statement to private rail ridership, for the fact that passenger rail was struggling due to competition against government funding towards highways and airlines. Amtrak was created as a private company to be funded to maintain passenger services, because rail was being out spent by the federal government/ and has fulfilled it’s job to the extent of it’s funding.
    With respect, I have to say that most of your statements glare with error. You stated that airlines carry more with less, but have yet to counter my quote stating that rail vs. air is $35 to $42 respectively. You also have not accounted for the fact that highways at most only recover 60% of their operating costs, while Amtrak covers between 60%-80%, and even higher with it’s corridor and commuter routes.
    Another statement that you have not pointed out is that with the advancement of passenger corridors, Amtrak is able to recover up to 90% of it’s operating costs and even recover most of it’s costs, while taking the demand off of our highways and tarmacs. Can the Megabus, using our government owned roads, do that as well? Recent hikes in gas, congestion on the highways, and airplane issues suggests that development in passenger rail has become more essential with time.

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