Trains magazine columnist Don Phillips is an unabashed enthusiast for passenger trains. Yet his latest column lashes out at Amtrak for repeatedly misrepresenting the Acela–the closest thing Amtrak has to a high-speed train–as profitable.
Amtrak Acela train entering the Washington, DC station. Flickr photo by Steve Wilson.
“Seldom in my life have I seen such a mass of misinformation spread about any one subject as is being spread now about the American passenger train,” Phillips begins. “The misinformation is spread by confused and shallow politicians, young reporters who have no idea what they are talking about, and by Amtrak officials who have learned that they can count on the first two groups to not understand their technical jargon.”
Phillips recently “had to bite my tongue not to protest openly” when he heard Amtrak President Joseph Boardman tell a Congressional committee that the Acela was profitable. “The Acela does not make money,” Phillips asserts. “It loses money, big-time.”
The problem, says Phillips, is “Amtrak’s odd methods of accounting, using practices that could get officials of real for-profit companies in big trouble.” The Antiplanner has described some of these shady accounting practices before, mainly counting maintenance as a capital cost when under generally accepted accounting principles it is an operating cost. Phillips calls this the “commingling of capital and operating funds.”
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Phillips’ big concern, however, is for how Amtrak allocates costs between the Acela and long-distance trains. “When some long-distance trains enter the Northeast Corridor, their ‘costs’ triple,” Phillips claims. “This helps make Corridor trains look better” while making long-distance trains look worse.
Phillips seems to think that Amtrak is trying to make long-distance trains look bad, but Amtrak knows that politically, as long as Congress subsidizes the Northeast Corridor, it will have to subsidize most of the rest of the Amtrak network. Amtrak probably thinks that, if it persuades people that the Acela is profitable, politicians will be more inclined to fund high-speed rail projects elsewhere as well as Amtrak’s insane $151 billion plan to rebuild the Northeast Corridor.
Unfortunately, Phillips closes with the trite observation that all ground passenger transportation is subsidized. “Who pays for highways and streets? Gas taxes and other user fees don’t even come close,” he claims. “So why in the world do conservatives and libertarians keep harping on whether Amtrak makes a profit, as opposed to whether America is being well-served by all its forms of transportation?”
Phillips obviously isn’t listening, as conservatives and libertarians are working just as hard against subsidies to highways, airports, transit, and other forms of transportation as they work against Amtrak. But if Amtrak seems to get too much attention, perhaps it’s because the subsidies are an order of magnitude larger than subsidies to highways and air travel.
As the Antiplanner showed in a recent paper, “per-passenger-mile subsidies to Amtrak are nearly nine times as much as subsidies to airlines, and more than 20 times as much as sub- sidies to driving.” Subsidies to buses, whose fares are far lower than Amtrak’s, are similarly small relative to Amtrak’s.
Phillips is right that Amtrak’s claim that the Acela is profitable is indefensible. But subsidies to all forms of transportation are indefensible. They waste taxpayers’ money, encourage pork-barrel projects that benefit only the contractors, and often end up doing our transportation system more harm than good.
Don Phillips’ column in Trains begins by trying to explain Amtrak’s opaque accounting practices, which makes the grossly misnamed “Acela” trains appear profitable, although Phillips points out that using GAAP, “Acela” has not earned a positive return on the $3 billion in sunk capital costs used to create the service.” This would have been a helpful and informative article if Phillips had stuck to clearing up Amtrak accounting misinformation. At the end of the column, however, he drifts into a general rant about transportation subsidies, using his bully pulpit to take a gratuitous potshot at “conservatives and libertarians” who “keep harping on whether Amtrak makes a profit.” If Phillips wants to write an op-ed comparing the amounts of subsidies given to each transportation mode, fine, but throwing it into this column makes no sense. The question he needs to address is not *whether* transportation is subsidized, but how cost effective each mode is. Everyone seems to have a different opinion on this topic, and it cries out for some intelligent analysis.
The Antiplanner:
“…as conservatives and libertarians are working just as hard against subsidies to highways, airports, transit, and other forms of transportation as they work against Amtrak….”
Horse hockey, as Colonel Potter from MASH liked to say. The Antiplanner gives lip service to eliminating all transportation subsidies, but then turns around and ignores the massive subsidies to parking, accident injuries and deaths NOT covered by auto insurance, and the many other indirect negative impacts and hidden subsidies to the act of driving that has been documented profusely by Mark Delucci, Litman and many others.
And what are the examples of “conservatives” et al fighting against all transportation subsidies outside The Antiplanner and a few of his colleagues?
Typical. Cherry pick one line rather than refuting the central premise.
The central problem here is that advocates of transit and transit expansion projects (and for the purposes of this discussion, I lump Amtrak in with the various modes that get subsidies from the Federal Transit Administration) always assume that capital costs nothing, because it comes from sources other than transit patrons and owners of some (usually downtown) properties in some downtown areas near transit stations – and those capital grants are never paid back.
msetty says “The Antiplanner … ignores the massive subsidies to
parking, accident injuries and deaths NOT covered by auto insurance,
and the many other indirect negative impacts and hidden subsidies to
the act of driving that has been documented profusely by Mark Delucci,
Litman and many others.”
Whenever there’s a discussion of financial subsidies of transportation, the pro-transit folks want to change the subject to externalities, because they know they can’t win the argument on subsidies. They want to characterize externalities as a form of subsidy, which I find totally unconvincing. I think you could identify negatives associated with most human activities, but to consider them subsidies is just silly. By this reasoning, I suppose you’d consider manufacturers of bathtubs and ladders to receive massive subsidies too, since people get injured using these things, and maybe they don’t have insurance to cover their medical expenses.
Sure, people get into accidents with cars, and auto pollution causes health problems, but calculating the cost of these externalities without valuing the car’s benefits is irrational. The reasonable way to look at it is to recognize that, overall, the value we receive from automobiles far exceeds the cost of their externalities. The best approach is to accept this fact, then go about minimizing these externalities. Which is exactly what we’ve done. Cars pollute only a tiny percentage of what they did decades ago, due to improved technology. Cars are also much safer, for the same reason. GHG emissions are rapidly decreasing as well, due to improved fuel economy (technology, again). And note this was done without the need to corerce the public to change their lifestyle (e.g., switch from driving to transit), an effort that’s mostly failed.
The Antiplanner has well established that the financial subsidies going to rail and transit (on a passenger-mile basis) far exceed those going to air and automobile travel. Generally, I agree that transportation should be paid for by its users, not through taxation. But I might make some exceptions. One, subsidizing service for the transit dependent, as a social service. Two, subsidizing transit in the handful of places where it’s essential to the city being able to function (like Manhattan). And three, the local road sustem (subsidized through property taxes), because it’s essential for those places also being able to function. Everyone benefits: drivers, bikers, bus riders, walkers. Even if you never leave the house, you benefit from the local roads used by the post office, delivery services, fire and police, etc., who provide your essential services. The local road system is an essential part of life in any neighborhood, just as power, water, and sewer lines are.
The same can’t be said for much transit service, especially that designed to get affluent commuters out of their cars and onto rails (LCR, formerly known as LRT). What benefit does the non-transit-riding public get from the massive subsidies they require? Not much. In most cities, they carry too few riders to impact congestion and pollution much. Worse than they, they divert funds from things that do cost-effectively address congestion, emissions, and safety, like improved traffic signal systems. And how on earth can we justify subsidizing people’s vacations on Amtrak (see their ads)?
“Kens” spake:
Whenever there’s a discussion of financial subsidies of transportation, the pro-transit folks want to change the subject to externalities, because they know they can’t win the argument on subsidies.
Blah, blah, blah…
Auto apologists ALWAYS ignore the total impacts of gross over-dependence on their hobby horse. Based on the intellectual emptiness of your argument, I’d say you’ve never heard of the concept of “path dependence.” In this case, the government tail of funding and favoring road transportation has “wagged the dog” of urban transportation and its impacts on cities and towns for the past 90 years. How do you a place a value on the walkability and other qualities that have been grossly sacrificed to government’s one-sided favor of the automobile for nearly a century??
BTW, as a matter of principle, the costs of parking, non-auto insurance related costs, etc., etc. properly belongs charged to the act of driving, and actually are DIRECT COSTS to the economy, PAID FOR BY EVERYTHING EXCEPT THE ACT OF DRIVING.
Like rail lines with rolling stock, operating way (the rails and right of way) and terminals (called “train stations”), the auto/road system has vehicles, operating way (roadways) and TERMINALS called parking lots. What is there about this simple concept you fail to understand?
Another concept The Antiplanner and his allies refuse to understand is the concept that for most people, a walk of a few blocks often has the same value as an auto trip of several or a dozen or more miles, at least in those few places in the U.S. where the integrity of walkable communities hasn’t been sacrificed on the altar of “reducing congestion” and moving traffic as quickly as possible along “stroads” (Google it) regardless of the impacts on neighborhoods, pedestrians, bicyclists and transit users.
The guy at this website has a very clear view of how things REALLY work http://stroadtoboulevard.tumblr.com/.
His summary points:
…Here are some rules-of-thumb to help judge any Transportation Plan.
Modal choice is induced by the built environment; it is not an intrinsic personal trait.
1. The best transportation plan is a land use plan.
2. Make sure roads are roads, and streets are streets.
3. Focus on intersections.
4. Safer streets do not require expensive infrastructure.
5. In transit, frequency is freedom.
6. Think of cyclists as pedestrians with wheels…
Found this in my in-box yesterday:
FOR IMMEDIATE RELEASE Contact: Scott Hurd, Lead Agent
May 1, 2013 Portland Union Station
hurdsherd@q.com
503-273-4867
COME SEE WHY “TRAINS MATTER”
NATIONAL TRAIN DAY, A FAMILY EVENT
AT PORTLAND UNION STATION, SATURDAY, MAY 11, 10 to 4
Portland, Ore. – Bring family and friends to enjoy the fun, excitement and good news generated by
National Train Day. Entry is free. The Portland event will be held at Union Station, Saturday, May
11, from 10 a.m. to 4 p.m., because “trains matter” to travelers, shippers and the economy.
The proof is in the numbers, said Scott Hurd, Amtrak’s lead agent at Portland, who spoke of the
growing enthusiasm for trains:
• Amtrak ridership in Oregon has risen steadily to nearly 915,000 persons in 2012. Trains between
Portland and Seattle are often sold out. (http://narprail.org/resources/ridership-statistics)
• Portland is No. 16 among American cities in Amtrak ridership, according to the heralded
2013 study by the Brookings Institution. (http://blog.oregonlive.com/commuting/2013/03/
study_passenger_trains_making.html)
• Ridership growth is greater, said Brookings, on routes supported by states (such as Oregon and
Washington). State support adds to service capacity. (http://www.brookings.edu/
research/reports/2013/03/01-passenger-rail-puentes-tomer)
Travelers across the country are taking trains in greater numbers. Nationally,
according to Brookings, Amtrak ridership grew 55 percent to more than 31 million
annually during the 16 years through 2012.
Shippers are increasingly moving goods by rail. Seventy-six percent of Oregon’s
rail system is operated by three major rail operators: Union Pacific, shortline conglomerate Genesee
& Wyoming, and BNSF. The railroads are vital to the economy and provide family-wage jobs.
Hurd reminded fun-seekers that Train Day at Portland means good times for families, complete with
model trains, music, clowns and surprises—really cool surprises. For more fun, stroll next to one of
Oregon’s new Talgo trains and see up close the classic steam locomotive SP&S 700, lovingly
restored by volunteers at Portland.
Other special National Train Day events will take place in Eugene, Salem and Klamath Falls. For
details, go to http://www.nationaltrainday.com and click on the map of Oregon.
msetty
May 2, 2013 at 2:15 pm
“Kens” spake
More condescending remarks and appeals to ridicule from mike setty. How can we take seriously someone with means who lives on a Napa ranch/winery and expects others to pay for him to mail his widdle bookie wookies?
Please also ignore the “hand waving” and red herrings and come back to the central premise: The Acela Does Not Make Money. Does anyone have information that refutes this central premise?
I’m confused. This seems to be a rant that individuals don’t know what is good for them. Ok, I get it. Benign slavery to the self-selected ‘smart guys’ is your value system. But the super-majority disagrees. And then an assertion that (a) everything is subsidized and (b) externalities exist, consequently, those all wash out in favor of getting rid of cars and/or subsidizing rail/bike paths/sidewalks? That’s not persuasive no matter how much invective you throw in there.
If we were building a transit system from scratch then I’d wager auto would be the first, second, and third choice. Speed, freedom, and flexibility. Cost effective even if one imposed a big chunk of the military expenses into the price of gas. Would anyone really suggest passenger rail between Phoenix and Las Vegas? Or build cities with narrow streets that cannot support cars? Really?
Europe uses more rail/walking because it has old cities. How is that not “path dependence?” 2000 years vs 90 years seems to militate in favor of auto, not against. Somehow, that path dependence didn’t work out for the carriage.
Nobody can argue that massive distortions in the market do not exist and have not existed. From taxes, subsidies, regulation, favors — big oil and big auto have gotten many benefits. Of course, so did rail — the right of way came with massive land grants. One could try and quantify these things and to model what might have happened but for whichever one was larger. But using the existence of subsidies for all as part of a hand-waving ad hominem attack on opponents is not very persuasive. Randall’s paper on subsidies suggests that there is an order of magnitude difference between rail/auto/air subsidies currently. How far do we need to go back? When are the prior subsidies fully depreciated?
As far as externalities, these are getting far less. And it isn’t like trains don’t kill people — they do — all the time. They run on electricity that is made with coal. The pollution just happens somewhere else. And at the end of the train, you have to get on a bus. What is the time-loss externality of inconvenience? I’d wager that it is a huge price to pay.
“How do you a place a value on the walkability and other qualities that have been grossly sacrificed to government’s one-sided favor of the automobile for nearly a century??”
Well, first, this statement begs the question that (a) government has a one-sided favor of the automobile; (b) that such favor is deterministic of outcomes; and (c) that “other qualities” have been “grossly sacrificed.”
I suspect that individuals also favor the automobile, which, in part, is why the government favors it as well. My extensive experience with senators, reps, and bureaucrats in D.C. and Sacramento is where I base that view. Lobbying has had a huge effect, no doubt. If we shifted all those expenses into rail, would more or less people/goods be moving around right now? I don’t know but the evidence in the record suggests probably not. So, the first premise is probably not true. Auto exists because people like it, use it, and vote for people who maintain that access or move away from cities that take it away. It also allowed people to move out of horribly run cities into suburbs. That was a choice people made in their own perceived self-interest.
Second, whatever “walkability” means, it can be valued in a range. Everything can and is valued all the time — go ask the insurance companies. The problem with most pro-transit arguments is that they seem to depend on a very high, objective valuation of ‘walkability’ or some other societal value that they claim has this high value and, thus, everyone should have their choices restricted because some people’s opinions are just more valuable.
I suspect, based on my experience as a human, that ‘walkability’ is not valued highly by individuals. In LA, we drive where we can walk because it is faster. Walking is consumption of leisure time for most people. Or a suboptimal manner of movement when your city is old and cannot support easy auto access. Do some people prefer to live where it is walkable? Yes. In fact, I do. And my office is .5 miles from where I live. Traffic sucks. But shifting from cars to trains is not feasible or faster. And forcing people to walk? People would just starve to death or move to some place where autos were allowed. I suppose people might want to live in a Hong Kong situation. I wouldn’t. It is crowded, slow, and expensive. And you’re trapped on an island.
If one is to argue that people would be less fat/sick if they had to walk/bike places then I agree. If one went further to suggest that individuals underestimate the benefits and might be making bad choices then I’d also agree. But once you go to the whole I’m some super-smart person and I should impose my calculus is where I get off the (low speed) train. Super-smart people are wrong slightly less than the rest of us. Super-smart planners are behind all sorts of wasted public space. But that money that could have fed the starting and cared for the sick is sunk into worthless projects.
I think you just need to accept that people don’t share your values system of imposing choices upon them based on what is allegedly better for them. Once you do, you’ll be happier and you wont be so upset that my wife drives an A8L. People want the right to make choices. They are already massively subsidizing poorly thought out streetcar plans and low speed, low use rail. I can tell you that in LA, rail is a disaster of epic proportions. It kills people. It has slowed down formerly fast streets. It is expensive and creating expensive union jobs and pensions. That means higher taxes, long run, for limited or no benefit. It is not used like it was sold. Big shock. But contractors did make money so that is a benefit.
If people want to “walk” then they can move to New York. Or downtown anywhere. But those of us who like to drive, ride motorcycles, fly airplanes, etc, shouldn’t have to be forced into neolithic era technology just because you think it is better for us. Luckily, one can specialize his or her time. It is called exercise. And it is optional but good for you. Somehow, I’m still super-fit.
And, btw, I can never get my wife on public transport. But that is because she was shot as a kid waiting for the bus and nearly raped, oh, five times on the bus. So, good luck telling her how good public transportation is for her. Since she started driving, no issue with any of that. Where does that show up in your ‘analysis?’ What value are those “externalities” to be given? Seeing as how a CEO of a $15mm private company with 75 employees was almost killed waiting for the #3 to roll down Lincoln Blvd, I’d say that would be pretty damn negative for society if she were to have been killed from that bullet. I suppose a rape is not quite as negative. But she’d pay a lot of money to not be raped… and so the only rape now is from the stupid rail systems that we have to pay for.
I’ll leave you with this bit of local wisdom: The man who walks in LA… walks alone.
Mr.Setty, we all know that roads are there regardless of economic conditions.
So libertarians don’t care about money.
What they want is power over other people.
Like rail lines with rolling stock, operating way (the rails and right of way) and terminals (called “train stations”), the auto/road system has vehicles, operating way (roadways) and TERMINALS called parking lots. What is there about this simple concept you fail to understand?
How do you figure? Who do you think is paying for those parking lots? The owners of the properties they serve pay for the initial costs, but these are passed along to end users (e.g. shoppers in the case of retail establishments). Patrons of a grocery store may not be punching coins into a parking meter, but they are paying for the cost of that parking nonetheless (through the retail prices they pay).
To the extent that anyone is “subsidizing” the provision, it would be people using non-auto modes. But locations where parking is free tend to be locations where the price of land is low (otherwise why would a developer devote so much land to parking?) due to relatively low demand for land. These low-density environments are, not coincidentally, places that attract very few trips by public transit, biking and walking. Places where non-auto mode use is more prevalent tend to correspond, also not coincidentally, to places where land is more intensively developed, and hence parking is charged for.
If you really want to promote a grievance on behalf of non-auto users, one could imagine schemes where shoppers who did not use a parking space could receive a rebate equivalent to the marginal cost of parking. Retailers could do this if it were in their best interest, or local governments could offer compensation to participating firms.
Of course, the marginal effect on both auto and non-auto users would be small, precisely because the cost is small.
” the government tail of funding and favoring road transportation has “wagged the dog” of urban transportation and its impacts on cities and towns for the past 90 years. ” -msetty
Maybe elsewhere but not in the US. Urban transit was well established before cars. Government paid more attention to roads after cars caught on and their drivers demanded more and better roads. The government did not change the people’s habits, the people’s habits changed by choice and by the networking effect.
The good roads movement was brought on bikes not automobiles, but roads in urban areas were always in better condition than those in rural areas.