Railways Receiving Billions From Infrastructure Bill Are 'Dying,' Experts Say

Published: 8/14/2021, 12:19:16 AM EDT

A shiny passenger train racing across long empty stretches of American plains may be iconic, but it’s an economic anachronism, experts say.

Even so, the Senate’s infrastructure bill gives $66 billion toward the repair of Amtrak lines—nearly 60 cents to Amtrak for every dollar the bill put toward highways.

This figure doesn’t reflect the way Americans actually travel, said Cato Institute senior fellow Randal O’Toole. People drive 840 times more distance than they take Amtrak.

Passenger railroad use has steadily declined overall since 1920 except during World War II, O’Toole added. The Interstate Commerce Commission predicted that inter-city passenger trains wouldn’t exist by 1970.

But vast amounts of government aid has kept long-distance passenger train travel running long after it became economically implausible, O’Toole said.

Amtrak’s History

Before 1980, railroads were highly regulated. But railroads had a problem. Long and unprofitable passenger train routes were draining their funds, O’Toole said.

To cancel a route, train companies had to lobby for approval from every state on the route, he added. It was almost impossible to end a train route that passed through multiple states.

To save railroad companies from being drained by passenger routes, the federal government created Amtrak in 1970 to run 20 passenger railroads.

Amtrak is privately controlled but owned by the federal government. It gets money from passengers as well as state and federal funding. At first, legislators wrote that Amtrak should try to make a profit. It has never succeeded in doing so.

In 2020, Amtrak received $342 million in state subsidies and $2 billion in federal grants. Since its founding, it has received about $45 billion from the federal government.

Today, Amtrak runs routes on 21,400 miles of railroads, most of which don’t make enough money to support themselves. The 450-mile Northeast Corridor made 52 percent of the company’s revenue, according to Amtrak’s figures.

One problem with Amtrak is that most of the 500 cities it serves don’t generate enough passengers to pay for service, critics say. Over half of Amtrak’s passengers get on and off the train from only nine cities.

The Northeast Corridor is the only profitable rail line in the company, said Tom Schatz, the president of Citizens Against Government Waste (CAGW).

Off The Rails

However, the Northeast Corridor’s profitability comes into question after considering Amtrak’s deceptive accounting system. Unlike other railroads, Amtrak doesn’t subtract costs for a maintenance fund, O’Toole said.

Amtrak also shuffles costs between train lines and overstates mileage to make some routes seem more profitable than others, the Rail Passengers Association (RPA) says.

Instead of demanding results and accountability from Amtrak, the government continues to give Amtrak more money, Schatz said.

“As part of the ‘We Give Up’ aspect of the budget resolution, Congress includes language that says Amtrak cannot shut down any long-distance lines, they must have an on-site ticket agent if 40 or more passengers per day buy tickets at a location, and there are no labor provisions,” said Schatz.

Schatz said that the infrastructure bill seems to accept that Amtrak is poorly run and inefficient.

“If you take it overall, it's definitely pushing that the government is just going to run this forever,” said Schatz. “It’s never going to be privatized, it’s never going to be making a profit, and we don't care.”

Compared to other transportation, Amtrak falls far behind in revenue received and service delivered, O’Toole said.

According to the Bureau of Transportation Statistics, Amtrak got $.41 for each mile traveled by passengers. In comparison, commuter rails get $.26 per passenger mile, and airlines get $.18 per passenger mile.

These statistics deceive, said O’Toole. Although other mass transportation industries only count their fares as revenue, Amtrak also counts state subsidies as revenue. If only money paid by passengers were counted, Amtrak would receive far less revenue per passenger mile.

Besides this poor performance, Amtrak carries Americans only .1 percent of all miles they travel, said O’Toole. Even Amtrak routes between population centers and popular destinations have failed to compete with other transportation.

Many people want to visit Las Vegas from Los Angeles, said O’Toole. An Amtrak route between the cities would cost about $45 per ticket. But bus trips and cheap airlines both cost only $20. Cost has favored planes over trains since 1990.

“Passenger trains are obsolete. They're obsolete because they cost so much. They cost a lot of money. That's why people stopped riding them,” he said.

Politics and People

RPA vice president of policy and government affairs Sean Jeans-Gail agreed that Amtrak’s rural routes need to be cancelled to make the service profitable. However, politicians don’t cancel services provided to their own states, even when the services are inefficient.

“Of course, when it came down to the rubber meets the road moment, there's a number of senators and representatives in the House who were quite upset and said, ‘This is a national program,’” Jeans-Gail said.

One case for Amtrak’s usefulness is that trains serve some people that cars can’t help, he said. The elderly, those with disabilities, and those with young children might struggle to take a car trip. Ending Amtrak services to rural America will leave these people stranded.

Also, once a small town gets disconnected from America’s transportation networks, it often dies, Jeans-Gail said. Small towns sometimes rely on federal transportation networks. As well as Amtrak, the federal government subsidizes air flights to 153 communities that airlines can’t profitably serve. This program is often wasteful in dollars spent, but it keeps small communities alive and connected to the rest of America.

The RPA’s website argues that although Amtrak’s lines aren’t profitable, they still generate more economic benefits than taxpayers pay. The Amtrak line from Chicago to Idaho contributed to $326.7 million in economic benefit.

Despite these benefits to rural communities, the fact is that Amtrak’s biggest users are upper middle-class professionals, said Mike Palicz, the federal affairs manager on transportation, infrastructure, and energy for Americans for Tax Reform.

“It’s no surprise what the Northeast Corridor is for,” said Palicz. “We know why people like traveling from New York to DC. It’s middle-class and upper middle-class professionals who are using rail as a form of transportation. The idea that this is about helping the underprivileged is not a correct narrative.”

Funding Flaws

Although the Northeast Corridor will get the most funding from the infrastructure bill, O’Toole said the funding it receives will only maintain current infrastructure.

Today, most of Amtrak’s train cars are 30 years old. In 2018, the company had $5.9 billion in liabilities.

To improve the Northeast Corridor, Amtrak has previously requested $117 billion. Only $20 billion of the $66 billion in Amtrak spending is allocated to this route.

To make a real improvement in Amtrak service on the Northeast Corridor, President Joe Biden should give the passenger train service nearly twice as much money, said O’Toole. Otherwise, the program will remain a waste.

“Where’s the other 92 billion going to come from?” asked O’Toole.

If the American people won’t pay for Amtrak tickets, they shouldn’t pay Amtrak taxes, O’Toole said.

“The idea that transportation should make a profit is important, because profits are symptomatic that we're producing something that people want.”

From The Epoch Times