Off track

Amtrak critics say the national agency is, quite simply, a business failure. The surprise is that Amtrak agrees. "For 30 years, Amtrak has labored under the weight of a business model that does not work," said Amtrak president George Warrington on Nov. 1, in testimony before the Senate Commerce Committee.

The reason Amtrak has never broken even, representatives and supporters say, is a contradictory mission from Congress: Amtrak is not only supposed to operate as a public service that stretches over transcontinental distances. It's also supposed to make money, or at least break even -- a goal that became a legal requirement with a 2002 deadline, thanks to legislation passed four years ago.

Since then, Amtrak has trimmed costs and introduced new services that have generally been well received, but the agency maintains it's difficult at best to provide national service and become profitable without capital investment for upgrading trains and the infrastructure they require. The result has been short-term compromises at the expense of long-term solutions. At the expense of reinvestment in better technology and infrastructure, Amtrak cross-subsidizes unprofitable routes with revenue from more popular ones. Congress, meanwhile, has paid out hundreds of millions a year just to keep the trains rolling, instead of providing funds for improvements that might eliminate or at least reduce the need for subsidies.

Some Amtrak critics say the way to resolve the contradiction is to simply eliminate the railroad, or at least to drop unprofitable routes. In 1985, President Reagan argued that it would cost less to hand out free airline tickets than for the government to continue subsidizing some rail routes. As a result of this and other criticism, Amtrak has gradually reduced service, with cuts in recent years such as the elimination of a route between Denver and Seattle.

Budget shortfalls and criticism continue, however, and today, one of Amtrak's leading critics is Sen. John McCain, R-Ariz. Earlier this year, McCain said Amtrak should not be a "money pit" and called the proposed High Speed Rail Investment Act "another desperate attempt by Amtrak to receive federal money without any accountability." The bill would let Amtrak sell $12 billion in bonds to help finance high-speed rail projects around the country.

Amtrak supporters argue that criticism of transportation subsidies is fine -- it just needs to be spread around.

"There's nothing wrong with this argument if you apply it evenly, but if we apply that principle only to rail and not to aviation and highways, you have a tremendous skewing of investment," says Scott Leonard, assistant director of the National Association of Railroad Passengers (NARP). Leonard and others point to a longstanding "investment gap": in fiscal year 2001 federal highway investment totaled $33.5 billion, while aviation spending was $12.6 billion. Intercity rail got only half a billion. Amtrak also lacks a predictable mechanism for capital investment, such as the taxes on gasoline and airline tickets that provide a ready source of funds for road and airport infrastructure. The railroad goes begging every year.

Amtrak's history over the last three decades, however, is just the latest chapter in a story that stretches back more than a century. Deliberate decisions have sacrificed U.S. passenger rail for the sake of promoting highway and air travel. "We are being affected by policy decisions that were made as long as a hundred years ago," says Leonard. Goddard says that the best one-word way to explain the current U.S. rail situation is "underinvestment." Instead, most of the investment has gone to highways and air travel. "As for road, rail and air, rail is the only one of the three to have paid for its own infrastructure, which immediately puts it behind the eight ball," Goddard says. Much existing rail infrastructure was built with private funds, while federal and state governments have arranged much of the funding for projects like highways and airports. Making matters worse, Amtrak runs most of its routes over tracks that are owned by private freight railways, making it subject to freight delays that it has little or no control over.

"In public policy terms, Americans think of road spending as essential infrastructure, rail spending as an expense. This results from 75 years of conditioning," says Goddard. In his book "Getting There," Goddard notes the widespread and genuine resentment of monopolistic railroads in the 19th and early 20th century, but he describes other excesses as well, such as U.S officials who brazenly promoted highway development. Goddard writes that Tom MacDonald, the director of the U.S. Bureau of Public Roads for 30 years until 1953, "could not have been a more effective spokesman for the [motor] industry had he been on a full-time retainer to it." He largely credits MacDonald for reshaping the U.S. transportation landscape in favor of highways at the expense of rail. Then in the '50s, Goddard says, the U.S. interstate system was built with Congress paying 90 percent of highway costs.

Similarly, the airline industry has received significant federal aid as well. Most recently, this took the form of a $15 billion bailout package for the airlines in the wake of Sept. 11. And looking further back over time, James Coston -- a member of the Amtrak Reform Council who voted against the decision that requires liquidation plans -- says direct and indirect airline support, such as airport construction and pilot training in the military, has made the airlines "the beneficiaries of one of the largest taxpayer subsidies in the history of American socialism."

Efforts like these "created the paradigm" that American transportation is still in today, says Goddard. Instead, he says, we need to think "intermodally." "Let's become Europeans," says Goddard. "They began thinking intermodally more than a century ago. A truly intermodal system is one that operates as a team and in which the capacity of each mode can absorb the traffic of the others when one of them is at risk."

Next Page: Liquidation decision "could not have come at a worse time"

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