Fixing Amtrak Without the Political Hysterics

As most people know by this time, there was a horrible and tragic Amtrak accident this week in Philadelphia. A train running from DC to New York derailed and at least eight people have died and over a hundred were injured. What we know at this time, just days after the accident is the following:

1. The train was going over a hundred miles an hour when it should have been going half that speed as it approached a curve in the tracks.
2. The engineer does not remember the time leading up to the accident.
3. Safety equipment for such a situation had been installed but no activated on the train.

That is all we know. However, that did not stop some of our less kind, less sensitive, less obnoxious Washington politicians from immediately jumping on this tragedy for their own good and aims. Democrats in Congress were quick to blame Republicans for under funding Amtrak and that somehow, through what only can be called a contorted and idiotic logic flow to say that the size of Amtrak’s budget affected this single train’s fate. The most despicable of the lot went so far as to claim the blood of the victims; were on the Republicans hands. 

They went through, and are still going through, these hysterics even though we only know the three facts listed above. There is absolutely no hard proof that funding Amtrak at whatever levels caused this accident. But this is how low our political class in Washington has stooped, executing their well know failed strategy of ready, fire, aim without know the root causes of anything.

We have seen it before.Not knowing what is really going on has burned the American taxpayer before., Not knowing the root causes of our high healthcare costs resulted in the failed Obama Care legislation. Not knowing the root causes of the 2008 Great Recession resulted in the inane Dodd-Frank financial reform legislation. Our politicians shoot first and then move on to the next crisis that they can leverage for their own careers, often leaving more damage behind than prior to when they acted.

Let’s look at some basic realities of Amtrak and then come up with a root cause solution that keeps the trains safe, the taxpayers happy, and politicians focused on solutions, not press releases, courtesy of a recent Breitbart website analysis:

Reality #1 - The Federal government took over most of the long haul train business in 1971 because the business was failing. At that time the Feds created the publicly funded railroad service known as Amtrak. Given that the Federal government operates very few, if any, government programs efficiently and effectively, taking over a dying industry and allowing the Federal government to operate it was probably a bad idea 44 years ago.

Reality # 2 - Amtrak loses millions of dollars a year from its operations, having lost close to $2 billion since just 2009. It has probably lost about $44 billion since it was established. In other words, it is a money loser, being subsidized by the American taxpayer. It is expected to get another $7 billion in taxpayer subsidies in the next five years.

And some hysterical Democrats want to give this dying white elephant even more taxpayer money. Old saying: “When you are stuck in a hole, stop digging.”

Reality #3 - By far the busiest track of the Amtrak system are in the so-called Northeast Corridor, running from Boston to DC. Thus, the vast, vast majority of American taxpayers, from Hawaii to Florida to Minnesota are subsidizing a losing proposition that they will never have a reason to use.

How few people use Amtrak? Annual Amtrak ridership is about 31 million riders a year. there are about 320 million people in the country. If we assume that each of those 31 million riders were a different person, than the percentage of Americans who use Amtrak in a single year is less than 10%, not a high number. 

But assuming each of those 31 million is a unique person is definitely a generous assumption, too generous, The same people within that 31 million use Amtrak for multiple rides a year. Let’s assume that the number of unique visitors, taking into account repeat and regular users, especially along the Washington to New York track, is a quarter of the overall ridership. Then the percentage of Americans that use the Amtrak system is less than 2.5%, a small number of people getting subsidies from all of America.

Reality #4 - Not only is Amtrak heavily subsidized, it is also grossly mismanaged. We have reported several times in the past in this blog how Amtrak loses tens of millions of dollars a year just through its mismanagement and theft of food.

But there is more insanity, according to work done by the Manhattan Institute:

• Amtrak’s largest expense is labor, salary, and benefits, which cost over $2 billion in 2014. 
• Much of that high overhead is because Amtrak Maintains fully-staffed trains on infrequently and lightly traveled routes.
• The pay rate of Amtrak’s employees is extremely high with the average onboard employee made $41.19 an hour on Amtrak in 2012. Assuming a forty hour work week, an average Amtrak employee earns over $80,000 a year, about 60% higher than the average American household earns.
• U.S. railroads that contract out services to private companies pay their train employees $7.75 to $13.00 an hour.

So the American taxpayer is subsidizing high salaries for many employees that serve very few customers on the majority of Amtrak’s routes.

Reality #5: How high are the subsidies? According to some analyses, the American taxpayer pays a $60 subsidy for EACH Amtrak ticket purchased on average. Thus, a ticket from New York to DC which currently costs a rider $69 should really cost $129 if Amtrak riders were paying a market based price. Instead, the taxpayer picks up the tab for almost half of the cost of a New York to DC train ride.

Reality #6 - And if Democrats were truly on the side of the less economically fortunate, as they always claim to be, than they should be up in arms about Amtrak, not blindly giving it more money. Why? For the most part, it is not the poor and downtrodden that are riding Amtrak.They are much more likely to be using local mass transit to get around.

The majority of Amtrak users are business people, government executives, lobbyists, etc. that are riding between New York,Boston,and DC on the Northeast Corridor. According to a CATO analysis from 1997, a situation that has probably not changed much since that report: “Amtrak’s typical riders are not low-income Americans. The poor are less likely to travel by Amtrak than by most other travel options. Only 13 percent of Amtrak passengers have incomes below $20,000. The average Amtrak rider has a higher household income than the average taxpayer. In fact, the clientele for Amtrak Metroliner service between Washington and New York consists largely of Wall Street traders, K Street lobbyists and other affluent business travelers. These folks aren’t poor.”

So in reality, taxing poorer people for Amtrak subsidies is helping out wealthier people who actually use Amtrak.

Reality #7 - The Federal government was in charge of Amtrak when it had this fatal accident. And some Democrats want to blindly give Amtrak more money when they were in charge when this accident happened? It’s like giving a teenager more booze after he cracked up the family car in a drunken stupor. Makes no sense to blindly give more money to culprits without understanding the root causes. 

And let's move beyond this analysis and review an analysis of reality that was published in the March, 2013 issue of Reason magazine:

• Amtrak is the most expensive way to transport oneself from city to city, on average costing consumers twice as much than commercial airline travel.
• The average American travels 15 miles a year via Amtrak but 15,000 miles a year via car.
• Amtrak per-passenger miles subsidies are more than nine times higher than subsidies paid to airlines and 20 times more than subsidies paid to car drivers.
• In 2012, Amtrak needed about $1.4 billion from the American taxpayer to run its operations.
• Only three of its twelve routes are profitable without taxpayer subsidies.

Come on Washington, let’s discuss reality and not politics for once. Amtrak is a loser as currently configured. It loses money, it operates losing routes, it gouges the taxpayer, and it is mismanaged.

How about we do the following before shoveling more taxpayer wealth down the rat hole:

• Shut down all money losing routes in order to make the remaining routes and the slimmed down Amtrak organization profitable.
• Focusing on far fewer routes might make the remaining routes safer.
• If you do not want to shut down the money losing routes, than either 1) make the states those money losing routes pass through make up the difference or 2) charge the right amount (i.e. higher ticket prices) to cover operations costs. Want to bet that when the states or the riders on these money losing routes have to pay their fair share that the routes die a natural death from no ridership?
• On the remaining profitable routes, raise the ticket prices to respect the reality of the operating costs, i.e. no more subsidies for lawyers and business people on the Northeast Corridor. If you are still worried about the poor who might, occasionally ride Amtrak, come up with a tight, manageable subsidy program for them.
• Get expenses under control by phasing in a more realistic and lower salary structure and tightening up inventory control so that food and beverage fraud is reduced.

There you go, Washington, five simple, logical steps to follow to address the true root causes of Amtrak’s woes. After we do these steps, THEN we can sit down and talk subsidies, with the hope that need to discuss subsidies never arises since Amtrak would then be a smaller,leaner and profitable operation.

Of course, another approach is to just give away the entire system today to a private operator. In that scenario,the taxpayer wins immediately because the subsidies go away, the riders probably win since a private operator would likely run a better, tighter and safer operation, and we would not longer have to listen to you hyperventilating and jumping on every human tragedy to leverage it as a political opportunity.

As always, “when you are in a whole, top digging.” Good advice for the Washington political class that have dug us a $18 TRILLION national debt hole with hysterics and not solutions.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w