FEDERAL SPENDING DERAILED BY AMTRAK
We’ve been inundated with news reports about the fiscal woes of the US Postal Service. Why is it that we never hear anything about another federal enterprise facing ongoing losses -- Amtrak? Consider the following…
Amtrak trains pass by my office a few times a day as they travel to and from Niagara Falls and points north. Despite the fact that the Falls is one of the most popular tourism destinations on the planet and the rail system stretches across an international border to a region ripe with economic activity, it’s very rare that I see anyone in the passenger cars. It’s patently obvious that public transportation via rail is unpopular, if not useless, locally.
That’s pretty much the case across the United States. That’s more than just an anecdotal observation; the proof is in the statistics. According to Amtrak, 78,000 passengers travel on their network daily. Considering we are a nation of approximately 307 million people that means only 0.025 percent of our population frequents the system. That woefully small number, combined with similar numbers from other public and private rail companies, puts the United States in last place among 32 nations that accumulate 5 billion or more passenger kilometers per year. The leader of that pack, Switzerland, sees its average citizen amass 2,422 km/year while commuting via train. The average American travels just 80 km/year by rail.
Even though such observational and statistical evidence shows that Americans are disinterested in rail travel, the federal government (and then, in turn, state governments who benefit from federal largesse) insist that we are interested. Truthfully, if the demand for commuter rail did exist in the second half of the 20th century and was a possibility for the first half of the 21st century, we would have seen a huge investment by the private sector in the development of both light rail and high-speed rail. But intelligent capitalists know a loser when they see one and will not enter into a business destined for failure. Government, though, doesn’t understand basic economics — or possess fiscal common sense — and chooses losing ventures that no one will touch.
The government-owned Amtrak has long operated in the red. 2010’s losses were once deemed unfathomable at $419.9 million. They were topped again for the fiscal year that ended in September when losses hit $560 million. This year’s losses are projected to be in excess of $600 million. This shows that the business model is completely unsalvageable — a casualty of bad management and a bad market.
The only reason that Amtrak stays alive is subsidies by taxpayers. Since the start of the 2000s, the United States has dedicated more than $1 billion per year to the broken system, and matters were only made worse by the Rail Safety Improvement Act signed into law in 2008 by President George W Bush. The Act guarantees annual funding of $2.6 billion through 2013. Even with the cash flow of such charity, Amtrak continues to string together losses.
Despite the glaring weaknesses of commuter rail (and the federal government’s business acumen), Washington is insistent on spending our money – and lots of it - on its ethereal demand.
Sadly, there’s no end in sight. Thinking the concept of high speed rail is the silver bullet that will win over the masses when it comes to the continued socialization of our means of travel, the White House announced a year ago that it will be “investing” $53 billion over the next 6 years to build such a network. That money will be used almost entirely by government entities, including state-run operations and Amtrak alike.
Only government officials could see a winner in high-speed commuter rail, having never learned a lesson from what ails the present system. Promoting and sustaining entities like Amtrak – with broken, irreparable operational systems and a market that won’t bear the investment – now and into the future has us speeding to fiscal destruction by adding to the unconscionable deficits and debts that burden us at the federal level.
Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at firstname.lastname@example.org.
This column originally ran in the 30 Jan 2012 Greater Niagara Newspapers
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