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January 11 2011

30 Ideas for 30 Days: Day 5

Nicole Kurokawa Neily

It seems some of our newly elected Representatives are having problems naming programs they’d cut from the federal budget. Admittedly, it’s hard to cut spending – as President Reagan once said, “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!” Sooner or later, however, things are going to have to be trimmed – because the federal government doesn’t have the resources to pay for all the things people want (they’ve tried and failed… and now we have a $14 trillion debt).

One of IWF’s recommendations:

Suggestion #5: Eliminate Amtrak Subsidies

Amtrak is notoriously poorly run. Unfortunately, because taxpayers pick up the tab, it has very little incentive to improve its efficiency and become cost-effective.

Its fiscal year 2011 budget (PDF) requested $2.6 billion from the federal government – more than its revenue in FY2009 ($2.3 billion)!

Restructuring Amtrak comes up every few years. In the 2003 Congressional Budget Office report “The Past and Future of U.S. Passenger Rail Service,” the CBO examined four possible policy solutions to Amtrak’s problems:

  1. Eliminating federal subsidies and provide for an orderly shutdown of service
  2. Reorganize to build on passenger rail’s comparative strengths
  3. Upgrade the corridors and keep the existing national network
  4. Substantially upgrade both the corridors and long-distance service

    The report states that some of the effects of "eliminating federal subsidies" are (emphasis added):

    This option would affect taxpayers, passengers, commuter and freight railroads, and railroad employees. It would save federal taxpayers about $1 billion a year, based on the current rate of subsidy. Passengers would have to turn to buses, airplanes, or cars for the 25 million trips they take on Amtrak each year. Even if all of those passengers crowded onto buses or airplanes, they would increase the demand for those modes only marginally, because those modes already provide 99 percent of the passenger-miles taken on commercial carriers annually.

    In the Northeast Corridor, state and local transportation agencies operate commuter rail service along Amtrak's tracks and use Amtrak's stations and other facilities. Currently, the commuter railroads are required to pay Amtrak only for the marginal costs they impose. If Amtrak stopped operating, those agencies would probably find a way to continue running commuter service, but they would most likely have to cover the full costs of infrastructure and operations themselves through increases in fares or subsidies. The federal government could provide transitional assistance to those state and local agencies, or it could allow them to divert existing federal aid for other programs (such as highway and transit programs) to corridor rail service.

    In other words: the vast majority of the population would not be affected, while those people who do take commuter rail will have to pay for the full value of their trip. What an interesting idea!

    Other concerns mentioned by the CBO include commitments to current employees for pay and benefits. Interestingly, however, five years’ worth of pay and benefits would be only $3.2 billion – little more than a year of FY2010 federal funding for Amtrak!

    The country can’t afford to use its finite resources to subsidize travel expenses for the few. It’s time for Amtrak to hit the road.

    Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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