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Study: Reform Committee Should Pull Plug on Amtrak

October 22, 2001

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Despite continuing efforts to supplement its passenger load with commercial cargo, Amtrak is hemorrhaging and should be liquidated and restructured, according to one study.

The Amtrak Reform Council is charged with executing a congressional mandate to reorganize the government-owned rail system if it doesn't turn a profit by 2002. The council might as well go ahead and start reorganizing, says a new study by the nonprofit think tank Cato Institute. In "Help Passenger Rail by Privatizing Amtrak," former council member Joseph Vranich and Edward L. Hudgins, director of regulatory studies at Cato, argue that Amtrak will not meet the deadline.
"It is time for the council to make this finding official and begin the mandated process of restructuring and liquidation," they say.
Amtrak has always run at a loss since its creation 30 years ago, according to the study, collecting more than $25 billion in taxpayer subsidies. And if it is not reorganized, the authors say, it will continue to hemorrhage.
"One reason for Amtrak's abysmal showing is that the trains run late," the authors say. "Some Amtrak trains are slower than the trains our great-grandparents rode in the early 1900s."

Although Amtrak has reported that its punctuality has improved, Vranich and Hudgins charge that they have tinkered with schedules, artificially padding time at the end of a line, to give the appearance of on-time performance.
Such padding is part of a series of Amtrak "credibility crises" that the authors outline, including broken promises about its new Acela Express, exaggerated ridership gains, and its use of stealth subsidies.
"A government-owned Amtrak whose debt is at record levels and whose costs continue to rise will never be solvent," Vranich and Hudgins argue. They explore the routes to an Amtrak alternative and explain how no fewer than 40 countries around the world are replacing government railways with more efficient franchised private operators.
Amtrak recently started attaching refrigerated ExpressTrak rail cars to its passenger trains in an effort to compete with trucks for the transport of produce and other refrigerated freight.

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