To Reduce the Deficit, Eliminate Amtrak

The Wall Street Journal has an excellent editorial today about the burden of Amtrak on the federal government and the deficit. While Amtrak announced a new record of 30 million passengers in the last fiscal year, it also ran up an operating loss of $560 million, which was paid by the federal government. As the WSJ stated:

“Amtrak announced last week to great media fanfare that the national train service carried a record 30 million passengers last year. A banner year on its 40th anniversary of government ownership, right? Well, no.

Here's what Amtrak didn't trumpet: It lost a near-record amount of money in fiscal 2011, with some $560 million from the feds required to cover its operating deficit.

This isn't an operation that can make up losses with greater volume. The curse of Amtrak is that its operating costs are so high on most routes, and its fares so inadequate to cover those costs, that even as more people hop on board it still can't cut its losses. It currently loses about $54.50 per passenger, and the Sunset Limited line between New Orleans and Los Angeles loses $390 per ticket, according to the House Transportation Committee. Since Richard Nixon nationalized passenger rail service in 1971, Amtrak hasn't made money in a single year.”

I noted last week that the deficit was so large – – 36% of the federal budget – – that the problem could not be solved by cutting around the edges. Rather, entire departments and agencies would have to go. Amtrak is a prime candidate for total elimination. Certainly, all routes outside the Northeast could be eliminated without any damage to the public interest. On those routes, Amtrak competes with airlines, who offer higher frequency and lower fares. Most of Amtrak's loss would be eliminated the cancellation of those routes.

In the Northeast, it is likely that Amtrak could approach breakeven with its high density routes. If not, it could be subsidized by the states through which it passes, rather than by the federal government. In fact, the House Transportation Committee is drafting legislation to privatize the Northeast corridor so that private industry could build high-speed rail.  In any event, there is no need for continued subsidization of  train service by the federal government.