[Peepers]

As a result of his Monday op-ed (see below) in the Washington Post, Jim Coston was invited to be interviewed live by Larry Kudlow and Jim Cramer on their daily news/public affairs show on CNBC. The interview will be broadcast Thursday, Jan. 6, at 5 p.m. Eastern and 4 p.m. Central. Check local listings for Mountain and Pacific times.

Beyond Amtrak-Federal Funding for Trains Should Be Similar to Highway and
Airport Programs By James Coston, Monday, January 3, 2005; Page A13:
America's intercity passenger rail company, Amtrak, cannot survive much
longer -- at least not in its current size and shape -- on the amount of annual funding that Congress and the administration provide. That was the conclusion of the Transportation Department's inspector , Kenneth M. Mead, in a report delivered Nov. 18. It ought to be heeded.

The administration wanted to provide Amtrak with $900 million this fiscal year. Congress came through with $1.2 billion, but Mead agrees with Amtrak chief executive David Gunn that even the higher figure is not enough to keep the full operation going.

"Unsustainably large operating losses, poor on-time performance, and increasing levels of deferred infrastructure and fleet investment are a clarion call to the need for significant changes in Amtrak's strategy," the inspector general wrote. "Continued deferral brings Amtrak closer to a major point of failure on the system but no one knows where or when such a failure will occur."

Mead noted that on the Boston-New York-Washington Northeast Corridor, the only substantial piece of railroad that Amtrak owns and controls, century-old movable drawbridges could fail at any time for lack of upkeep or replacement. One such failure would close the line, forcing a massive, expensive and probably unmanageable diversion of the region's business and personal travel to already overburdened highways and airports.

Outside the Northeast Corridor, Amtrak rents track space from the
privately owned freight railroads. That infrastructure is more sound,
but freight-train congestion and antique signaling throw passenger
trains off schedule. Meanwhile, Amtrak's diversion of scarce capital
funds to patch track along the Northeast Corridor leaves no money to
rebuild or expand its small rolling-stock fleet. Ridership grew by
double digits on key corridors in California, Washington state and in the Midwest last year -- but no funds are available for more cars or locomotives.

Whether it's the railroad falling apart in the East or the fleet failing in the rest of the country, Amtrak is not getting the federal support it needs to meet demand.

Mead did not say why this is happening or what needs to be done about it. As a veteran Washington bureaucrat adept at ministering to multiple contending constituencies, he eschews the blame game. Instead, he handed the job of sorting it out to Congress, which, after all, is the body that will have to fund any solution.

"Congress needs to provide clear direction for Amtrak's operating and capital investment priorities as well as Federal funding levels in
reauthorization legislation," Mead wrote. He suggested five possible
strategies: refocus on under-500-mile corridors, where fast trains
outperform air and auto transportation; cut low-performing operations;
increase funding to develop the entire existing system; fund only to
maintain the status quo; or "any combination of the above."

That's an interesting slate of choices, but all of them amount to
micromanagement unless Congress first takes another, global step: It
has to stop treating passenger trains as a business and start treating
them as a federal transportation program.

What does a federal transportation program look like? Simple: like our
highway and airport programs. The federal government doesn't operate
the vehicles or market the service. There's no such company as "Amcar"
or "Amflight." Instead, Washington helps the states to fund a
state-of-the-art infrastructure that private operators can have access
to -- highways for private cars and commercial motor coaches, airports
for airliners. Congress needs to stop focusing solely on Amtrak, a
government-owned train company operating on obsolete private and public
infrastructure, so that it can refocus on getting matching funds out to
states and communities that want to build up their intercity railroad
tracks and start running fast, frequent, comfortable trains that people
will pay to ride.

Several impatient states -- California, North Carolina and Washington
-- couldn't wait for a federal program, so during the go-go '90s they
spent some of their taxpayers' money to build track capacity and buy
trains on their own. Their programs are successful -- California's 60
daily departures are carrying more than 4 million riders a year, and
growth is quickly surpassing the capacity of the state-owned fleet.

But even rich states such as California have hit the fiscal wall, much
as Pennsylvania did in 1939, when it ran out of money to finish its new
turnpike and had to wait for an emergency grant sought by President
Franklin D. Roosevelt. Unless Congress develops a federal-state
matching-grant plan for railroad tracks like the highway program it
started in 1916 and the airport aid program it passed in 1946,
passenger trains will continue to starve, highway and airport backups
will grow, and Mead's successors at the Transportation Department will
continue to scratch their heads about why the federal government can't
seem to run a profitable train business.

Passenger trains used to be a profitable business in this country --
many, many years ago, when railroads enjoyed a monopoly over mechanized
overland transportation and the federal government was not yet building
and subsidizing two competing travel systems. But those days are gone.
To expect a passenger train company to earn a profit on today's
underfunded, obsolete and downsized track network is an exercise in
nostalgia.

But to expect fast, frequent, efficient trains to carry masses of
travelers who now fly, drive or stay home is the height of reality --
provided the funding is there for a railroad infrastructure as modern
as the ones government provides for cars and airplanes. The key is our proven federal system of matching grants. It's amazing how much money a state legislature will appropriate for a project when it knows there's money waiting in Washington to match it. And it's amazing how eager entrepreneurs are to provide quality transportation once they're sure government will keep funding the infrastructure.

Look at the airlines. They're broker than Amtrak, but they keep trying, because win or lose, they know government will keep paying for the airports. Infrastructure assistance, not operations, is the federal government's proper role in a better train system.

The writer has worked for Amtrak and served on the Amtrak Reform
Council. He is chairman of NewTrains Leasing System, which provides financing for passenger train equipment and infrastructure.

[theragtopguy]

So here we are, either in the Peak or damned close to it, and our glorious President is ready to end all government subsidies to our rail system. Of course, since Amtrak loses about $500 million a year it would be totally out of business in no time. Will this madness ever stop? When will the leaders wake up? link

[savethehumans]

Uh--who says they will?

[Andy]

I ask the same question. The people in charge seem to be absolutely incompetent.

[Phil]

Fire sale anyone? They want to snatch these properties up on the cheap because they know the future will make them very valuable.

Or at least that's one viable conspiracy theory.

[The_Virginian]

Fire sale anyone? They want to snatch these properties up on the cheap because they know the future will make them very valuable.

quite true, and yes it will be made into a viable, profitable system in the future...just think of all the coal rights allong the tracks!

The trains themselves will make a comeback IMHO, even if it is by a crony associate of the sitting prez.

[lawnchair]

Fire sale anyone? They want to snatch these properties up on the cheap because they know the future will make them very valuable.

The problem is that Amtrak owns very little railroad. They own the mainline from DC to Boston, which is valuable beyond belief. But, beyond that they run on the frieght line (BNSF, UP, CP, NS) rails. The fire sale would be for a few thousand 25-year-old battered railroad cars.

See, Amtrak pays the rail companies for using their rails. They don't pay well, but the frieght lines are required to accept the Amtrak service by law. And, they're a pain to the freight lines, because Amtrak runs on a human schedule. They'd rather have the computer schedule the track so the mile long coal-unit-train doesn't stop between Wyoming and Illinois. Starting one of those is expensive. So, certain lines have done what they can to slow Amtrak service. They figure that if the Amtrak is always 15 hours late, no one will ride it and it will go away.

Where it gets interesting is taxation. The freight lines pay property tax on every foot of rail line and every station house along their track. They also pay for their own switching crews, and pensions for their retirees. Local governments pay millions for airports, airlines get free land and tax incentives for overhaul bases. Air Traffic Control is federally paid for, and most pensions for ATC and defunct-airline workers are paid for by taxpayers. 'Airport fees' cover very little of the cost.

Until Amtrak (or sucessors) get anything like the subsidies that roads and air travel get, rail will be a losing proposition.

The more cynical (PO) take is: Fuel is not as major a cost to Amtrak. When cross-country flights cost $700 (due to $80/bbl oil), a lot of people might consider a $300 train ticket. But, they won't if the train doesn't exist.

[mindfarkk]

possibly a bid to keep airlines in business longer then?

[Phil]

Still though, I think they're up to something.

1) Bushco knows about peak oil, obviously.

2) Bushco knows the implications of peak oil on our country's transportation system; meaning, they know that railroads will once again become the major player in transcontinental shipping and passenger travel.

3) Bushco knows the airlines are screwed. But clearly he wants to continue the illusion that nothing's wrong; because to do otherwise, he would have to mention peak oil and its implications. What would happen to the economy if Bush read the writing on the wall?

Why would he want Amtrak to fail? Maybe he wants someone close to him to buy it up- even if it is just a few thousand old cars and a couple nice runs of track. Maybe once TSHTF, and his people are firmly in control of some aspect of the railroad industry, Amtrak and other possible acquisitions, he'll try to legislate into existence as much subsidy as possible for the railroad- and let the airlines crumble.

This is the way these people operate. This documentary illustrates exactly what I mean. This is a must watch!!!

Watch it online here:

http://www.informationclearinghouse.info/article3995.htm

Exposed: The Carlyle Group

Shocking documentary uncovers the subversion of Americas democracy.

I defy you to watch this 48 minute documentary and not be outraged about the depth of corruption and deceit within the highest ranks of our government.

Note: The first one minute forty seven seconds of this program is in broadcast in Dutch, The remainder is in English.

[DomusAlbion]

Yikes!

I sure hope not. That's how I travel to Seattle on business trips. 300 miles for $30. That's cheaper than any other mode of transportation.

[NevadaGhosts]

"President Bush is willing to spend billions to send a couple of people to Mars, but not one dime for Amtrak's 25 million annual travelers who want better rail service to destinations on this planet," said Sen. Frank Lautenberg , D-N.J. The president has expressed a wish to have manned flights to the moon and Mars.

http://www.commondreams.org/headlines05/0203-07.htm

I find this very interesting. I wonder who's getting kickbacks and favors from the Mars and moon exploration projects.

[BabyPeanut]

"President Bush is willing to spend billions to send a couple of people to Mars, but not one dime for Amtrak's 25 million annual travelers who want better rail service to destinations on this planet," said Sen. Frank Lautenberg , D-N.J. The president has expressed a wish to have manned flights to the moon and Mars.

http://www.commondreams.org/headlines05/0203-07.htm

I find this very interesting. I wonder who's getting kickbacks and favors from the Mars and moon exploration projects.

The problem with your statements is they assume the money gets spent where Bush promises it will be. Amtrack in this case was promised 900 million dollars until it didn't get any money written into the budget proposal.

Bush is very generous when talking but only when talking.

[oowolf]

In the 1920's the US had the finest public transportation system on earth. Then General Motors and Henry Ford got together and hatched their grand plan to force everyone into automobile dependency.
This latest move by the honky death-culture is just the "frosting on the cowpie" as we say in MT.
No passenger trains; no planes; no sanity; dieoff

[Peepers]

I'm pretty close to this debate on Amtrak, as I've worked in rail transit and high-speed rail advocacy for 20 years. Unfortunately, there is no "conspiracy" except that Bush is getting bad advice from his own Federal Railroad Administration, which would like to see Amtrak privatized.

I got into a argument with an FRA administrator a few years ago over this. He pointed to the UK as an example of privitization (lousy choice on his part). He was convinced that privatization would work here, even though our gas taxes are several dollars less per gallon, our rail infrastructure is designed more for handling heavy freight trains, and the federal government has no long-term capital funding mechanism for rail like the Highways Trust Fund or Airport & Airways Trust Fund.

The FRA is convinced that transportation in the U.S. operates in the "free market" when nothing could be farther from the truth. It is all about infrastructure -- the railroads own theirs and have to finance them through the profit-driven private marketplace; motorists and air travelers use the government's infrastructure and thus avoids many of the costs the railroads have to pay.

Memo to Bush and the FRA -- Either equalize the policies and level the playing field, or stop expecting Amtrak to make money. It never will as long as it has to play by a totally unique set of rules.

KJP

[pea-jay]

Having worked in a transportation planning department before my current job, it always galled me to see public transit in general get held to a different standard than other means of transit. On one hand you have many administrations keen on having Amtrak make a buck (hence the discussion of "Amtrak lost another 300 million year") when your average driver barely pays for the true cost of driving or the flier, the true cost of flying. Intercity passenger train systems have it the worst, but all transit systems face this arguement to a certain degree. Its just that we have come to accept that our bus and subway systems would always require funds to supplement farebox ratio.

I don't think the administration is trying to dump amtrak for diabolical reasons. They have a budget deficit on one hand and insane belief that the private sector can do everything better in the other. They'll let private companies bid on the assests, toss a few bones to key constituents (localized rail improvements) and let the market sort things out. Also don't forget a number of states like CA and IL add state subsidies as well so even if the feds take a whack at the system, you'll still see limited rail activity. In the end, if this comes to pass (and I am not convinced this will) there will continue to be trains in the US. It'll probably be disjointed, certainly not national in scope, but most major commuting corridors will survive. You guys on the Northeast Corridor: STOP WORRYING. Your train service isn't going anywhere.

[Wildwell]

Not paying out subsidy to Amtrak is its present form is probably a good thing. There’s absolutely no point in paying out to a system that is just effectively screwing the Freight Railroads by using needed capacity. The US has probably got one of the best freight systems in the world and conversely the worst passenger system outside urban areas. It’s far better to get serious about metro rail and where economically possible high speed rail, using part private money. The NE corridor, is of course, an exception in this.

The British made a mistake of upgrading lines to carry faster trains. Fine, up to a point, but $18bn later on just one main line everyone realised it just wasn’t worth it for the hassle, disruption and cost. A clean slate was needed, like the rest of Europe the future is seen in new builds which offer better value for money and can complete with airlines up to 500 miles. Amtrak might as well be moved forward into the 21st century too.

http://www.guardian.co.uk/uk_news/story ... 42,00.html

http://www.cfit.gov.uk/reports/hsr/index.htm

[PlannerBee]

I was listening to Bloomberg television today and there was some guy talking about Amtrak and how he wants them just to "operate" the business instead of the capital end of things. I understand "operate" but don't know what to make of them being taken out of the "capital" end. Can someone shed some light on this for me?

[Peepers]

The guy you heard talking was U.S. Transportation Secretary Norm Mineta, who proposes that Amtrak, as a transportation provider, shouldn't own and maintain tracks, stations, etc. and instead should just run trains. That's about as much as I agree with him.

Instead, he proposes that states (not the federal government) should be solely responsible for funding the operating subsidies for trains, with the capital costs (improving tracks, stations etc) split evenly between the states and the federal government.

Two problems with that approach:

1. most routes, even short-distance travel markets like Chicago-Milwaukee (85 miles), involve two states. Getting two states to agree on anything, let alone cost-sharing, is a difficult thing to accomplish. For example, California is at least a decade ahead of every other state in developing passenger rail services, yet one of the most promising passenger rail markets in the nation, Los Angeles-Las Vegas, has no passenger rail service because it involves two states who haven't been able to agree on cost-sharing and because there is no federal capital funding program for rail. The difficulty in getting states to agree is why the Founding Fathers wrote the Commerce Clause into the Constitution to give the federal government jurisdiction over interstate transport. Yet, Mineta seeks to dish this responsibility onto the states when it comes to rail (but not for roads, aviation, waterways).

2. Mineta's proposed plan for 50/50 federal/state capital cost sharing for rail projects is a nonstarter. When competing highway and aviation projects get an 80 percent federal funding share, guess where states will put their limited dollars? Rail has to offer a similar federal share for project costs if rail projects are to happen. Mineta argues that mass transit projects get only a 50 percent federal share, but that's half true. States can make up the difference by using their federal allotment flexible surface transportation funds to make up for the shortfall in federal transit funding so that the actual federal support can approach or even exceed 80 percent. Intercity rail projects (like for Amtrak) are an ineligible use for these surface transportation funds, so states wouldn't be able to make up for the limited federal funding share.

Probably more than you wanted to know, but Mineta really burns me up. Even worse is that the media quotes him without seeking an opposing comment (ie: from more enlightened persons) to counter the falsehoods he is spreading. But that would require our media to stop their stenography and start investigating to verify the accuracy of Mineta's statements and the viability of his plan for reforming Amtrak.

KJP

[aahala]

It's a shell game. Customers want the government to pay, taxpayers
want the customers to pay. The Feds want the states and the states
want the Feds to pay.

Most everybody thinks Amtrak is a good idea as long as someone else is
getting the bill.

[canis_lupus]

All the major news outlets are reporting David Gunn, president of Amtrak has been fired. Gunn was the one who dug his heels in and battled with the Bush administration for funding for a national passenger rail network.

Senator Byron Dorgan commenting on this on C-Span2 said "David Gunn was nobody's crony, and for that he was fired". Thus endeth any hope for a national passenger rail network. This infuriates me much more than on a Peak Oil level...