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A Not So Free Ride

Posted By Conn Carroll On June 10, 2008 @ 11:07 am In Economics | Comments Disabled

After decades of losing millions of taxpayer dollars, the Senate finally voted this week to privatize the Senate restaurants [1]. If only they would do the same with Amtrak. Heritage senior research fellow Ron Utt looks at [2] this year’s Amtrak reauthorization bill:

Since Amtrak’s inception in 1970, the annual business-as-usual bailout has allowed it to squander more than $30 billion in taxpayer money for the benefit of a tiny fraction of the traveling public and its overpaid workforce. Despite this massive subsidy and endless promises of improvement by a series of recent managers and board members, Amtrak is no closer to service sustainability today than it was 38 years ago, in large part because its passengers value the service at only a fraction of what it costs to provide it.

These losses have continued and worsened down to the present day: In FY 2007, Amtrak earned $1.7 billion in passenger ticket revenues but incurred costs of $3.2 billion serving those passengers. The loss for that year–$1.12 billion, up from $1.07 billion in the previous year–was covered by the taxpayers. As a result, Amtrak’s recent modest increase in passengers has been at the expense of the American taxpayer.

Over the five-year life of the legislation, taxpayers would have to provide a total of $12.8 billion for the benefit of the tiny share of the nation’s travelers using the system. A better policy would be to limit Amtrak’s annual subsidy to $900 million per year and link the receipt of that subsidy to the requirement that Amtrak fill more than half of its seats on an annual basis.


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URL to article: http://blog.heritage.org/2008/06/10/a-not-so-free-ride/

URLs in this post:

[1] privatize the Senate restaurants: http://ap.google.com/article/ALeqM5gMmFHV249e34tf41zW-VAzylknXgD916O0781

[2] looks at: http://www.heritage.org/Research/SmartGrowth/wm1949.cfm

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