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October 10, 2011

A New Amtrak Station is a Waste of Money

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In its request for substantial sums of taxpayer money to move and rebuild Amtrak’s Atlanta train station, the railroad notes that its Atlanta passengers have increased by 16 percent over the past year. But since no more than an average of 308 passengers get on or off the two Amtrak trains that serve the station each day, the city and state have better things to do than spend $38 million to accommodate an additional 42 daily passengers who are already heavily subsidized by federal taxpayers.

By way of comparison, daily Amtrak ridership in the city is only one-tenth of 1 percent of the daily passenger load at Hartsfield-Jackson International Airport (243,000), and probably fewer than the number of passengers served per hour by the Goliath roller coaster at nearby Six Flags.

As Amtrak’s own data reveal, the Atlanta Amtrak story is pretty much the same as the American Amtrak story. Overall, and despite billions of dollars of annual subsidies and investment by Washington, Amtrak carries less than half of 1 percent of the nation’s intercity passengers, and its trains on average are less than half full. Outside the Northeast Corridor service that runs between Washington, D.C., and Boston — which accounts for 40 percent of Amtrak’s passengers — Amtrak is a slow, unreliable and inconsequential mode of travel. And even in the densely packed northeast, its performance is subpar, carrying only 6 percent of the intercity passengers in the corridor, compared to 5 percent for the airlines and 89 percent for buses and cars.

Despite its manifest failings and limited use, Amtrak has a large and politically influential fan club that has succeeded in getting Congress and presidents to provide it with outsized annual subsidies that increase each year despite the government’s yawning budget deficit. Counting a $563 million federal loan from President Obama’s Department of Transportation, and its $1.5 billion in appropriations from Congress, Amtrak’s annual subsidy for the last fiscal year (2011) was over $2 billion. This compares to “just” $1.3 billion in 2008, and offers a vivid example of congressional disinterest in controlling spending.

Amtrak and its supporters will argue that the loan is not a subsidy, but Amtrak is the nation’s ultimate subprime borrower: Each year it loses huge sums of money and, on its own, has no capacity to repay any loan of any size. With ticket sales of nearly $2 billion covering only 53 percent of its annual costs in FY 2010, the loan’s debt-service payments must be covered by taxpayers. As a result, the new loan is a stealth guarantee for a perpetual “appropriation” that forces Congress to spend even more taxpayer money to service the loan provided by the president.

Oddly, Amtrak sees this pattern of excess spending as one of the benefits it provides America. In its FY 2009 fact sheet for Georgia, Amtrak proudly notes that its Georgia employees earn an average annual wage of $64,508. Reflecting the extent to which Amtrak’s unionized employees have achieved above-market wages and benefits (including a six-year severance package) thanks to generous taxpayer subsidies, this wage is well above what a typical Georgia worker earns. The U.S. Bureau of the Census reports that median household income in Georgia was $47,590 that year, and since a Georgia household averages 2.7 people, that estimate also includes the combined income earned by the many two-income households in the state.

In appreciation of the $1.3 trillion deficit in the federal budget and Amtrak’s minimal contribution to travel needs, this year Congress is proposing significant cuts in Amtrak’s budget. Georgia faces the same challenges, including transportation needs whose costs exceed current resources. As such, the $38 million represents a waste of money, and citizens should demand that those resources be spent on more pressing needs.

Ronald D. Utt is a senior research fellow at the Heritage Foundation.

First appeared in the Atlanta Journal Constitution

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