June 24, 2002

June 24, 2002 | WebMemo on Federal Budget

Congress Should Call Amtrak's Bluff

Press reports indicate that Amtrak's new president, Dave Gunn, has threatened to not only close down the intercity rail system, but also close down commuter rail operations in the Boston, Philadelphia, Baltimore and Washington areas. This is unnecessary and punitive.

  1. Amtrak currently provides commuter rail services under contract to transit agencies in Boston, Baltimore, Washington, San Francisco and Los Angeles, which could be threatened with closure. All of these are profitable contracts for Amtrak, and there is no reason whatever for Amtrak to discontinue service. Fortunately, there are immediate alternatives for the transit authorities -- both freight railroads and international commuter rail operators could quickly substitute for Amtrak, because the trains are owned by the local authorities, not Amtrak.
  2. Amtrak claims that its Acela service in the Washington-New York-Boston corridor is also profitable. If this is the case, there is no reason for this service to shut down. If Amtrak shuts down the money losing slower trains in the Northeast corridor, intercity bus companies stand ready to provide an alternative, virtually immediately.
  3. Because Amtrak owns the Northeast corridor, Gunn's draconian closure could threaten commuter services in the Philadelphia and New York area on Amtrak lines. There is no reason for this. The local commuter railroads pay for track access and dispatch and provide badly needed revenues to Amtrak. If Ronald Reagan could keep the much larger air traffic control system operating when the controllers went on strike, surely they can keep Northeast corridor commuter services running.
  4. Concern has been expressed that commuter services might not have access to Amtrak owned stations, such as Union Station in Chicago. Again, commuter railroads pay profitable rates for access to Amtrak stations and there is no reason that they should not continue to be served. In the final analysis, Amtrak's assets belong to the people, to whom they should not be denied by the unnecessary and precipitous strategies of Amtrak management.

What all of this indicates is a railroad that is way off-track. After five years of mismanagement and deception, Amtrak's new and highly touted management has unwisely raised the stakes beyond credibility. Mr. Gunn's strategy would hold hostage not only customers of Amtrak's own profitable services, but also thousands of commuters who are the customers of local transit agencies. Indeed, in the Northeast Corridor, Mr. Gunn's strategy could precipitate a regional crisis. This is not even thinly veiled blackmail, a tactic that has no place in civilized society. That a government-owned, taxpayer-subsidized corporation is prosecuting it makes it all the more offensive.

The Bush Administration should meet this challenge head on and implement a strategy to keep Amtrak's profitable service lines in operation. The administration should seek whatever legal or administrative strategy available to bring Amtrak under control. Either bankruptcy or a form of federal administration, under which a trustee would continue to operate trains and undertake the financial reforms that have so long been avoided by Amtrak's management and board of directors. Whether they know it or not, Dave Gunn, the Congress and the Bush Administration are embroiled in a game of brinkmanship and Mr. Gunn has raised the stakes well beyond what he or Amtrak can sustain. Neither Congress nor the President should blink.

Wendell Cox is a member of the Amtrak Reform Council and Visiting Fellow at the Heritage Foundation.


Resources

No Bailout for Amtrak; Board Members Should Resign by Wendell Cox

Amtrak's Impending Collapse Offers One-Time Opportunity for Reform by Ronald D. Utt, Ph.D. (May 13, 2002)

Proposed Amtrak Bailout Would Bust the Budget by Ronald D. Utt, Ph.D. (October 2, 2001)

Opportunities to Improve Passenger Rail Service Testimony by Ronald D. Utt, Ph.D. (March 7, 2002)


News Links

Amtrak Under the Gunn (Wall Street Journal)

Amtrak, Shamtrak: The national rail system needs an overhaul (Dallas Morning News)

The Great Pork Express (St. Louis Post-Dispatch)

About the Author

Wendell Cox Visiting Fellow
Thomas A. Roe Institute for Economic Policy Studies