Amtrak Unworthy of Stimulus Funding | Citizens Against Government Waste

Amtrak Unworthy of Stimulus Funding

The WasteWatcher

The Cares Act, the largest ever stimulus package passed by the United States, was signed by President Trump on March 27, 2020.  As reporters and researchers dig through the legislation, undeserving recipients are being uncovered.  This group includes Amtrak, which received $1 billion in the bill.

Since its inception in 1971, Amtrak has cost taxpayers more than $40 billion, and has unceasingly failed to earn a profit.  A January 2018 audit from Ernst and Young found that “the Company has a history of operating losses and is dependent upon substantial Federal Government subsidies to sustain its operations and maintain its underlying infrastructure.”

The Amtrak Inspector General (IG) has issued several reports detailing inadequate supervision, including a September 2012 report that investigated two employees who received fraudulent pay for hours they never worked.  Amtrak has also failed to control costs on key expansion projects.  The overhaul of Union Station in Washington, D.C., “faces significant risks of coming in over budget and behind schedule,” according to an August 1, 2018 IG report.  Projects in Virginia were cited for poor staff communications and project delays.

While Amtrak ridership increased by approximately 4 percent over the first quarter of fiscal year (FY) 2020 from the equivalent period last year, the global pandemic caused up to 90 percent declines in passengers.  In any event, the majority of the ridership increase stems from Northeast corridor routes, which  Amtrak admits are the only ones turning a net profit.  None of the long-distance, lesser-used routes, which cost the most to operate and bring in the least amount of revenue, are projected to be profitable.  Given this information, any well-managed privately-owned business would have shut down the lines years ago, and focused on profitability.  As a consequence of its mismanagement, Amtrak’s FY 2019 net loss was $880.9 million. 

Even previous supporters of Amtrak have turned skeptics.  Former Amtrak spokesman and rail expert Joseph Vranich asserted in October 2002 that, “Amtrak is a massive failure because it’s wedded to a failed paradigm.  It runs trains that serve political purposes as opposed to being responsive to the marketplace.  America needs passenger trains in selected areas, but it doesn’t need Amtrak’s antiquated route system, poor service and unreasonable operating deficits.”  Even the so-called “Father of Amtrak,” Anthony Haswell, regrets his involvement, stating, “I feel personally embarrassed over what I helped to create.”

Unfortunately, additional stimulus funding for Amtrak may yet be in the cards.  Following the passage of the CARES Act, President Trump on March 31, 2020 called for a new stimulus package focused on infrastructure, matching the $2 trillion in the first bill.  Any new bill faces opposition, including from Senate Majority Leader Mitch McConnell (R-Ky.), who on April 1, 2020 stated “it would take a lot of convincing to convince me that we should do transportation in a way that’s not credibly paid for.” 

However, many other legislators support a transportation-focused bill.  Given that the administration and congressional Democrats nearly agreed on an infrastructure bill in April 2019 before talks fell apart at the last minute, momentum might build quickly.  In any event, until it gets its fiscal house in order, Amtrak should be left out of any new round of funding.

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