by Veronique De Rugy | May 28, 2015 12:01 am
After the recent Amtrak train crash in Philadelphia, some politicians and pundits used the terrible tragedy to perpetuate the misleading claim that the federal government’s passenger rail operation suffers from a lack of taxpayer assistance. This rush to judgment was unsurprising, given that misfortune is sometimes synonymous with opportunity in the eyes of the political class.
Amtrak has a lot of problems, but a lack of federal funding isn’t one of them.
It was established in 1970 to help the struggling railroad industry by placing its unprofitable private passenger rail lines under federal control. Amtrak’s creators believed that a unified rail network with Uncle Sam in charge would be successful enough that federal funds wouldn’t be needed. Its first chairman, David W. Kendall, claimed, “This new system can and will succeed because it unifies for the first time the operation and promotion of the nation’s rail passenger service.” More than four decades and $44 billion in taxpayer subsidies later ($70 billion when adjusted for inflation), however, Amtrak has yet to deliver a single year of profitability.
While this continued faith in government’s ability to heal most wounds with funding is par for the course in Washington, it’s time to set the record straight. The reasons for Amtrak’s struggles have more to do with its history of poor management than they do with its lack of cash. One need only peruse reports from the Government Accountability Office and Amtrak’s own inspector general to see what can go wrong when the discipline of the market is absent. As the IG noted last year, Amtrak “has not consistently used sound business practices in each phase of the capital planning process, including developing sound project proposals with performance measures, learning from the execution and outcome of projects, and controlling unauthorized expenditures.”
Amtrak’s fundamental problem, however, is the same one that afflicts all government endeavors: Operational decisions are often made on the basis of political concerns rather than sound economic and financial reasoning. The clearest examples of this are Amtrak’s money-losing long-distance passenger routes, which are kept on life support with federal funds because politicians generally prefer to waste other people’s money than confront the tiny but vocal minority of people who benefit.
Also, consider this: As reports revealed that the recent crash was caused by the train’s going too fast rather than by poor maintenance, everyone’s attention shifted to an available technology — positive train control — that would have automatically slowed the ill-fated train down. As it turns out, a 2008 law required that Amtrak and other railroads install PTC by 2015. But whatever the reasons for Amtrak’s not having fully met the deadline, the failure to implement the technology shouldn’t be blamed on a lack of additional money allocated by Congress for Amtrak. Instead, it should be blamed on Congress’ being more interested in funding the next shiny object than it is in funding boring lifesaving technology.
Shortly after the law was enacted, the Obama administration and its congressional allies allocated $8 billion of so-called “stimulus” funds for a nationwide system of high-speed rail. The next year, Congress gave another $2 billion for the endeavor. Never mind the multitude of articles written about the waste of money such investments represent because they have proved to be systematically costlier than officials expect and are generally little-used. It’s too bad none of that money went to pay for PTC. Yet many of the people who are now decrying a lack of funding for rail safety are the same people who thought that high-speed rail would be a smart use of other people’s money.
In Washington, squandering money and then bemoaning a lack of it is how the game is played. If there is a lesson to be learned from the recent train wreck, it’s that too much taxpayer money has been spent on rail, not too little.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.
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