HACKENSACK, N.J. — With Americans increasingly conscious of the need for transportation alternatives that reduce both traffic congestion and reliance on foreign oil, you would think our rail passenger system would be hailed as the national resource that it truly is, according to an editorial by James J. Florio in the Bergen Record.
Instead, a process has been put into place that could lead to its demise.
The vehicle for this figurative train wreck is the Amtrak Reform Council, created by Congress in 1997. The council grew out of a report by the Working Group on Intercity Rail, a bipartisan panel on which I served that was appointed by the U.S. House of Representatives. The working group was to review proposals for restructuring Amtrak and preserving intercity rail service. But its eventual recommendations — from which I dissented — called for something else. The plan would create a crisis in rail transportation in the Northeast corridor and the erosion — or collapse — of rail passenger service everywhere else in the nation. Congress put that plan in place and established the Amtrak Reform Council to implement it.
Clearly, a majority of Council members had already decided to end Amtrak as we know it and just needed to find the mechanism. They came up with a test that no passenger rail system in the world could pass: self-sufficiency. The breakup of Amtrak would be initiated unless Amtrak could support itself without federal assistance by the end of 2002.
The Amtrak Reform Council has already developed the breakup plan and submitted it to the Congress. The way the legislation creating the council was written, its plan automatically takes effect unless Congress modifies or rejects it. No congressional action means Amtrak is required to liquidate itself. The plan is radically simple, involving separation of ownership of infrastructure from operation of rail service. Infrastructure, particularly in the Northeast corridor, would be divested from the existing Amtrak and conveyed to a new governmental entity, with rail passenger service parceled out to private sector operators.
The trouble with this approach is that it can’t work. Ask freight railroad operators whether they want control over their operations separated from control over their infrastructure and they will say that you can’t run a railroad that way. Indeed, those most enthusiastic about this initiative would be the investment bankers who will make a financial killing from multiple transfers of tracks, stations, and rolling stock assets.
A review of rail passenger history clearly proves the reason it is a public service is that the private sector determined long ago it can’t operate trains at a profit and won’t take the risks inherent in trying to do so. Every nation outside the United States accepts this and provides subsidies to maintain and operate rail passenger lines.
The Amtrak Reform Council’s enthusiasm for what amounts to privatizing the system should be evaluated against the experience of Great Britain. Studies examining British privatization of some of the more profitable lines found that the inability to cross-subsidize the cost of other lines meant that public moneys had to be increased to maintain service.
A House of Commons report concluded that the overall cost to taxpayers of privatization was a grave drain on the public treasury. Breakup of the British system has resulted in catastrophic safety problems as a result of dispersing overall responsibility among various entities.
All of this means Congress had better pay attention. First and foremost, our representatives in Washington must shed the ideological baggage that has burdened debate over Amtrak for too long. Abstract concepts like privatization, devolution, and competitive market forces just won’t run a passenger railroad. What’s needed is legislative guidance to Amtrak’s management-and a realistic capital investment.
Amtrak gets only a fraction of the federal subsidies that go to the airline and automotive industries. This past year, Amtrak received $600 million dollars compared to $28 billion for the airline industry (a subsidy that is increasing, post-Sept. 11) and the nearly $40 billion awarded to the private automotive and trucking industries. Criticism of those subsidies is rare, and yet Amtrak is treated like it asks for something it doesn’t deserve.
It’s time for reality to frame this debate. We need passenger trains. They facilitate movement, relieve traffic congestion, improve air quality by reducing pollution, and conserve energy. And they require a major investment. The sooner we act in a responsible, pragmatic manner the better. And the first step is clear: Congress must stop the Amtrak Reform Council’s plan from taking effect.
James J. Florio is a former governor of New Jersey and chief executive officer of XSPAND Inc., an asset management company.