Taxpayers Gouged by Amtrak's Highly Subsidized Gravy Train

Press Release

Taxpayers subsidized every Amtrak ticket by an average of $49.25 dollars last year, and have shelled out nearly $40 billion for the costly and inefficient passenger rail service provider over the last four decades. A Congressional hearing today highlighted the exorbitant subsidy levels for Amtrak compared to those of other modes of passenger transportation, as well as the persistent inefficiencies that contribute to such high operating costs.

Transportation and Infrastructure Committee Chairman John L. Mica (R-FL), who led today's hearing, said, "Taxpayers have been footing the bill for Amtrak's gravy train for over forty years, and all they've gotten in return for their $40 billion investment is an inefficient, costly, Soviet-style passenger rail system.
Mica continued, "Each of the past five years the Amtrak per-ticket subsidy has hovered around $50, while the total federal subsidy averages $1.432 billion per year. That is a lot of money, especially compared to subsidy rates per passenger of other modes of transportation, and the situation is not improving.

"This average over the last five years does not even include the $1.3 billion in 2009 Stimulus dollars that the Administration threw at Amtrak," Mica added. "Including those Stimulus dollars, this works out to an average subsidy of $67.84 per ticket over the last three years."

"I firmly believe there is an opportunity to reform and improve Amtrak that will benefit passengers, taxpayers, workers, and our transportation system as a whole," said Railroads, Pipelines and Hazardous Materials Subcommittee Chairman Bill Shuster. "Passenger rail is essential to our nation's transportation future, and our best hope for easing crowding on our congested highways and airspace. But the time has come for us to explore new options on how we can improve service and reduce subsidies -- with our nation's current budget crisis the status quo simply isn't good enough."

All modes of transportation receive a federal subsidy, but a cross-modal comparison shows just how dramatically the amount of federal subsidy per passenger trip varies. Mica cited a recent study that found, on a per trip basis, and taking into account all types of federal funding going to each mode for 2008, aviation received $4.28 per passenger trip, mass transit received $0.95 per passenger, intercity commercial bus received $0.10 per passenger, and Amtrak received $46.33 per passenger.

"Amtrak has by far the highest per-trip subsidy, about eleven times that for aviation, and 463 times that of intercity bus trips," Mica stated. "Furthermore, highway and aviation subsidies are offset by a user fee, while Amtrak's subsidy comes from the General Fund of the Treasury. All federal taxpayers subsidize Amtrak whether they use it or not, but they often they get stranded at the station."

Mica pointed to some of Amtrak's most highly underwritten routes and biggest losers, and posed alternative transportation options. "The very worst-performing route, the Sunset Limited, receives a per ticket operational subsidy of $375.10," he said. "On this route, it will take two full days to get from New Orleans to Los Angeles. For $50 less than the Amtrak federal subsidy, I can hire a driver and sedan to pick me up and take me to the New Orleans airport for $58, take a four-hour nonstop flight to LAX Airport for $170, and hire another at LAX to my downtown hotel for $95. I can pay a total of $323 for a flight plus door-to-door car service, and get there in seven hours or less."

Mica also compared another Amtrak route to privately operated intercity bus service, saying, "Every ticket on Amtrak's Hoosier State, from Chicago to Indianapolis, costs $23, takes five hours, and only has one departure per day. Megabus, on the other hand, costs $22, takes three hours and 15 minutes, and has seven departures per day. When the federal taxpayer subsidy of $118.10 is included in the price of the Hoosier State ticket, the real price of this ticket is $141.10 -- more than six times the cost of the bus ticket. Amtrak costs more, takes longer, and has fewer options.

"For four decades, taxpayers have been taken for a ride with Amtrak," Mica concluded. "The Committee will continue its oversight of these issues in its efforts to cut waste and inject more private sector competition in passenger rail transportation."

Today's Committee hearing was the third in a series of Amtrak oversight hearings. In August, the Committee reviewed Amtrak's mismanagement of its food and beverage services and found that over the last 10 years, Amtrak has lost a total of $833 million.

Last week the Committee examined Amtrak's inability to compete in the commuter rail market. The Committee found that commuter rail agencies saved $107.8 million -- 11.5 percent -- by awarding operating contracts to private operators instead of Amtrak. If the kind of savings that transit agencies have realized through competitive procurement of commuter rail service is realized by also competing out state-supported routes, the states could potentially save an estimated $91.3 million annually.

Source