Amtrak: White House wants to privatize, Congress subsidize
One of the favorite stories around Amtrak concerns a visit David Stockman paid to President Reagan during his first term. Then-budget director Stockman is said to have shown up with a trolley conductor's change dispenser. He clicked out a nickel, handed it to the President, and told him that it would take 700 nickels ($35) to equal the subsidy paid by the federal government every time a passenger climbed aboard an Amtrak train.Skip to next paragraph
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It was a nice theatrical touch, and it helped shape the administration's outlook toward Amtrak - the quasi-governmental corporation formed in 1971 to try to salvage US passenger rail service.
For five years, the White House has sought to cut off federal funding for the system. President Reagan has called Amtrak a ``mobile federal money-burning machine.'' But, every year, Congress ignores the President and hands out the cash. The subsidy for 1987: $603 million.
This year, the administration's proposed budget calls for ``privatizing'' the system - putting those portions of Amtrak that can be operated at a profit into private hands.
Analysts say there is unlikely to be any move toward either doing away with the subsidy or selling the system. The real issue is how to make the subsidy as painless as possible for Congress.
Amtrak has powerful friends, including passenger and labor groups and a bevy of congressmen with train tracks running through their home districts. Within the next few weeks, Amtrak will ask Congress for $630 million for the coming budget year.
``I doubt if we'll ever be able to cover 100 percent of our expenses,'' says W.Graham Claytor, Amtrak's chairman and president since 1982. ``But we can close the gap.''
Mr. Claytor says that Amtrak generates enough revenue to pay more than 90 percent of its daily operating expenses. It's the long-term investments, for such things as new equipment and upgrading facilities, that require ongoing federal support. Amtrak officials compare such subsidies to the federal support given to build and maintain highways or airports. ``No transportation system in the world is able to cover all its costs,'' Claytor says.
Indeed, one of the ironies of this year's emerging budget squabble is that Amtrak is financially sounder now than ever before.
Federal subsidies grew steadily through the 1970s, peaking at $896.3 million in 1981 and have gradually declined since then. Amtrak officials say heavy federal funding through the last decade allowed them to rebuild much of what was once a badly deteriorated system.
According to Amtrak's 1986 annual report - being submitted to Congress this week - the system chalked up the highest revenues and the best revenue-to-cost ratio in its 15-year history. Simply put, Amtrak is getting more back for each dollar put in. At the same time, the system achieved something of a coup during 1986 by carrying more passengers daily between New York and Washington than any of the airlines that fly that hotly competitive route.
Transportation analysts say that Amtrak's success in the Northeast Corridor, the heavily traveled stretch between Washington and Boston, is a major factor in the system's financial turnaround. In addition, Amtrak has launched a variety of ventures to snare extra profits.
Still, Amtrak faces serious problems. Many of the system's far-flung rail lines, especially in the West, are nowhere near capable of generating enough revenue to cover operating expenses.
The system's on-time service record fell from 80 percent in 1985 to about 74 percent last year. Officials attribute this to bad weather and cutbacks in the frequency of locomotive maintenance. Some safety analysts worry that belt-tightening measures are forcing Amtrak to skimp on needed upkeep. More recently, Amtrak was battered by the negative publicity arising from the fatal train crash in northern Maryland.
Some critics say Amtrak would be better off in private hands. ``The only way Amtrak will ever become self-sustaining is through providing the incentives that can only come from a private owner,'' says Stephen Moore, a policy analyst at the Heritage Foundation, a conservative Washington think tank.
Heritage relently released a study of privatization initiatives, including the proposed sale of Amtrak. The study calls for taking the lucrative Northeast Corridor and giving it over to a corporation jointly owned by its employees and frequent travelers.
Reagan administration officials emphasize that the debate over Amtrak has been falsely framed in terms that equate ending subsidies with ending passenger rail service.
``Now is the time to get creative - to see if there's some way the private sector or the states can step into the picture and maintain service,'' a spokesman for the Department of Transportation says.
The underlying assumption in privatization is that only profitable rail lines would survive. Most analysts agree that only the Northeast Corridor comes close to meeting this requirement.
Meanwhile, defenders of Amtrak's subsidy emphasize the relatively small amount spent on maintaining the present system. The Defense Department, for example, would operate for about 17 hours on what Amtrak gets each year.