Sunday, August 28, 2016

Loaning Amtrak Billions, Subsidizing A Cash Losing Entity!

Amtrak Loan Pure Politics
Vice President Biden on Friday, August 26th announced that Amtrak will receive a $2.45 billion federal loan. Amtrak will use the loan to purchase 28 new train sets for the Acela service on the Northeast Corridor, which will offer 40 percent more seats than currently offered on Acela trains making stops in Washington, D.C., New York, and Boston, according to an announcement from Biden’s office. “This loan is a key step to providing investments needed to help keep high-speed trains moving throughout the region, and to help all commuters in the Northeast Corridor,” Biden said in a statement. “We need these kinds of investments to keep this region – and our whole country – moving, and to create new jobs.”

According to a CNN report, the Vice President frequently traveled on Amtrak when he was a Delaware Senator. When announcing the loan on Friday at the Joseph R. Biden Jr. Train Station in Wilmington, Biden said, "I have traveled over 2,100,000 miles on Amtrak. I have made over 8,000 — roughly 8,400 round trips. I believe it's about 257 miles a day. And these men and women have become my family." The White House says the U.S. government will cut a mammoth $2.45 billion check to Amtrak in what will be the largest single loan in the Transportation Department's history. Amtrak has been working to fund new trains and improve infrastructure throughout the country.

It must be noted, however, that intercity passenger rail services provided by the National Railroad Passenger Corporation also known as Amtrak are already heavily subsidized by the federal government and loses money annually. In 2015, it reported a $306.5 million loss. It claims it will be able to pay for the improvements through growth in the Northeast Corridor, which has long been a source of revenue for the service. Ironically the government cash infusion comes the same day the Boston Globe reported that Amtrak threatened to cut rail service from Boston to New York and Washington, D.C. because of an ongoing dispute with the state's transportation authority over who should pay for maintenance of the Northeast Corridor. With part of the money from the loan, Amtrak plans to undertake necessary track upgrades between the New Carrolton and Baltimore stations as well as perform station and platform improvements at four of the busiest stations in the Northeast Corridor.

The truth is this story received little notice or scrutiny by the media and was simply hailed as progress in the effort to improve the country's infrastructure while creating good paying jobs. Since 1970 federal subsidies to Amtrak have totaled about $45 billion, calling this a loan may be a misnomer in that repayment is very doubtful. This is pure politics in a financially troubled country, the upgrades it will finance are aimed at improving the safety of the Northeast Corridor mainline, and improve passenger experience and reliability. "There's no better way to say 'we're open for business' than closing the largest loan in DOT history," Transportation Secretary Anthony Foxx said in a statement. "America needs to go big on infrastructure, and we're not just talking the talk. The Build America Bureau has put the pieces in place to get big, transformative projects done, and this is just the first big marker."

My problem with this loan is two-fold and amplified by the reluctance of our government to call a spade a spade. One issue pointed out by the Congressional Budget Office that saw cutting subsidies to passenger rail services was one of the things we should be doing to cut America's massive deficit. Federal funding is subsidizing the operation of uneconomic services and routes (including sleeper-class service and many long-distance routes) that are not used extensively and provide little public benefit in terms of reducing congestion or emissions of greenhouse gasses. The other issue is this so called loan will allow us to continue sidestepping the real issue confronting mass transportation and that is developing a system addressing the long-term goals of our changing nation.

Footnote; Below are two other posts from my archives concerning transportation in America. Thanks for reading, as always comments are welcome.

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