Passenger

A commercial enterprise is defined by its activities, not by its corporate form.  Amtrak is a government owned corporation.  The preferred stock is owned by the federal government.  The common stock was issued in 1971 to the railroads that contributed capital and equipment; these shares convey almost no benefits, but their current holders declined a buy-out offer by Amtrak. 

The objective of Amtrak at its formation was to earn a profit, although it has never come close; in fact, it cannot even cover its operating expenses.  It is a government sponsored commercial activity, just like the TVA, Bonneville Power Authority, Lower Colorado River Authority, etc., which are owned by federal or state government authorities.  They sell power, often times in competition with investor owned electric utilities, at commercial rates.  They are commercial power sellers.  

The nation's commercial airlines account for approximately 30 per cent of FAA operations.  They pay fuel taxes, licensing fees, etc. to cover their share of the FAA's costs.  They also pay landing fees, gate fees, and TSA assessments.  They pay federal income taxes, state and local income taxes, inventory taxes and property taxes.  In 2008 these taxes and fees did not cover all of the FAA's costs driven by airline operations, thereby necessitating an average federal subsidy of .43 cents per passenger mile.  This compares to an average Amtrak subsidy of 22.61 cents per passenger mile.  The notion that the airlines do not pay their share of the cost of the federal airways is wrong.  The numbers can be found at FAA, USDOT, TSA, OMB, CBO, etc.  Anyone is welcome to dig them out.  I do so every year and post them to a spreadsheet.

All motorists, including truckers and bus operators, pay a variety of direct user taxes that cover most of the cost of federal and state highways.  They also pay federal income taxes, state and local income taxes where applicable, inventory taxes if they are a business, state licensing fees, and property taxes.  Whether they pay their proportional share is debatable, but as I have shown in more detail in other postings, most of them cover the tab one way or the other.  Only passenger rail requires a large subsidy that is largely paid by nonusers.

As one example, in 2008 J.B. Hunt, one of the nations most successful truckers, in addition to its fuel tax bill, had federal income tax expense of $121.6 million plus $32.2 million in other taxes and license fees. The amount of inventory and property taxes is not set out separately in the company's annual report, but they are probably embedded in the $32.2 million.  This is just one trucking company.  

Whether the government(s) should fund high speed rail, which was the presenting issue for this thread, or any form of passenger rail, has nothing to do with airlines, trucks, etc.  The question is what problem is high speed rail addressing, is it the optimum solution, and can the country afford it? 

Sam: 

Going to your last paragraph:  You've laid out a fair, defined question, and I agree that the narrow question is worth asking without the distractions of "fairness" with other modes.  

Not trying to be glib, but I think the answer to your question is rather simple:  the voters asked for it because they think they need it and they think they want it.  I don't think it goes much deeper than that.  I've been to so darn many meetings with state officials, city officials, and federal officials about HSR and passenger rail lately that I could cry, and nowhere in those meetings did I get a sense that the level of public analysis is any deeper than that.  I know that sounds lame, but my goodness, we go invade countries based on less than that, and I was present to design policy on the aftermath which likewise was based on nothing but abstractions, so it's not new to me.

Now, I think that what you want is to say, "OK, fine, the voters said, that, but can we bring a level of analysis to it that has some depth."  I wholeheartedly encourage your asking that question.  I like you am not particularly interested in whether it's "fair"  to spend $1 on rail for every $10 on highway and every $1,000,000 on F-22s.  So what.  The voters spend money on all sorts of things that make little sense to me, but that's neither an excuse for throwing good money after bad, nor a guideline to what's fair. 

For anyone that's a passenger advocate, my advice is that the more one focuses on net public value, and quantification of that value, and the less one focuses on what's fair among transportation modes or other sideshows, the more effective the argument for high-speed rail will be.

RWM

But the arguement can be made that the public did not vote on Amtrak, that is was a political maneuver by the Federal government to take the passenger service from the private railroads who did not want to provide the service any longer.  That was so private enterprise could save face by not being the bad guys who eliminated the passenger train.  There are charges that Richard Nixon operated under the assumption that Amtrak would be gone within a short period of time and the railroads(and the nation) would be without passenger services.  In other words, it was actually shoved down the public's throat with a sugar coating saying it was the answer when it was only the beginning of many questions about its survivability, its function, its funding, its total existance!

Thanks, Phoebe Vet. When I looked at the drawing, I had great difficulty visualizing the exact location; when I pulled a map of that part of Charlotte up, I saw that the drawing is rotated 90 degrees to the right. Apparently, there will be an elevated passage to the railroad platform.

Johnny

I was reading previous posts in this thread, and scrolled a bit too quickly past the sketch of Charlotte's new station... What is that "Pork" building in the bottom center?  Aren't all government projects "pork?"

What is "pork?"  What is "profitable?"  What is "subsidized?"  What is "socialism?"  Our nation's economic stability, environmental sustainability, and transportation infrastructure are all crumbling.  If we don't look seriously at what we expect from government and industry, the whole thing is going to collapse into a Marxian nightmare...

Maglev:

I was reading previous posts in this thread, and scrolled a bit too quickly past the sketch of Charlotte's new station... What is that "Pork" building in the bottom center?  Aren't all government projects "pork?"

What is "pork?"  What is "profitable?"  What is "subsidized?"  What is "socialism?"  Our nation's economic stability, environmental sustainability, and transportation infrastructure are all crumbling.  If we don't look seriously at what we expect from government and industry, the whole thing is going to collapse into a Marxian nightmare...

You did scroll too fast...ROFL

POLK building.

President James K. Polk was from Pineville, a suburb of Charlotte.  A replica of the house in which he grew up, and a small museum are located on Polk Street in Pineville.

Phoebe Vet:

President James K. Polk was from Pineville, a suburb of Charlotte.  A replica of the house in which he grew up, and a small museum are located on Polk Street in Pineville.

Johnny

Well, what will President Obama's legacy be?  Perhaps a building constructed of recycled gas-guzzling cars?

I support his hopes of revitalizing our nation, but I haven't seen any dramatic action as far as transportation is concerned.  All this talk about funding "shovel ready" projects really means that we are finally going to do what needed to be done long ago, and has been in the planning stage for a long time.

How will health care be reformed?  Another Amtrak, which lets an ancient system whither from lack of innovation and bold investment?   Eventually, our hospitals would resemble the Northeast Corridor--so much of a dinosaur that NOBODY dares to believe it could be fixed.

henry6:

But the arguement can be made that the public did not vote on Amtrak, that is was a political maneuver by the Federal government to take the passenger service from the private railroads who did not want to provide the service any longer.  That was so private enterprise could save face by not being the bad guys who eliminated the passenger train.  There are charges that Richard Nixon operated under the assumption that Amtrak would be gone within a short period of time and the railroads(and the nation) would be without passenger services.  In other words, it was actually shoved down the public's throat with a sugar coating saying it was the answer when it was only the beginning of many questions about its survivability, its function, its funding, its total existance!

An interesting paper:

 https://www.policyarchive.org/bitstream/handle/10207/1446/RL31473_20020626.pdf?sequence=1

Here and exerpt:

Amtrak would be profitable.3 In February of 1971, he elaborated on that assertion,

saying that Amtrak would break even within three years and be profitable thereafter.4

However, this expectation was based on two assumptions: (1) that Amtrak would

provide better service; and (2) that it would operate a reduced number of routes.

Volpe claimed that “fast, clean, economical and safe trains” could attract enough

riders to make a profit5; at the same time, he was drawing up a route system for

Amtrak that was a great reduction from the extent of service being provided by

railroad companies. But when he declared that Amtrak’s profitability would depend

in part on a reduced number of routes, he did not mean simply Amtrak’s original

route network; he said that, after Amtrak had been in operation for a few years, the

unprofitable routes would be cut back to the point that their losses could be covered

by the money earned on the profitable routes.

And this:

I am confused.  You wrote:  "The nation's commercial airlines account for approximately 30 per cent of FAA operations.  They pay fuel taxes, licensing fees, etc. to cover their share of the FAA's costs.  They also pay landing fees, gate fees, and TSA assessments.  They pay federal income taxes, state and local income taxes, inventory taxes and property taxes.  In 2008 these taxes and fees did not cover all of the FAA's costs driven by airline operations, thereby necessitating an average federal subsidy of .43 cents per passenger mile.  This compares to an average Amtrak subsidy of 22.61 cents per passenger mile.  The notion that the airlines do not pay their share of the cost of the federal airways is wrong." 

Well, If the airlines did actually pay for their share of the Federal airways, why the .43 cent per passenger mile subsidy?  .43 cents may be a small subsidy, but it is still a subsidy.  Also, do we know if airlines pay the full cost of the airline terminals they use.  Typically these are owned by local government entities.  Are the terminals profit makers, break even, or loss generators for the local governments.  Do local taxpayers have to subsidize them?

By the way, I assume the subsidies you listed are thus:

$0.0043 for air and $0.2261 for rail

clarkfork:

Well, If the airlines did actually pay for their share of the Federal airways, why the .43 cent per passenger mile subsidy?  .43 cents may be a small subsidy, but it is still a subsidy.  Also, do we know if airlines pay the full cost of the airline terminals they use.  Typically these are owned by local government entities.  Are the terminals profit makers, break even, or loss generators for the local governments.  Do local taxpayers have to subsidize them?

There is a baseline assumption in the passenger train advocacy community that trains are intrinsically good.  We may have come to that assumption because we are railfans or because we are personally dissatisfied with the inconveniences of other transportation modes.  Since we are advocating trains, specifically advocating government subsidies for trains, we start with our baseline assumption and work outward in marshalling reasons why others should also support trains, a requirement for public funding in a democracy.

One of our long-time NARP-sanctioned talking points is that yes, trains receive subsidy, but everything else seems to receive subsidy, and airlines and auto travel, in our view, receives much more subsidy in absolute dollar terms.

There are other people who don't particularly care for trains and especially the subsidy for trains.  These people may be Libertarians who are critical of other government interventions in the economy, they may be people who simply like cars and airplanes and believe in the inherent goodness of those conveyances much as many of us like trains, or they may be people beholden to economic interests involved in the construction of cars and planes, the building of highways, and related activities.  These "rail critics" or "Amtrak critics" do not share our views, and we are often critical of them on account of that.

Perhaps the strongest talking point of the Amtrak critics, whatever motivates them for not supporting something that we want very much, is that while the Amtrak subsidy is low in absolute dollar terms, it is very high in amount of subsidy per passenger mile.  The subsidy to sleeping car passengers is also very high -- in the hundreds of dollars -- per passenger boarding.  Of all the arguments pro and con on Amtrak, the high rate of subsidy is the elephant in the room that won't leave quietly.  This thread is titled "Envelope Please", regarding a boost in funding for Amtrak and whether this funding could be used effectively to perhaps remedy this situation.

Depending on how you do the accounting, the subsidy rate for Amtrak is between about a 10-fold and a 100-fold increase over the other modes.  There is a strong desire in the advocacy community to say, "Oh, that cannot be right, the various 'hidden subsidies' and 'social costs' of planes and autos are not being properly taken into account."  Could be, but the large subsidy rate of Amtrak remains, and it remains difficult to justify simply on the argument of fuel efficiency, especially since Amtrak is only marginally more fuel efficient than cars or planes on average, or on congestion relief, where a better use of the money may be commuter trains if not short corridors such as the Surfliners and the Hiawathas that serve as commuter trains to many people.  Then one is left with intangibles -- that strangers meeting in Amtrak lounge cars helps American society.

The advocacy community needs to come to terms with the high subsidy rate of Amtrak and especially the high direct cost subsidy to long distance trains.  We have spent the last 40 years not coming to terms with it, falling back on the NARP line on subsidies, believing somehow that air and highway travel was getting a better deal as it were.  There is a limited amount of capital money coming our way (8 billion in ARRA "stimulus" money), and were we to spend it wisely, we could do much to improve the long-term outlook for Amtrak, but were we to revert to business-as-usual, the long term picture for Amtrak looks bleak to me.

It is not just "those representatives from the Mountain West who want to spread Amtrak too thin."  One of those representatives is Senator McCain, who doesn't particularly care for the Sunset and we demonize him for that.  The people who are going to influence opinion as to where the 8 billion, and if we are lucky follow-on money, goes are us.

Paul Milenkovic:

-- that strangers meeting in Amtrak lounge cars helps American society.

Oh! I like it!

Very good summation....[

But Paul, wouldn't those numbers go down if passenger miles and or quantity of services go up?

According to the FAA in 2005, the Chicago O'Hare 20 year modernization plan is expected to total $13.3 Bil., second only to Boston's "Big Dig."   And that is just ONE airport, although the #1 or #2 in volume.  So air has a lot of funding, and they are not certainly paying for it all or they would be out of business.

I also ran into an interesting article (updated 2009)  by a Texas guy which suggests huge efficiency differences for different transport representatives.  Not sure how accurate his numbers really are, but they appear to be good stats (which of course can be very misleading).

 BTW, I concur on Paul's memo.  More of the same old Amtrak is a huge waste.  Better a to fund a few corridors (not the NEC) that can demonstrate how what real rail travel can do compared to air, bus and road.  dropping the long distance cruise trains and converting the Superliners to high-capacity corridor coaches might help as well.