I guess henry6 had it pegged a few posts ago,
C&NW, CA&E, MILW, CGW and IC fan
KCSfan Sam1 The reason to question the subsidies paid to Amtrak is because of the amount per passenger mile. They are the highest transport subsidies by as much as 20 times those for other modes of transport. That's in my spread sheets. My first reaction was to doubt the 20 times figure but as I thought more about it, it began to pass my "smell test". Common sense suggests that there's a relationship between usage and the subsidy per passenger mile. The higher the usage, the lower the subsidy and conversely, as in the case of Amtrak, the lower the usage, the greater the subsidy per passenger mile. Since you've already done the analysis, would you consider sharing with us what your spread sheets show to be the subsidy per passenger mile for the different modes of transport? These data should put to rest many of the arguments (my own included) presented on this and the other locked thread which are based on emotion and snippets of knowledge. Sam1 Amtrak runs long distance trains that carry less than one per cent of intercity travelers, which is not the best allocation of the country's resources. Few passengers ride LD trains their entire route from from one end point terminal to the other (NEC excepted). The vast majority ride between intermediate stops or from an intermediate stop and an end point terminal. This suggest to me that perhaps we should think of LD trains as being akin to Essential Air Service (EAS). My knowledge of EAS is limited to its objective which I believe is to establish or maintain air transport to smaller cites that might otherwise be neglected by the airlines in favor of their more densely travelled and therefore more profitable routes. If the data is available it would be interesting to see a comparison of the subsidy per passenger mile paid for EAS vs that paid for LD Amtrak service. Sam1 Since its inception Amtrak has lost more than $28 billion. This information can be found in the Amtrak FY11 financials if you want to verify it. After adjustments for inflation doesn't the data show a reduction in yearly Amtrak losses that corresponds with the increases in ridership in recent years? Sam1 The key question is where does passenger rail make sense? What should it look like and how should it be funded? I totally agree!! This should be the basis for any further discussions. As always, thank you, Sam, for your insightful comments and for the work you have done to develop the information on which they are based. Any comments on the points I have brought up in this reply would likewise be appreciated. Mark
Sam1 The reason to question the subsidies paid to Amtrak is because of the amount per passenger mile. They are the highest transport subsidies by as much as 20 times those for other modes of transport. That's in my spread sheets.
The reason to question the subsidies paid to Amtrak is because of the amount per passenger mile. They are the highest transport subsidies by as much as 20 times those for other modes of transport. That's in my spread sheets.
My first reaction was to doubt the 20 times figure but as I thought more about it, it began to pass my "smell test". Common sense suggests that there's a relationship between usage and the subsidy per passenger mile. The higher the usage, the lower the subsidy and conversely, as in the case of Amtrak, the lower the usage, the greater the subsidy per passenger mile.
Since you've already done the analysis, would you consider sharing with us what your spread sheets show to be the subsidy per passenger mile for the different modes of transport? These data should put to rest many of the arguments (my own included) presented on this and the other locked thread which are based on emotion and snippets of knowledge.
Sam1 Amtrak runs long distance trains that carry less than one per cent of intercity travelers, which is not the best allocation of the country's resources.
Amtrak runs long distance trains that carry less than one per cent of intercity travelers, which is not the best allocation of the country's resources.
Few passengers ride LD trains their entire route from from one end point terminal to the other (NEC excepted). The vast majority ride between intermediate stops or from an intermediate stop and an end point terminal. This suggest to me that perhaps we should think of LD trains as being akin to Essential Air Service (EAS). My knowledge of EAS is limited to its objective which I believe is to establish or maintain air transport to smaller cites that might otherwise be neglected by the airlines in favor of their more densely travelled and therefore more profitable routes. If the data is available it would be interesting to see a comparison of the subsidy per passenger mile paid for EAS vs that paid for LD Amtrak service.
Sam1 Since its inception Amtrak has lost more than $28 billion. This information can be found in the Amtrak FY11 financials if you want to verify it.
Since its inception Amtrak has lost more than $28 billion. This information can be found in the Amtrak FY11 financials if you want to verify it.
After adjustments for inflation doesn't the data show a reduction in yearly Amtrak losses that corresponds with the increases in ridership in recent years?
Sam1 The key question is where does passenger rail make sense? What should it look like and how should it be funded?
The key question is where does passenger rail make sense? What should it look like and how should it be funded?
I totally agree!! This should be the basis for any further discussions.
As always, thank you, Sam, for your insightful comments and for the work you have done to develop the information on which they are based. Any comments on the points I have brought up in this reply would likewise be appreciated.
Mark
I am updating my data to take into consideration several items that I have not considered as federal subsidies for highways, i.e. the interest associated with the Cash for Clunkers Program and the on-going credits for alternative fueled vehicles. When I get it done (I have other priorities now), I'll share them, which I have done.
I am a bit tired of the subsidies argument: Nothing is going to unwind the country's investments in airways, highways, and waterways. Furthermore government subsidies paid to competing modes of transport are irrelevant since it is not a matter of slicing up a fixed size pie at the federal level, which is the major source of passenger railroad funding in the United States. If passenger rail is a good investment, the federal government can print the money it needs to fund it.
If Amtrak's annual loses were restated in 2011 constant dollars, they probably would show a higher loss per passenger mile, especially during the formative years. It would take a lot of work to get there, i.e. each year would have to be calculated, and I don't have the time or inclination to do it. Moreover, given the information given the public by Amtrak, I could only work with averages.
Amtrak's accumulated losses tell a simple story. Amtrak is a failed business.
The cost of the Essential Air Services Program is in the neighborhood of $175 million per year. I don't know the cost per passenger mile, but it is probably very high.
My long held view is that all transport subsidies should be eliminated over a reasonable period of time. They distort pricing and result in wasteful behaviors. I would nix the Essential Air Services Program. However, as I have stated in other posts, subsidies are not going away because of politics. The politicians are not going to give up this cookie jar. Moreover, beyond the financial implications of subsidies, there are social and economic justifications for some subsidized commercial services.
schlimm Sam1I don't understand Frailey's comment regarding depreciation schedules in Japan. What do they have to do with the United States? If the NEC were depreciated over 30 years, its operating loss would be significantly higher than it is now. I don't have the Frailey column here, but I believe he referred to amortization schedule of 30 years, i.e. a bond note schedule to pay for the infrastructure, not a depreciation schedule. sam1: "I read Frailey's column. He is a journalist. He does not appear to have access to Amtrak's property accounting records or those of the commuter railroads. He says that the commuter and freight roads will be required to pay their share for use of the NEC by 2015, in accordance with a 2008 law, without providing any details. What percentage are the paying now? And is Amtrak paying its proper share when it runs over the 94 miles of the NEC that it does not own? Again, without access to the property accounting records of the carriers, we don't know. And neither does Frailey. This is a example of relying on a secondary data source. And why it is important to take the views of journalists with a grain of salt." Why the need to knock on Frailey? Because you don't like what he said, so you challenge his veracity? He may be a journalist, but given that he has been writing about the rail industry for years, his credentials would seem to at least match yours as a utilities accountant.
Sam1I don't understand Frailey's comment regarding depreciation schedules in Japan. What do they have to do with the United States? If the NEC were depreciated over 30 years, its operating loss would be significantly higher than it is now.
I don't have the Frailey column here, but I believe he referred to amortization schedule of 30 years, i.e. a bond note schedule to pay for the infrastructure, not a depreciation schedule.
sam1: "I read Frailey's column. He is a journalist. He does not appear to have access to Amtrak's property accounting records or those of the commuter railroads. He says that the commuter and freight roads will be required to pay their share for use of the NEC by 2015, in accordance with a 2008 law, without providing any details. What percentage are the paying now? And is Amtrak paying its proper share when it runs over the 94 miles of the NEC that it does not own? Again, without access to the property accounting records of the carriers, we don't know. And neither does Frailey. This is a example of relying on a secondary data source. And why it is important to take the views of journalists with a grain of salt."
Why the need to knock on Frailey? Because you don't like what he said, so you challenge his veracity? He may be a journalist, but given that he has been writing about the rail industry for years, his credentials would seem to at least match yours as a utilities accountant.
In a column entitled Passengers for a Profit: Can it be Done, which is the context, Fraily said amongst other things that the Europeans and Japanese governments amortize the capital contribution [for their rail projects] over 30 years. Presumably the capital contribution was used or is used for infrastructure.
Amtrak's capital contribution is embedded in its Property, Plant, and Equipment. Most of it is in right-of-ways and other properties. When a company buys or builds PP&E, unless it is cash rich, which is certainly not the case for Amtrak, it has to fund the acquisition. It usually does so with long term debt. In Amtrak's case, however, most of it capital funds are from government grants. The initial accounting transaction is a debit to cash and credit to long term debt. However, in the case of a grant, it would be a debit to cash and a credit to accounts payable, followed by a credit to cash and a debit to PP&E. Debits increase asset accounts whilst credits decrease them and vice versa for liability accounts.
Debt is a Balance Sheet Account. It does not flow through the Income Statement and, therefore, has no impact on net income (profits) or net loss. It is the depreciation associated with the capitalized value of the asset that flows through the income statement. Depending on the debenture governing the debt, the issuer may be required to set-up a sinking fund to pay the debt when it matures, but this is not an income statement account.
The interest associated with the debt flows through the income statement annually. Over what period of time this occurs depends on the debt maturity schedules. In the case of most capital intensive businesses, like a railroad, the debt is rolled over numerous times, so getting a fix on the maturity date of the debt for a particular project would be challenging. The debt interest (rate, amount, period) impacts the income statement.
The United States government, which is the principal supplier of funds to Amtrak, as well as the other U.S. transport operations that require a transfer from the general fund, issues debt over a variety of maturities. The most common issue of U.S. Treasury debt is the 10 year Note, but it also issues 30 year long bonds, and there is some talk, I believe, of issuing 40 year bonds. Short term debt usually costs more than long term debt, but the total interest charges for a 30 year bond vs. a 10 year Note are substantially higher.
Frailey is not a CPA. He does not appear to have a solid grasp of finance, as demonstrated by the statement regarding the amortization of capital. The fact that he is a long time rail journalist has nothing to do with his understanding of accounting and finance.
My message regarding passenger rail is straight forward. Tell it like it is. I am not knocking Frailey; I am questioning his facts. He overlooked three key points in his reference to European and Japanese amortization of capital.
Amtrak could show a profit if it could spin off the cost of its infrastructure. Based on my readings of several years ago, this appears to be what the Japanese and French companies did. If Amtrak and the feds pulled it off deftly, they could show a gain on the disposal of the assets and tell the taxpayers that they realized a profit. Accountants know how this works; those without a background in accounting and finance as a rule don't.
To think that an accountant only knows how to read the financial statements of one industry demonstrates a lack of knowledge of the accounting profession, accounting, and business. Depreciation is common across all businesses in the United States. It is scheduled in accordance with accounting standards that apply to everyone.
Paul Milenkovic Just think, a thread got locked that I didn't even comment on . Invariably the subject of subsidies comes up, someone advocating a cold-turkey approach to weaning Amtrak from subsidy, perhaps more of a free-market or privatized and contracted government service approach, and that view is slammed because of the many important functions performed by the government or as the result of government funding and why-are-you-picking-on Amtrak. Sometimes, this is expressed by saying that the Federal government wastes much more money in some area than it spends on Amtrak. I invariably weight in with I consider "The Subsidy (rate) Problem." It is not that Amtrak is subsidized, but that it is subsidized at a high rate in relation to the other modes of transportation. Or some portions of Amtrak have that condition, but it is hard to know from Amtrak's accounting practices some say. And when I contribute that point of view, including some figures, as of late I have been branded as "Anti-train" and that I need to wear the shameful Scarlet Letter ("A" for anti). Or more commonly, I am accused of being a "bean counter", knowing the "cost of everything and the value of nothing." In other words, the answer to the High Rate of Subsidy Problem is that passenger trains have a deep, intrinsic, but unquantifiable value that discussions of costs and subsidy rates are not taking into account. OK. But I still hold the view that the cause of Amtrak, of expanding Amtrak by giving it more subsidy money, could be advanced if the advocacy community would concentrate more on "bang for the buck", that is how could that subsidy dollar serve the most people and start a snowball effect of more people liking trains and wanting money for trains. This is in contrast with a 'fairness" approach, of "I live in rural Illinois far from O'Hare airport and Amtrak will take me to Denver for $75 and it is unfair if I lose that."
Just think, a thread got locked that I didn't even comment on .
Invariably the subject of subsidies comes up, someone advocating a cold-turkey approach to weaning Amtrak from subsidy, perhaps more of a free-market or privatized and contracted government service approach, and that view is slammed because of the many important functions performed by the government or as the result of government funding and why-are-you-picking-on Amtrak. Sometimes, this is expressed by saying that the Federal government wastes much more money in some area than it spends on Amtrak.
I invariably weight in with I consider "The Subsidy (rate) Problem." It is not that Amtrak is subsidized, but that it is subsidized at a high rate in relation to the other modes of transportation. Or some portions of Amtrak have that condition, but it is hard to know from Amtrak's accounting practices some say.
And when I contribute that point of view, including some figures, as of late I have been branded as "Anti-train" and that I need to wear the shameful Scarlet Letter ("A" for anti). Or more commonly, I am accused of being a "bean counter", knowing the "cost of everything and the value of nothing."
In other words, the answer to the High Rate of Subsidy Problem is that passenger trains have a deep, intrinsic, but unquantifiable value that discussions of costs and subsidy rates are not taking into account. OK.
But I still hold the view that the cause of Amtrak, of expanding Amtrak by giving it more subsidy money, could be advanced if the advocacy community would concentrate more on "bang for the buck", that is how could that subsidy dollar serve the most people and start a snowball effect of more people liking trains and wanting money for trains. This is in contrast with a 'fairness" approach, of "I live in rural Illinois far from O'Hare airport and Amtrak will take me to Denver for $75 and it is unfair if I lose that."
Amtrak's high cost mostly come because political reasons and years worth of complex regulations and general anti-rail policy that only at this point apply to passenger rail. In reality the cost of running a passenger train isn't that expensive compared to everything else and people will pay for it if the service is good as shown by system such as the Shinkansen which receives no subsidy.
Railroad to Freedom
This is in response to comments in several posts.
When a billing is allocated on the basis of an underlying accounting process, to bill properly means that the allocation of costs to be billed comply standard cost accounting principles. In the case of a public company or government agency,the allocation model is audited by the external auditors or the GAO. Amongst other things the allocations must be reasonable, supported properly, and consistent from year to year.
Power plants in the United States are depreciated over the estimated life of the plant. The plant's life is based on Iowa engineering curves, which if I remember correctly every power generator in the U.S. has agreed to use. This is important for jointly owned power plants, i.e. the South Texas Nuclear Steam Electric Station is owned by three utilities, each of which is billed proportionally for its stake in the plant.
Amtrak uses straight-line depreciation. It classifies its assets by group and amortizes the group as a whole. If it has a gain on the disposal of an asset, it does not recognize it, which is a conservate approach, although it is unlikely that it would have a gain on the disposal of its assets. Locomotives, cars, and other rolling stock are depreciated on schedules ranging up to 42 years. Right-of-way and other properties (excluding land) are depreciated using useful lives up to 105 years. Other equipment (office equipment, computers, etc.) is depreciated using useful lives up to 20 years. The cost of internally developed software is capitalized and amortized over 5 to 10 years.
I don't understand Frailey's comment regarding depreciation schedules in Japan. What do they have to do with the United States? If the NEC were depreciated over 30 years, its operating loss would be significantly higher than it is now.
Businesses in the United States follow GAAP. Government agencies follow GAAS. Amtrak is a business. It follows GAAP. The Europeans and the Japanese follow the accounting rules promulgated by the International Accounting Standards Board. As a result, a one for one comparison between U.S. entities and most overseas entities is difficult.
KCSfan: "On Sept.30 I posted a message on this thread that was intended as a positive, constructive response to some of the Sam1's comments. Apparently my ideas were not worhty of consideration since no one responded to my message. In spite of the impression I get from reading many of the subsequent replies that there's a far greater interest in interpersonal attacks and counter attacks, I'm going to reiterate one of the points I raised in my earlier message."
OK. Breaking some/all of LD out of the rest of the Amtrak, studying to see what portions are essential, i.e., serving places otherwise not served, might be useful. Comparing the cost per passenger out of and into a given town (the miles are irrelevant) with that of the EAS average and with bus service could be a benchmark for determining what, if any service modality to offer. In other words, to get someone out from Billings, MT to a connection hub, how much does EAS cost vs the train vs a bus?
Paul Milenkovic Do you remember how much electricity a Metroliner train used between any specific city pair?
Do you remember how much electricity a Metroliner train used between any specific city pair?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
Sam1 Without access to Amtrak's accounting records, as well as those of the foreign carriers that it operates over, it is impossible to know whether Amtrak is recovering the proportional cost of its capital improvements in the NEC or its other investments. By the same token it is impossible to know whether the commuter railroads are billing Amtrak properly for their capital investments. Determining the proper billing for government agencies with multiple streams of government payments to support their operations is a daunting task. Frank, I am not sure that it can be done. Over the years Amtrak's IG has conducted audits of the payments made by Amtrak to hoist railroad. They have found numerous problems. I read Frailey's column. He is a journalist. He does not appear to have access to Amtrak's property accounting records or those of the commuter railroads. He says that the commuter and freight roads will be required to pay their share for use of the NEC by 2015, in accordance with a 2008 law, without providing any details. What percentage are the paying now? And is Amtrak paying its proper share when it runs over the 94 miles of the NEC that it does not own? Again, without access to the property accounting records of the carriers, we don't know. And neither does Frailey. This is a example of relying on a secondary data source. And why it is important to take the views of journalists with a grain of salt.
"Proper share" is in the eye of the behold, kind of like the word "fair".
Once upon a time, Penn Central owned the NEC. They paid the entire electric bill. They didn't much care how much power a Metroliner used compared to and E44 on a freight train. They still got the whole bill. Then came Conrail with Amtrak owning the NEC and providing traction power on all the old PRR lines. The bill had to be split.
The next thing that happened was both parties didn't like the split! So, we put some power meters on some locomotives and started sampling consumption, trying to back into formula that would be "fair". We might have come up with a "better" solution, but I'm sure the wrangling would have continued.
It became a moot point as Conrail stored, then scrapped all their electric locomotives.
The cool part, was I got to ride a bunch of trains on the NEC to get meter readings. One of the meters just happened to be in a Metroliner parlor car! Tough duty!
On Sept.30 I posted a message on this thread that was intended as a positive, constructive response to some of the Sam1's comments. Apparently my ideas were not worhty of consideration since no one responded to my message. In spite of the impression I get from reading many of the subsequent replies that there's a far greater interest in interpersonal attacks and counter attacks, I'm going to reiterate one of the points I raised in my earlier message.
KCSfan Sam1 Amtrak runs long distance trains that carry less than one per cent of intercity travelers, which is not the best allocation of the country's resources. Few passengers ride LD trains their entire route from from one end point terminal to the other (NEC excepted). The vast majority ride between intermediate stops or from an intermediate stop and an end point terminal. This suggest to me that perhaps we should think of LD trains as being akin to Essential Air Service (EAS). My knowledge of EAS is limited to its objective which I believe is to establish or maintain air transport to smaller cites that might otherwise be neglected by the airlines in favor of their more densely travelled and therefore more profitable routes. If the data is available it would be interesting to see a comparison of the subsidy per passenger mile paid for EAS vs that paid for LD Amtrak service.
Any comments would be appreciated. For the benefit of those not familiar with it, a brief overview of the EAS Program follows.
In Frailey's column, he just mentions that unlike the US (apparently) the infrastructure for HSR's in Japan and Europe is amortized over 30 years.
oltmannd schlimm Sam1The commuter agencies bill Amtrak for its use of the portions of the NEC owned by the commuter rail agencies. By the same token Amtrak bills the foreign carriers that operate on its segments of the NEC. If Amtrak funded the capital improvements on the NEC owned by the commuter rail agencies, the agency would have to adjust its billing back to Amtrak to reflect this fact. Otherwise it would be double billing Amtrak. See current (November) Frailey column. According to him, Amtrak is not currently collecting from the commuter and freight line their share of capital improvements on track they use. Like the frt roads aren't collecting their share from Amtrak outside the NEC, I suppose. I also wonder of the $600M/yr capital the NEC consumes, how much is for "catching up" with work deferred over the years.
schlimm Sam1The commuter agencies bill Amtrak for its use of the portions of the NEC owned by the commuter rail agencies. By the same token Amtrak bills the foreign carriers that operate on its segments of the NEC. If Amtrak funded the capital improvements on the NEC owned by the commuter rail agencies, the agency would have to adjust its billing back to Amtrak to reflect this fact. Otherwise it would be double billing Amtrak. See current (November) Frailey column. According to him, Amtrak is not currently collecting from the commuter and freight line their share of capital improvements on track they use.
Sam1The commuter agencies bill Amtrak for its use of the portions of the NEC owned by the commuter rail agencies. By the same token Amtrak bills the foreign carriers that operate on its segments of the NEC. If Amtrak funded the capital improvements on the NEC owned by the commuter rail agencies, the agency would have to adjust its billing back to Amtrak to reflect this fact. Otherwise it would be double billing Amtrak.
See current (November) Frailey column. According to him, Amtrak is not currently collecting from the commuter and freight line their share of capital improvements on track they use.
The financial records for Amtrak, Southwest Airlines, DOT, etc. are primary source documents or roll up from primary source documents.
The accounting databases are constructed in accordance with rigid accounting rules, i.e. General Accepted Accounting Principles (GAAP) or Government Accepted Accounting Standards (GAAS). Equally important, they are audited by independent auditors. If those responsible for the data attempt to put a spin on it, or the records are not maintained properly, management will be called to task over it, and the results will be reported to the board of directors or the U.S. Congress. They are not partisan databases.
If the New York Times or the Cato Institute publishes select information from the data bases, it is a secondary source. If I cite or calculate statistics from one of the primary source databases, it too is a secondary source. If I want to verify the information in a New York Times article or from the Cato Institute to determine how much spin has been put on it, I can if I know where the data source. The same applies to the statistics that I cite.
A person who downloads data from the primary databases, slices and dices the numbers, and calculates what he or she believes are relevant statistics is not avoiding tedium. The tedium referred to having other people go through numerous links to get to the data. Most of them are not interested. And most of them probably would not understand the data even if they got there inasmuch as they are not accountants and financial analysts.
Again, the primary source for the Amtrak calculations is Amtrak's financial and operational records available to the public. If a person does not know how to get there, i.e. via Amtrak's website, my providing them with links is not going to help them.
Ultimately, people have to have some faith in the credibility of others once it can be determined. Although I have been chided for listing my experience and educational qualifications, it is important for people to have a rough idea of what skills I bring to the table. Of course, I could be lying, but the motivation for doing so in forum like this is not strong. By the same token, I appreciate know that several of our contributors are mechanical and civil engineers. That coupled with the fact that what they say appears to make sense is comforting. I rely on contributors like Oltmmand for an engineer's insights.
First of all, Sam, my post was a comment on another poster's statement and was not directed to you so your defensive response seems a little overblown.
However, you do agree with me that you do not provide links. Of course, this is your decision and I respect your decision. However, I do think links are preferable to the somewhat vague response "primary sources." After all, one person's primary source may be another person's partisan data base. Beyond that, you also point out you do not provide the primary source data either; rather you perform calculations on it and present those calculations to us.
I do agree with you that accuracy is tedious. You say you prefer to avoid tedium and you do have every right to do that. I simply want to know how to understand your figures. You have explained them and now I do know how to understand them. I thank you for that.
V.Payne Would you care to break out how much of the capital expenditure is really for commuter operations on the NEC? The problem in going from the financial statements is Amtrak keeps wildly swinging the unit output to which the capital cost is assigned. My sense is the number crunchers keep trying to make the numbers fit the Volpe hypothesis without going back to check the hypothesis from the source documents. There was a time around 1973 or 1974 where the USDOT recognized that some level of subsidy was equivalent to what was going on in the rest of the federally funded system. Back then the figure allowed was $0.02/PM, $0.09/PM in $2010, or about $0.125 per equivalent automobile VM at a 1.4 person average occupancy. This still holds true from the calculations in my paper on the other post. Here is a fun little article on the National Limited from that era, where the $0.02/PM is cited, apparently the train made a solely allocated profit in the summer. http://bulk.resource.org/gao.gov/91-518/00005252.pdf
Would you care to break out how much of the capital expenditure is really for commuter operations on the NEC? The problem in going from the financial statements is Amtrak keeps wildly swinging the unit output to which the capital cost is assigned.
My sense is the number crunchers keep trying to make the numbers fit the Volpe hypothesis without going back to check the hypothesis from the source documents.
There was a time around 1973 or 1974 where the USDOT recognized that some level of subsidy was equivalent to what was going on in the rest of the federally funded system. Back then the figure allowed was $0.02/PM, $0.09/PM in $2010, or about $0.125 per equivalent automobile VM at a 1.4 person average occupancy. This still holds true from the calculations in my paper on the other post. Here is a fun little article on the National Limited from that era, where the $0.02/PM is cited, apparently the train made a solely allocated profit in the summer.
http://bulk.resource.org/gao.gov/91-518/00005252.pdf
As of the end of FY11 Amtrak showed under Property and Equipment on its Consolidated Balance sheet $9,971,446 for right-of-way and other properties before depreciation. This would include its investments in the NEC as well as its other rights-of-way, maintenance facilities, etc., to the extent that they were not leases, although it would depend on the nature of the lease. In a nutshell, without access to the company's property accounting records, it is not possible to know how much of this investment is attributable to the NEC, and it is clearly not possible to know how much of it is attributable to the NEC commuter operations.
Amtrak owns 363 of the 456 or 457 route miles between Boston and Washington. The other 94 miles are owned by commuter rail agencies. The federal government put up the money to upgrade Amtrak's portion of the NEC, I presume, and the cost of the investment is included somewhere in the number for right-of-way and other properties. How the capital cost for the upgrade of the portion of the NEC owned by the commuter rail agencies was accounted for is unknown. It is probably carried on the books of the commuter rail agency, but without access to those books, it is impossible to know for sure.
The commuter agencies bill Amtrak for its use of the portions of the NEC owned by the commuter rail agencies. By the same token Amtrak bills the foreign carriers that operate on its segments of the NEC. If Amtrak funded the capital improvements on the NEC owned by the commuter rail agencies, the agency would have to adjust its billing back to Amtrak to reflect this fact. Otherwise it would be double billing Amtrak.
You probably could get Amtrak's property accounting records under the Freedom of Information Act. The Amtrak Inspector General's website has a procedure for filing an FOIA request. To be successful you would have to tell Amtrak exactly what records you wanted. It would cost you $38 an hour to get them. To get the information you want would entail a considerable amount of work. You would probably be looking at thousands of dollars of fees to get the information.
The opening post claimed that freight railroads not paying pay fuel taxes is not a subsidy and further posited that this tax advantage is more than offset by the property taxes paid by said railroads.
If a person prefers competitive markets for commercial activities they are a better way to allocate scarce resources, he is making a political statement. If a person argues that a taxpayer subsidized government run enterprise agency is a better way to allocate scarce resources, he is not making a political statement. Is that about the size of it?
blownout cylinder Sam1 blownout cylinder Sam1 blue streak 1 Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC. You don't have a clue about my politics. Now, just what factual evidence to do you have to refute which point? Can someone attempt to argue to the point instead of throwing what appears to be conspiracies around? She has facts and figures here and still some seem hung up on her 'politics'...whatever that might be. How can you claim that I am hung up on my politics when you don't know what they are by your own admission. Hardly a logical observation. Quote wars...gotta love 'em. It was not you that I was having issues with..it was Blue Streak's commentary about ALEC....
Sam1 blownout cylinder Sam1 blue streak 1 Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC. You don't have a clue about my politics. Now, just what factual evidence to do you have to refute which point? Can someone attempt to argue to the point instead of throwing what appears to be conspiracies around? She has facts and figures here and still some seem hung up on her 'politics'...whatever that might be. How can you claim that I am hung up on my politics when you don't know what they are by your own admission. Hardly a logical observation.
blownout cylinder Sam1 blue streak 1 Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC. You don't have a clue about my politics. Now, just what factual evidence to do you have to refute which point? Can someone attempt to argue to the point instead of throwing what appears to be conspiracies around? She has facts and figures here and still some seem hung up on her 'politics'...whatever that might be.
Sam1 blue streak 1 Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC. You don't have a clue about my politics. Now, just what factual evidence to do you have to refute which point?
blue streak 1 Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC.
Henry; affter reading much of sam's posts it seems that the gist comes from the play book of the lobbiying outfit of ALEC.
You don't have a clue about my politics. Now, just what factual evidence to do you have to refute which point?
Can someone attempt to argue to the point instead of throwing what appears to be conspiracies around?
She has facts and figures here and still some seem hung up on her 'politics'...whatever that might be.
Quote wars...gotta love 'em.
It was not you that I was having issues with..it was Blue Streak's commentary about ALEC....
Your correct about the quote wars. I read you wrong. My apologies.
John WR blownout cylinderShe has facts and figures here and still some seem hung up on her 'politics'...whatever that might be. Except somehow we are never allowed to know the "facts and figures" except for some tossed out numbers. However, there is never a link to a source. I try to give links for my sources and when I do I am rebuked precisely because a do give the link. The whole "politics" argument seems to me to be a red herring. None of us are politicians; we are people having a conversation. Nothing we say will bear on any policy decision. But the argument does get us away from wondering about the numbers we somehow must accept on faith.
blownout cylinderShe has facts and figures here and still some seem hung up on her 'politics'...whatever that might be.
Except somehow we are never allowed to know the "facts and figures" except for some tossed out numbers. However, there is never a link to a source. I try to give links for my sources and when I do I am rebuked precisely because a do give the link.
The whole "politics" argument seems to me to be a red herring. None of us are politicians; we are people having a conversation. Nothing we say will bear on any policy decision. But the argument does get us away from wondering about the numbers we somehow must accept on faith.
Which numbers are tossed out? When did I cite a financial number or statistic and not tell the reader where it could be found?
Your correct. I don't provide links. I use primary databases, as opposed to partisan databases or blogs. I tell the reader where to find the information, i.e. Amtrak, IRS, etc. Most of the numbers are calculated from several primary numbers. To link them would be tedious and would serve little purpose, especially given the fact that many of the readers of these forums are not accountants, financial analysts or economists.
Here is an example from the FY11 federal subsidies for Amtrak. Unlike those attributed to the airlines, highways, etc., Amtrak's subsidies are paid directly to the carrier in the form of operating and capital cash payments.
In FY11 Amtrak had a net loss from operations of $1,352,004,000. The loss was covered by the operating cash transfer from the federal government, i.e. taxpayers, and the depreciation or amortization of prior year capitalize projects. These numbers can be found in the Amtrak's FY11 Financial Statements, which I have cited consistently. If I just linked them, a reader would not be able to see the calculations required to determine the subsidy per passenger and passenger mile because they are not at one location.
In FY11 Amtrak carried 30,186,733 passengers. It's operations resulted in 6,532,250,000 passenger miles, i.e. one passenger carried one mile, and 12,530,314,000 seat miles, for an average load factor of 52.1 per cent. This is a calculated number based are the two inputs, which are found at different locations in the financials and monthly operating reports. Based on the aforementioned numbers, the average subsidy per passenger in FY11 was $44.46 and the average subsidy per passenger mile was 20.54 cents.
Amtrak's loss is ultimately covered by cash payments from the taxpayers. But in any one year the operating cash payments and the capital cash payments from the federal government will not add up the the numbers shown in the financial reports. This is because of the time lag associated with the depreciation and amortization of prior period capital payments.
Amtrak toutes the fact that its annual operating subsidy is around $500 million per year, which has been correct for the past few years. It acknowledges deeper in its press releases that it receives substantial funds from the federal government, i.e. the taxpayers, for capital projects. But the current year transfers don't add up to the current year losses as per above.
Accounting wise most of the operating funds flow through the accounting statements in the year that they are received, but the capital funds flow through in the form of depreciation and amortization in subsequent years. The FY11 depreciation and interest amortization numbers are a compilation of thousands of capital projects that were constructed and/or acquired in previous years and are being depreciated or amortized over periods ranging up to and sometimes beyond 40 years.
If you understanding accounting and finance, you could dig this information our of the numbers that Amtrak makes available to the public. But I don't believe that many of the people who visit these forums are accountants or financial analysts and, therefore, would know what they are looking at if I linked them to the financial statements.
If you think these are tossed out numbers, it is incumbent on you to show our readers where and how they are wrong.
Any argument carried far enough will end up in Semantics--Hartz's law of rhetoric Emerald. Leemer and Southern The route of the Sceptre Express Barry
I just started my blog site...more stuff to come...
http://modeltrainswithmusic.blogspot.ca/
greyhounds Sam1 Moreover, as I noted in another post, one can argue that barge lines receive a subsidy in that the marine diesel taxes that they pay do not provide sufficient funds to cover the cost of maintaining the inland waterways locks. This would be a valid argument if one assumes that the dams that blocked navigation of the inland waterways were constructed purely for the benefit of the barge operators. That would be a difficult argument to support. No, it's a very easy argument to support. All you have to do is quote the US Army Corps of Engineers. They operate the locks and dams and keep the river dredged. The locks and dams are purely for the benefit of the barge operators. They are not for flood control. "Dams are built on rivers to hold back water and form deeper navigation "pools." Most pools in the United States are maintained at a constant minimum water depth of 9 feet for safe navigation. Dams allow river vessels to use a series of locks to "step" up or down the river from one water level to another. The Corps operates the locks and dams on the Mississippi River for navigation, not flood control. The locks and dams create slack-water pools for navigation during periods of low- and moderate-level water. For each pool, there is a primary control point, where a predetermined water elevation must be kept for navigation to continue." http://www.mvp.usace.army.mil/navigation/default.asp?pageid=145 I think you would have a very hard time finding an economist, at least one who didn't work for the American Waterways Council, who believes it's a good economic policy to subsidize the barges like the government does. Now, back to Amtrak.
Sam1 Moreover, as I noted in another post, one can argue that barge lines receive a subsidy in that the marine diesel taxes that they pay do not provide sufficient funds to cover the cost of maintaining the inland waterways locks. This would be a valid argument if one assumes that the dams that blocked navigation of the inland waterways were constructed purely for the benefit of the barge operators. That would be a difficult argument to support.
Moreover, as I noted in another post, one can argue that barge lines receive a subsidy in that the marine diesel taxes that they pay do not provide sufficient funds to cover the cost of maintaining the inland waterways locks. This would be a valid argument if one assumes that the dams that blocked navigation of the inland waterways were constructed purely for the benefit of the barge operators. That would be a difficult argument to support.
No, it's a very easy argument to support. All you have to do is quote the US Army Corps of Engineers. They operate the locks and dams and keep the river dredged. The locks and dams are purely for the benefit of the barge operators. They are not for flood control.
"Dams are built on rivers to hold back water and form deeper navigation "pools." Most pools in the United States are maintained at a constant minimum water depth of 9 feet for safe navigation. Dams allow river vessels to use a series of locks to "step" up or down the river from one water level to another. The Corps operates the locks and dams on the Mississippi River for navigation, not flood control. The locks and dams create slack-water pools for navigation during periods of low- and moderate-level water. For each pool, there is a primary control point, where a predetermined water elevation must be kept for navigation to continue."
http://www.mvp.usace.army.mil/navigation/default.asp?pageid=145
I think you would have a very hard time finding an economist, at least one who didn't work for the American Waterways Council, who believes it's a good economic policy to subsidize the barges like the government does.
Now, back to Amtrak.
Agreed, the locks are for navigation. Now, why were the dams in most instances built? In the case the TVA they were built for flood control. A secondary purpose was for power generation in an an area of the country that was devoid of adequate power generation. No dams; no need for locks!
To be sure, the dams improved navigation in many instances, but the rivers were navigable before the dams. During the American Civil War, Union gun boats, which were relatively large and heavy, moved up the Tennessee and Cumberland Rivers to attack Confederate defenses. In the case the Tennessee they were able to go all the way to Knoxville and beyond. An idea of the size and weighty of these boats can be seen in the remnants of the USS Cairo at the Vicksburg National Military Park.
As I noted in my precious post, the barge operators don't pay the full cost of maintaining the locks. Whether they should is arguable. If it can be shown that they are the sole beneficiaries of the dams and lock systems, they should. That point, however, is contentious. To date the operators have prevailed against the argument that they should tote the whole note.
It should be noted that the operators pay 48 per cent of the cost of maintaining the locks, as per the end of FY11. It should also be noted that the operators are successful commercial operations. Accordingly, they pay federal, state, and local income taxes, as well as inventory taxes, property, and excise taxes. The federal income taxes flow into the U.S. Treasury. In turn a portion of the funds flow back to the Inland Waterways Trust Fund. Accordingly, the operators contribute more than 48 per cent of the cost of maintaining the locks, etc. How much more would be very difficult to determine.
blownout cylinder Can someone attempt to argue to the point instead of throwing what appears to be conspiracies around?
OK. As I said earlier, henry6 undoubtedly committed the 'cardinal sin' of referring to "all corporations" being subsidized. Nevertheless, through indirect subsidies and externalized costs (eg., environmental) that are not part of the cost of business but passed on eventually to the government and us taxpayers, he may be not so far off the mark. These hidden costs of doing business do not show up as line items in the various governmental budgets and thus not in the Cato reports. They may show up, in the case of some environmental issues, only after a considerable time delay. Some of the most egregious cases of hazard spills got picked up by the Superfund or by the consumer. But ongoing and increasing carbon emissions, for example, will cause all to suffer expensive consequences, including non-users. I realize there are some who choose to ignore this issue or contend it is made up, but that is at variance with the overwhelming evidence of actual research.
However, even the annual government subsidies identified in the 2002 Cato report of about $93 bil. are hardly chump change. Comparing that number with the entire US economy is an inappropriate comparison, given the object of all of this was an examination of the government subsidy for Amtrak, which runs about $1.5 bil. annually. So amid the forest of subsidies, many of which are essential, the one earmarked for Amtrak seems relatively small. I also realize that some folks object to any subsidies, i.e. services that are not covered by user fees. That, however, is by definition an ideological/political question, outside the parameters of this forum.
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