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[quote user="Falcon48"] <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> Bucyrus:</div> <div></div> <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> Falcon48:</div> <div></div> <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> Bucyrus:</div> <div></div> I think it would be interesting to consider all of the off-book or externalized costs and credits that can be found.  But we need a definition of subsidy.  Making a profit or receiving a subsidy are not the only two outcomes possible.  For example, if Amtrak did not make a profit, but did cover its costs through fares and taxes provided only by the riders, it would not be receiving a subsidy.   So the question posed in the title of this thread is not an either / or question.  <div style="clear:both;"></div>   </blockquote>   Defining "making a profit" and "receiving a subsidy" is pretty simple, and can be done without all the fancy economic jargon.  Amtrak is "making a profit" if the bag of gold AMTRAK GETS from those who use its services (primarily passengers) and those who contract for its services (states, etc.) is larger than the bag of gold AMTRAK SPENDS to provide those  services.  And, in making that determination, it's important to include in second bag of gold ALL of the gold Amtrak spends to provide its services, without regard to whether the gold is for "operating" or "capital" expenses.  After all, a dollar is a dollar.  We can quibble whether all the gold spent in a particular year should, as an accounting matter,  be considered an expense for that year or "spread" over several years (that's the practical consequence of the distinction between "operating" and "capital").  But the bottom line is that, in order for Amtrak to be "profitable", the bag of gold coming in has to be larger than the bag of gold going out. If, on the other hand, the bag of gold AMTRAK SPENDS to provide its services is larger than the bag of gold AMTRAK GETS from those who use or contract for its services, Amtrak is generating losses, not profits.  I believe that is the actual state of Amtrak's finances.  Amtrak certainly does not "cover its costs" through fares or other revenues provide by riders or those who contract for its services.  The value that OTHERS GET from Amtrak service, or the costs OTHERS INCUR because of Amtrak's service are irrelevant to the question of whether AMTRAK is making a profit or incurring a loss.         Now let's turn to "subsidy".  Amtrak is "receiving a subsidy" if it's receiving bags of gold from someone (like the Feds) who does not use or contract for its services.  The amount Amtrak gets every year from the Feds to  to cover the shortfall between the amount Amtrak spends to provide its services and the amount it collects from those who use or contract for its services is a "subsidy". As I said before, this does not answer the question of whether the  Federal "subsidy" is or is not a prudent use of public funds.  It could well be that subsidizing some of Amtrak's services is cheaper for the government than paying for alternatives.  But that doesn't change the fact that the amount the Feds pay Amtrak to keep it afloat is a "subsidy".     <div style="clear:both;"></div>   </blockquote> I agree that it is easy to define profit.  But defining a subsidy is not as simple as you suggest.  First of all, the fed does not have any money to provide a subsidy.  The money must come from the taxpayers, and some of those taxpayers use the service.    If a service were not making a profit, but its cost exceeding the fare box receipts were being paid for by taxpayers, and if all of those taxpayers were using the service, there would be no subsidy.  The taxpayers would simply be paying for what they use, partially through the fare box, and partially through their taxes.    Now this perfect scenario is unlikely to occur because there will always be taxpayers who don’t use the service.  But I would say that pubic highways are much closer to this perfect scenario than Amtrak is.  Most taxpayers use the highways, whereas few of them use Amtrak.     So, something that does not make a profit is not necessarily subsidized.  It is possible to not make a profit and not be subsidized.  <div style="clear:both;"></div>   </blockquote> I've been away from my computer for nearly two weeks and just saw these responses to my earlier "bag of gold" post (which was an attempt to get away from all of the economic jargon). As I understand these responses, the argument is that, even if the money Amtrak is paid directly by those who use or contract for its services doesn't cover Amtrak's costs to provide those services, and even though the difference is paid for by the Federal government, the Federal support is not a "subsidy" because those who use the Amtrak service are the taxpayers who pay the "subsidy".  That would only be true if all or most taxpayers were also users of Amtrak service.  The vast majority of taxpayers do not use Amtrak.  Therefore, the argument is not valid. Moreover, the amount of the Federal payments made to Amtrak which are borne by individual taxpayers is not proportionate to their actual use of Amtrak.  In other words, given three taxpayers with equal income and taxes, one who never uses Amtrak, one who uses Amtrak once every 5 years, and one who uses Amtrak every week, each is paying the same amount to support Amtrak deficits. Therefore, it is not valid to treat Amtrak's Federal support as a form of "fare" for service received.  I agree, however, that "it is possible to not make a profit and not be subsidized", at least for awhile.  However, an enterprise that is chronically in this position is doomed.  It will eventually cease to exist, typically when it runs out of cash or requires additional capital investment to continue in business.  The Milwaukee Road and the Rock Island are excellent examples of what eventually happens to enterprises which do not make a profit and aren't subsidized.  It may be a long, painful death, but it is unquestionably a terminal condition.  In Amtrak's case, however, it might be a painful death , but it wouldn't be a long one. Without Federal support, it wouldn't have enough cash to operate even for the short term. The real issue is not whether Amtrak is "subsidized" - it clearly is.  The issue is the extent to which the subsidy is justified.  Pretending that there is no subsidy - even though Amtrak would quickly shut down if it had to depend solely on its farebox and contract revenue - is a pointless exercise.         <div style="clear:both;"></div> [/quote]  <o:p></o:p> It sounds like you understand the point I was making about subsidies.  However, I was not concluding, as you say I was, that Amtrak is not subsidized.  They are highly subsidized because, as you point out, many people paying for Amtrak do not use it.  <o:p></o:p> The distinction I was making was intended to illustrate the difference between the Amtrak and highway subsidies.  With public funding of highways, more payers have use for highways, as opposed to the number of Amtrak payers who have use for Amtrak.   <o:p></o:p> Look at it this way:  Say you had an Amtrak service with a million users, and only those users paid fares and paid taxes to the government to fund the rest of the cost.  With that example, there would be no subsidy, because there is no granting of money.     <o:p></o:p> The reason I mention this is because every time people defend public funding of Amtrak, they make no distinction between that subsidy and subsidies funding highways.  They simply point to the highway subsidy, and conclude that if they can get a subsidy, then Amtrak deserves a subsidy.
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