Amtrak, taxpayer burden, should not be expanded in Kansas

Recently the Kansas legislature and governor decided to authorize the Kansas Secretary of Transportation to establish and implement a passenger rail service program in the state. This service would most likely be implemented through Amtrak, the federal passenger rail authority.

This service, true to the nature of Amtrak, would require subsidy from taxpayers in order to survive. Most of the arguments of rail supporters boil down to “other things get subsidy, so we want ours too.” The proper response to this is to advocate for ending all subsidy to all forms of transportation. In this way, we can fully learn which forms of transport are truly valued, and by what relative margin. Then private sector investment can be channeled to where people — not politicians, government bureaucrats, and rail enthusiasts — value it most.

Rail supporters — we should be accurate and call them taxpayer-funded rail supporters — argue that the total dollar volume of taxpayer funds redirected to support Amtrak is small. That, however, ignores the context of the passenger mile. In this context, government funding of rail travel is truly alarming.

In 2008, a Cato Institute report stated “In 2006, subsidies to Amtrak totaled just over $1 billion, or about 22 cents per passenger mile.” The subsidy to highways was about one-half cent per mile.

Subsidyscope, an initiative of the Pew Charitable Trusts, has a recent study about the taxpayer subsidy flowing into Amtrak. For the Heartland Flyer route, which runs from Fort Worth to Oklahoma, and is proposed by taxpayer-funded rail supporters to extend into Kansas through Wichita and Kansas City, we find these statistics about the finances of this operation:

Amtrak reports a profit/loss per passenger mile on this route of $-.02, meaning that each passenger, per mile traveled, resulted in a loss of two cents. Taxpayers pay for that.

But this number, as bad as it is, is totally misleading. Subsidyscope calculated a different number. This number, unlike the numbers Amrak publishes, includes depreciation, ancillary businesses and overhead costs — the types of costs that private sector businesses bear and report. When these costs are included, the Heartland Flyer route results in a loss of 13 cents per passenger mile, or a loss of $26.76 per passenger for the trip from Fort Worth to Oklahoma City.

This isn’t the type of business we should import into Kansas for economic development purposes. Hopefully Kansans will realize the tremendous burden to taxpayers that is Amtrak.


21 thoughts on “Amtrak, taxpayer burden, should not be expanded in Kansas”

  1. Wow, another rail post from politician Bob Weeks. I guess questioning the factual basis for the original post annoyed you. This new post has more more information applicable to the proposed Kansas rail expansion however.

    Amtrak is not designed to make money. Instead, it provides a public service. In fact, none of the country’s transportation systems generate profit or pay for themselves. Airlines use a combination of municipal, state, and federal funding to finance the cost of airports, and federal funds pay for airport security and the FAA. Furthermore, many pilots are trained by the military, and additional R&D is obtained through military research. If these costs were transferred to airline passengers, the price of a plane ticket would be prohibitive.

    Even private jets are subsided. For example, a 2007 report from the institute of policy studies stated that 2.2 billion of the 7 billion in federal funds spent for capital improvements over a two year period at airports went to tiny fields like Sardy Field in Aspen, Colorado, or the Napa Valley airport. Private planes also avoid the 7.5% tax on the cost of airline tickets used to fund air traffic control services. You can read the report here: http://apps.mtc.ca.gov/meeting_packet_documents/agenda_1205/News_Clippings.pdf

    Roads are also heavily subsidized. The highway trust fund is funded by gas taxes. Additional administrative and policing entities oversee its administration and function, all funded by taxes. If these costs were transferred to individual travelers, the cost per mile would be far different (and much more) than the report cited in Bob’s article. Rail is one set budget expense that’s fairly clear and obvious, instead of being achieved through a hidden, complex layer of services across many government entities.

    Trains then likely cost taxpayers far less than cars or planes. It’s just an easy target for people like Bob Weeks because it has an easy to understand spot in the budget. The other, much larger, expenditures go unmentioned, and unexamined. The true measure of a rail line’s profit is the energy and vitality that it brings to an area and the commerce that it supports. Again, I would note the report from Jayhawk Consulting that states that the proposed line would produce approximately $3.00 in overall profit for every $1 spent. After a one year break even return, the report projects a 43 million dollar possitive ROI. You can read the report here: http://www.northflyer.org/resources/KU-ROI-NFA-SUMMARY.pdf This study has been mentioned a few times. Bob Weeks chooses to ignore it.

    I guess one could dream of a world without any tax subsidies for transportation, but the system that is in place isn’t going to change anytime soon. Subsidized transportation goes back to the Romans and before, and will be around long after we are gone.

  2. Hopefully, Bob won’t delete my post because I disagree with him. I see I am being “moderated.” I thought Bob didn’t like moderates. :)

  3. I’m sure Bob has read that KU study. I’m surprised that Chuck would want it discussed, as when examined, we’ll find it’s a work of fiction just like all other similar studies.

    The newsletter I just received from Bob had this informative passage within:

    The increasing use of scientific jargon, especially in the social sciences, has permitted intellectuals to weave apologia for State rule which rival the ancient priestcraft in obscurantism. For example, a thief who presumed to justify his theft by saying that he was really helping his victims by his spending, thus giving retail trade a needed boost, would be hooted down without delay. But when this same theory is clothed in Keynesian mathematical equations and impressive references to the “multiplier effect,” it carries far more conviction with a bamboozled public. — Murray N. Rothbard

    Supporters of plans like this always have impressive studies that justify their pet plans. Redistribution of wealth by force creates winners. The losers aren’t analysed in studies like these. Termed “The Forgotten Man” by Sumner, they work in obscurity to pay the taxes so that Chuck and his ilk can have their toys.

  4. Mr. Weeks,

    I read with interest this article and the comments of other readers. I appreciate the information facts and in particular the thoughts, ideas and arguments that are shared on website forums, blogs and on-line newspaper reader comments.

    I am on record as a passenger rail proponent. It is not ever easy to compare various modes of transportation 1 to 1. The other difficult thing to do is sort out the vitriolic biases harbored by readers and interest groups.

    Amtrak has a 40 year history of being attacked in the media. It usually follows two lines of condemnation, 1) as a collosal public-government failure (which runs against the grain of conservative limited government principles) and, 2) that it is grossly inefficient.

    The unfortunate thing is that trashing Amtrak often relies on emotional statements and superficial analysis. Very rarely is there a reasoned discussion of why?

    When the ridership argument is raised (one of the top 5) no one looks or considers the available capacity (seats). You could use such an argument for why is there an average of just over 1 person per car on the freeways during rush hour? We know the answer, but that doesn’t invalidate auto travel. Why aren’t their 13 people in each car. That’s obvious also, for the same reason that an aircraft doesn’t carry 5,031 passengers on a flight. Amtrak ridership is partially limited because availability and capacity. At any moment outside of the northeast there are not very many passenger trains on the tracks. Between Chicago and LA on the Southwest Chief route there are just 4 trains. And each train has a seating capacity. The train that runs across Missouri can board a maximum of about 200 passengers at 1 time. However, over the course of its run somewhat more may actually ride the train. In Missouri there was a record annual ridership of 210,000 passengers on four trains. Divided by 365 days this calculates to a 157 daily average passenger count. That would fill 2 of the three coaches leaving the third (a cafe car) relatively empty, except passengers make constant trips to it for snacks and meals.

    If Amtrak had more trains cars and equipment, the ridership might be dramatically higher and the cost per mile conversely less. There are vast regions, including several entire states that have no Amrak service at all. Two questions: if there was service there would Amtrak’s ridership be greater (probably)? As there is no service in these states (e.g. South Dakota) is the state economy there dramatically better (probably not)?

    Also, a commentor above mentions the 8 million annual operating cost. That cost is for the entire route, shared among three states.

    Lastly (Mr. Weeks), this discussion of passenger rail attracted noticeably more comments and opinion than some of your other recent articles. This shows evidence of the interest in this issue and more articles written on the subject are sure to attract the same level of reader interest and comment.

  5. “I’m surprised that Chuck would want it discussed, as when examined, we’ll find it’s a work of fiction just like all other similar studies.” There is nothing like a little objectivity. It is good to know that a report can be criticized without any analysis, or even reading it at all.

    Thieves operate with deception, secretively. The analogy is more suitable then from those who benefit from the hidden subsidies built into the transportation system, rather than the ones that are clearly and unambiguously voted on, and part of the budget.

    The point has been made in this thread that s subsidies are embedded into our entire transportation system. There is no politically viable way, at this point, to stop that. When I bought my ticket to fly out of Wichita for a trip a month ago, I helped to subsidize a flight of a private jet out of a small regional airport. I did not have a choice. Taxation by force is inherent in the system. Interstate highways and local roads? The same. Therefore, if I and everyone else are part of this system, I have as much right as anyone else to express a preference for sensible modes of transportation that would be of benefit to my locality.

  6. @Chuck and any other idiot who is for and expansion of government in any way, what is your great interest in a rail line? The average Kansan does not want this and probably will never use it. Yet just like health care at the federal level the wizards of smart who were rich enough to run and be elected feel they know more than the average citizen and will ram their ideas down our throat regardless if we want them or not. It is us the average citizen will have to pay for their stupid ideas and they don’t care! If something is economically viable the private sector will make it happen and the government should stick to doing their jobs instead of trying to do these side jobs, costing the tax payers trillions! The government is a huge waste because they don’t do what they are supposed to do efficiently or correctly but they want to take on jobs that are not under their purview!
    This is the problem with the government at all levels!

  7. Maybe we should just abolish taxation entirely, and let the private sector decide whether anything should be done. I mean, really — what has the F-22 or even the military in general done for me lately? Every year, the government spends huge amounts of money providing for a collective defense. Even were an attack to come, the odds that it would hit me seem pretty low. End the subsidies! Give me back my money! MEMEMEMEMEMEME

    That’s how this discussion of Amtrak comes across. The private sector channels dollars in the low billions AT BEST. At those rates, nothing in transportation — not the road network, not the rail network, not the air traffic network — would function. We’d have a few toll roads in high-traffic areas and everyone else would buy tracked vehicles so they could travel across rugged terrain.

    I know that it’s lost on Bob Weeks and people like him, but the reason that we pay taxes is so that we can leverage economies of scale to provide things through volume that benefit all of us but which no one or even several of us could possibly provide on our own. End subsidies, and you end societies. Why can’t you see that? Is there some sort of degenerative disease that just interrupts your basic grasp of sociology?

    Even here in Singapore, the very definition of free markets (people here pay cash for medical care), services like the MRT (subway system) are subsidized by tax dollars. It just makes sense.

  8. Chuck, you said that “at this time” it doesn’t seem politically possible to change the way things are done. Would you be in favor of ending these subsidies if they could be? You also seem to be put off that you subsidized the private jets. Why?

    And Jamie you said the reason we pay taxes is to leverage economies of scale to provide things through volume that will benefit all of us. Do you believe the costs are cheaper when the government does it? What if not all of us want it?

  9. Hi Curious – my comments on the private jet question was in response to a quote suggesting that supporting an expansion in rail transportation in Kansas was the equivalent of stealing. My contention is that it is not, because everyone pays subsidies for the transportation infrastructure, whether they use them or not. Quite often these costs are deeply hidden and have obscure recipients. That is not a positive thing because these expenses are not subject to any scrutiny or oversight.

    With regard to the larger question of whether there is any validity to a subsidized project or not, I think there is. Transportation systems are a necessary public service that are not easily privatized.

  10. To Mark Redeker: As one of the resident idiots that read this blog, if you feel strongly about what you believe, run for office. As previously stated, transportation provides a public service. Perhaps you wish to live in a community with only a private landing strip and with no government funded roads. If so, I encourage you to move there. Quickly.

    Most people prefer to live in communities that have a good transportation infrastructure, as well as other public services, such as parks and libraries.

  11. Anonymous,

    I understand your comment better but I think the point isn’t that it is hidden, it is that many people believe it isn’t right to take from them, even in broad daylight, and spend it on someone else. Have you ever had that feeling? You may be correct that it is not easy to privatize transportation but most things worth doing are difficult. And the more difficult the task, the more satisfaction you get in accomplishing it. Have you ever had that feeling?

  12. Hi, my Grandfather was a Fireman on the Wabash RR until 1961. He lived in a small town in Illinois, where it was comfortable to walk to the train station carrying a weekend’s worth of clothing in a suitcase. Convenience is what made the railroad profitable. The RR took you farther away, more quickly than the horse. That made RR’s great… Until about 1950. I love RR history, but that’s what it is history.

    It is no longer a timesaver to 1. take your stuff to the train station, 2. get on a passenger train, 3. go to another city, 4. get off the train, and 5. walk or take public transportation to your destination. Most of us have a car or two or three. The car goes to within feet of our destination, the train stops 25 miles away. Trains run at about 70MPH, and make a few stops here and there. Automobiles run at about 70 MPH and make a few stops here and there, and EVERYWHERE there is a road.

    The money spent on improving rail service is a giant step backward in time. They’re called Suburbs, we live there, we own a house there, and we go from the suburbs to work, to the Federal Doctor, to baseball, etc, and then back again. We don’t live by the train station anymore. There aren’t enough train stations for this to work anymore. There isn’t enough track left to make this work anymore.

    Just to prove that RR are a waste of time, Obama gave the state of Illinois tens of millions of $ to build rail service from Chicago to Saint Louis. I used to live in the area, and unless you’re going from StL to Chicago, with no stops in between, you don’t have rail service in downstate Illinois. Haven’t had it since 1966, I road on the Bluebird the last year they ran it.

    Mike

  13. If a need for passenger rail service exists (IT DOES NOT) then the pure free market will provide it. Privatize Amtrak and let the chips fall where they may!

  14. Hi Curious – feelings are subjective, and they are not necessarily rational. I tend to view our society as one that values private property, but balances this with services and projects that benefit the community. In an ideal setting, this is voluntary, and entirely consentual.

    A good idea of this would be the Amish, for example. Amish communities are comrpised of individuals whonown their own property. They are engaged in enterprise, and they gain financial reward for their work. An individual’s hard work and determination results in much of the results. However, there are some tasks an individual cannot do on their own within the Amish community, such as rasing a barn. The project is too expensive to pay for by one family, and impractical (or impossible) for them to do on their own. Therefore, as a group the entire Amish community has opted to perform these functions collectively. It is not done by force. Everyone is free to join or leave this group.

    Once you exand the group to many individuals, or even an entire nation, you have a different dynamic. People are not free to join or leave at will, and there are many different views. So either there can be no community activity, or there will be – and there will have to be some mechanism in place to pay for these things that benefit the community (whether it is the nation, state or locality). With a represenative government, this should be with the consent of the majority; but to temper the potential destructive overreaching of the majority limitations on power must be in place and the rights of the minority should be preserved when possible, and be given great importance.

  15. Chuck,

    I think you are correct that once you have many differing views and opinions, it becomes a different dynamic. I think that is why it is impossible to have a nation survive for an indefinite period of time. The more homogenous the people, the easier it is, as in the case of the amish. But given that we aren’t a homogenous society and that we do have many differing views and that we were founded on the principles of freedom, don’t you think that forcibly making me raise a barn because you don’t have one is a little out of the parameters of what this country was founded on?

    I do recognize the need for governemnt. There are laws that need abiding. There are even services that need to be provided. But if you step back and look at it from a macro level, do you not see that ethically, it is a little questionable in our society to build barns with the backs of the people that won’t use it?

  16. To: Curious

    Your logic could be correct, however, neither you nor anyone else provides empirical evidence that people won’t use it (Amtrak service). There is no transportation system that everyone uses. Some do not fly, there are some that do not drive. Some will never ride the DC subway system. However, we all pay support these systems through taxes at various levels.

    It is invalid to attempt to disprove a negative with regard to passenger rail ridership. Where it exists people ride. When it expands, more people ride. When it is introduced or developed people do use it. If it expands in Kansas there will be many riders, especially because it will interconnect with two existing terminating routes.

    You can’t offer an argument that effectively proves me wrong until it is proven after service is introduced.

    I would take odds on the wager.

  17. Mark,

    Do you think that on some level the people who don’t fly feel jilted that they have to pay for the system? And those that don’t drive, do they feel like they are needlessly spending their money on roads? Or how about bailing out big companies that are “too big to fail” even if you have never needed their services? My point isn’t that the rail won’t be used, it is that building a transit rail system isn’t a common interest of the people. There will be those that benefit from it and those that don’t. It seems like we have gone down a path, as you argue, that because we pay for some services, we must pay for others. That logic could come back to bite us.

  18. To Dismal Scientist, would it follow that if the public wants safe airline service let the private sector pay for air traffic control and airport security? …and let the chips fall where they may. Horseback riding through the fields is about the only means of transportation that has no public subsidy. So what is your current mode of transportation? It is so easy to be a naysayer and it sounds so brillant!

  19. Hi Ellen, you’re in a way correct. Since the public wants safe airline service, they let the private sector be taxed on their (the airlines) profits / flights so that the government will provide the common service of flight discipline.

    Generally your use of the term public subsidy for the FAA, and the Kansas “Rules of the Road” is at odds with the rest of us. Our version of Subsidy is the act of the government taking tax money to keep a private company in business, like Airtran’s subsidy. The term subsidy for the airport security (a normal police force) and the FAA / ATC isn’t correct.

    Mike

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