White House seeks rail overhaul
Plan would end Amtrak subsidies

By Glen Johnson, Globe Staff, 6/21/2002

WASHINGTON - The Bush administration yesterday called for a fundamental overhaul of Amtrak by eliminating its federal subsidies, finding competitors for major intercity routes, and focusing the railroad's attention on train service by ending its ownership of stations and tracks.

The plan would gradually remove Amtrak as owner of 366 miles of track in the Northeast Corridor from Boston to Washington and put them under control of a public partnership that has yet to be defined. Routes elsewhere in the country might be dropped if they proved unprofitable, and states would receive more control over their local lines in exchange for assuming more of their costs.

''The country can ill afford to throw billions of federal dollars at Amtrak and just hope its problems disappear. Thirty years' experience should teach us that merely hoping for better performance is a doomed approach,'' Secretary of Transportation Norman Y. Mineta said in a speech to the US Chamber of Commerce.

''Prices and passengers - not politics - should drive service,'' said Mineta, who did not set a time frame for the proposed changes. ''Amtrak's current route network provides too many services with limited market appeal at high operating costs to the federal government.''

The critique comes at a perilous time for Amtrak. Founded in 1971 with the goal of self-sufficiency, the railroad has never operated without a government subsidy. Earlier this week, David L. Gunn, Amtrak's president, asked the Federal Railroad Administration for $200 million in loan guarantees, warning that the system would go bankrupt within weeks and eventually shut down without a cash infusion.

In Congress, where Amtrak has almost equally vocal critics and supporters, the prospect of approving such a drastic overhaul appeared uncertain. This year, Congress approved a $521 million subsidy for Amtrak and the Bush administration has proposed a similar amount for next year, although both the House and Senate are considering larger amounts. Amtrak says it needs at least another $1.2 billion from the federal government to continue operating another year.

''It's a foolish idea,'' Senator Joseph R. Biden Jr. said of the administration proposal. The Democrat regularly rides Amtrak between Washington and Wilmington, Del.

''The Brits tried [privatization] and it was a disaster,'' said Biden, who supports greater federal funding. ''Maybe the only way people will understand how important it is is if we shut it down. The administration's going to be totally, unequivocably responsible for this debacle.''

Gunn told the Senate Appropriations Committee yesterday that ''no amount of councils, commissions, study groups, panels, or symposiums will find a painless answer to what to do about Amtrak. Recent proposals to privatize or restructure are exercises in problem avoidance.''

Former Massachusetts governor Michael S. Dukakis, vice chairman of the Amtrak board of directors, labeled the administration proposal ''very disappointing'' and said the way to cure Amtrak's ills is to accept it will need subsidies - as do Europe's famed railroads - and then provide a consistent amount of operating and capital money. ''The notion that you can run a national rail system with a bunch of Balkanized regional systems is nonsense. The states have no interest in this. The freight railroads will tell you they want none of this,'' Dukakis said.

The Association of American Railroads, a trade group that represents freight railroads as well as Amtrak, said putting competing rail companies on tracks that are mostly owned by freight carriers would create logistical and safety problems. For that reason, operators would prefer to coordinate with a single entity such as Amtrak. An association spokesman also said the idea of creating competition for intercity rail routes is impractical because the only logical competitors - freight carriers - have no interest in transporting passengers.

''It's a license to lose money,'' said spokesman Tom White. ''Passenger service is both labor-intensive and capital-intensive. Often it's one or the other, but here you have to invest a lot and you also have to have a lot of people to provide the service. In a sense, you're getting the worst of both worlds.''

The administration proposal follows suggestions by the Amtrak Reform Council, which Congress formed in 1997 to monitor the railroad's finances. At that time, Congress also declared that Amtrak had to become self-sufficient by the end of 2002.

Amtrak made progress in reaching that goal, instituting high-speed Acela rail service in the Northeast Corridor and laying plans for similar lines elsewhere. At the same time, it developed a backlog of capital projects and even took the extraordinary step last year of mortgaging its access rights in New York's Penn Station to gain $300 million.

Mineta criticized efforts ''to maintain the fiction that it could be self-sufficient'' and said any additional spending should be accompanied by changes along the lines he proposed. He asked the National Governors Association to appoint a task force to work with him on developing a transition plan.

Dukakis said Amtrak was hampered in meeting its goals by the recession, the late delivery of its Acela trains, and lawmakers' failure to provide all the capital and operating funding the railroad sought. It has enjoyed a resurgence since Sept. 11.

''As Gunn said, there's nothing wrong with the model,'' Dukakis said. ''But what this system needs is a modest, but consistent, amount of capital investment, a tiny fraction of what we have been putting into roads and airports for decades.''

This story ran on page A1 of the Boston Globe on 6/21/2002.
© Copyright 2002 Globe Newspaper Company.
==========
**NOTICE: In accordance with 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.** ==========