May 19, 2015

Federal Funding Received by Amtrak

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The cause of last week’s tragic crash of Amtrak train 188 in Philadelphia remains unknown. Some policymakers and pundits immediately pinned the blame on a lack of federal funding for the government-owned and -managed passenger rail operator. This week’s chart shows the annual amount of federal operating and capital funding that Amtrak has received since it was created by the Rail Passenger Service Act of 1970, including a generous allocation in 2009, as part of the American Recovery and Reinvestment Act (ARRA).

Amtrak has received almost $44 billion—almost $70 billion in inflation-adjusted 2015 dollars—from federal taxpayers since its creation. That amount is considerable, since Amtrak was intended to subsist on its own profits. However, Amtrak has lost money every year of its existence despite repeated claims from government officials through the years that profitability was on the horizon. 

A fundamental problem remains: because Amtrak is managed by the government, operational decisions are often made on the basis of political concerns rather than sound economic and financial reasoning. For example, all of Amtrak’s long-distance routes lose money and make little economic sense, but they continue to exist because a national network of rail lines engenders more political support.

Even in the northeast corridor, where the population density might be sufficient to operate a profitable rail line, government management has led to financial mismanagement. A 2014 report on Amtrak’s management challenges produced by the Amtrak inspector general’s office makes that clear:

"The company has not consistently used sound business practices in each phase of the capital planning process, including developing sound project proposals with performance measures, learning from the execution and outcome of projects, and controlling unauthorized expenditures."

Although technology apparently exists that would help prevent crashes such as the most recent tragedy, Amtrak and its bosses in Washington have repeatedly chosen to allocate money elsewhere. That includes $8 billion in the 2009 ARRA “stimulus” package for a dubious system of high-speed rail. It’s worth noting that the “stimulus” package also included an additional $1.3 billion in capital grants to Amtrak, which is reflected in the chart.  While we do not know as yet what specifically caused the crash of Amtrak 188, it is not clear that giving Amtrak more taxpayer dollars would have prevented it.