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Amtrak Trains Run on Red Ink

Written by Gary North on April 6, 2012

Amtrak has absorbed $40 billion in federal subsidies  over the last 40 years. It has never earned a profit.

How many people ride the trains? They account for one-tenth of one percent.

This is a boondoggle. It has been since day one.

Then there is fraud.

In a report released last year, the Office of the Inspector General documents the fraudulent sales schemes in the food and beverage service on Amtrak trains by Amtrak employees, costing the government-assisted corporation, and taxpayers, up to $7 million. . . .

In October 2011, U.S. prosecutors charged “11 people in connection with an alleged $1 billion fraud involving hundreds of railroad workers filing false disability claims,” reported Reuters.

Former Long Island railroad workers would file disability claims just before retirement, allowing them to collect both disability and pensions.

Employees  allegedly claimed between $800 and $1200 in medical expenses to hire one of several disability doctors in on the scheme. These doctors would then conduct unnecessary tests and diagnose unnecessary ailments that would allow the workers to go on disability.

The Manhattan U.S. Attorney’s office estimates that the Long Island Railroad Board paid roughly $1 billion in these fraudulent claims.

Will this stop? No. But overall it pales in comparison to the subsidies.

“During the 2000s, Amtrak averaged annual losses in excess of $1 billion. In 2010, Amtrak received $563 million in operating subsidies and $1 billion in capital and debt service grants. The American Recovery and Reinvestment Act of 2009 pumped an additional $1.3 billion in capital grants into Amtrak.”

It never changes. Calls for reform change nothing. Congress refuses to implement reforms.

This is modern politics. The average Joe is supposed to subsidize the train rides of the richest Americans: people in the Northeast like Boston, New York City, and Washington. D.C.

Will it ever change? Only when Washington’s checks bounce.

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21 thoughts on “Amtrak Trains Run on Red Ink

  1. sean murry says:

    These is a lot of fraud the goverment today.

  2. billstanley1 says:

    (5 Dec. 2010) Amtrak passengers paid an average of $59.23 per ticket last year and taxpayers were forced to pay an additional $51.92 for each of those tickets, not including the $1.3 billion in Czar Obama’s stimulus funding. http://www.newsandopinions.net

  3. One of the real problems is that Amtrak loses money, and the train(s) it shuts down are the ones that run most full. If supply and demand forces (like market forces, right) existed, these more popular trains would have higher fares, and thus make more money (or lose less money — the difference is the same). When all is said and done, government set rules and prices are the problem. Congress (maybe with the exception of the former Senator from Delaware, Mr. Biden), don't have a clue how to run a business.

    Union work rules may have an effect as well, given structures that date back 40-ish years for Amtrak and were carried over from the old rules that were forced onto the industry by the government back in the 1930s and 1940s.

  4. Actually, the Northeast Corridor is the only place that Amtrak is making money. The losses are on their long-haul routes servicing the central and western U.S. I ride those every couple of years an can tell you there are almost NO rich people on them. Lots of retired folks, kids and young families trying to avoid the hassles of air transport. I totally agree that the subsidy should end but it is a subsidy to the less wealthy, not the rich.

  5. It was a sad day when the RRs that were running went under. I still would rather ride a train, although I really like flying.
    There were many trains that ran right through the middle of our town when I was growing up and we traveled more by train than any other way in my family (and other families). My Daddy was a real railroad man, even after he retired after 50 yrs. of working for the railroad. Great days!!! I was thrilled, also, when he took me down to the yards and let me sit in the top seat of a caboose.

  6. justathought says:

    Actually, when you consider it, we get a pretty sweet deal with Amtrak (granted with a lot of sour too boot)> Amtrak employs over 20,000 people, and at a billion per year they're doing pretty well.

    On the other hand consider congress: in 2008 it cost over $892 million for the senate, and over $1.2 billion for the house. These were the direct costs (staff, office space, etc.), ancillary expenses cause the actual congressional budget to exceed $4.4 billion.

    Let's keep the railroad (which has intrinsic value) and toss the other into Boston Harbor (it's so polluted they'd not be able to tell the difference anyway).

  7. Fritz329th says:

    THE GOVERNMENT CAN NOT RUN ANYTHING. THEY TOOK OVER THE CHICKEN RANCH SEVERAL YEARS AGO AND IN 6 MONTHS THEY HAD TO FOLD UP. HOW HARD IS IT TO RUN A BAR AND PROSTITUTION. TO THE GOVERNMENT IT MUST BE REAL HARD

  8. bullrider says:

    The issues of waste and fraud need to be addressed and people held accountable. And I do not believe we need to spend staggering sums putting in trains that go 300mph. I would personally not want to set foot on one. However I am taking my first trip on Amtrak in two weeks – between two large cities – and the tickets were not $51.92 but more like $700 for business class seats, not even a ‘roomette’. The closer you get to the travel date the more the prices go up. My co-worker and I didn’t know this and watch the $450 tickets almost double before we made our reservations and that was about three months before the travel date.

    I am riding Amtrak because a) airplanes are packed to the gills and seats are just not big enough for many people so you get squeezed between others, b) going through the airports and the TSA groping / fondling / viewing experience is something to which I will submit myself, and c) on my last trip the airline landed the plane on the opposite end of a huge airport from where my connecting flight was. I and some others ran across the whole airport to get to the gate for the connecting flight on time and watched as people flying ‘stand-by’ were being ushered onto our flight, and we were told we were too late. We waited eight hours for them to put us on another flight. Between regulations and costs and taxes the airlines probably have no choice but to operate like this. I refuse to fly anymore – and the biggest reason of all is the TSA fondling I refuse to tolerate.

  9. I worked for Amtrak for 8 years and what has been reported here is just the skim off the top that can be found out. You've heard of "The Government pays $150.00 for a Hammer" or a "Toilet Seat"! Well Amtrak pays way over the top for any and all supplies and parts for their trains. The whole thing is a SCAM on the American Taxpayer! My supervisor's used to tell me that "They Have To Use UP The Money The Government has Gave Them, So they can apply for an even BIGGER amount next Year". I worked in the mechanical department and I've seen it! They Blow money like there's NO tomorrow and our government keeps giving them more, more and More! Its OUR money that congress gives away WE should complain! When I say complain; Ask at the next town hall meeting if people are fed up with giving away money they don't have!

  10. Get the government out, and let the private sector run it. It will be cheaper to run and more efficient. I have yet to see ONE government agency work.

  11. Colonialgirl says:

    Don;t forget that Biden was a patron if AM-track; DId you expect him to have to drive home from Washington when he was a Senator.

  12. I rode the train from Seattle to Los Angeles coach fare and from Los Angeles to Houston in a sleeper compartment round-trip. I enjoyed the trip and paid almost $1,000.00 for my ticket. I could have flown to Houston for less than $300.00 round-trip so its hard to understand why Amtrak isnt making a profit. The trains were crowded and this was April and the train from Seattle to LA had 18 cars full of people . Just makes you wonder.

  13. guest on this planet says:

    What about his high speed trains that will lose billions

  14. Huapakechi says:

    The government IS fraud since the middle 50s.

  15. BIDEN has no clue about trains, the weather, cable TV, where the closest McDonalds is, how to operate a hand held razor, loan a dishwasher or change his own underwear. He is CLUELESS and belongs in an assisted living facility for the memory impaired.

  16. The prostitutes were not charging the clients (government). The money, no profit.

  17. BIDEN is as corrupt as Marion Berry –you know the dope smoking, prostitute calling former mayor of D.C. Her is CLUELESS. He is just a mouth piece for the "dude" in the White House.

  18. Let me first mention that I understand that Amtrak hasn't always been the best in the realm of business. I hear where both the linked article and Mr. North are coming from, and I respect that, and even cringe to hear what is going on behind the scenes with the fraud and waste.

    What I'd like to do is correct the inaccuracies I read in the article and then offer my two cents. First, the on-time record has been phenomenal since 2008 – with the exception of some mechanical breakdowns or detours here and there, I've been in St. Louis and other destinations a little under an hour early, seen the train make a 5 hour trip in 3.25 hours when it ran late, and overall have arrived on time in most cases. Second, if I recall basic math correctly, 30+ million over a U.S. population of 300+ million is about roughly 10%, pending the actual figures. Third, very rarely have I encountered a non-Amtrak item being sold, but I was the recipient of at least one of those items in the form of supreme customer service because they had run out of a particular item and wanted to please the customers (in the words of the attendant, "in light of the TSA, we want to make sure customers come back again"). The item they ran out of was their cheese and crackers, which then was various crackers and various small round cheeses (they replaced it on my last trip with a crappy version that only had three cheeses and three plain saltines); the attendant remembered there were some other things on board and allowed me to purchase a neat cheese and crackers thing with a small sweet roll and trail mix. In the same vein, from my experience in using the system, the provision of items at no cost have been things that were needed because something went wrong. Longview, TX: because of Union Pacific's hold on the train in Mineola, TX, we were going to miss the known dinner time of 6:30p – 9:00p because of an anticipated 9:30p arrival, and so pizza was provided for everyone. Way back in the day: bingo on the Sunset Limited on the way to New Orleans (and back when Hollywood and Miami, FL, was served by this train), the items I got were free as a prize for winning bingo (albeit I was young, and I had completely forgotten to pick up the prize: a pair of socks, a blanket, and a cup; they paged for me later on to pick it up). All in all, the use of "scam" to describe some of the things, I think, is a bent against railroading that I disagree with wholeheartedly – everything I've seen has been customer service, with several exceptions that fit the definition of "scam" very well. 2004: admitted breakfast on the Texas Eagle only because the waitress liked my mother – had definitely given a last call two minutes prior, and evidently was supposed to treat coach passengers like second-rate customers. Didn't matter it fell on the day of my birthday.

    My two cents: why aren't airline and highway subsidies called into question just the same as Amtrak? Why is Amtrak the only thing that's supposed to make a profit and rely less on subsidies? $40 billion over 40 years, which means about $1 billion a year without adjusting for inflation. Highway system: $40 billion/year as last count, and who knows about the airlines (I haven't been able to find a source to give me a number yet). The only place I hear the Interstate system getting privatized is in Missouri because it can't fund I-70 between KC and St. Louis for the improvements it needs. The only tolls I know of are I-35/335 between Topeka and the OK state border, around Boston, MA, and few other areas. In essence, if you're going to be fair about the subject, why focus only on this and not the other two that are receiving plenty more than Amtrak's $2 billion for 2013.

    Turning around now, why doesn't Amtrak get smart and actually bring in the private sector at market rates to do the tunnels and what not right in the NE and then bring the capital in for equipment improvement and expansion? I give Amtrak due props for actually considering BNSF's offer to reroute both the Empire Builder and the Southwest Chief (albeit if only they could extend the Chief reroute to serve the Chillicothe Sub in Illinois, too) because there definitely good markets available to bring service south of Newton to Wichita and, if they think about it, Oklahoma City (to provide a connection with their local service into Texas); Amarillo would give the Texas Panhandle service, and arrival into Albuquerque would be much faster. Axe the split Lake Shore Limited service at Albany, NY, to cut down on transit time, allowing the ample local service to carry passengers into NYC while it heads to Boston, and reroute the Capitol Limited to service stations once served by the Amtrak-run Broadway Limited/Three Rivers train. I could go on and on about what could be done with what Amtrak has without incurring a great deal of costs, but I think my point is made.

  19. PépèreLePew says:

    The reason Amtrack came into being is because the private sector *was* running it and passenger rail would have simply disappeared if it was up to them. That's the whole reason for having what we quaintly refer to here in Europe as "public services" – to protect them from the dictates of profit. When medical care is no longer profitable in Amerika people will simply be let to die. When growing food is no longer profitable, people will be allowed to starve. Etc.

    BUT does that mean that waste and mismanagement should be tolerated in government? MAIS NON! Of course not.

  20. Kevin Beck says:

    The only workable solution is for this boondoggle to establish a budget based upon the annual costs (which they would be too incompetent to measure) and the actual ridership figures for each segment serviced. Then with simple math, you divide the cost by the ridership; this is what the tickets should sell for. If you have a shortfall, then you may borrow at market-based interest rates.

    It's called, operating a business.

  21. […] -Governments with printing presses don’t worry about profit and loss statements. […]