A speech by Amtrak Reform Council
member James Coston in Philadelphia December 1,
2001.
James E. Coston is the managing partner of the Chicago law
firm Coston & Lichtman where he specializes in equipment
financing. He is a member of the Chicago and Illinois State Bar
Associations and sits on the Equipment Leasing Subcommittee of
the American Bar Association. Parallel to his legal profession,
he co-founded Chicago’s Twentieth Century Railroad Club and
for 15 years managed its highly successful program of weekend
excursion trains chartered from Amtrak. His guest editorials on
rail service have appeared in, among others, the Chicago Tribune,
Washington Post and USA Today. Senate Minority Leader Tom Daschle
appointed him to the Amtrak Reform Council.
Thank you,
Richard. I'm delighted to be with you today and I'm honored to be
at the founding meeting of the first independent
consumer-advocacy group for the nation's railroad passengers.
You know, 2001 is the 175th anniversary of the American railroad
industry. Isn't it great that after all that time the rail
passengers of this country can finally have a strong, independent
organization fighting for their interests? Only 175 years-isn't
patience a wonderful thing?
Actually, I can answer that question. I'm an expert on patience.
It took me eight years to get to a position where I could
influence American passenger-rail policy. I started out in 1993
seeking a presidential appointment to the Amtrak board of
directors. It was April 4, 2000, before I finally received a
congressional appointment to the Amtrak Reform Council, a body that didn't even exist when I
began my quest.
I'm not complaining. Now that I am on the ARC, I have to admit it
was worth the wait. My colleagues on that panel include some of
the most serious, committed, thoughtful and dedicated partisans
of passenger trains in our nation's history. With only one
exception, all of them want to see passenger trains run, and all
of them embrace the idea that it is
the responsibility of the federal government to provide the
leadership and the financial support for a strong and growing
passenger-train system in our nation. Working
with my colleagues on the ARC is the most exciting, stimulating
and rewarding thing I have done since the early 1980s, when I
actually ran chartered Amtrak passenger trains and served
full-course meals and poured wine for our first-class passengers
riding in dining and lounge cars we chartered from private
owners.
I'm sure the nice people here would like to hear me tell some
stories of what it was like to run those trains, but that's not
why I'm here. More than a decade ago I made an important decision
about my life. I decided to switch from running passenger trains
as a personal frolic to getting our government to run passenger
trains as a public obligation. This morning, I'd like to bring
you up to date on what we have to do to make that happen.
As you all know, on November 9, 2001, the ARC exercised one of
its statutory responsibilities. The members voted six to five in
favor of a "finding" that Amtrak would not become
financially self-sufficient in time to meet a congressionally
imposed deadline of October 1, 2002. This was something the ARC
was mandated to do under the 1997 Amtrak Reform and
Accountability Act. That was the legislation which created the
ARC and laid down the mandate that Amtrak must become
self-sufficient within five years.
When the vote on self-sufficiency came, I voted in the minority.
I voted that the ARC should not make such a Finding, even though
I knew at the time-as all of the ARC members did, that there is
no possible way-and never was any possible way that Amtrak could
have reached operational self-sufficiency, deadline or no
deadline.
Many people have asked me since then, "If you knew Amtrak
couldn't break even by October 2002, why didn't you concur in a
Finding that said that?"
And my answer is: Because to do so would have been to concur in
an absurdity, which is the presumption that passenger trains
can-or should-be profitable. In fact, it would be to concur in
two absurd presumptions. The second is that passenger-train
profitability can be ordained by an Act of Congress.
That's what I'd like to talk about today-the absurd Myth of
Passenger Train Profitability and how it has retarded the
nation's progress toward a sound passenger-train system.
I'd also like to talk about two ancillary myths. I call them the
Myth of the Great Debate and the Myth of Picking Winners and
Losers. Together, these three dangerous myths have led
passenger-train advocates as well as critics down a primrose path
of falsehoods. These falsehoods-some of them propagated by Amtrak
itself- have made public discussion of passenger- train issues
unnecessarily confusing and set back the construction of
America's new passenger-train system by well over a decade.
Let's look first at the Myth of Passenger Train
Profitability.
I voted against the ARC's Finding because the 1997 law was silly,
meaningless, irrelevant, futile superfluous, gratuitously
punitive, and inappropriate. Companies don't become profitable
because somebody passes a law ordering them to. Companies become
profitable for two reasons: An economic and political environment
favorable to profitability exists, and a management capable of
exploiting that environment is in place.
Passenger trains have not enjoyed a favorable economic or
political environment in this country since the 19th century.
Absent a change in that environment, passing a law commanding
Amtrak to stop losing money is like shaking a baby to make it
stop wetting its diaper. It's an act of futile, cruel desperation
by somebody who doesn't understand what's really happening or how
to stop it.
We laugh about "the blind leading the blind." But the
1997 Amtrak Reform Act was compounded that absurdity: It presumed
that politicians could command bureaucrats to be businessmen. The
Congress acted without understanding the forces that drive
transportation economics in this country.
Profitability is not a reliable or trustworthy index of the
effectiveness of a transportation system. Our highway
and civil aviation systems are not profitable, nor do we expect
them to be. Why then should we place this commercial
burden on Amtrak?
The chairman of the Senate Commerce Committee, Fritz Hollings of
South Carolina, recently noted that no passenger rail operation
in the world operates at a profit. Sen. Hollings was correct, but
he didn't go far enough. He made it sound as if passenger trains
are unique in being unable to make a profit. In fact, all
forms of intercity commercial passenger transportation are
money-losers-if you calculate all of their costs in the same way
we calculate the costs of passenger trains.
Let me tell you about Warren Buffett. I hope most of you know who
Warren Buffett is. He's America's most successful investor. He
became one of the nation's ten richest people by picking
investments shrewdly and risking his money with companies he felt
were poised for strong growth. Well, here is how Warren Buffet
was quoted in the October 21 Chicago Tribune:
"The airline business, from the time of Wilbur
and Orville Wright through 1991, made zero money net."
I didn't say that. America's most successful investor did.
During the Clinton prosperity bubble, of course, several airlines
made enough money to pull the industry as a whole into
profitability again. But in the year following the collapse of
the tech stocks in April, 2000, all of those profits and more
were wiped out and the airline industry as a whole once again has
become a lifetime net-loser. This year the market capitalization
of United Airlines dropped so far that
its parent company lost its ranking as one of Chicago's fifty
largest corporations. By the time United's board fired the CEO
last month, the nation's second- largest airline had a lower
market cap than Tootsie Roll Industries. And, as I learned on my
trip out here today, United's meals in First Class now feature
entrees with the consistency of a Tootsie Roll.
So, using the logic Congress applied to Amtrak in 1997, should we
force the airline industry into liquidation or restructuring just
because it has shown a negative aggregate lifetime profit?
The failure of the airline industry to earn a profit
over its 75-year lifetime should tell us something
about the futility of expecting Amtrak to make a profit,
particularly over a five-year timeline as specified by Congress
in 1997. For the airlines have been the beneficiaries
of the one of the largest taxpayer subsidy programs in the
history of American socialism.
* Item: In 1926, the U.S. Post Office began building a nationwide
system of navigational beacons to guide air-mail pilots at night.
Air Mail customers did not pay for these improvements, or even
for the direct cost of operating mail planes. Post Office
subsidies guaranteed the Air Mail contractors a rate-per-pound
sufficient to pay all costs plus profits.
Some airlines gamed this system by air-mailing hundreds of pounds
of "letters" stuffed with blank paper to themselves in
order to build revenues. One airline air-mailed itself two tons
of lithographed materials from New York to Los Angeles. The
postage cost $6,000 but the Post Office paid the airline $25,000
for the haul.
* Item: During World War II and the Korean War, the federal
government funded billions of dollars worth of aeronautical
research that later was cascaded free of charge down to the
commercial airline industry-high-compression piston engines, jet
engines, radar and sophisticated new lightweight metal alloys.
The world's first successful commercial jetliner, the Boeing 707,
developed directly out of the Air Force's B-47 bomber. The
airlines did not pay these huge R&D costs; Cold War taxpayers
did.
* Item: During those same wars, the U.S. taxpayers
paid for the training of thousands of military pilots who upon
discharge joined the airlines and brought their skills with them.
Only in the last decade have retirements from the Vietnam War
generation of airline pilots forced the airlines to begin
training pilots from scratch.
* Item: Since 1946, the federal government has poured
billions of dollars into airport development. In
1992, Prof. Stephen Paul Dempsey of the University of Denver
estimated that the current replacement value of the
U.S. commercial airport system-virtually all of
it developed with federal grants and tax-free municipal bonds-at
$1 trillion.
Not until 1971 did
the federal government begin collecting user fees from airline
passengers and freight shippers to recoup this investment.
In 1988 the Congressional Budget Office found that in spite of
user fees paid into the Airport and Airways Trust Fund, the
taxpayers still had to transfer $3 billion in subsidies per year
to the FAA to maintain its network of more than 400
control towers, 22 air traffic control centers, 1,000
radar-navigation aids, 250 long-range and terminal radar systems
and its staff of 55,000 traffic controllers, technicians and
bureaucrats.
And let's not forget that walking-around change-$15 billion-that
Congress gave to the airlines so fast that "please" and
"thank you" were separated by a nano-second. I read
yesterday that Midway Airlines is getting a check big enough for
it to start flying again. Midway is one of that group of
airlines-like TWA-who frequent Bankruptcy Court the way
professional athletes hang out at strip clubs.
Question: If the airlines cannot be profitable after 75 years
of federal investment in a state-of-the-art infrastructure and
command-and- control system, how is Amtrak supposed to operate
profitable, customer- friendly passenger trains over a
22,000-mile network of privately financed 19th-century railroad
alignments using a 19th-century signaling technology and
19th-century grade-crossing protection that limits trains to an
effective average speed of 48 miles per hour? You wouldn't
dare pass a law ordering a bunch of managers to operate a
profitable shoe-manufacturing business in a 19th-century factory
building using technology built in 1920 while paying their
employees 21st-century wages. So why would you pass a law
ordering a bunch of managers to earn a profit carrying railroad
passengers according to those same rules?
Here is how I answer that question. The answer has several
elements:
* First, "profitability" is no more achievable for
passengers trains than it is for airliners and private autos
(are private cars "profitable" to their owners when
they carry an average of 1.2 passengers per trip and spend about
20 out of each 24 hours sitting idle in a garage or parking lot?)
The question of "profit" in for-hire passenger carriage
is dangerously misleading and irrelevant. The economic value
generated by passenger transportation historically is captured by
the businesses served by the transportation network, not by the
carriers.
* Second, passenger trains require federal
infrastructure investment in a modern right of way and a modern
command-and-control technology just as cars and airplanes do.
Until the federal government funds a meaningful, modern and
relevant system of passenger-train tracks, signals and stations,
no comparison between passengers trains and cars or airliners is
valid. To be competitive, trains must first be provided with the
means of competitive success, as cars and airplanes were. And as
shoe factories are.
* Third, the stupidest thing ever done in the name of a
successful U.S. passenger-rail system was Congress's 1997 mandate
that Amtrak become profitable in five years on the American
railroad industry's network of obsolete, congested, low-speed
freight-train routes.
* Fourth, the second-stupidest thing ever done was for Congress
to fritter away the next four years without establishing a budget
and a program to build modern railroad tracks.
* And finally, the third-stupidest thing was when Amtrak
management agreed to go along with Congress's stupidity. Not
until the spring of 2001 did Amtrak's CEO begin publicly hinting
that the nation might need to invest in better railroad tracks
outside the Northeast Corridor.
Thus, Congress and Amtrak colluded to ignore reality and finesse
the infrastructure issue by tacitly accepting the idea that
Amtrak's trains could somehow compete with the nation's advanced
highway and airway systems without a federal investment in
advanced railroad tracks.
It cannot be done. Trains, like cars and airplanes, cannot
perform effectively on an obsolete infrastructure.
* The U.S. government began facing the highway infrastructure
issue in 1916 with the Federal Aid Highway Act.
* It confronted the waterway infrastructure issue in 1920 with
the Transportation Act, which as early as 1923 included a
$57-million appropriation for locks and dams on the Ohio.
· It began addressing the airways problem with the postal
beacons of 1926 followed by the Federal Airport Act of 1946,
which offered the nation's cities $520 million in federal
matching funds for airport construction over a seven-year
period-an enormous sum of money for that time.
Since the establishment of their respective federal
infrastructure programs, each of those three modes has enjoyed
hundreds of billions of dollars in federal infrastructure
investment, each from its own infrastructure-development program,
and each eventually from its own trust fund.
But today, after nearly a century of federal investment in
road, air and water infrastructure, we still have no federal fund
for development of a modern passenger rail system, and our
passenger-train service-as well as our congested highways and our
terror-threatened airline industry- reflects this colossal
failure of congressional will.
Transportation is no different than any other area of human
activity: You may not always get what you pay for, but you
definitely do not get what you don't pay for.
So when six of my fellow ARC members said, "We are
shocked-shocked-to find Amtrak isn't making any money," I
just couldn't go along with the charade. My "no" vote
essentially was my way of saying, "You're telling me Amtrak
isn't making any money? So what else is new? Who is?
Profitability in passenger transportation is a myth. Everybody is
subsidized. Congress needs to get over it.
Let's look at Myth No. 2, the Myth of the Great Debate. The Great
Debate Myth is related to the Profitability Myth, but it has
taken on enough of an identity of its own that it merits a
separate discussion.
What is the Great Debate? As you know, Amtrak's chief executive
officer, George Warrington, got up in front of the National Press
Club last May and announced that he had discovered-after
three-and-a-half years in his job, I might add-that Amtrak could
not make a profit while also carrying out its mandate to provide
a public service.
[Editor's Note: George Warrington resigned April 2002. He was
succeeded by David Gunn in late April 2002.]
I don't know why it took George so long. to figure that out. It
may not be sufficiently common knowledge to be included in the
standard high- school civics curriculum, but. every state
Department of Transportation official knows it, and they say so
every year so when their friendly Amtrak government-affairs
officer comes around soliciting alms for the 403(b) program.
Anyway, after three-and-a-half years of reassuring Congress that
he would make their passenger trains profitable, George got up
and told the National Press Club it couldn't be done. And to
resolve the dilemma he called upon the people and their elected
representatives in Congress to hold what he called "a great
national debate" on the future of the American passenger
train. Sen. John McCain has called for the same thing.
Well, I'm here today to spare the people and their Congress that
unnecessary effort. The idea that we need some sort of great
national debate on passenger trains is a myth. Why? Because the
debate has already been held, and passenger trains have won, and
I've got the proof.
Those of you are older than I will remember those first
senatorial hearings televised in black-and-white back in the
1950s. Senator Joe McCarthy of Wisconsin would leap to his feet
while brandishing a sheet of paper and say, "Mr. Chairman,
Mr. Chairman-I hold here in my hand a list of fifty-two known
Communists who are employed by the State Department. Who's
covering up, America?"
I myself do not happen to be old enough actually to remember
those hearings. I know about them because I was a poli-sci major
at Northwestern. Nevertheless, I have learned the importance of
brandishing pieces of paper and naming names in public forums, so
here goes.
Uh-Mr. Chairman (look over at Richard), I hold here in my hand
copies of forty editorials and guest essays that have appeared in
the nation's media since September 11, all of them urging
Congress to get busy on funding a passenger-train system. Only
three media published essays against passenger trains.
I counted them up. There were forty of these editorials and
op-eds in the days following the September 11 attack. You may be
familiar with a couple of them. They were done by Andy Rooney in
his segment on "Sixty Minutes." I have the transcript
of one of them here, along with thirty-nine others clipped from
newspapers across the country. I feel sort of like that defense
attorney in "Miracle on 34th Street" who wins Kris
Kringle's sanity hearing by saying, "O.K., boys, bring 'em
in!"-and the clerks start emptying mail bags full of letters
that say the people of New York believe in Santa Claus.
Well, ladies and gentlemen, I rest my case: The people
of the United States believe in passenger trains,
and they don't expect to get them from Santa Claus. They expect
their taxes to pay for the building of new railroad tracks and
signals, just as their taxes paid for highways and airports and
dams and barge canals. Hello, George
Warrington! Hello, Sen. McCain! You can forget about that great
debate. It's over. We may not yet know how we're going to pay for
that new infrastructure, but as the for question as to whether we
want it and whether we need it-that's settled.
Before I move on to debunk the third and final myth, let me just
say something about funding. If I am reading the sentiments of
the American people correctly (hold up the stack of editorials
again), we are rapidly approaching the same phase of
passenger-rail development as we had reached in highway
development of July 12, 1954.
That was the date when Vice President Nixon addressed the
National Governors Conference at Lake Placid, New York, to
announce the Interstate highway program. Nixon told the
conference that President Eisenhower, along with the auto
industry, the petroleum industry, the cement industry, the
trucking industry, the manufacturers of earth-moving equipment
and the big civil-engineering firms had all agreed on the basic
design of a 40,000-mile, coast-to-coast, border-to-border network
of limited- access, grade-separated high-speed divided highways
that would connect all cities of more than 50,000 population.
Despite that agreement, however, it wasn't until two years
later-June 25, 1956-that Congress passed an Interstate highway
bill. All of the intervening time was spent debating a funding
formula. Three Interstate bills failed before Congress agreed on
a funding mechanism-a fuel tax paid into a new Highway Trust
Fund.
I hope it won't take this Congress another two years to devise a
formula for funding passenger rail infrastructure, but I hope the
people in this room will not feel unduly frustrated if it does.
All of the different transportation modes had to fight for their
existence-some for a very long time.
In 1925 Orville Wright testified before the House
Committee on Interstate and Foreign Commerce that the chief
obstacle to the development of aviation was the lack of a federal
airport program. It was another 21 years-1946-before the
federal government began dispensing matching funds to help local
communities build commercial airports. Trains can't wait that
long. We have to get ready for the funding battle now.
Let me conclude by debunking the final myth. It is the myth that
government not only should build the rails for the new passenger
trains, but should pick the winners and losers.
What I am referring to here is the growing number of would-be
passenger-train supporters who propagate the doctrine that the
only type of intercity passenger train that can be justified
economically is the short-distance or intermediate-distance
high-speed corridor species.
Don't let anybody tell you that. For one thing, we don't actually
know if it's true. A lot of people have been going around acting
as if it's true, but the fact is: We just don't know what
kinds of passenger trains will work in this country. There is no
solid body of evidence and no corpus of experience that would
enable us to pick the "winners and losers" in advance.
The dirty little secret of the passenger-train business in the
United States is that there has been so little
passenger-train activity in the last 30 years that in effect
there is no passenger-train industry and hence no industry
experts.
I include myself when I say that, even though I've probably got
more passenger-train experience than most of the management at
Amtrak. I worked for Amtrak as a station agent and reservations
clerk from 1973 through 1979. In 1971 I co-founded a rail-travel
club which by 1986 had operated nearly 100 profitable rail
excursions-about half of them on entire special trains we
chartered from Amtrak.
Nevertheless, despite all that experience, I hesitate to call
myself a passenger-train "expert," and I don't
acknowledge very many others in this country to be
passenger-train experts either. Most of the trains we need to
be running have never even been tried, and the number of trains
we do run is so small, and our passenger-rail technology so
outdated, that America has never had the opportunity to build up
a body of passenger- rail expertise and management capability
that measures up against the best practices overseas.
Let's face it. We're amateurs. We're not in a position to get
doctrinaire about what's going to work and what isn't.
So when people ask me, "Can overnight business-class
sleeping-car trains be a successful alternative to air travel in
any American markets of-say- 700 to 900 miles?"-I honestly
have to say, "I don't know. I have strong suspicions-but I
don't actually know. The concept hasn't been in existence in this
country for 35 years, and in the last 10 years of its existence
it wasn't supported."
When people ask, "Can modern, fast, comfortable,
long-distance coach travel-something like the El Capitan or the
Pacemaker-again make a significant contribution to American
mobility?"-again, I have to say, "I have my suspicions,
but I'm no expert, and neither is anybody else."
This is not false humility. I'll stake my passenger-train
credentials against those of anyone in this country. We
passenger-train advocates have to recognize that there's a
huge vacuum of knowledge and experience in this country. We
have no basis for picking winners and losers at this stage of our
understanding. Mail-and-express trains, seasonal vacation trains,
long-distance trains that network with feeder trains at key
junctions, building high-speed rail lines into hub airports, tour
trains, group travel, corporate charters of whole trains or of
certain cars-same deal: We don't know.
There are no American passenger-train "experts." The
corporate memory of American passenger-train management has been
decimated-no,devastated- by time and mortality and by nearly a
century of neglect on the part of our national policymakers. We
will have to re-invent and rebuild those skills ourselves.
So the idea of picking winners and losers-like the idea of having
a "Great Debate" and the idea that profitability is a
reliable index of passenger-train success-is a myth. What does
that suggest about the railroad infrastructure the Congress is
now being called upon to build?
It suggests that this new infrastructure should not be
configured for any one particular type of train-or for any
particular region of the country.
Instead, we should follow the model used in building our
highways, our airports and even our waterway improvements: Don't
let the government pick the winners and losers. Just put a modern
infrastructure out there and then rely on the ingenuity and greed
of the American business community to find profitable uses for
it.
Don't forget: We had this debate before when we tried to build
highways.
When the "Good Roads" movement began back in the 1880s,
it was the farmers who started the agitation. The road advocates
in Congress all sang the same tune: "We have to get the
American farmer out of the mud so he can get his crops to the
local grain elevator and bring his supplies and mail-order
merchandise back from the freight house." This was the
period when so-called "farm-to-market" roads were
the justification for a federal highway program.
Then the League of American Wheelmen got into the act and
demanded hard-surfaced roads so they could ride bicycles from
town to town.
When cars were invented, the motoring lobby started agitating for
roads. That got the farmers upset. Why waste precious federal tax
dollars to pave roads for city folks with autos when the farmers
need the roads more?- they asked.
The same issue cropped up again after World War I, when the motor
truck became sufficiently reliable for manufacturers to start
switching some of their freight shipments from rail to road.
After the truckers spent several frustrating years making
nine-day trips from Chicago to New York over dirt roads, they
began agitating for hard-surfaced highways to connect major
cities.
But the critics wailed that trucking freight over long distances
was a utopian fantasy that could never justify itself
economically. Long-distance freight shipping, they said, was a
"natural" job for the railroads and government should
not interfere with nature.
The same debate broke out in the 1930s when Congress rejected a
proposal for an $8-billion national highway program. The critics
charged that only rich people owned cars capable of driving long
distances between cities, so Congress should not waste federal
funds on what they called "extravagant speedways for the
luxurious few."
I think you can see where I'm going with this. We're not ready
to say which kinds of trains will work and which won't. We don't
know what the "natural market" for passenger trains is,
and we won't know until we get some experience running them. We
have to start building projects that will enable us to run more
trains of all types-including the high-speed freight trains that
shippers like UPS and FedEx are demanding-and to run them faster,
more frequently, more closely spaced, more safely-and run them
grade-separated from conflicting rail routes and from the motor-
vehicle system.
When I hear critics say, "Well, the federal government may
have a role in financing improvements for high-speed trains that
to carry business travelers in urban corridors, but it has no
business promoting long-distance leisure travel for a tiny
minority of well heeled tourists,"
I have to ask, "Oh, really? Then why do the Army
Engineers use taxpayer funds to build breakwaters and to dredge
channels for cruise ships that dock at Miami and Ft. Lauderdale
and Palm Beach and New Orleans, and why does the U.S.
Coast Guard protect those harbors, and why does Customs
& Immigration Service have an army of inspectors at every
pier?"
And anyway, who says long-distance train travel
consists only of so- called leisure travel? The pace
may be leisurely compared with air travel, but when I spent my
days putting people on the Zephyr and the Empire Builder and the
City of New Orleans at Chicago Union Station, they didn't look
much like cruise-ship passengers to me.
The people I put on those trains were college students
traveling between home and school, people visiting their
families, people relocating to new jobs or checking out an
out-of-town job opportunity, professional groups heading to a
conference, foreign visitors who wanted to see the U.S. close up
and meet Americans en route, and retirees-most of them not
particularly wealthy-who wanted a relaxing and informative travel
experience. I think those are activities worthy of federal
infrastructure support. They already get federal
infrastructure support when they're carried out on the highway,
airway and waterway systems. Why not on rail as well?
And you know what? If a so-called tiny minority of well heeled
tourists wants to ride a passenger train, I say, "Welcome
aboard!" Cruise-ship travel started out as an
upper-class fringe phenomenon in the 1960s, but thanks to the
billions of dollars the federal government handed out to local
communities to improve their deepwater ports, the cost of
cruise-ship travel came down, new entrepreneurs entered the
business, and what was formerly considered a luxury for a slender
stratum of super-rich individuals has now turned into a virtual
entitlement for middle-class America.
I can't prove it, but I strongly suspect that a firm federal
commitment to rail infrastructure also will change the
demographics of rail travel, creating new markets, opening up new
travel and leisure choices for millions of Americans who today
know nothing of rail travel, attracting train-riding overseas
visitors who find our current mobility options puzzling and
inconvenient, and opening up new entrepreneurial opportunities
that the bureaucratic mind with its picking-winners-and-losers
mentality simply is not configured to imagine.
I hope I have demolished the Three Myths today. I hope everyone
will now accept the idea that profitability is of no more
importance in a passenger-train environment than in an air or
highway environment, that we need no further debate about funding
a national passenger rail system, and that government bureaucrats
cannot handicap the system's winners and losers.
I've had fun demolishing those myths, and I hope you've had fun
watching me demolish them. But remember, we don't demolish for
the fun of hearing things go smash. We demolish to clear the
ground for the new structure that will be built on the site of
the old.
The time to start building our new national passenger rail system
has arrived. It's a job that will require all of our efforts. I
look forward to joining with you in that grand project, and I
thank you for giving me the opportunity to say a few words about
it.
12/14/2001
http://www.usatoday.com/news/washdc/dec01/2001-12-14-amtrak.htm
Panel weighs alternatives to Amtrak
WASHINGTON (AP) — A panel began work Friday on a new
blueprint for
America's passenger rail system that would take much or all of
Amtrak's
authority and divide it among states or private companies.
While differing on many details, most members of the Amtrak
Reform Council
endorsed decentralizing intercity passenger rail, which for 30
years has been
run solely by Amtrak. They weighed nine alternatives, all of
which would
introduce some form of competition from private companies or
regional
authorities.
Most of the 10 members present — Transportation Secretary
Norman Y.
Mineta was the only one absent — supported letting states or
private
companies take responsibility for populous train corridors that
are thought to
have the best chance of profitability.
But they disagreed on the thornier issue of long-distance
overnight trains,
which generally are regarded as money-losers.
Wendell Cox, a transportation consultant, said long-distance
trains are used
primarily for "vacations and leisure, not
transportation" and therefore should
not be subsidized by the government.
James Coston, managing partner of a Chicago law firm, disagreed.
"Long-distance passenger trains indeed serve leisure
markets," he said, "but
they provide essential transportation through parts of our
country that are
underserved" by buses and planes.
The council appeared to dismiss the most drastic option under
consideration
— turning over rail service to the private sector and
letting unprofitable routes
die.
There was even less enthusiasm for any system resembling the
status quo.
"One of the most important things we can do is subject the
current Amtrak
monopoly to competition," said Paul Weyrich, president of
the Free Congress
Foundation.
Council officials said the nine scenarios were only a starting
point and that the
final recommendation could contain pieces of several of them.
Milwaukee Mayor John Norquist presented several ideas of his own.
Among
them: Airports should be allowed to use federal funds to build
rail stations and
connections that could replace short aviation routes.
After several hours of discussion, the council instructed its
staff to winnow the
nine alternatives to three. Council Chairman Gil Carmichael said
the panel will
discuss those next month and submit a plan to Congress by Feb. 7.
Carmichael said the goal of the plans is to improve passenger
rail, not kill it.
He said blame for Amtrak's financial problems rests with "an
unmanageable
organizational structure that was woefully underfunded."
Norquist said the council "has some really positive ideas to
support passenger
rail, to rejuvenate it, to create a situation where it can face
the market and be
successful."
Amtrak posted a cash loss of $405 million in the first eight
months of this year
and has consumed more than $24 billion in subsidies — both
operating and
capital — since its inception in 1971.
Congress created the council in 1997 to oversee Amtrak and gave
the
railroad until Dec. 2, 2002, to begin operating without federal
subsidies. A
majority of council members concluded last month that Amtrak will
not
achieve that goal.
The council's vote also meant that Amtrak had to come up with a
plan for its
own liquidation — essentially a list of its assets and
liabilities. The Senate has
adopted a measure that would excuse Amtrak from that task,
however.
Organized labor's representative on the council, Charles
Moneypenny, tried
to derail the discussion of restructuring options even before it
began.
Moneypenny, a staunch defender of Amtrak, argued that the council
violated
its authority in holding last month's vote. About 20 union
members,
representing about five of the 13 unions that work for Amtrak,
attended the
meeting to support Moneypenny's position.
The council defeated Moneypenny's motion to rescind its finding,
however.
