Written by Steven Richards
Amtrak is a major focus in the bipartisan infrastructure bill negotiated in the Senate. According to the New York Times, the bill “includes $66 billion in new funding for rail to address Amtrak’s maintenance backlog, along with upgrading the high-traffic Northeast Corridor from Washington to Boston.”
These investments come to the quasi-private entity amidst its enduring poor financial state. Amtrak has lost money every year since it was established in 1971 by President Nixon. In FY 2018, Amtrak came up short approximately $170 million in operating costs, with its failing transportation model being propped up by federal spending, not the profitability of it’s rail lines. Before the COVID-19 pandemic struck and forced Amtrak to cancel much of its services, CEO Richard Anderson had worked to reduce operating costs and balance the budget by slashing service on unprofitable lines. By FY 2019, Amtrak had reduced its yearly loss down to approximately $30 million from the approximately $170 million.
Anderson understood what it would take to make Amtrak profitable and closely followed the laws laying out Amtrak’s mission. The original charter included language that directed Amtrak to achieve “a performance level sufficient to justify expending public money” and “to provide efficient and effective intercity passenger rail mobility consisting of high-quality service that is trip-time competitive with other intercity travel options.” These provisions are what encouraged Anderson to pursue a reduction in the yearly losses.
However, the new infrastructure bill includes a rewrite of Amtrak’s main functions and mission that will undermine efforts to reverse its yearly losses. According to Business Insider, the bill would change Amtrak’s goal to “meet the intercity passenger rail needs of the United States” rather than achieving “a performance level sufficient to justify expending public money.” In addition, Congress will task Amtrak with a new goal: requiring it to “support and maintain established long-distance routes to provide value to the Nation by serving customers throughout the United States and connecting urban and rural communities.” In essence, this new goal requires Amtrak to maintain service on its most unprofitable routes.
Tasking Amtrak with pursuing these revised goals will all but guarantee that efforts to stem Amtrak’s yearly losses will be reversed, requiring even more funding from Congress to maintain the rail lines and services.
Steven Richards is a research analyst for GAI.
