After twenty-five years of federal subsidies Amtrak is no closer to black ink than the day it was created, according to a new study by the Cato Institute. Furthermore, say study authors Jean Love, Wendell Cox, and Stephen Moore, every rationale proffered for continuing the subsidies is based on myth.

Amtrak's per-passenger-mile costs are by far the highest of any mode of mass transportation: twice as high as automobile and airline travel, and three times as high as intercity buses. Riders, however, pay less than half these costs—taxpayers pay the rest. Subsidies exceeded $1 billion in 1995; over $13 billion since the system was created in 1970. On average, taxpayers donate $100 to each Amtrak passenger buying a ticket.

In many cases the subsidy per trip is higher than discount airfares between the same two points—the subsidy on an Amtrak round-trip between New York and Los Angeles, for example, is $1270, while discount airfares on the route are around $400. A round trip between Denver and Chicago receives $650 in subsidies, while the airfare is less than $300.

Amtrak supporters offer a number of rationales for continuing the subsidies. Among them:

Amtrak provides essential transportation for the poor. In, fact, the percentage of Amtrak passengers with annual incomes below $20,000 is the lowest of any intercity transportation mode, while the percentage with incomes above $40,000 is the highest. Amtrak's chief clientele are upper-middle income suburbanites in the Northeast Corridor and affluent leisure travelers on the Western routes. The goverment would actually spend less by buying every lower-income passenger a bus ticket.

Amtrak contributes to energy efficiency and reduced pollution. Amtrak is only slightly more fuel efficient (in BTUs per passenger mile) than auto and air travel, and less than half as efficient as intercity buses. Moreover, because Amtrak carries only a minuscule fraction of intercity travelers (0.4% of all intercity trips), its impact on fuel consumption and pollution is negligible.

Amtrak relieves congestion on highways and at airports. Because it's market share is so low, eliminating Amtrak would add 1.3 vehicles per lane per minute in the Northeast Corridor (Amtrak's busiest route) if most riders were diverted to auto travel. If most were diverted to air travel, they could be easily accommodated in presently unsold seats on existing flights. On most other Amtrak routes, diversion to automobiles would add only one or two vehicles per lane per hour.

The study concludes that, freed from government ownership, political manipulation, and archaic work rules, some Amtrak routes could operate profitably. As long as subsidies are forthcoming, however, the system will have no incentive to improve efficiency and meet the competition.

—GM