I received an email from Amtrak yesterday introducing me to an ‘advocacy organization’ that was ‘involved in launching Amtrak’ and telling me that if I paid to become a member of this advocacy organization I could have a discount on future train travel. It struck me as problematic that an entity 100% owned by the government would give discounts to people paying to support lobbying for more subsidies of its product. And ask whether others felt the same way.
The comments mostly strayed from that topic, turning into a good-versus-bad of Amtrak or subsidies generally, a worthwhile topic but one I had hoped would be for another day. I took the train up to New York on Friday. The train was on time. The on-board internet was virtually non-existent. It was fine. Though of course the Northeast Corridor routes aren’t where the bulk of the subsidies go, it’s the lightly traveled routes across the country, zig zagging through Congressional districts. Train travel may make sense for short-haul travel between large population centers, some may enjoy the nostalgia of a sleeper car across country. None of this was really the subject of the post.
The question was picked up by National Review Online, by Instapundit, and at the Volokh Conspiracy.
And the National Association of Railroad Passengers has responded as well. Most of their defenses are along the lines of arguments teased out in the comments on this blog.
The federal government has spent more than $34 billion in general revenue taxpayer dollars (that is, tax dollars from sources other than user-fees, like the gas tax) on highways since 2008 alone. The surface transportation reauthorization bill currently being debated in Congress includes $12 billion more in general funds for highways. And yet, as evidenced by this story, the point of view that says passenger rail is the only mode of transportation that receives federal investment persists.
The federal government spends money on lots of things, so why attack spending on rail? Except that no one was, it was just a question of the appropriateness of Amtrak giving discounts to members of a group arguing for more Amtrak subsidies.
NARP is a 501(c)(3) nonprofit organization. This means that, by law, the vast majority of our expenditures (and thus staff time) is spent on activities other than lobbying. Also, we cannot contribute to politicians, take part in elections, or do anything that constitutes electioneering. Indeed, the prohibition against electioneering has been in our by-laws since our founding in 1967, a quarter century before we became a 501(c)(3).
Nowhere in my post is there any mention of campaigning in elections, and I didn’t see any such reference in the posts linking to this blog, either. So that’s a non sequitur. As for lobbying, Amtrak’s email describes NARP as an advocacy organization. NARP’s website calls themselves an advocacy organization. One commenter on the original post who describes himself as “a long term proud member and former Director of NARP” concedes “One particular educational battle we fight is over government subsidies for transportation.”
The bloggers could’ve found out that NARP spends most of its time educating the American public on the benefits of train travel. About how energy efficient train travel is—20% more energy efficient per passenger mile than airlines, and 27% more energy efficient per passenger mile than cars (Oak Ridge National Laboratory). How the U.S. Department of Commerce estimates that every $1 billion invested in rail directly creates 20,000 jobs. How Amtrak trains serve rural communities that have no other public transportation
Yes, if only I had spoken to them I would have learned how wonderful trains are!
Finally, I would’ve directed them to the section of Amtrak’s website that shows the full discount list, which includes essentially the same discount for AAA members and for active-duty military personnel and their spouses and dependents.
Amtrak gives discounts to several organizations (that one must pay to be a member of). AAA members get discounts on train travel, they get discounts on car rentals, they get discounts on hotels. I’m never actually asked for my AAA card but I am a AAA member for the discounts.
But in this case there are discounts which are pro- a specific viewpoint and in particular, pro-subsidies for Amtrak. And that’s what seemed problematic — Amtrak going out to its customers offering a better deal than offered to the general public if they join a group which supports Amtrak subsidies (although not a better deal than offered to anyone). Another variant of the argument made in the comments is that the discount isn’t very good. Though it’s certainly being promoted by Amtrak as desirable.
The NARP response hardly warrants a big “Myth vs Fact” graphic…
But mostly I was hoping that a discussion of discounts for members of a pro-subsidy group given by a government-owned entity would be the subject of the original modest discussion. It seems like that was a tough conversation to have.
I love that argument! “The US spends more money in other areas, so there is no need to question whether this spending is worthwhile.”
PokerStars had a similar promo where you got some free money for signing up for an online poker lobby. But of course, PokerStars was a private company, so it was totally different.
Good point, Gary. I, too, received the NARP from Amtrak email, except it didn’t strike me as odd until reading your post.
One thing that does seem off to me is that I’m an Amtrak Guest Rewards member who takes the train every chance he gets, and yet I only get a discount on train tickets if I join an advocacy organization. Doesn’t seem like a great way to take care of your customers.
Benefits of train travel? Round trip senior fare from Syracuse, NY to the “Big Apple” and back:
Amtrak: $121 RT and 5 1/2 hours each way
Greyhound: $76 RT and 5 hours each way
More money and more time. So where’s the value in Amtrak?
Although none of this may really be the subject of the post, but your 2nd paragraph is full of inaccuracies and half truths.
The Northeast corridor consumes significant subsidies as well, primarily for capital costs. Northeast corridor service comes close to covering its operating costs, largely due to the relatively high fares charges since the service is fast and frequent (though an argument can be made that fares should be lowered in order to incentivize more people to shift from cars and buses to trains if there is available rail capacity.) But Amtrak owns essentially the whole railroad and it requires a great deal of capital to maintain, and the operating costs don’t cover that. Long distance service requires a greater operating subsidy but there are few capital costs.
Isn’t subsidy ultimately a form of cost shifting? It seems like very mode of transportation has a great deal of subsidy or cost shifting involved, whether in the USA or abroad, and that includes flying, particularly general aviation.
I don’t see any reason why Amtrak should exclude NARP, a paid membership organization, from discounts it gives to other groups.
Gary, thank you for bringing up this topic. I see your post was linked by Instapundit, which likely brought an Instavalanche of new eyeballs to your blog.
The federal highway spending is supported by a federal gas tax. I’m uncertain whether that tax fully covers all highway spending, but I suspect it does. There is no equivalent tax on rail that brings in revenue remotely close to rail subsidies. So the attempt to make this an equivalency is, shall we say, inapt.
@Carl they do not give the same discounts to all groups.
@Tenmoc what inaccuracies are contained in that paragraph?
Regarding what you seem to be looking for here: should amtrak be giving any discounts to NARP or AAA, I personally don’t have a problem with it.
As was pointed out by many on the other post, many in congress and such have been on Amtrak to act more like a business and trying to withhold funding based on the claims that they don’t. So they try to start acting like a business, find some partners in two completely opposing view points both for (NARP) and opposing (AAA) and now this strikes you as wrong as well.
Basically I don’t mind said situation, you are against it. That I have no problem with.
I just wish you in your very public forums would work to get the facts right about what amtrak is, how they operate, how the accountants move money around to make the NEC look more profitable at the expense of the long distance trains and how fighting for basic minuscule levels of funding each year has handicapped them in the ability to plan for the future and work towards improving instead of just surviving.
While it’s true the replies in the original post did stray somewhat from the subject of the post that’s largely because the argument in that post was so weak that it was fairly well demolished in the first few responses: namely that, as a business, Amtrak offers discounts to a variety of affinity organizations including AAA and NARP (and, for all I know, the AARP) and that it may also engage in the common business practice of lobbying. If different behavior is desired, Amtrak should made into a government program rather than a business corporation. End of story.
Again, what in the second paragraph specifically was inaccurate? You said “your 2nd paragraph is full of inaccuracies and half truths.” The best I can decipher is that you think that subsidies aren’t largely going elsewhere beyond the Northeast corridor? I’m simply saying that other areas of the country are more heavily subsidized. If your argument is that Amtrak is cooking the books on that, it would only make the economics of Amtrak look WORSE. Which of course is hardly the point of the post.
The bulk of the subsidies do in fact go to the NEC. The vast majority of Amtrak subsidies are not operating but are for capital expenses. Mostly ROW maintenance.
Secondly, “the lightly traveled routes across the country, zig zagging through Congressional districts” are in fact mostly sold out and operating at or near capacity with very reduced crews. This ties into my point above in post 9 about not being able to plan and order more cars. (Amtrak does have a car order in place now but only for trains east of Chicago at this time, to my last knowledge). So they are not lightly used. The demand is exceeding what they can provide. Also, the reason it appears more subsidy is required on these trains is because each “line” gets assigned a portion of the capital budget. But one train a day in each direction from Chicago to LAX is considered 1 line and then things more frequent like Acela Express is considered 1 line. But they get similar portions.
The last problem I have is your conclusion of that paragraph. “Train travel may make sense for short-haul travel between large population centers, some may enjoy the nostalgia of a sleeper car across country.” Yes I will agree fast frequent service between large population centers is the future face of paxrail in this country. But let’s take the SW Chief for example. It runs Chicago to LAX. Sounds like no one wants to ride the train 2000 miles. But it goes through Kansas City. It goes through southeastern CO. It goes through Northern Arizona. It goes through Barstow CA. It finally goes to LAUS. Basically the line covers many many city pairs where travel is only several hundred miles. This is the biggest issue with the usual anti amtrak arguments regarding where passenger rail works. Everyone assumes their endpoints are the only two city pairs any passenger would want to ride because that’s how a plane operates.
@Gary, post 11. I was still writing post 9 when you asked for clarification. Post 12 is my clarification.
@Robert Concord The Federal Gas tax does not fully cover the cost of highways. Subsidies from general taxes are transferred into the trust fund to cover what the gas tax doesn’t. This doesn’t include all the subsidies local roads receive from property, sales, and income taxes as well.
@Tenmoc: Guess you’re not going to dispute my pricing and time differencial in post #3. Amtrak is subsidized and is still more expensive and time consuming than the bus. What logical reason would anyone use to utilize Amtrak on my route?
@Rich in 15.
Yes. The train is not always the cheapest ticket price. Especially in the north east this is a likely case. First off, we have a lot of bus competition. We have the NYS Thruway for that bus to use to get to NYC which is paid for in large portions from federal dollars.
But what it really is about is offering choices. This blog is really often about getting a better class of product for your travel. And as such, Amtrak is a better class of product compared to greyhound.
Sort of like comparing the benefits of flying Southwest or AA/UA. They’ll both get you there, but by flying AA/UA/etc you can get more from it depending on your needs.
It really comes down to having more choices in transportation. Some have different ticket prices for different products. But all, every single one of them, is subsidized by the governments.
@Rich: Buses are more subsidized than rail since they contribute nothing (beyond gas tax) to maintaining their road network. Also, we are at an historic low in bus transportation pricing due to the explosion of competition in which many lines are willing to run buses at a loss to capture market share.
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Bus and train travel are not comparable (and I’m a happy bus traveler much of the time). The comfort level cannot be compared and it’s completely impossible to work on a bus. For me, for business travel, the time spent on the train is a net gain of money (from the time I can bill) while time on the bus is a net loss.
Robert Concord repeats one of many fact-free assertions about transportation subsidies — that highway spending is supported by user fees (gas taxes, etc.) This is not no nor has it ever been true. For decades prior to enactment of the Interstate and Defense Highway Act (1956, I believe) 100 percent of federal gas tax revenues were deposited in the federal general fund. At the same time, 100 percent of federal highway funding came from the federal general fund, and there was only the most accidental correlation between user fee revenues and highway funding levels. Since passage of the Interstate Highway Act, most federal highway (and urban transit) funding has been supported by federal transportation user fee revenues. In years since 9/11/2011, federal transportation funding for all forms of transportation has increasingly relied upon federal general fund subsidies. Currently, less than 50 percent of federal transportation spending on each mode — highways, commercial aviation and inland waterways — comes from direct user fees. The other 50% comes from federal general fund revenues.
Non-federal transportation spending is even more heavily subsidized, by property and income tax revenues, by special assessments, and by low-cost publicly floated bond issues that are often paid off from non-user fee revenues. (Railroads, for example, do not have access to public bond issue proceeds,but must rely on commercially floated bond issues that require higher interest payments and higher private processing fees.)
Amtrak currently recovers more than 80% of its operating costs from operating revenues, far more than any other national rail passenger service on earth. The overwhelming percentage of Amtrak’s federal funding supports capital expenditures, primarily for maintaining and upgrading the Boston-Washington Northeast Corridor. Very little federal funding goes toward day to day operating expenses.
A major reason for confusion about Amtrak funding is its curious bookkeeping procedures that include impossible to understand and/or explain allocations of system costs among its various services and routes. What exact portion of any given capital expenditures on fixed facilities should be allocated to individual trains or routes that share use of that facility? What exactly is properly included in individual route operating costs? Is it accurate or fair to allocate fuel costs to trains based upon an assumed average train-mile per gallon of fuel or should fuel costs be apportioned based on actual measured use by each train on each trip? Amtrak uses the former, not the latter. Thus a Washington-Florida train is allocated exactly the same fuel-cost per train mile as is a Chicago-Denver-San Francisco train. yet the former traverses relatively flat land while the latter traverses mountainous territory west of Denver.
Put it another way, no matter how framed, almost all alarms raised today about the legitimacy of any Amtrak expenditure or activity are based upon incomplete information and/or ideologically skewed views about such expenditures or activities.
@J Howard Harding — let me translate your long comment. “Amtrak engages in really duplicitous accounting. They’re hiding just how profitable they are. Rather than not trusting them because of their accounting techniques, just realize that no one can know how successful Amtrak is. Except for me. Trust me, Amtrak is really successful. And anyone who disagrees is either evil or stupid.”
Except arguing over how Amtrak allocates its capital expenditures doesn’t change the underlying economics. Even you you allocate those costs differently, they are STILL COSTS. And the bottom-line remains the same.
Pretending you can ignore “system costs” is like saying that the airlines were profitable during the previous decade once you ignore aircraft leases (and airport/gate leases).
Amtrak: CHI – LA on 7/25 one way. Three options $258 – $337. There is only one instance of each option/route per day. It is much easier to sell out when your capacity is greatly diminished. All leave within an hour of each other. Arrival 43 – 76 hours later. Total capacity is probably < 600 passengers per day? Apart from the scenery buffs, train buffs, and those who are terrified to fly, how does this make any sense at all for transporting people? By air, non-stop starts at $150, takes at least 4.5 hours, and there are about 250 choices (according to Orbitz). Rail across the west is a boondoggle. Even intercity rail in the west is not economical or timely. Now, in the east, that is another story.
@Gary with 19.
Gary. I agree they are in fact costs. That is correct. What is incorrect is ignoring the government funding for such costs for every other mode of transportation when calling out paxrail/amtrak. His use of fuel in his example was a poor choice in my opinion, but it illustrates how amtraks accounting is not on the up and up.
Yes Amtrak is subsidized. So is the airline industry. Every single car on the road. The trucking industry. general aviation, etc.
From a purely operating point of view, amtrak does ok compared to the rest.
@Jim.
You just lost me with your insistent use of the word boondoggle.
Just because you’re valuing time and cost in a singularly researched example does not mean you should take choices away from people.
> The comments mostly strayed from that topic
Actually, I just looked. Most of the comments were on-topic. You just didn’t care to acknowledge their points, let alone respond to them.
Which is to say, you are basically interested in spreading your viewpoint under the guise of provoking discussion. Not exactly a surprise, and hardly rare, but one feels that you could be a bit more transparent about it.
I .just don’t see the outrage. Yes they’ re government funded but Amtrak stil l wants to attract pax. So what if NARP lobbies.
You talk about “better fares than the general public” as if it’s some secret society. Anyokne can join for $30, $20 student dues. Hardly a difficulty. You can even pay withGuest Reward points.
The discount is 10% and there are lots of restrictions.
AAA discount is also 10% with slightly fewer restrictions. AAA membership is more than NARP. So I stil l think it’s a bit much to say NARP gets a better deal than the “general public”
@Fred Foord actually go back and look and a majority of comments are about whether Amtrak is good or bad, subsidies, etc not the question of whether a government controlled entity giving discounts to a group pushing for more subsidies is problematic
Didn’t you forget to do your union bashing today?
I come here for travel info, not for your tiresome right-wing rants. Guess I should take my eyeballs elsewhere. See ya.
@jo mama – Few could reasonably describe me as right wing, by any stretch of the imagination. Bye!
@Tenmoc, where are you getting your stats about long distance trains being sold out? From what I have seen, Amtrak LD trains lose more money per passenger than the NR Regional.
As long as Amtrak operates on the freights ROW, they won’t have the speed necessary to be competitive for long distance travel. Their real future lies in partnerships with states, like Michigan, Virginia and Maine.
@9 Gary. You really need to learn how to read! I never said or suggested that Amtrak is profitable; it is not now nor has it ever been. Nor did I defend Amtrak’s accounting.
While all costs affect the bottom line, cost allocations among trains is a serious issue because how it is done greatly influences the accuracy of claims that all “long distance” trains lose money. Some statistical experts believe that when only direct operating costs v.s direct operating revenues are compared, nearly every individual Amtrak train at least breaks even. Loses per train (or route) occur only after other corporate costs are allocated among trains and/or routes. Cost allocation is as much art as science and any given cost allocation process can be found inaccurate or at least dubious in the minds of any given observer. Fuel use is the simplest illustration of why direct measurement, rather than formula-bound cost allocation, should be used whenever possible.
Other operating costs now allocated among trains via complex and often contentious formulas include: corporate office operations; reservation system; shared station and maintenance facilities. Plus, capital costs incurred for multiple-use facilities.
One of the reasons long distance train direct costs may exceed their direct revenues is stations used at most twice per day. Repeated analyses indicate that doubling train frequencies on existing routes [and thus at existing stations]will quadruple revenues while barely doubling total route costs. Amtrak cannot do this because it lacks the capital funding needed to purchase the needed cars and locomotives.
Doubters such as @28 Graham will almost certainly insist that such calculations must be wrong because they believe long distance trains are mostly empty, and that no one will ride a train 2 or 3 thousand miles.
In fact, particularly at this time of year, it is common for all Amtrak long distance trains to be sold out for days and weeks at a time. Just try to make a train reservation for travel tomorrow or within a week and you will discover it is rarely possible. Sleeping car space is even harder to find.
Three thousand mile train rides are indeed rare — even though some of us thoroughly enjoy even longer train trips — but seat occupancy on long distance trains turns over several times between endpoints because so many people travel relatively short distances between intermediate stations.
Critics such as @28 Graham also are fond of proposing “either-or” problems/solutions that ignore far too many issues to be practical. Amtrak already partners with 16 states to provide added services with states. But no two states have ever quickly agreed to share costs for trains that serve two or more states. Only three states — Maine, Illinois, and Michigan — absorb 100 percent of the state-share costs for trains that travel outside their respective borders. Texas and Oklahoma share the cost for a single daily round trip train between Ft. Worth and Oklahoma City. In all other cases, state support stops at state boundaries regardless of of where logical trip end-points may be. More, the federal definition for “long distance” vs. corridor trains sets the latter limit at no more than 750 miles. And finally, there is the cost allocation issue — how are shared costs most fairly divided among participating states?
What a silly statement, “Some statistical experts believe that when only direct operating costs v.s direct operating revenues are compared, nearly every individual Amtrak train at least breaks even. ” Gee, if capital costs were free I’d be a wealthy man, too. And I’d have no difficulty earning back the cost of capital. My criticism wasn’t of long haul vs short haul trains, I was specifically SETTING ASIDE those usual issues. But no serious person would make the claims you’re trying to make.
AAA has a pro-road building agenda however, they are quite about it. It is however, reflected in their promotional materials and magazine.
Gary @30 increasingly appears to have a serious reading disability! Nowhere did I suggest that covering all direct operating costs with direct operating revenue creates profitability. Nor have I ever ignored capital costs. Critics of Amtrak long distance trains often denounce their “operating” loses by ignoring the comparison of direct operating revenue vs. direct operating costs. At the same time such critics often laud Amtrak’s Northeast Corridor Acela services as “profitable” even though direct operating revenue for Acela service covers direct operating costs but covers zero percent of capital or system overhead costs
no matter how either are allocated among all Amtrak trains.
Put it more simply, when Amtrak Acela and long distance services are compared on an “apples to apples basis[direct operating costs vs. direct operating revenues]” neither service is profitable nor are they significantly different in the degree to which each covers fully allocated system costs.
@J Howard Harding – None of which is relevant to the discussion here, and I’ve never been diagnosed with a reading disability. And it makes little sense to compare revenues with costs that exclude capital costs. Count all passenger revenue against all costs and you’ll see how Amtrak is doing. Depreciate the capital investment over the useful life of that investment, sure, but it makes no sense to postulate a fantasy world where capital costs don’t exist, since those expenditures do the bulk of the work in earning the revenue.
You seem to think you’re making an important or subtle or nuanced point that others just don’t understand, when iyour point is quite clear and just not nearly as important as you think it is…
@ Jim 20 makes a common error by ignoring actual Amtrak ridership patterns. Very few Amtrak passengers travel from one end of any route to its other end. A typical Amtrak passenger boards and/or departs a train at intermediate stations rather than at end-point stations. Further, a surprising number of Amtrak passengers take very long distance trips using parts of two or more Amtrak routes — such as a Charleston SC – Ottumwa IA trip, using three different trains.[Data taken from analysis completed by a now deceased NARP officer in which he closely examined daily Amtrak ridership data by passenger reservation number, not by name. This process identified actual individual passenger trips, not just raw numbers of passengers on and off at each station. It is a statistic not complied by Amtrak.]
@Gary 33 — Pardon my assumption of reading disability, but that seemed the most likely explanation for your persistent misreading of my remarks.
While you may find my apples-to-apples comparison point unimportant, it is very important in the endless battle between passenger train users and those who seek any and every potential argument to destroy Amtrak long distance trains. That is the environment in which I operate and for which I frame my statements.
I agree with you about the importance of capital costs, but a great many anti-Amtrak folks apparently believe that the only issue that matters is the existence of any subsidy of any size for rail passenger service, regardless of its source — and regardless of the size or nature of subsidies for all other transportation modes.
There is no doubt that if Amtrak had, from its first days, been provided with capital funding sufficient to cover the extensive capital needs created both by private railroad company neglect of passenger service and by on-going capital renewal expenses, Amtrak’s current operating loss would be dramatically smaller and its total on-going capital and operating subsidy needs of little or no social, economic or political consequence.
“There is no doubt that if Amtrak had, from its first days, been provided with capital funding sufficient to cover the extensive capital needs created both by private railroad company neglect of passenger service and by on-going capital renewal expenses, Amtrak’s current operating loss would be dramatically smaller and its total on-going capital and operating subsidy needs of little or no social, economic or political consequence.”
Now that’s just silly. If only we had spent hundreds of millions or billions of additional taxpayer dollars, Amtrak would be profitable?
Actually, that’s not what you said. If we gave them hundreds of millions or billions more in the past, then the current operating loss would be smaller. Sure, they’d have incurred plenty of costs in the pasts instead of now. But those are still huge taxpayer losses, that matter just as much.
Accounting trickery doesn’t change the fundamental question —
* How much does it cost to run a train system?
* How much revenue will that system generate?
* And should the government pick up the difference?
Reasonable people can differ on whether to pay the difference between costs and revenues.
There’s little doubt that the political system piles huge and unnecessary costs onto Amtrak. And if it didn’t have those costs, its numbers would look better. But that’s also necessarily the cost that goes along with taking subsidies. Once you have a government train system, it will be used for political purposes. Once it’s subsidized, there are costs associated with those subsidies — operating less efficiently, for political purposes rather than economic purposes.
Those inefficiencies may even be worthwhile — subsidy cost plus political cost to get those subsidies. Many won’t think so. But at least be honest about it, no accounting games.
It appears that further discussion attempts would be a mutual waste of time. Our basic perspectives are so vastly different that constructive talk cannot occur. Let us allow others to carry on whatever discussion they wish while we move on to more useful activities.
@Tenmoc in 16 and @LarryInNYC in 17
Just returned from NYC around midnight on Train #49. Departed Penn Station yesterday afternoon at 3:45pm and arrived SYR 11:45pm. 8 hour actual return without wifi vs. 5 hours by bus. Time is money, so: Bye-bye Amtrak, hello Greyhound —
Look, when you write about rail travel, you’ll get less argument and hassle if you actually know what you’re talking about. For instance, you refer to Amtrak’s “lightly traveled routes across the country”. In fact, Amtrak’s long distance trains are immensely popular. Most are completely sold out and sleeping car accommodations must be reserved months in advance. Most of the routes would support two trains a day instead of just one. See, the reality is, given a choice, Americans prefer trains.
@Jim Loomis if that were true they would be able to make money on the routes instead of bleeding cash.