Very Odd Stories Pushing For Amtrak Subsidies At The Points Guy

Over at The Points Guy there have been several articles promoting train travel – and in particular travel travel public policy – and they’re really odd. For instance laying out arguments for greater government spending on trains featuring the views of the head of the Rail Passenger Association, a lobbying group that promotes subsidies for Amtrak, and promoting the environmental benefits of train travel pushing such odd white elephants as California high speed rail between Merced and Bakersfield (trains that don’t attract riders are not good for the environment, since per capita emissions are high).

Let’s be clear, train travel can be great. It makes a lot of sense between densely populated urban centers situated close together. That’s why it’s successful in Europe, in Japan, and the Northeast.

It makes a whole lot less sense for,

  • Slow travel over long distances
  • Travel between small population centers, because only irregular service or limited schedules can be sustained

In many cases low emission buses can make a lot more sense, since they don’t come with the same capital intensive up front investment requirements, it’s easier to scale frequencies, and travel can be more direct.

TPG‘s Madison Blancaflor blames ‘car culture’ but that has things in some sense backwards. Because train service can support convenient travel between places people want to go, when they want to go, outside of dense city pairs situated close together cars make a lot of sense to consumers. Indeed, even in the Northeast, it’s great to travel by train from Washington, DC to Manhattan but not so great if you live in the DC exurbs.

Moreover blaming a lack of government support for railroads is odd. They quote the head of the train lobby shop, “any first-year freshmen student in economics will tell you that if you have something that’s subsidized competing with something that’s not subsidized, the subsidized thing is going to win.”

However Four of the five U.S. transcontinental railroads were literally funded through land grants – the federal government provided the land on which to build, and land that the railroads sold for financing.

Moreover complaining about highway subsidies in the 1950s being unfair to rail as the cause of today’s challenges is even more strange, since the Rail Passenger Association (then known as the National Association of Railroad Passengers) led the charge for passage of the 1970 Rail Passenger Service Act which effectively nationalized the train system into Amtrak, an entity whose board is appointed by government officials, and which has received over $50 billion in federal subsidies. This doesn’t count state support, or government money for projects like the new Moynihan train station in New York.

Just a year and a half ago Amtrak was pretending it could be profitable. Then it replaced former Delta CEO Richard Anderson at the helm, and we’re back to arguing that subsidies for Amtrak are what’s profitable for communities,

“There’s not a region of the country that would not benefit from additional or improved service,” said Mathews.

Thankfully, Congress is putting some money into improving and expanding train travel options in the U.S.

The Senate recently introduced a new bipartisan infrastructure bill that includes $36 billion in funding for rail projects. The reauthorization of the Fixing America’s Surface Transportation Act includes billions of dollars in funding as well — both to be used over the next five years.

What’s the argument for this profitability?

The way I like to describe it is that passenger trains are kind of like freight trains for wallets,” said Mathews.

Someone who takes a train from one city to another isn’t just spending money on a train ticket. They’ll buy meals and souvenirs. They’ll stay at hotels, cabins or home rentals. They’ll purchase museum admission or theme park tickets, or pay other tourist attraction entrance fees. So not only are local businesses getting an influx of cash, but those places are hiring more workers, too, and improving the job market in those destinations.

Except… this same economic activity happens if people come by train or by car. This isn’t an argument for rail. It still comes back to whether train travel makes sense for a given journey, and whether the national subsidized rail corporation is best-situated to deliver that service.

Amtrak isn’t as safe as air travel. And travelers shouldn’t be subsidized out of the pockets of non-travelers. The argument that “airlines get subsidies too” is an argument for fewer subsidies not an excuse for more. Train travel has a role to play in certain places but isn’t a panacea. When TPG quotes the lobbyist that “there’s not a region of the country that would not benefit from additional or improved service” that’s just dumb.

So why the TPG-Railroad lobbyist push now? The Senate infrastructure package that passed last week contains $66 billion for rail, mostly to Amtrak. But there’s still very much live negotiations going on in the House. Don’t expect that $66 billion to give you high speed rail, or “additional or improved service” since Amtrak plans to spend most of the money on maintenance ($38 billion just in the Northeast corridor). It’s a shame the pieces do not explain this and instead frame investment in Amtrak as “more train routes”.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. It’s been clear to me for a long time that Amtrak must be one of TPG’s biggest advertisers (along with the cruise industry), because they breathlessly publish every press release Amtrak puts out. I used to post comments noting that their Amtrak and cruise articles read like press releases, until they eliminated comments.

  2. Gary – nothing wrong w train travel (or airlines). I have 8 million miles w airline programs and always fly when I want to get somewhere quickly.

    However, I also enjoy a leisurely 2-3 day train ride (in an Amtrak private room) where I can unwind and enjoy the journey.

    Neither is wrong. You know it is sad you are becoming a negative, “get off my lawn” guy about so many things. Between the negative articles and National Enquirer click bait it is really sad how far your blog has fallen.

    BTW jealous much that TPG was bought by the largest online marketing company (Red Ventures) in the US? Bet you wish they bought your blog instead.

  3. @AC – I don’t thinK Gary is saying you shouldn’t be able to take that train journey, just that the taxpayer should not be subsidizing your “leisurely” journey. Sounds kind of ridiculous when you look at it like that.

    If the service was self sustainable, great, but all of those long distance trains lose money, lots of it I am sure.

  4. Well, TGP is basically just a shill for whatever company sponsors it, plus their writers seem to be mostly untalented diversity hires. They haven’t really been useful for anything travel related in years.

  5. Color me confused … but how exactly are automobiles not heavily subsidized in the US? The federal gas tax of 18.3 cents per gallon hasn’t been raised since 1993. This doesn’t reflect the changing nature of more efficient and EV vehicles. The highway trust fund is consistently broke with more expenditures than revenue and other funds make up the difference. Massive spending on highways throughout the US through general funds, including the proposed transportation infrastructure plan. Rail and mass transit always get left behind because there is a conservative notion that they are subsidized but cars aren’t (because people buy them and kinda pay a small tax on fuel). The truth is that all modes of transportation in the US are subsidized. Gary, you have the losing and biased argument.

  6. The most stunning revelation of this article is the fact that someone believes TPG is influential.

  7. Remember when m free markets were the backbone of American policy? Yeah not anymore, now that ye who do we feel more bad for

  8. 61% of people in the USA paid $0 in Federal income taxes last year. Who doesn’t want free money?
    Amtrak is no different except they have a better lobby. Amtrak got so much money from the Feds last year that their biggest problem is figuring out how to spend it all. They want to spend $117 billion to shave 30 minutes off the trip from DC to NY.

    Spending other peoples money is fun and easy!

    “A U.S. government commission on Wednesday proposed a $117 billion plan to remake the Northeast Corridor – the Boston-to-Washington train route that is the nation’s busiest – by 2035, potentially cutting travel times and boosting capacity.”

  9. A continuing massive subsidy for cars is parking. Many places mandate that buildings have lots of parking spaces. Many places have on street parking either free or at prices that are way below the cost of the land that they are on. Road maintenance isn’t exactly free either. Two wrongs may not make a right, but good luck getting these subsidies reduced.

    Not everyone has a car. Trains are the only way some people can afford to get from place to place.

    Looking only at Federal income taxes is a rather skewed way to consider tax policy. You really should look at all taxes, including state and local, social security, medicare, sales, property, capital gains, etc.

  10. Many comments here may poke fun at you for pointing this out, or at TPG for their obvious lack of objectivity and bias. However, there are a lot (far too many) people who read stuff on websites like TPG and never question the motives of it. So, I applaud you Gary for pointing out bias and potential collusion when you see it. Because the internet (and our media) are loaded with it and a large percentage of the consumer base has no clue that they’re being manipulated.

  11. It’s interesting that no one has commented on A’s spot-on post. As Americans it’s our right to bloviate without any regard for actual facts.

  12. Yea well the writer over at TPG is one of those green new dealers for sure, so I am not surprised that she is a bit detached from reality. They tend to have a rather simplistic view of things and just spout off without a real deep dive into the pluses and minuses of a policy. I’m all for train travel, but for parts of the country it is just not feasible. We should upgrade our high speed capacity for the areas where train travel does make sense e.g. northeast.

  13. “Europe, Japan and the northeast” have great mass transit because like roads, the public invested in it. When Grand central was built in NYC, there were still farms in Manhattan.

    50 Billion Amtrak subsidies? Yes, since 1970 they have received close to that number.
    25 Billion was spent last year supporting just the US airlines. That does not include new terminals, car rental facilities, or the $18.5 billion spent on the FAA every year.

    In the USA, mile per mile – we subsidize roads far more than anything else. Did you pay a toll on your way to the supermarket? How much profit did your town make on your journey? I think not. Yet no one seems to be surprised when hundreds of billions are spent on Roads yearly.
    The same politicians who have cut Amtrak’s budgets for years, continue to fight Amtrak’s cuts to rural areas where they live. They don’t seem to be lobbying for more low emission bus stations either.

    I’m not telling that one size fits all, and that Rail fits everywhere. It does not.

    However when talking about rail and subsidies…You might want to ask yourself…Who is the lobbyist, and where the large subsidies go? Hint: It’s not rail.

    Note: Chances are your internet traffic to read this went across long haul fiber optic routes. They generally run alongside your rail lines.

  14. @A yes, you are confused. No one at TPG or at this blog said that “automobiles are not subsidized in the U.S.”

    What TPG did say is:

    “The United States government spent what’s now equivalent to billions of dollars back in the late 1950s on a national highway program, aviation industry subsidies, canal projects and more. By comparison, the passenger rail industry received no taxpayer support, according to Mathews.”

    And what Gary responded was:

    “Moreover complaining about highway subsidies in the 1950s being unfair to rail as the cause of today’s challenges is even more strange, since the Rail Passenger Association (then known as the National Association of Railroad Passengers) led the charge for passage of the 1970 Rail Passenger Service Act which effectively nationalized the train system into Amtrak, an entity whose board is appointed by government officials, and which has received over $50 billion in federal subsidies. This doesn’t count state support, or government money for projects like the new Moynihan train station in New York.”

  15. @SeanNY2 you are one funny person and clearly don’t understand my post. My comment pointed out that automobiles are in fact heavily subsidized by the us government (not to mention local and state) and that Gary’s bias against Amtrak is misplaced and fails to take into account the overall funding context. I was not commenting on specifics of the post, nor TPG’s post.

  16. The Points Guy isn’t a news outlet or even a blog. It’s basically sponsored content with some occasional constructive criticism. It exists only to sell credit cards. That’s perfectly fine but I doubt many readers understand what they read truly isn’t “news” in the finest tradition of journalism. This isn’t the only time TPG has entered the political arena. They’ve done it on other things and many of their writers are hugely political on Twitter. I would not be surprised if some of these TPG took something of value from Amtrak. I’ve noticed lately that many of the reviewed hotels or flights were comped by the hotel or airline whereas previously they never accepted freebies.

  17. Yawn. Wake me up when car travel is no longer subsidized and this article might begin to make sense.

    Until then, routes like the Northeast corridor provide enormous benefit to our nation.

  18. odd white elephants as California high speed rail between Merced and Bakersfield

    Train travel in this country isn’t ‘odd’, it’s insane. Does anyone know anyone who wants to take a train from Merced to Bakersfield? Does that matter to the politicians who want our tax money wasted? Not a bit. Americans are governed by the bureaucrats and politicians who do far more harm than good. We can all understand that the feds need to subsidize huge projects that will benefit huge numbers of people. Huge projects that benefit nobody? Not so much.

  19. @A says: My comment pointed out that automobiles are in fact heavily subsidized by the us government

    They are. And Gary didn’t dispute that. He did say it’s very strange for rail proponents to complain about historical subsidies from the 1950s. Which it is. Indeed, if you are focused on subsidies in the present tense, you may also think focusing on the 1950’s is strange.

    The only thing confusing is what part of Gary’s post confused you.

  20. There was a period a few months ago where they were posting something like a post a day or every other day about cruising. It was so strange during a pandemic. It was pretty over the top.

    I think if it’s important to you that your content is not heavily influence by money TPG has some hallmarks that suggest it may not be the best place to go. Who knows in the end, but it does feel that way.

  21. TPG is a joke. The paid posts are obvious and sad. It’s irrelevant and people should stop paying attention to that website.

  22. Might be because TPG’s parent company Red Ventures’ CEO was a survivor of the crash on the Hudson and is more of a train guy now?

  23. “America needs a system of high-speed rail! Like Europe!”, says man who lives in a dense urban corridor similar to a European city.

  24. They are just so woke over at TPG, they are the elitists and know what is best for us. That is why they turned off comments – no need to comment on great journalism that is on point 🙂

    and I digress. I can’t understand how TPG is still successful. Everything they do is slanted and for self promotion. Did you know Brian Kelly has a black card? He is so cool.

  25. Wow I only thought the NY Times or MSNBC were big government mouthpieces. Guess the money was too hard for TPG to resist to stay neutral. Joining the Fake News.

  26. There are only two train routes in the entire world that turn a profit – all the rest are subsidized by governments. One is Paris-Lyon, and I think the other may be one of the Japanese routes.

    For rail to truly make sense, there needs to be short routes, high speeds, and dense populations willing to take the train. Downtown to downtown makes sense for routes where it’s faster than taking a plane. So would airport to airport. Once a plane is faster, including time to get to and from the airport and transit security, it no longer makes sense. The faster the train, the longer the routes that will make sense. Downtown Philly to New York or DC makes sense, but so would PHL to JFK, EWR, LGA, HPN, BWI, IAD, or DCA. Philly to Cleveland, not so much.

    California’s boondoggle is way too long and expensive to make sense. If they wanted to accomplish something to demo the concept, they should have started with ONT to LAS using French TGV technology. Highly travelled route, mostly unpopulated, would have been quick and cheap to build, relatively speaking. They could figure out how to get it through the rest of LA later. Would have been a party train every weekend. At 200 mph, it would have covered the route in 1 hr 15 min.

  27. What a horrid waste of taxpayers $$$$$// along with the $100 billion to pay for the postal workers pensions screw the TAXPAYERS!! thanks Joe

  28. The Points Guy like most bloggers receive compensation. Why is he promoting Railroad industry lobbing groups?

    Follow the $$$$

  29. Rail subsidies should be given out by population, so California, Texas, and Florida should get far more than the elitist Northeast corridor.

    Houston and Dallas should be first in line, because they are the largest cities in the US not connected by even slow Amtrak service.

    Biden and other East Coast elites want to continue to force the rest of the country to subsidize what is already the nation’s most expensive and extensive passenger rail network.

    Biden’s tiny Delaware has nine Amtrak routes. Houston, with seven times the population, has one Amtrak route that runs twice per week.

    Down with Northeast Coast thieves!

  30. Amazing how people simply do not understand how the federal government intervened in transportation and after WWII created an unleveled playing field in transportation, favoring the airlines and bus/truck/auto modes, at the expense of the passenger train.

    Just a few examples to point out the economic bias of the feds against the passenger train include:

    -The railroads used to move the mail on its passenger trains; payments for carrying the mail supported those trains until 1967 when the USPO eliminated the railway post office in favor of trucks and the airlines. Three years later Penn Central went bankrupt and Congress created Amtrak in response.

    -When Congress mandated in 2008 a new, unproven, very expensive system to prevent accidents in railroading, (Positive Train Control), the railroads, Amtrak, and commuter lines were left on their own to budget for testing and implementation. However, the same Congress funded the Air Traffic Control System for the benefit of the airlines.

    What Amtrak suffers from is a Board lacking the requisite experience required to provide competent stewardship; a line of corporate management lacking the requisite railroad experience to make the best decisions, including acting out of insecurity and jealousy unloading lines of management with real railroad experience (allowed by the Board that did not know better). Amtrak thinks and acts as an SOE, intolerant of any potential competition.

  31. A thought from the UK.

    Here we are generally the right size for train travel, have pretty good trains and they are – under normal circumstances – very well used. Virtually all were built as private ventures and even now most main lines are profitable with local and commuter lines needing subsidy. It is also incredibly safe (as is air travel)

    However, when in the states there are a great many journeys where I just couldn’t imagine getting the train as it would take too long 2-3 days when I could fly in a few hours no thanks!

    As an outsider it would seem logical to focus subsidy on regional services of up to 3-4 hours which is a sweet spot for rail travel rather than the huge cross country trips

  32. @C_M states very well, that rail travel is subsidized everywhere else in the world. So pointing towards TGV or Shinkansen as successful, ignores the billions that the respective governments put into these enterprises. Also ignores all the subsidies that the EU, UK and China are spending. The USA’s subsidies of rail are minuscule in comparison.

    The fact is there are plenty of cities that high speed rail would work successfully. There are also many where high speed rail won’t work. High speed trains between Chicago and NYC are feasible, now, with technology that exists right now. We have to get off this mantra of “it will raise taxes”! Which is probably a big exaggeration as we are already paying huge amounts of our taxes to subsidize roads and air travel. As a nation, we have to get people out of cars as much as possible. But high speed rail is not the end all solution. It is just a piece of using public transportation. Public transportation just needs to be in more places. We don’t have public transportation as a mindset outside a handful of large cities in the USA.

    When the evidence of climate change, becomes that slap in your face, things are different now, then taxes won’t matter. It will be too late when CA and TX can’t grow anything, or those same places have no drinking water. Just because, people wanted to stay commuting in their cars.

    Again Gary, you are not thought leading but click baiting. For social change to happen it requires leaders. Gary you are not exhibiting leadership with posts like this one.

  33. Well I’m all for trains making sense. But the railfan crowd doesn’t only want more train routes….. go on any train nut website. It’s all about the subsidized food.

  34. All forms of travel are subsidized, and they should be. Sidewalks, roads, bridges, tunnels, trains, airports, bike path, you name it. Those that are run or paid for by the government shouldn’t be profitable. If we took the government out of the picture, we might end up with tool booths on every city street, highway, etc. Even people that never travel themselves by one or more modes of transport benefit from government subsidized transportation due to the ports, roads, rails and airports used to bring their goods to their doorstep.

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