Amtrak Untracked

A significant, but largely unreported, development that should be of interest to politically attuned Americans transpired without fanfare in early October. Amidst overriding concerns about terrorism and war, anthrax and bombing campaigns, the British company Railtrack, created in the mid-1990s to run the UK's newly privatized rail-transport system, quietly went bankrupt and reverted to government administration. Starry-eyed investors, who had earlier jumped aboard for a presumed ride to shareholder heaven, lost their shirts when the mismanaged company, no longer able to pay its bills, sank into receivership.

Although taking place an ocean away, the story of Railtrack's demise should be a cautionary tale for the US, whose own passenger rail system has been inching toward privatization in recent years. Rarely has passenger rail functioned successfully in the private market anywhere in the world; it's a public-service necessity that generates few profits and, for that reason, has mostly been left in modern times to government management. Yet, America's passenger rail service, a federal responsibility for 30 years, is trending in exactly the opposite direction. Unbeknownst to the travelling public, the government-operated National Railroad Passenger Corporation (or Amtrak, as it is better known) has been mandated by law to transform itself into a quasi-private, market-driven organization by late next year.

In 1997, a conservative Congress passed the Amtrak Reform and Accountability Act, which suspended a financial sword of Damocles over the perennially struggling rail company. Although never able to earn a profit during its prior three-decade existence, Amtrak was given five years (until December 2002) to cease its dependence on federal subsidies and achieve full operational self-sufficiency, or face liquidation by Congress. In the meantime, it would no longer function as a government corporation and no longer hold a monopoly on US passenger service. It would, on the other hand, have the discretion to dismantle the existing national rail network by closing unprofitable routes and to treat its workers as private-sector employees -- gaining the right, for instance, to lock them out in labor disputes, dismiss them without separation pay, and replace them with contractors.

To oversee gradual privatization, the 1997 law also created a bureaucratic star chamber with inquisitorial authority called the Amtrak Reform Council. The council's statutory role is to monitor Amtrak's financial performance, make policy recommendations, and prepare a plan for a restructured passenger rail system in the event the company fails to achieve self- sufficiency by the end of 2002. Its unstated political role is to badger Amtrak and prod it to quickly privatize itself, pressuring the railroad in the meantime to enhance revenues, mostly by cutting labor costs through downsizing, negotiated wage reductions, or changes in workplace rules.

One of the key powers conferred on the council in 1997 was that of determining the likelihood of Amtrak meeting its self-sufficiency deadline and, deeming it unlikely, to demand of the company a plan for its own liquidation. Jumping the gun in an outrageous manner, the council showed its true colors in early November by declaring in a 6-5 vote that the railroad would not make its 2002 goal. In effect, the premature evaluation requires Amtrak to plan its own suicide, pending a reprieve by Congress.

The council's biases are not surprising given its political makeup. Whereas the legislation establishing Amtrak in 1970 created an operating board dominated by presidential appointees, the reform council is dominated by congressional appointees from the era of the Contract with America, with six of its 11 members chosen by Trent Lott and Newt Gingrich. The watchdog organization's vice chairman is Paul Weyrich, co-publisher of the Conservative Digest, founder of the rightist Heritage and Free Congress foundations, and stalwart Reagan/Forbes Republican. The Amtrak Reform Council is, in other words, a vehicle devised to implement the rail-transportation policies of the Republican Revolution. At bottom, it is hostile to the very concept of Amtrak.

Actually, Amtrak does need change, but of another sort. As the company's own chief executive has said, it has had an impossible mission since its inception. Speaking last May before the National Press Club, President and CEO George D. Warrington pointed out that for 30 years, Amtrak has been expected to perform like a business, in the guise of a profit-making government corporation, while simultaneously serving community needs like a nonprofit organization. "You cannot," he argued, "meet a mandate to run a national [rail] network and operate in a true, profitable, commercial sense."

On the other hand, an ideologically inspired privatization scheme is just as impractical. The very reason for Amtrak's creation was the failure of the non-governmental system that preceded it. Under a 1958 amendment to the Interstate Commerce Act, regulation of private passenger railroads passed from traveller-friendly state railway commissions to the ICC, with the requirement that the federal agency let the nation's railroads discontinue passenger lines at their discretion. The railroads almost immediately began to abandon passenger service in favor of the more lucrative freight business, cutting the track-miles operated for passengers almost in half within 10 years.

Shortly before the debut of Amtrak in 1971, Charles Luna, then-president of the United Transportation Union (successor to Eugene Debs' old railway union) wrote, "Perhaps the greatest danger to passenger train service is the railroads' apparent desire to eliminate passenger runs. ... The railroads were apparently convinced [by the late 1960s] that there was no money to be made in carrying people." In order to reinforce that judgment, he went on, railroad managers neglected advertising, downgraded facilities, and discouraged ridership. As one who remembers the torn seats, leaky windows, and stale sandwiches of the pre-Amtrak era, I can only concur with Luna's verdict.

The Rail Passenger Service Act of 1970, which formed Amtrak, ended the worst of the bad old days. Nevertheless, the government-operated system has never earned a profit, and there's the rub for free-market conservatives. Although Washington spent $33 billion last year on highways and $12 billion on private aviation, they begrudge Amtrak the mere $500 million it received in subsidies -- less than 1% of the total federal outlay on transportation.

Since its beginnings a generation ago, Amtrak's operating shortfalls have cost the government $23 billion -- real money, as they say. But we are in the process of dispensing more than half as much ($15 billion) just to keep the airlines solvent until the end of this year. In a time when air travel is fraught with uncertainty and highway travel is increasingly problematic, why not divert more tax dollars (not fewer) to the people's railroad? Why not accept, furthermore, that broad-based passenger rail is not only a necessary public service, but that it can't be expected to satisfy commercial expectations while fulfilling nationwide transportation needs?

And, finally, why not admit that Amtrak would function best as a re-created public corporation unburdened by the need to show an annual profit? Adopting Britain's solution to its Railtrack dilemma (creation of a nonprofit entity run by a government-appointed board representing railway constituencies, such as employee unions and passenger groups) might be just the way to keep Amtrak on the rails.

Wayne O'Leary is a writer in Orono, Maine.

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