I think that many of us are against the so called "750 mile" rule requiring state funding for service below that distance. I can think of many < 750 mile routes that could be done if Amtrak did not need states to chip in.
On the other hand, there are some trains that I feel should require state support if the train(s) clearly serve a limited market as opposed to others that serve a larger percentage of the country.
Now which trains are "national" trains and which are "regional" is certainly up to debate and interpretation. If we can agree as to which are which, we can use federal money to serve national trains and state/local money to serve regional trains. But good luck with that.
Otherwise, maybe we have to say all trains must be funded by states they serve. Or you give Amtrak a blank check to start a short train in the middle of nowhere and use all of our money to pay for it.
Should we require all trains to be funded regionally or have no rules at all? Is there a compromise as to which trains are regional and which are national? I think the 750 number is very arbitrary. Maybe we can say a train that runs completely in one state is the responsibility of that state and local areas and that any interstate train can be funded nationally. Or 1-2 regionally and 3+ nationally (so if a train just touches the border of a neighboring state it still should be primarily the predominant state's responsibility). Can you think of a better "rule" to separate national vs. local?
You are quite correct, the '750 mile' rule seems largely or completely arbitrary and not a sound basis for such policy making. Expressed simply, trains which operate in only one state should ordinarily be the financial responsibility of that state (Empire Service, Surfliners, etc.) while interstate trains - those which routes traverse two or more states - should be a federal responsibility.
There are some 'gray areas' or potential exceptions, and the question thus arises how to write such special cases into policy. I would submit that trains primarily serving a single state, but which operate beyond that state's borders to a (nearby) major destination or rail hub (Hiawatha, Michigan trains, etc.) should still remain a state responsibility; Perhaps train which operate past the next major destination or logical terminal point into a second state should be classified as interstate trains. Secondly, Amtrak should have the legal right (subject to contracts and negotiations with the sponsoring state agency, of course) to extend state trains beyond the point the state funds the service (for instance, extend the Illini to Memphis). This would technically make it an interstate train (outside Illinois borders), but its operation contingent on the original state service. ch.
That said, we might be as well or better off just to go back to the rules under the old 403(b) state supported services. Let Amtrak run whatever it chooses within the limits of its federal appropriation and let the states add what they will with the corresponding federal match.
You make the optimistic assumption that Amtrak has more available funds to fund operations than the states do. That is patently untrue. If Amtrak truly starts holding NEC operating surplus for NEC use we will actually start seeing LD trains off notices going out. That is why they will not do it. If Pennsylvania had not come up with funds for the Pennsylvanian there would have been no more Pennsylvanian! The sooner people start understanding this the more grounded in reality this discussion can become.
Of course an electoral miracle could change all that, but until then ....
The amount of federal funds available to Amtrak for Northeast Corridor and nationwide operations is not written in stone. Amtrak annual appropriation is completely up to Congress and could increase or contract sharply on a whim or as the political winds blow - and has done both in the past. Other than maybe very limited exceptions I don't see Congress going along with much increased funding for more long-distance trains in particular, and probably not much for Amtrak operations of any sort. Amtrak could always present a plan for increased national service (short, medium, and long distance) if Congress chooses to fund it. I don't think anyone here would expect such a proposal to get very far in Washington - more accurately it would go over like a lead balloon - but we'll never get anywhere just assuming Amtrak cannot ever have money for greater service levels.
Political fortunes can change at the state level too - look at what happened in Wisconsin and other states a few years back. It is not at all inconceivable that even in states with a longer history of state-funded trains a change in political administrations or political control of state legislatures could curtail funding for those trains. This seems less likely in the midwest with contracts in place for state purchased equipment, but again it is not impossible. You don't want large or critical segments of your rail network at the mercy of individual states, because just one could always pull the plug. This further illustrates why the '750 mile' rule is arbitrary and makes little sense; It is not practical to even try to get two or three states to coordinate and agree on funding passenger rail for interstate trains. Even for intrastate service, the states are often cash-strapped as well; Congress, if only they would stop micromanaging and start actually governing the nation, has a far larger budget at its disposal.