Envisioning the Amtrak Transition Process to Private Enterprise

[dlagrua]

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover. Point is that whether you are a supporter of a government owned Amtrak or not, eventually the USA runs out of money and good or bad, changes will occcur. I predict that something can and will happen to Amtrak. This is not a knock on anyones favorite political party but a reality of our financial affairs that must eventually be dealt with.

When the day comes, this is how I view the transition of Amtrak to private industry.

Compared to the rest of thr Amtrak LD routes the NEC is in pretty good shape. Most of the LD routes are not but I strongly suspect that congress will move to privatize all of Amtrak in the next four years.

This is how I see it happening.

The daily operation of Amtrak will be given to private industry.

The government will still own all of the equipment for now.

The employee pension plans are vested and their compensation packages will be government protected by subsidies. Most employees will be retained but food service will be contracted out. As Amtrak employees retire the private RR operators will hire their own employees at greatly reduced compensation packages. What else is new?

Fares will remain stable but the routes will grow and the RR's will continue the upswing pattern. Service will get better as some railroads will now have full control of their track or will it?

Thats my prediction on how it will go.

I deliberately did not present arguments to whether or not privatization would be fair, efficent, or benefical but in todays heated political climate, picking on 2.8% of the federal transportation budget seems to be in style.

 

[the_traveler]

I do not think any part of the Amtrak system will go private - and certainly not to the freight railroads! (Why do you think Amtrak was formed in 1971? The freight railroads were losing too much money on passenger service and wanted to concentrate on freight service!) Just look at passenger trains (what there was) in the 1960's!

As an example of privatization, I'll just say 3 words: Grand Luxe Vacations (aka American Orient Express)!

 

[Ryan]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

 

[dlagrua]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

I agree that my post is based on guesses, perhaps some logic but it could be based on false premise.

As for running out of money, in principle it could never happen to the USA but in reality simply printing money eventually reduces it to just worthless paper. You might disagree but the rule of economics usually prevails. As for privatization, should the administration change we very well may see it. Do you rule this out? If so why is this argument so outlandish? Remember my position is not pro or con but an opinion of a possible scenario.

 

[Ryan]

As for running out of money, in principle it could never happen to the USA but in reality simply printing money eventually reduces it to just worthless paper.

Yes, but we're nowhere near that happening.

I don't rule out the demise of Amtrak as we know it if Romney/Ryan somehow find their way into the White House, but it'll have little to nothing to do with "running out of money".

 

[AlanB]

The employee pension plans are vested and their compensation packages will be government protected by subsidies. Most employees will be retained but food service will be contracted out. As Amtrak employees retire the private RR operators will hire their own employees at greatly reduced compensation packages. What else is new?

While much of your post is pure fantasy, this part can already be discredited. An Amtrak engineer or conductor could in most cases right now make more money by transferring to a freight operation than they get from Amtrak. So sending passenger service over to the freights would actually be better for them.

And all of the current contracts that Amtrak has for its employees are outgrowths of the contracts from the freight RR's back when they ran passenger rail service. Contrary to popular belief, the contracts between Amtrak & its employees really haven't become as bloated as many people think. They were already bloated to begin with and Amtrak has had little success at changing them.

And short of allowing Amtrak to go bankrupt, cease operations totally, waiting a year or two to privatize, there is no hope that the freight RR's will be able to change those contracts if they were to reacquire passenger service. And last I knew they weren't looking to do so.

Here's just one case in point of the inefficiencies that Amtrak inherited from the freight RR's in its contracts. Regional trains change conductors & engineers between Boston & New York at New Haven. That change was due in part because of the old switch between electrics and diesel @ New Haven, along with the Springfield line.

Today that change is no longer necessary, as demonstrated by Acela where Amtrak was able to get a different contract. The crew there goes Boston to NY and back. But still, Amtrak can't get an agreement to change the contract for Regional crews.

 

[stntylr]

It's my understanding that since Amtrak is a corporation that Congress can't seize it's assets and give them to a private company without paying a fair market value. This was brought up hen Rep Mica wanted to take the NEC away from Amtrak.

In order to privatize wouldn't the department of transportation have to sell it's preferred stock. Since no body would want to buy those shares the government would have to let Amtrak go bankrupt then it's assets could be divided up and sold off. Again who would to buy any of the equipment but some of the facilities would have value.

 

[amamba]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

Agreed.

Dlagrua, I know you live in the NY area, I suggest you read any editorial by Paul Krugman at the New York Times. He is a nobel prize winning economist and a professor at Princeton. I am going to believe him on this issue.

 

[Shortline]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

Agreed.

Dlagrua, I know you live in the NY area, I suggest you read any editorial by Paul Krugman at the New York Times. He is a nobel prize winning economist and a professor at Princeton. I am going to believe him on this issue.

This is true-But, I've also been to many places where it cost 50,000,000 blivits (insert local currency here) to buy a sandwhich. Guess how nice a place it was? True, we can't run out of money. But we can run out of things that money can buy when it's devalued to the point it's worthless. I remember buying coffee in Italy in the late 90's when it was still the Lira-I recall around $3000 Lira for a cappuchino. Cars were in the millions or billions.

 

[Shortline]

As for running out of money, in principle it could never happen to the USA but in reality simply printing money eventually reduces it to just worthless paper.

Yes, but we're nowhere near that happening.

I don't rule out the demise of Amtrak as we know it if Romney/Ryan somehow find their way into the White House, but it'll have little to nothing to do with "running out of money".

But we're getting closer to it every day. With the rediculous huge debtload we now have, the easiest way for us to get out of it, would be to devalue it. That premise in and of itself, lowers the value, as a certain percentage of foriegn currency investors assumes that will hapen. And, to an extent, it IS happening.

 

[PerRock]

I sadly don't see passenger rail continuing here in the states if Amtrak is dismantled. The freight RRs aren't going to pick up passenger service, and as long as the tracks are owned by them no 3rd party (like Virgin or First) are going to want to step in and negotiate service. We could probably see someone like Virgin taking over operations on the NEC, and the California services could be operated by someone else (maybe even UP). But beyond those two corridors (and maybe one or two other smaller corridors) all passenger service will cease to exists. The only saving grace for Passenger Rail if it were privatize is if provisions were put into place to require the continuation of current services.

Now if I could do things my way...

I'd 'buy back' all the track from the Freight RRs (and DOTs) into the public domain (like the highways are). Then contract out services on those lines, each line would get put into a region and each region would get a freight contractor and a passenger contractor. The various RR companies would then bid for the contracts. Long Distance passenger services would be their own region. Tickets & stations would be managed by a public entity but still run by the contractor.

peter

 

[Ryan]

As for running out of money, in principle it could never happen to the USA but in reality simply printing money eventually reduces it to just worthless paper.

Yes, but we're nowhere near that happening.

I don't rule out the demise of Amtrak as we know it if Romney/Ryan somehow find their way into the White House, but it'll have little to nothing to do with "running out of money".

But we're getting closer to it every day. With the rediculous huge debtload we now have, the easiest way for us to get out of it, would be to devalue it. That premise in and of itself, lowers the value, as a certain percentage of foriegn currency investors assumes that will hapen. And, to an extent, it IS happening.

Reality begs to differ, inflation isn't a problem:

(inflation, monthly from 1914 to present)

Edit:

Data pulled from here, graphed by me:

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

 

[Just-Thinking-51]

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover.

The United States of America is not bankrupt.

We pay the lowest amount of taxes of any industrial nation.

We have a Military that is the largest of the any on this planet.

They got you hook, line, and sinker.

 

[NY Penn]

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover.

The United States of America is not bankrupt.

We pay the lowest amount of taxes of any industrial nation.

We have a Military that is the largest of the any on this planet.

They got you hook, line, and sinker.

Does having low taxes and a huge military somehow make the nation more fiscally stable? No, it's exactly the opposite.

Back on topic: Given that the unions have a stranglehold on Amtrak and its policies, not much will change any time soon.

 

[George Harris]

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover.

The United States of America is not bankrupt.

We pay the lowest amount of taxes of any industrial nation.

Define industrial nation. We mauy not even be one anymore. Even if we are, the answer is, No we don't.

We may be under the rates in western Europe, but western Europe is not the world.

We have a Military that is the largest of the any on this planet.

No we don't. There are several countries that have universal military service.

To explain the obvious: Countries where all males or all people that are physically able are obligated to perform military service.

Israel, Singapore, Taiwan. I am reasonably certain that there are several others but these are just off the top of my head.

They got you hook, line, and sinker.

Yes, we can print our own money whether there is anything behind it or not, but it will ultimately become near worthless. Ask Argentina, and there have been quite a few others that have had similar experience.

 

[rusty spike]

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover.

The United States of America is not bankrupt.

I just hope you can still say that 10 years from now. :blush:

 

[Ryan]

Does having low taxes and a huge military somehow make the nation more fiscally stable? No, it's exactly the opposite.

It also means that Amtrak is neither the cause of nor the solution to our current fiscal situation.

You don't have to be a genius to figure out that the USA is bankrupt and we owe more and more money each month than the flow of tax revenue can cover.

The United States of America is not bankrupt.

We pay the lowest amount of taxes of any industrial nation.

Define industrial nation. We mauy not even be one anymore. Even if we are, the answer is, No we don't.

We may be under the rates in western Europe, but western Europe is not the world.

Of course we're still an industrial nation:

And while our tax rates aren't the lowest, they're pretty darn close:

We have a Military that is the largest of the any on this planet.

No we don't. There are several countries that have universal military service.

To explain the obvious: Countries where all males or all people that are physically able are obligated to perform military service.

Israel, Singapore, Taiwan. I am reasonably certain that there are several others but these are just off the top of my head.

Yes we do, by any rational measure. The countries you list may have mandatory service, but they're so small that our military is vastly bigger.

They got you hook, line, and sinker.

Yes, we can print our own money whether there is anything behind it or not, but it will ultimately become near worthless. Ask Argentina, and there have been quite a few others that have had similar experience.

You must have missed my post above - inflation is not even close to being a problem.

I just hope you can still say that 10 years from now. :blush:

Since it's impossible without massive changes to the world economy, I'd say that's a safe bet.

 

[jis]

I sadly don't see passenger rail continuing here in the states if Amtrak is dismantled. The freight RRs aren't going to pick up passenger service, and as long as the tracks are owned by them no 3rd party (like Virgin or First) are going to want to step in and negotiate service. We could probably see someone like Virgin taking over operations on the NEC, and the California services could be operated by someone else (maybe even UP).

Yeah, Virgin Rail probably need something to operate just to remain in existence, having just lost the WCML contract to First. At least they still have Cross-Country to hand onto.

But neither Virgin nor First* are stupid enough to negotiate anything until government brings more money than they currently bring to the table. People really ought to read the history of what happened in course of privatization of passenger rail in the UK.

Also an outfit like Virgin is unlikely to take over maintenance of NEC, which is the major cost item. Someone else will have to pick that up. Merely operating trains on the NEC is but one part of the whole puzzle. We of course can guess what will happen if the various transit agencies en route are given the responsibility to maintain the NEC. One just needs to look at the MNRR maintained part of the NEC and what happens to Regionals and Acelas there.

*Edit: Meant to say First here, not Cross Country as I did originally

 

[MikeM]

Let's just cut to the chase. The whole "we're bankrupt" line is nothing other than a talking point to cut social programs, domestic spending, and taxes. And that includes Amtrak spending. What we're left with in this new conservative universe is an extremely well funded military, subsidies to high contributing industries like Oil and Utilities, low tax rates on high incomes (aka "job creators"), and no social safety net. Think vouchers for Medicare that are worth progressively less, retirement that is totally self funded for those who can afford savings, and the only safety net for the disabled will be church and other community funded options.

As for Amtrak, ride your trains today if you vote Republican. I doubt even the NEC would survive unless the northeast states band together to purchase and run the corridor. Maybe California HSR survives, but with no federal funds, that's doubtful. Federal investment in railroad infrastructure would probably continue because of it's economic contribution (i.e. well paid lobbyists) but it won't have any connection to passenger rail. Maybe some cities may purchase old superliners to display at their new train museums, where Amtrak used to stop.

I think Ryan did a very nice job above illustrating the dynamics in play through stats above. But in short, there will never be privately operated passenger service in the US unless the federal government provides some subsidy similar to that which is provided to all other modes of transportation.

 

[Paulus]

Also an outfit like Virgin is unlikely to take over maintenance of NEC, which is the major cost item. Someone else will have to pick that up. Merely operating trains on the NEC is but one part of the whole puzzle. We of course can guess what will happen if the various transit agencies en route are given the responsibility to maintain the NEC. One just needs to look at the MNRR maintained part of the NEC and what happens to Regionals and Acelas there.

It's entirely possible that they would. Aside from integration of infrastructure and operations being a very good thing for rail, the NEC is more than capable of paying for its own maintenance. Deferred maintenance might require federal support, but the regular maintenance should be less than Acela's operating surplus.

 

[jis]

Also an outfit like Virgin is unlikely to take over maintenance of NEC, which is the major cost item. Someone else will have to pick that up. Merely operating trains on the NEC is but one part of the whole puzzle. We of course can guess what will happen if the various transit agencies en route are given the responsibility to maintain the NEC. One just needs to look at the MNRR maintained part of the NEC and what happens to Regionals and Acelas there.

It's entirely possible that they would. Aside from integration of infrastructure and operations being a very good thing for rail, the NEC is more than capable of paying for its own maintenance. Deferred maintenance might require federal support, but the regular maintenance should be less than Acela's operating surplus.

Anything is possible but actual facts always get in the way as spoiler to eternal optimism

 

[stonesfan]

Yeah, Virgin Rail probably need something to operate just to remain in existence, having just lost the WCML contract to First. At least they still have Cross-Country to hand onto.

But neither Virgin nor Cross-Country are stupid enough to negotiate anything until government brings more money than they currently bring to the table. People really ought to read the history of what happened in course of privatization of passenger rail in the UK.

Virgin lost Cross Country a few years ago! Now Arriva runs this service. Unfortunately whilst they've done a good job on WCML, XC was something of a disaster under Virgin. Replacing old 7-8 coach trains with new 4 or 5 coach trains. No point in having a shiny new train if you spend half of your journey standing in the vestibule.

 

[jis]

Yeah, Virgin Rail probably need something to operate just to remain in existence, having just lost the WCML contract to First. At least they still have Cross-Country to hand onto.

But neither Virgin nor Cross-Country are stupid enough to negotiate anything until government brings more money than they currently bring to the table. People really ought to read the history of what happened in course of privatization of passenger rail in the UK.

Virgin lost Cross Country a few years ago! Now Arriva runs this service. Unfortunately whilst they've done a good job on WCML, XC was something of a disaster under Virgin. Replacing old 7-8 coach trains with new 4 or 5 coach trains. No point in having a shiny new train if you spend half of your journey standing in the vestibule.

Yeah, I thought I goofed just after posting that, since silly me, I did travel by XC last year and do remember it was not Virgin!

So is Virgin pretty much out of the rail passenger business in UK come December? Or do they have something else?

It will take a bit to get used to First West Coast. I suppose it should be pretty similar to First Great Western, which BTW, I liked quite a lot on a quick trip from Reading to London Paddington last year.

 

[stonesfan]

Yeah, I thought I goofed just after posting that, since silly me, I did travel by XC last year and do remember it was not Virgin!

So is Virgin pretty much out of the rail passenger business in UK come December? Or do they have something else?

It will take a bit to get used to First West Coast. I suppose it should be pretty similar to First Great Western, which BTW, I liked quite a lot on a quick trip from Reading to London Paddington last year.

Virgin are pretty much going to be out of the railway altogether now. Mixed feelings in general. Their onboard services and image have always been pretty good. They've managed to put together a pretty impressive timetable on what is the busiest intercity line in Britain. The staff are generally excellent (see what happens when you pay more than other operators!) However, there's also a feeling they tried to impose airline style conditions onto the railway, ie slightly cramped and claustrophobic seating. Prices, especially on the day of travel are also on the high side.

First arent bad, but one feels they have bitten off more than they can chew and may even end up 'giving up' on the WCML rather like Nat Ex did on the ECML. Could all end in tears!!

Not sure the likes of Virgin would ever want to bid on the likes of the NEC, although I could see them taking an interest in any new high speed developments. Even a 'privatised' railway such as the UK model, theres still quite a few govt subsidies being pumped in!

 

[Swadian Hardcore]

As far as trains in the UK go, I like FGW and East Coast as well. Not impressed with FCC.

Gotta love those HSTs, preferable to less comfotable MUs!