AMTRAK ANNOUNCEMENT BEFORE THE
U.S. CHAMBER OF COMMERCE
WASHINGTON, D.C.
JUNE 20, 2002
8:30 AM
Thank you Bruce (Josten, Executive Vice President for Governmental
Affairs, US Chamber of Commerce) for that nice
introduction.
Today Amtrak faces a profound financial crisis. While this is not news,
it is a relatively newfound consensus at Amtrak itself,
and among its supporters in Congress.
Just over a year ago, I reluctantly approved Amtrak’s request to
mortgage its key access rights to New York’s Penn
Station. That transaction was urgently required to meet Amtrak’s
payroll, a precondition for survival to the end of the fiscal
year. In retrospect, that transaction was the last-gasp breath of a
fiction – the fiction that Amtrak could achieve operational
self-sufficiency by its statutory deadline of December 2002.
Congress created Amtrak in 1970 as a for-profit corporation. From
this inception, policymakers have had an expectation
that has proved elusive -- the hope of operating a national passenger
rail system with modest federal support.
Congress has made successive attempts at re-establishing this original
premise, but the last three decades have proved that
Amtrak’s model of a national network of passenger rail is just not
sustainable without massive, continued federal support.
To maintain the fiction that it could be self-sufficient without making
fundamental reform, over the past five years, Amtrak sold,
leased and mortgaged valuable assets to meet operating expenses.
During the same period, it lacked adequate funds to
maintain its capital infrastructure. A capital backlog of over $6
billion is the result.
Just recently, Amtrak’s new President affirmed the need for Amtrak to
borrow some $200 million from a private line of credit
by the end of June to meet current year operating expenses or begin a
process of shutting down operations for the remainder of
the fiscal year.
The Administration is reviewing the viability of options for how Amtrak
can solidify access to this line of credit, and Federal
Railroad Administrator Allan Rutter will be testifying this afternoon
before the Senate Appropriations Committee to report on
those deliberations.
We are reviewing ways to preserve the opportunities for Congress and the
Administration to adopt significant reforms to our
national passenger rail policy, principles of which will be outlined
in these remarks.
Unfortunately, until recent months, Amtrak lacked fundamental financial
controls even to determine the extent of route
cross-subsidizations. Amtrak’s performance was insufficiently
transparent to the Congress, the Department of
Transportation and the public. It has embraced numerous business plans
– including some that have set it in competition with
the freight railroads, upon whose tracks Amtrak operates on all routes
outside the Northeast corridor. These plans have in
large part been unsuccessful.
At the same time, Amtrak’s supporters in the Congress and the states
have forged an ad hoc alliance with advocates for
numerous high speed rail projects that could easily cost over $200
billion over the next 20 years. Supporters of Amtrak and of
high speed rail have thus sought common cause. Legislation creating
various means of bond financing, now under
Congressional consideration, reflects this strategy -- to intertwine
inextricably the needs of Amtrak and high speed rail.
The first recommendation I make today is that we must have the clarity
of mind and discipline to decide how and where to fund
and operate intercity passenger rail while separately deciding whether
to fund and operate high speed rail.
In a long career in Congress and now as Secretary of Transportation, I
have not wavered from an important conviction:
intercity passenger rail service is an important part of the Nation’s
transportation system.
Some who share my conviction about the potential of intercity passenger
rail have made a further, unwarranted assertion -- that
Amtrak’s problems can be fixed simply by a massive infusion of federal
dollars. The Bush Administration rejects that
assertion.
The country can ill afford to throw billions of federal dollars at
Amtrak and just hope its problems disappear. Thirty years’
experience should teach us that merely hoping for better performance is
a doomed approach.
We offer our ideas as a contribution to the current public debate about
Amtrak funding and reauthorization. We hope to
broaden the debate, while providing a benchmark for gauging the
acceptability of various prescriptions now being offered by
Congress for an ailing intercity passenger rail system.
First, we believe that our intercity passenger rail network must
transition to a system dictated by fundamental economics
without Federal operating support. Prices and passengers – not politics
– should drive service. Amtrak’s current route
network provides too many services with limited market appeal at high
operating costs to the federal government.
Second, Amtrak should transition into a pure operating company. We
believe a gradual separation of train operations from
infrastructure ownership would shed better light on the true economics
of passenger rail and help the public sector make better
educated decisions about the future of intercity passenger rail.
What I am talking about today is an Amtrak dedicated to operating
passenger rail services for profit, but not responsible for
investment in and maintenance of the passenger rail infrastructure.
Third, we must introduce market principles into intercity passenger rail
services.
The Transportation Department has provided extensive details about the
fact that high unit costs undermine Amtrak’s
competitive position relative to other passenger modes. Indeed,
currently less than one percent of all U.S. trips over 100
miles is by rail. We firmly believe that marketplace discipline
could deliver higher quality service at competitive prices.
This would entail competition for provision of certain routes, through a
process that would assign passenger rail operating rights
to a single operator in a corridor after a careful process overseen by
the Federal Railroad Administration. We also see
possibilities for alternative sourcing of system-wide support services
such as reservations, food service and equipment
maintenance, much as other transportation companies have done.
Fourth, we believe a new intercity passenger rail policy should be based
on a strong foundation of state and federal planning
that clearly identifies costs, benefits and funding approaches of
passenger rail, designs services that complement and connect to
other passenger modes, and thinks through practical implementation
problems -- such as environmental and operational issues
-- before launching projects.
We believe that clear-eyed, comprehensive, financially-responsible
transportation planning, which is mandated for other surface
transportation modes, is crucial to the future of new forms of passenger
rail.
I also believe that the ownership, management and control of the
Northeast Corridor must be carefully evaluated. The
multiple states and corridor users need time to identify practical
solutions to these issues. It will take extensive coordination –
and a deliberate approach – to assess the mechanisms appropriate to
manage this vital national asset.
During the transition, Amtrak would continue to operate the
corridor. But perhaps at some intermediate juncture, it should
be required to do so through a separate corporate entity formed for that
purpose. Again, our goal should be to find lasting
solutions to the thirty-year capital investment problem. This will
take time, to be sure. But the job must be done.
Our nation’s governors and the states they lead are major participants
in developing and implementing public infrastructure
investments. So it should come as no surprise that a central element
of the Administration’s vision entails a partnership with
the nation’s governors and other state and local leaders to support
intercity passenger rail.
To promote a systematic deliberation about these important issues, today
I invite the National Governors Association to
appoint a Governors’ task force to work with me to develop the details
of this partnership. In particular, I also invite the
Northeastern Governors to work with me on core corridor infrastructure
issues.
From Amtrak’s perspective, its on-time performance is significantly
affected by access delays not within Amtrak’s control.
The next authorization for intercity passenger rail -- and plans for
high speed rail expansion -- must balance equitably the
interests of passenger and freight rail operators. And we should
consider further the impact of reform on Amtrak’s workers.
Last summer I called for early consideration of authorization for
intercity passenger rail. The Bush Administration undertook
an extensive evaluation of the core problems at Amtrak, and has
formulated key principles for reform that I described here
today.
I am now personally persuaded that more debate and further consultation
with transportation policymakers are needed. A
full five-year authorization seems unlikely this year. The vision I
have outlined for the ongoing debate is incremental, yet would
bring fundamental change. I look to the past to understand the
challenge we face in the future, not to cast blame or stir
rancor.
Our long term vision would incorporate definitive performance milestones
in a new authorization. It would impose statutory
discipline and accountability in moving toward a viable system of
intercity passenger rail service. It would preserve and
strengthen a national asset.
Congress is presently considering passenger rail policy. I announce
these principles today so that any Congressional
action will be measured against this vision for the future.
The Administration is concerned about recent Congressional actions that
would increase funding for Amtrak without
addressing any of the core problems that have produced this crisis.
We believe this is the wrong approach.
For this reason, the Administration opposes FY 03 Amtrak funding in
excess of the $521 million in our budget unless
such an increase is accompanied by significant reforms consistent with
the principles I have outlined.
I believe it is time to recognize the role that intercity passenger rail
service can play in America’s transportation system, to offer
a comprehensive vision for the future of intercity passenger rail, and
to set out a proposal that offers an alternative to the
previous thirty years of Amtrak history – a vision worthy of a passenger
rail system that plays a sustainable role in the national
transportation network.
The Bush Administration looks forward to refining this vision and
discussing the implications of these policies with interested
stakeholders.
Thank you for your attention.
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Prices and passengers – not politics
– should drive service. Amtrak’s current route network provides too many services with limited market appeal at high
operating costs to the federal government.
Does Mineta honestly believe that Amtrak currently provides too many services??? I think nearly all of us will agree that there aren't enough routes and services to meet demand. This seems to be the premise upon which the administrations' entire policy is built. But an error in the premise, necessarily leads to errors in the conclusion.
I really get the feeling that the administration didn't do its homework. There's certainly no evidence here that they even remotely understand the intricacies of the problem. The plan is mostly free-market ideolgy, selectively applied to the railroads and no other transportation system.
This is especially disappointing coming from Mineta, a Democrat who was instrumental in the creation of the successful Capitol Corridor, which, according to this sort of thinking, shouldn't be popular. You can bet that if Tommy Thompson were Secretary of Transportation he wouldn't have allowed those words out of his mouth. I wonder what Thompson is doing today...
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Trust God, love your neighbor, and never mistake opinion for truth.
-Mr. Toy
And how many billions? All Amtrak has gotten on average, per annum, is $767 million to run trains in the entire USA. That's not too much money when compared to the scale of what their competition gets...
On the same note, the airlines' problems will not disappear too rapidly despite the $15 billion they got in one fell swoop after 9-11...