All aboard Amtrak reform

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It was probably just a coincidence that Amtrak cancelled its Acela high-speed lines just a day before a Senate panel met to consider President Bush's reform plan for the troubled company. Still, reform-minded lawmakers couldn't have asked for a better case in point.

Like its subsidized operator, Acela's history is one of bureaucratic heavy-handedness, unrealistic expectations and a flawed market design. The irony goes even deeper when one recalls that Acela was supposed "to carry [Amtrak] customers into the 21st century aboard 21st century trains," as Amtrak president Thomas Downs said at a 1996 ceremony announcing the new high-speed service. Instead, it looks as if Acela might be the end of Amtrak as Americans have known it for more than 30 years.

In his testimony Thursday before the Senate Subcommittee on Surface Transportation and Merchant Marine, David Laney, a member of Amtrak's board of directors, was quite candid: "The negative financial impact of the recent Acela problems could very well exhaust our working capital and leave us without available cash by fiscal year-end," he said.

Don't , however, blame Acela for Amtrak's financial woes. The passenger rail company already was anticipating having only $75 million to $100 million remaining at the end of this fiscal year, according to testimony by Jeffrey Rosen, general counsel for the Department of Transportation. In fact, Acela was a relative Amtrak success before its current brake problems, generating enough revenue every year to cover operating costs. But don't believe that if only the federal government gave just a little bit more -- Amtrak is asking for $1.8 billion -- to save Acela, that Amtrak would somehow remain viable.

The Amtrak Reform and Accountability Act of 1997 was supposed to end federal subsidies by 2002. With mounting debt and a few fiscal crises later, Amtrak is still in need of federal life-support, something its defenders are willing to give. But the administration says enough is enough. The federal government has given $29 billion in Amtrak's 34-year history. This isn't necessarily the fault of Amtrak. Rather, the 1970s-style thinking of an efficient rail service chugging along on the federal dole is one of the last remnants of the old liberalism.

Considering how wedded Amtrak's business model is to federal subsidies, it isn't likely that Congress will just be able to cut off the national railroad -- even if there were bipartisan support for doing so -- which there clearly isn't. Instead, the Bush proposal would in effect give Amtrak a six-year window to reorganize, while the federal government takes on the cost of badly needed track maintenance. At the end of the transition period, states would choose which train company to use, Amtrak being just one among many. There's a good chance that Amtrak might not survive such competition, but that's how the free market works.