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Amtrak Loan Backlash: Old Myths Die Hard

Some people were not happy with the U.S. Department of Transportation’s new $2.45 billion loan to Amtrak’s Northeast Corridor.

The Delaware News Journal argued that “It’s bad business to prop up Amtrak,” a project that “continues to bleed money.” Money Morning said “since its inception over 40 years ago, Uncle Sam has propped up the railway to the tune of about $1 billion a year… That's ‘bad investing 101’ right there.” The Washington Examiner bemoaned that “Amtrak has never made a profit and has survived through rocky periods when its continued existence relied on billions of dollars each year in congressional appropriations to keep it afloat.” The articles keep coming… and prepare yourself for some truly righteous anger along the same lines if you wade into comment sections on major news websites, railing against “more money down the Amtrak rat hole.”

Amtrak’s loan backlash shows that a certain transportation funding argument is alive and well – and it’s one we’ve been refuting for a long time. It goes like this: If transit projects don’t sustain themselves financially, or even turn a profit, we shouldn’t support them with taxpayer dollars.

None of the above articles debate whether passenger rail in the Northeast is a good idea. The Northeast Corridor connects the most densely populated part of the United States, including Washington D.C., Boston, and New York. It moves a workforce that contributes $50 billion annually to the GDP, and carries three times as many people between D.C. and New York as airplanes. And every trip brings with it reduced global warming pollution compared to travel in a car.

The problem with the articles is that they argue Amtrak is a failure because it doesn’t pay for itself. This argument is based on a persisting misconception of transportation spending: that competing transportation options, namely roads and highways, are self-sustaining. But that is simply not the case. In our 2015 report Who Pays for Roads, we found that in 2012 general taxes (i.e. not the gas tax or other fees paid by drivers) accounted for $69 billion of highway spending. That’s a lot more than the $2.5 billion Amtrak loan – but it’s a lot harder to find the outrage over that spending.

Any transportation future we decide on will require a financial commitment from the public. No transportation options are free. Privatization, the most commonly proposed alternative to taxpayer spending on transportation infrastructure, can pose many problems and can’t come close to meeting our country’s wide and varied transportation needs. It’s time to toss aside the idea that roads and highways are free or even cheap for taxpayers, and start debating which transportation choices deliver the most benefits for the public.

Photo: National Park Service