Amtrak Has Problems, But a Lack of Federal Funding Is Not One of Them
28th May 2015
Veronique de Rugy pulls back the curtain.
While this continued faith in government’s ability to heal most wounds with funding is par for the course in Washington, it’s time to set the record straight. The reasons for Amtrak’s struggles have more to do with its history of poor management than they do with its lack of cash. One need only peruse reports from the Government Accountability Office and Amtrak’s own inspector general to see what can go wrong when the discipline of the market is absent. As the IG noted last year, Amtrak “has not consistently used sound business practices in each phase of the capital planning process, including developing sound project proposals with performance measures, learning from the execution and outcome of projects, and controlling unauthorized expenditures.”
Amtrak’s fundamental problem, however, is the same one that afflicts all government endeavors: Operational decisions are often made on the basis of political concerns rather than sound economic and financial reasoning. The clearest examples of this are Amtrak’s money-losing long-distance passenger routes, which are kept on life support with federal funds because politicians generally prefer to waste other people’s money than confront the tiny but vocal minority of people who benefit.