JEFFREY BROWN: When Amtrak discovered cracks in the brakes of several of its high speed Acela trains last week, the company suspended the trains' service, stranding thousands of commuters along the heavily traveled northeast corridor.
Amtrak officials hoped it would be a temporary problem, but yesterday they said the Acelas would be off the tracks until at least this summer, and that, they admitted, poses a potentially larger problem.
DAVID GUNN: At this point, we're primarily focused on our image with our passengers and trying to restore service so that they stay with us.
JEFFREY BROWN: In fact, Acela's troubles come as Amtrak faces a threat to its continued existence.
President Bush has proposed eliminating Amtrak's operating subsidy and called for restructuring the nation's passenger rail service. The administration's plan calls for more private investment and more support from state and local governments.
That proposal came under fire at a hearing on Capitol Hill this morning, most notably from Commerce Subcommittee Chairman Trent Lott, a Mississippi Republican and longtime Amtrak supporter.
SEN. TRENT LOTT: If we don't have well-funded proposals for highways, and for airways and for railways and ports and harbors, we're not going to be able to grow economically because we won't have the capacity. And quite frankly I don't think the administration is stepping up adequately into the transportation area in general.
JEFFREY BROWN: At stake is the more than $1 billion worth of federal assistance Amtrak relies on yearly to operate its 22,000 mile-network of lines nationwide. For a company that lost $600 million last year and is currently $4 billion in debt, that funding is essential.
But the Bush administration and many Congressional Republicans say something has to change for a company that's yet to turn a profit in its 35-year history. The Department of Transportation's Jeffrey Rosen defended the administration's approach at today's hearing.
JEFFREY ROSEN: The very fact that we came forward with our own reform proposal, with a different model of passenger rail, is a demonstration that it's a call to action. It is saying we don't want to put money into a failed model, into a failed approach.
JEFFREY BROWN: Several Democrats and Republicans responded that Amtrak is failing only because it's never received enough funding to succeed.
SEN. BYRON DORGAN: Start it up, shut it down. Slow it down, keep it open. Get rid of long distance trains. Bring in competitors. And by the way, don't adequately fund capital investment or infrastructure, and also run it as a business, I mean, what a terrible way to run a railroad.
JEFFREY BROWN: Amtrak's board Chairman David Laney said managing the railroad has never been more difficult than today.
He noted that the Acela's mechanical problems are likely to consume the rest of Amtrak's available cash and said the company needs an additional $600 million to survive this year alone.
One solution, countered critics: Save money by shutting down some sparsely traveled routes across the country. But that didn't sit well with Montana Republican Conrad Burns, who said those routes are essential to constituents in his state.
SEN. CONRAD BURNS: It's just not passenger. There is cargo. We have people along that system that use it for, daily, in their freight business, because that's the only way they can get it in there out of Chicago or Minneapolis or the other way from Spokane or Seattle. We are isolated.
JEFFREY BROWN: Fellow Republican John Sununu, who thinks that moving towards privatization is the way to go, said Amtrak's current use of Congressional funding is unacceptable.
SEN. JOHN SUNUNU: I may be alone in the opinion that spending $200 per person in subsidy for a train ride is excessive. I may be alone in thinking that $500 million operating losses in perpetuity to operate twelve or fourteen or fifteen routes, trains is unacceptable. But I don't think it's a very good use of taxpayers' money.
JEFFREY BROWN: Democrats on the committee pointed out that it was Congress who established Amtrak in the first place because no private companies wanted to manage a national rail service. Department of Transportation's Rosen argued that the private sector would respond differently today.
JEFFREY ROSEN: I think we believe that there will be companies that would be interested in competing to be train operators.
JEFFREY BROWN: As for Amtrak's more immediate future, Chairman Lott said substantial rail funding was still possible. And in the House, nearly two dozen northeastern Republicans have said they would push to restore Amtrak's federal subsidy.
JEFFREY BROWN: What exactly is the problem with Amtrak and what are some possible solutions? We talk about that now with Ross Capon, executive director of the National Association of Railroad Passengers, which promotes rail service and works with Amtrak on many issues.
And Tom Till, former head of the Amtrak Reform Council, a federal commission that looked into the future of passenger rail service. He's now at the Cascadia Center for Transportation and Regional Development. And welcome to both of you. Mr. Till, starting with you, in a nutshell, what's the problem with Amtrak?
THOMAS TILL: Amtrak has two basic problems. The first one is that it doesn't work very well, and the second one is that as it's structured it can't be funded.
Sen. Lott said that this morning, when he said that we haven't been effective in funding Amtrak. And I think he admitted in that regard that the Congress could not be under the current structure.
If you want a recipe for creating something that doesn't work, I think the thing you have to do is to create a government owned monopoly and hot wire it to the Congress, and that's what Amtrak has been for all of its 30 years. That's the reason it doesn't work very well.
JEFFREY BROWN: Mr. Capon, a recipe for making something that doesn't work, what do you think?
ROSS CAPON: Well, I think that Amtrak has increased their ridership in seven of the last eight years. I think over the past three years David Gunn, the chief executive of Amtrak, has helped restore Amtrak's credibility on Capitol Hill, the bipartisan acknowledgment of that this morning.
And we now have a board of directors, 100 percent appointed by the president, which is endorsing a request for $1.8 billion for fiscal year 2006. So I think that there's a lot of ideas on the table.
I think the Amtrak board has done a very elegant job of trying to get the usable parts out of the administration's otherwise dead-on-arrival proposal, but I think there will be a lot of change to that idea before Congress finishes with it.
JEFFREY BROWN: Well, Mr. Till, tell us a little bit more about the president's proposal. He is talking about eliminating federal aid with an idea of restructuring the entire system. Now, in simple terms, what's the idea behind doing that?
THOMAS TILL: Well, I think the idea of the administration's proposal is based upon looking at Amtrak as it is and separating its government functions from its commercial functions and then separating its train operating functions within its commercial functions from its infrastructure functions.
That way you can begin to understand how these things work, you'll have all the pieces in place to run what we really need, which is a good federal state program to provide nationwide intercity rail passenger service.
There are some things in the president's program that I think will be negotiable, there are some issues there. But I think after listening this morning to this hearing that there's a lot more agreement in many respects than there is disagreement.
JEFFREY BROWN: Mr. Capon, Secretary of Transportation Mineta has talked about this proposal, it's just as Mr. Till was saying, of putting federal state governments in charge of parts of the system, and then privatizing or having Amtrak as one of the private companies operating the system.
Sounds to me something like the airline system, but what is wrong with that?
ROSS CAPON: Well, first of all, we agree with the secretary on the federal-state partnership for the state corridors, you know, Chicago, St. Louis, New York Buffalo, the short distance corridors.
Where we disagree is that the secretary seems to talk about that as a substitute for the Amtrak foundation, and we believe without that foundation you don't have a system.
Also, the, as I think most of the senators recognized at the hearing this morning, that the long distance network, it's either a federal responsibility or it doesn't happen. And that perhaps is the biggest divergence between the administration and even the Amtrak board.
JEFFREY BROWN: If the subsidy were cut, Mr. Capon, would Amtrak go into bankruptcy, and what impact would that have?
ROSS CAPON: The answer is yes. And the impact would be very bad. I think everyone recognizes that the control of the situation would devolve to a bankruptcy court, and it would just be a real mess. It would be difficult even to maintain commuter trains in the northeast corridor because the main asset that Amtrak owns is that corridor, or most of it.
JEFFREY BROWN: And, Mr. Till, is the idea for the administration that the bankruptcy would, whatever it causes immediately would at least allow the grounds for this restructuring?
THOMAS TILL: I don't think that's what the administration is aiming at, and I think Ross is wrong to say that. The secretary said in response to Ross's question at his February press conference where he announced the transportation budget, that what they are looking for are reforms.
And there will be money there if there are reforms. But even Amtrak today, David Gunn, David Laney, the IG as well as Mr. Rosen speaking for the administration, all agreed that you can't keep running this thing the way it's running and it's not just a problem of more money.
The question that Ross raises regarding having the structure of a national system is taken care of in the administration's proposal, because they do what the Amtrak Reform Council had also recommended, which is to keep the National Railroad Passenger Corporation as a small government agency that would do the system design, that would handle the issue of funding, and that would be the glue that hold this is thing together, where the trains are operated under contract by private companies or whether they're run by Amtrak.
So I think people have to understand that this is not privatization in the sense of throwing the Amtrak's train operations into the deep water and letting it sink or swim in the private market.
You're talking about a situation in which you would be looking at reasonable government subsidies to handle these routes. There is some disagreement over the long distance trains, and I think the Congress will work that out, particularly after listening to the hearing this morning.
But nonetheless, I think you're looking at a situation in which there is the probability of moving forward, and I think the positives and the agreements that are behind the proposals that were discussed this morning are much more important than the disagreements and the negatives.
JEFFREY BROWN: Mr. Capon, come back to the Acela issue for a moment. What impact does might that have on this longer term debate?
ROSS CAPON: Well, I think the Acela issue has dramatized the importance of a good passenger rail system, because it's brought the issue into the news quite dramatically. Actually I understand ridership is up this week.
They have done a very good job of backfilling with metro liner schedules the service between New York and Washington. And I think that's a tribute to the present management.
They're not going to be able to backfill all the revenue, as Chairman Laney pointed out and that adds to the urgency of finding a solution. But I think that in terms of Amtrak today, the way they've responded to this crisis speaks well for their management.
JEFFREY BROWN: And, Mr. Till, how do you see the Acela situation?
THOMAS TILL: Well, I see the Acela situation operationally as a revenue hit and an image hit. And I think Mr. Gunn said that in the earlier piece that you ran before we started this panel.
I think in the long run, though, you have to look at it historically as a situation in which a lot of people believe that there were good alternatives for buying off-the-shelf, proven trains. They believed that when Amtrak ran the acquisition process to acquire the Acela Express, they did it very poorly.
They never created a prototype and put it out there to test it, so what we really have right now is 20 prototype trains running on the northeast corridor, and there were a lot of change orders put into that production process.
On top of that, we're dealing with a situation in which some people believe that they were expecting an easing of federal regulations, meaning that there would have been, could have been a much lighter train, and it had to be beefed up and that beefing up, the increased weight has caused some of the problems.
And finally, I think all these kinds of trains have to be run on a really first class track. And if you read the, if you listen to the inspector general this morning or if you read the inspector general's reports, you know that the condition of the northeast corridor infrastructure where these trains run has been deteriorating over the last five years or more.
JEFFREY BROWN: Okay, Tom Till and Ross Capon, thank you both very much.
ROSS CAPON: Thank you.