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Following a report on the national passenger rail system's financial troubles, Ray Suarez discusses Amtrak's future with Gilbert Carmichael, chairman of the Amtrak Reform Council, and John Robert Smith, mayor of Meridian, Mississippi and Amtrak Board Member.
Amtrak, the nation's passenger rail service, has always lost money, but this year the deficit was the largest ever: More than a billion dollars, jeopardizing its very future. Recently, the agency announced it was considering eliminating 18 cross-country train routes and laying off 700 employees. Amtrak President George Warrington asked Congress for help.
GEORGE WARRINGTON, President, Amtrak:
Amtrak and Amtrak alone cannot fix the underlying policy and economic realities of intercity passenger rail service in this country. The Congress must appropriate $1.2 billion, or substantial route cuts will be necessary at the beginning of next fiscal year. In addition, an on-time reauthorization needs to occur this year to address the critical questions about the future of high-speed rail in America and to provide basic operating subsidies for what are, always have been, always will be, unprofitable services, but deemed to be in the public interest as public services connecting communities.
But the President's new budget proposal would give Warrington about only half of what he's asking for, $521 million. Amtrak was formed by Congress in 1971, when most of the private railroads bailed out of the passenger business. It runs 265 trains every day, carrying more than 23 million passengers a year over a 22,000- mile route structure. The Department of Transportation says it cost $3.3 billion to run Amtrak in 2001.
In the front of the car, it's the rear car of the train.
Congress tired of subsidizing Amtrak a long time ago. Back in 1997, it told Amtrak it had to become self-sufficient, at least break even by the end of 2002.
Amtrak hoped that Acela, the new high-speed trains that run between Boston, New York, and Washington, would bring in most of the money needed to meet the Congressional mandate. But design problems delayed the trains' debut by almost a year and, according to the Department of Transportation's inspector general, Acela has seen some success, but still hasn't reached ridership or revenue projections, and cannot take Amtrak out of the red. The inspector general predicts that Amtrak will fall $263 million short of self- sufficiency at the end of this year.
In 1997, Congress created a watchdog agency called the Amtrak Reform Council, which is now proposing a plan to restructure the entire national rail system. The Council wants Congress to make private competition with Amtrak possible within two to five years. It wants an independent government corporation to take over the northeast corridor, the routes between Boston and Washington, D.C., and it says all future fiscal and rail system decisions should be made by an independent board separate from Amtrak's current board of directors. Congress must decide on Amtrak's fate by October of this year.
Ray Suarez takes it from there.
For a debate about the future of Amtrak, I'm joined by two people close to the issue: Gilbert Carmichael is chairman of the Amtrak Reform Council; John Robert Smith is the Amtrak board member and the mayor of meridian, Mississippi. Mr. Carmichael, maybe we can start with the recommendations. What are you telling the Congress should be done in the near term with Amtrak?
GILBERT CARMICHAEL, Chairman, Amtrak Reform Council:
Well, we found out that the American people… we've been around the country and held hearings. We found out that the American people want a national passenger rail system almost passionately, and we have been studying Amtrak, the organization, for the last three years intensely. I've got a small council of about 11 people counting the Secretary of Transportation and a small staff of about seven. We've gotten a lot of information out of Amtrak. We've had a hard time getting all the information that we do need, but we are recommending that the Amtrak organization, as it presently exists, has to be separated so that it can function better and the Congress and the American people will know what they need the money for.
Right now Amtrak is a… I call it a conglomerate of things. It's a federal agency. It's a train-operating company, and it owns a big piece of real estate called the northeast corridor that runs between Washington and up to Boston and now even up to Portland, Maine. So it's trying to be everything to everybody.
Mayor Smith, on first pass, what do you think of the plan?
MAYOR JOHN ROBERT SMITH, Amtrak Board Member, Meridian, Mississippi:
The plan is calling for the creation of several small Amtraks, two separate companies, 11 separate regional corridors. That could be as many as 13 little Amtraks. The debate must be about what is the future of passenger rail? What is the national system? How much does it cost? And how are we going to pay for it?
That needs to be the focus of the Congressional reauthorization and debate. We think it will be. The good part of this story is Mr. Carmichael and I agree where we ought to be in 15 or 20 years, even though we disagree on the creation of more administrative duplication within the system. We think the argument is not about creating more little Amtraks but about properly funding the passenger rail system that we have today. That passenger rail system must evolve into interconnecting high speed rail corridors and serve this country. The Amtrak board of directors is about change, but we're about getting the authority for the formation of those interconnecting high-speed rail corridors, the development of what Mr. Carmichael has called a new interstate system of steel. Give that authority to the Department of Transportation. It is a federal authority. They need to take that on. It needs to be funded. There also needs to be capital and operational funding for the passenger rail system, which is Amtrak today.
You heard the mayor's critique of the Amtrak reform council recommendations. How does something become more efficient by having more boards, more chiefs of staff, more sets of letterhead and the other things that occur when companies break into pieces?
I served on the Amtrak board myself during the George Bush, Sr.'s administration. I know the organization intimately. Amtrak, as it's constituted today, really can't function. Its report card is laying out on the table there. It's had $25 billion and 30 years, and it has not produced a modern rail passenger system for this country.
Now, out of this rubble that I see out here that we've been spending money on for so long, there is a need to create a new national rail passenger company and to fund it properly. And I think Congress, if it understands that it's paying for certain trains or for the train system, will fund it properly. But as long as Amtrak keeps trying to do it collectively and keeps fighting to keep the Northeast corridor infrastructure in their structure and it keeps trying to do all of the railroad policy for the nation, we're not… Amtrak… the possibility of Amtrak succeeding is just almost unbelievably impossible down the line. If the old Amtrak company will split itself into divisions and give us good, clean, clear financial statements, I think it can get the money that it needs to run the trains. I don't think the process they used the other day of threatening to stop the trains if they don't get a billion and a quarter… the question is, a billion and a quarter for what? Where are you going to put it?
Mayor, what do you have to say to that?
MAYOR JOHN ROBERT SMITH:
First of all, let's look at that $25 billion over 30 years. During that same time, we've invested $750 billion in the airline industry and in the highways of this country. In fact, we spend more in this country on icing the roads and collecting the road kill off of those highways in one year than we spend on the entire national passenger rail system. That's a shame. That can't go forward. I'm glad that Gil and the ARC agree that there must be significant operation and capital funding, but let's look at the scorecard for Amtrak.
Over the past five years, we have grown revenue by almost 40%, ridership is up by 20%. During that whole time we saw operational subsidies cut by almost 80%. Amtrak has been doing its job. So now it is time for Congress and the administration to do their job. We've done ours. They need to do their job. And we need $1.2 billion. I'll tell you what we're going to do with that, and that was made very clear by George Warrington. $840 million of that $1.2 billion is for capital. $200 million is for running the national long-distance train network that we have that I believe in, that Mr. Carmichael believes in, and $100-almost-70 million of it is to fund the excess railroad retirement, which is really a pass-through to Amtrak.
There's where the money is. It's justified. We're hearing from Congress that they intend to fund it and that they intend to actively engage in the reauthorization of Amtrak and the development of these interconnecting high-speed rail corridors, which is the future for this country.
Well, Gilbert Carmichael, for people outside some parts of the West and the Northeast corridor, how do you make the sale? Why is this a vital issue? I've heard the mayor's numbers, I've heard your numbers. In some parts of the country, where passenger rail has become almost irrelevant, it just sounds like two guys throwing numbers at each other.
Okay. If Amtrak was wise– and I hope John and that board will do it– they'll split themselves now and agree with our council report and let's get on with submitting to Congress a very legitimate budget for a national rail passenger system, how to develop the corridors and how to put it altogether and produce a new, modern train system. This country wants it. Congress would like to do it. The Bush administration put out in their budget a very good, strong statement in there that they are quite willing to work with the states and the freight railroads, and Amtrak operates on 20,000 miles of the freight railroads, and they need help too. So this reauthorization that we're talking about and funding for Amtrak next year, we've got an excellent opportunity here to create a whole new Amtrak operating company.
I don't think we're going to lose the national rail passenger concept or the passenger trains, but I think we're going to get a new company that functions better and is not managing its money as poorly as the old Amtrak is. No disrespect to John, the board, or to George Warrington and his management team — nobody could run that corporation the way it's presently organized. And we shouldn't continue with it. I beg them to split it up now and let's get on with it.
Go ahead, briefly, Mayor..
Let me answer the question that was asked that really wasn't answered, and that is how do you rationalize a system of interconnecting high-speed corridors across this country?
And it's about connectivity. It's about the same will and desire this nation needs to have on developing passenger rail that it had on developing the interstate highway system. They didn't build the interstate highway system through Mississippi based on the number of cars on the dirt roads of Mississippi at that time. They built it because we're one of the 49 states of this continent, we deserve to be connected, and it's about economic development, bringing connectivity and opportunity to our people, and our people are not just the Northeast corridor.
It's Mississippi, Alabama, Tennessee, and Texas. And the Northeast corridor was an experiment for this nation in high-speed rail. It's been a successful experiment. Now other parts of the country want to learn from that success and implement it. Where Congress and the administration I believe ought to be is detailing a 15-year plan in five segments of how this national system will be sustained and how it will be evolved into these high-speed corridors over these 15 years. Each five-year segment would show what will be happening within those corridors and within the national system. Any investment in the national system ought to be that which propels it and moves it towards high-speed and higher-speed rail. You see ridership and revenue grow dramatically when you do that.
Mayor Smith, Gilbert Carmichael, thank you both.
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