WASHINGTON, D.C. — Amtrak President David L. Gunn’s declaration that the railroad might shut down this week was, in a symbolic way, the defining moment in a 31-year debate of what America wants the passenger train to be, how much it would cost and how we should pay for it, the Washington Post reports.
At first, only a few people believed that Gunn’s shutdown declaration was more than a familiar ploy to squeeze money from Congress. Now, with the start of the shutdown planned for Wednesday or Thursday, an administration trying to guide the country through a war on terrorism and an uncertain economy is faced with a choice of bailing out Amtrak yet again or letting the nation’s passenger rail system — local commuter lines as well as intercity trains — become paralyzed.
Even if the administration should not help Amtrak, which is unlikely, Congress would almost certainly do what it has done repeatedly. For three decades, it has saved Amtrak from efforts to kill it by both Democratic and Republican administrations, but has never given it enough money to do more than limp along.
Now the question is whether the federal government will provide only enough funds to keep Amtrak going.
Gunn knew Amtrak was financially troubled before he came out of retirement to become its president five weeks ago. But he had no idea how much, until he decided to ignore all the confusing financial reports and do his own cash forecast.
It wasn’t easy; Amtrak’s books were a mess. After a few weeks he had found that there was barely enough cash to run the system into July. Amtrak had already mortgaged almost everything it owned. And its auditors had discovered $200 million in losses that no one seemed to have known about.
“That was when I said, this is real, this is serious,” he said.
Gunn’s cash forecast and the audit by KPMG, finished less than two weeks ago, prompted Gunn to declare that Amtrak would begin an “orderly shutdown” unless the Bush administration or Congress found a way to pump about $200 million into the railroad — $204.9 million to be precise, as Gunn is.
31 Years of Red Ink
That Amtrak has survived 31 years, never making money, is a near miracle.
Year after year, administrations have cut all money for Amtrak from annual budgets, only to have Congress step in to give the passenger train corporation just enough money to survive. Year after year, Amtrak would threaten to eliminate long-distance routes that happened to go through states served by key House and Senate committee chairmen unless the railroad got more money. Congress complied, but it was never enough to do the job right — and kept adding more trains.
Some of the trains were real dogs, the most famous a train from Washington to Parkersburg, W.Va., the home town of then-House Commerce Committee Chairman Harley O. Staggers (D). The train gained the irreverent nickname, “Harley’s Hornet.”
But the passengers showed up for most other trains, even when the trains were late and dirty. That is what drove the political process. Some people rode trains, often filling them, and others liked the reassurance of knowing the diesel air horn would still blow through the night. People wanted passenger trains.
There have always been two Amtraks — the Northeast Corridor and the long-distance trains. No one has disputed that the Boston-Washington corridor is needed; Amtrak carries more New York-Washington passengers than both airline shuttles combined. Long-distance trains are another matter, however. Proponents describe long-distance trains as necessary transportation for rural America. Opponents call them money pits, land cruises or rolling national parks.
William H. Withuhn, transportation curator for the Smithsonian Institution’s Museum of American History, said that in modern America the business traveler drives the need for fast corridor travel, and the cost of new highways and airports would be far greater than keeping the trains going. He said, however, that the survival of long-distance trains is driven by something else.
“Rail constituencies are somewhat vocal,” he said, and many of them have political connections at the local levels. Local politicians, in turn, have connections in Congress.
A classic case is Senate Republican Leader Trent Lott of Mississippi, one of Amtrak’s strongest partisans. Lott once talked of killing Amtrak, but he did not count on the power of persuasion of Mayor John Robert Smith (R) of Meridian, Miss., who controls many votes in east central Mississippi. Smith is such a rail partisan that he is chairman of Amtrak’s board.
But Withuhn said something deeper is probably transpiring, too. Rural towns have lost a lot, and “a segment of America is those small towns that don’t want to lose what they have.”
Resilient Railroad
Amtrak was formed May 1, 1971, because of political pressure. There was a more practical reason, too. President Richard M. Nixon wanted to relieve the passenger burden from private freight railroads, which in the late 1960s and early 1970s seemed headed toward bankruptcy and nationalization.
But the White House never believed Amtrak would last, and administration and congressional sources said at the time that Nixon aides believed no one would ride the trains and Amtrak would go away within two years.
The first showdown over long-distance trains came on Nov. 25, 1970, when Budget Director George P. Shultz ordered Transportation Secretary John Volpe to issue a route plan with only a bare minimum of long-haul routes. Volpe countered, adding a few more routes to the selection. Pressure then was brought by the National Association of Railroad Passengers and the Interstate Commerce Commission to add even more routes. The final route system is basically the one in place today.
One reason the bill passed was that staff members at the Federal Railroad Administration assured Congress that Amtrak would turn a profit after two years. Those staff members, many of whom today are high-ranking railroad and government officials, say nothing else would have saved the passenger train.
Over the years, the same drama was played out annually. The Office of Management and Budget attempted to kill Amtrak, but Congress intervened. In the end, Amtrak never received enough money to be all things to all constituencies, and its financial situation grew steadily worse.
For years after 1971, Amtrak failed to order new equipment, relying on inherited and deteriorating cars and locomotives that often were hot in summer and cold in winter. Only after it became clear that train passengers were stubborn and would not go away did Congress provide money for new equipment. Eventually, Amtrak gained something the airlines already had — a computerized reservations system.
Similar cycles ensued through the years: Amtrak would defer maintenance on equipment, it would deteriorate further and there would be even more breakdowns and late trains. Then Amtrak would buy new equipment, often through long-term loans and occasionally with congressional appropriations.
Today, Amtrak equipment is in reasonably good shape, compared with past years, but the old cycles again have surfaced. As the losses and debts grew, Amtrak cut back on maintenance and budgeted nothing to fix wreck-damaged cars. More than 50 badly needed cars, damaged in wrecks, are now sitting at Beech Grove Shops in Indianapolis. Gunn has begun the process of slowly returning them to service.
5-Year Financial Deadline
In 1997, Congress required that Amtrak become operationally self-sufficient within five years. For the first few years after that, former president George Warrington assured Congress time after time that Amtrak was on the “glide path” to that goal. Few believed the happy public relations spin, but it seemed easier for Congress to just believe him and do nothing new.
But key members of Congress, rail unions, state transportation departments and others knew time was running out on Amtrak’s finances. Like a bureaucratic Paul Revere, Transportation Department Inspector General Kenneth Mead had testified repeatedly that a financial train wreck was coming. Even Warrington changed his tune last year, telling Congress that self-sufficiency was not possible and Congress needed to make some hard decisions about Amtrak’s future.
Reacting to the warnings, Congress already was considering more than doubling Amtrak’s budgetary authorization for next year, and the administration, with Deputy Transportation Secretary Michael Jackson doing the heavy lifting, was considering basic changes in Amtrak’s structure. Until the past few weeks, however, most of them seemed to think the crisis could be put off for a year or two.
Gunn’s declaration of imminent bankruptcy was believable to these key insiders partly because he spent many years developing a reputation as a straight-talking manager who does not play games. Other things had an effect on the attitude on Amtrak, including the realization after Sept. 11 that there was only a weak rail alternative to airlines and the intrusive security hassles at airports.
The Bush administration has provided a new touch of déjà vu. For more than five months, the Transportation Department and the Office of Management and Budget have struggled over what to do with Amtrak.
In simplified terms, administration sources said Transportation Secretary Norman Y. Mineta and Jackson wanted to develop an Amtrak model that could succeed. Budget Director Mitchell E. Daniels Jr., like every budget director since the Nixon administration, wanted Amtrak to go away.
When the two organizations finally held a meeting with President Bush a couple of months ago, a shaky truce soon dissolved into an argument, sources said. Bush, with other things on his mind, told Mineta and Daniels to get their heads together and come up with a way to “fix it.”
The Transportation Department and the OMB finally developed a set of restructuring principles. A speech outlining them was ready about two weeks ago, but was postponed to avoid interfering with Amtrak’s negotiations for a loan. Then, after Gunn announced the threatened shutdown, Mineta hastily set the speech up for Thursday morning, to get ahead of a hearing that the Senate Appropriations subcommittee on transportation insisted on holding about Amtrak that afternoon.
The question facing Congress and the administration is whether, after 31 years, they can agree on both a way and the will to “fix it.”