Tuesday, February 8, 2011

The Rail to Nowhere

Today, Vice President Joe Biden announced Obama's plan to fund $53 Billion for a high speed rail initiative.  Here are VP Biden's remarks:

While sensible infrastructure spending may make sense, spending $53B on a high speed rail when history has proven it does not work is foolish.  For starters, only France's and China's high speed rail is profitable.  Every other nation that has plunged funds into high speed rail came up short on their investment. 

But for the United States it is much worse.  When the U.S. Congress essentially bailed out private freight lines in 1970 to create national private rail service, the service known as Amtrak has failed to deliver.  The only profitable line is the Northeast Corridor between Washington, DC and Boston, Massachusetts.  And the notion of high speed rail along this corridor is a farce.  For starters, Amtrak leases the rail lines owned by private freight rail firms for $121.9MM annually, and these rail lines in high-density North East cities are landlocked and not conducive to high speed rail.

Besides the logistical impossibility of implementing high speed rail, sinking $53B into an already proven financial black hole is beyond stupid.  According to Amtrak's own financial reports, Amtrak has failed to be profitable over the last six years.  Here is a break down of their financial history (2005-2010):

  • FY 2010:  Net Loss of $1,309,297,000
  • FY 2009:  Net Loss of $1,264,355,000
  • FY 2008:  Net Loss of $1,132,778,000
  • FY 2007:  Net Loss of $1,120,909,000
  • FY 2006:  Net Loss of $1,067,990,000
  • FY 2005:  Net Loss of $1,192,345,000
Since 2005, Amtrak has delivered financial losses of continuing operations of over $7,087,674,000!  Continuing to fund an operation that fails to be profitable is beyond ridiculous.

Furthermore, if Amtrak is such a viable and worthwhile operation, Congress should privatize Amtrak.  National Passenger Rail Corporation, Amtrak's legal name, should be its own firm run as a private enterprise.  It already has a board of directors.  Ironically, VP Biden's son Hunter, served on Amtrak's Board of Directors from 2006-2009, including a stint as Vice Chairman.  No wonder, Biden is fond of Amtrak.

Obviously, Obama's "Winning for the Future" involves careening that rail car down to financial ruin.

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