GOP Seeks Bidders on Amtrak Rail Lines

[krtaylor]

True. I think they're on the same continuum though. You have:
- Sell off Amtrak in its entirety to the highest bidder
- Contract out various Amtrak lines to the lowest bidder(s) in each case
- Contract out various Amtrak services to the lowest bidder(s)

Different approaches to the same goal - privatization, and reduction in taxpayer dollars used - and not even entirely mutually exclusive. It remains to be seen which or what combination the GOP proposal mentioned in the thread-starter will be, much less what will actually take place (my money is on "no change").

[Station Aficionado]

Why do people think that "privatizing" Amtrak would save taxpayer money? I suggest you take a look at the British experience. The gov't spends more (even after inflation) now that private companies run the trains than when BR did. I think that was quite often the US experience with the various privatizations embarked upon by the prior administration, as well. In my view, privatization is simnply a code-term for handing over public assets and/or funds to friends of (ie, donors to) the party in power. That's been the GOP more often, but the Dems like to get in on the game, too (eg, the parking meters in Chicago). It's never really about doing things more cheaply. Any savings in labor costs (generally achieved through the time-honored tradition of sticking it to the workers) are more than eaten up by the profits, dividends, executive compensation and other niceties that usually get buried in the SGA line item.

[Greg Moore]

Why do people think that "privatizing" Amtrak would save taxpayer money? I suggest you take a look at the British experience. The gov't spends more (even after inflation) now that private companies run the trains than when BR did. I think that was quite often the US experience with the various privatizations embarked upon by the prior administration, as well. In my view, privatization is simnply a code-term for handing over public assets and/or funds to friends of (ie, donors to) the party in power. That's been the GOP more often, but the Dems like to get in on the game, too (eg, the parking meters in Chicago). It's never really about doing things more cheaply. Any savings in labor costs (generally achieved through the time-honored tradition of sticking it to the workers) are more than eaten up by the profits, dividends, executive compensation and other niceties that usually get buried in the SGA line item.

Cynically it's because "the government is incompetent".

I think the reason given though is "profit incentive". Private industry will work harder to cut costs. Amtrak as is will simply ask for more money.

[Station Aficionado]

I think the reason given though is "profit incentive". Private industry will work harder to cut costs. Amtrak as is will simply ask for more money.

That's just it--the profit incentive may well eat up cost savings, resulting in no decrease in taxpayer expenditures. Indeed, a number of the privatizations undertaken by the federal gov't have actually resulted in higher costs to the taxpayer than when functions were performed by "incompetent" in-house government employees. At its core, every business has one purpose, to make money. That's not a criticism, just an acknowledgment. Government's purpose on the other hand is to provide public services. Whether you think this is limited to public safety/national defense, or extends to providing transportation services (whether highways, airport or trains), that's not the same as profit maximization. In the Amtrak context, I see little reason to believe that a private operator would reduce costs for either passengers or taxpayers. Higher fares and higher subsidies are great ways to increase profits (see, again, the Chicago parking meter situation).

[michaelk]

I think the reason given though is "profit incentive". Private industry will work harder to cut costs. Amtrak as is will simply ask for more money.

That's just it--the profit incentive may well eat up cost savings, resulting in no decrease in taxpayer expenditures. Indeed, a number of the privatizations undertaken by the federal gov't have actually resulted in higher costs to the taxpayer than when functions were performed by "incompetent" in-house government employees. At its core, every business has one purpose, to make money. That's not a criticism, just an acknowledgment. Government's purpose on the other hand is to provide public services. Whether you think this is limited to public safety/national defense, or extends to providing transportation services (whether highways, airport or trains), that's not the same as profit maximization. In the Amtrak context, I see little reason to believe that a private operator would reduce costs for either passengers or taxpayers. Higher fares and higher subsidies are great ways to increase profits (see, again, the Chicago parking meter situation).

I think the politicians dream is that the profit venture can do the same job for say hypothetically 80% of the cost. Then the government and the private vendor would 'split the profit' where the vendor pockets some and the government pays less so 'pockets' the rest. And as you point out doesn't hurt that the pol has now made someone a load of cash who's likely to dump some of that in the campaign chest.

Honestly I don't know, but i suspect if we took a balanced look there's probably plenty of cases where it was a failure and plenty of cases where the government did in fact save some money. There's probably poster children for each side. Here in NJ I recall privatizing the motor vehicle inspections was a nightmare- didn't really save anything but the service was even worse than the -oh so happy- government employees who used to do the job. On the flip side (and although not exactly privatizing)- i remember some time ago when New York City was piles of time and money over budget redoing the ice rink in Central Park- they actually turned if over to Donald Trump to fix and he whipped it out in record time for a reasonable buck. Perhaps transit related - does any one know if the Design Build Operate contract that NJ Transit has for Hudson Bergen Light Rail is considered a success?

Now hypothetically assuming 50% works and 50% fails and the total amount of money is basically a wash- the pol still has made someone rich 100% of the time who contributes to their campaign. So maybe it does come down to campaign cash....

Seems both in private and public sector that those responsible for "outsourcing" usually stick around only a few years and take all the accolades for the projected savings- then they move on before the long term costs have really been figured out so they can't be pinned with a failure if it is one. So even if it was a failure they have moved on and no one can be held accountable.

[Jeff Smith]

Complicating Factor: Pensions.

http://thehill.com/blogs/transportation ... l-pensions

A key Democratic member of the House Transportation and Infrastructure Committee said Tuesday that House Republicans' plan to privatizing Amtrak rail service could have an unintended consequence: draining the fund for the retirement of rail employees of all stripes.


Amtrak employees make up 10 percent of the national railroad retirement system, Rep. Corrine Brown (D-Fla.) said. Thus, they make up a provide a large percent of the money in the trust funds that pay for those retirements, the Railroad Retirement and Railroad Unemployment Insurance trust funds, she said.

[michaelk]

Complicating Factor: Pensions.

http://thehill.com/blogs/transportation ... l-pensions

A key Democratic member of the House Transportation and Infrastructure Committee said Tuesday that House Republicans' plan to privatizing Amtrak rail service could have an unintended consequence: draining the fund for the retirement of rail employees of all stripes.


Amtrak employees make up 10 percent of the national railroad retirement system, Rep. Corrine Brown (D-Fla.) said. Thus, they make up a provide a large percent of the money in the trust funds that pay for those retirements, the Railroad Retirement and Railroad Unemployment Insurance trust funds, she said.

Problem? Or added bonus? Will depend on who you ask.

Reading comments on the link its full of fun stiff like 'ponzi scheme's and the like

[2nd trick op]

Many years fo watching the rail industy lead me to conclude that the entire excercise in this thread is meaningless. The freight roads gave up on short distance passengeer traffic, with the excepton of commuters, as soon as the affordability of automobiles for the middle class became evident. By 1960, improvements on all fronts in the airline industry put the writing on the wall for long distance.

What emerged with Amtrak was little more than a preserved anachronism, created as "middle class welfare": aimed at the mosrly-elederly, non-driving, reluctant-to-fly crowd. Released from the automatic discipline of the market, the bureaucracy was free to redesign what was left into something that resmbled the streamliners of the immediate past, but had no hope of full recovery of costs, since the "head-end" revenue of that day was gone.

If anone out there can explain to me how this overgrown Lionel Set, staffed by protected employees who don't have to answer to the laws of supply ansd demand. and operated over (and occasionally in conflict with) a system that has to provide much of the physical plant, I'll be waiting. I expect to wait for a long time.....

But having outlinrd that poiint, I don't expect all passenger service outside the mass-transit market to disppear either. The econmic forces which made traditional passenger dervice obsolete are now inveighing just as forcefully against the casual use of private autos over longer distances. The practice of runnig up several hundered miles per week on one's personal "wheels" is getting very expensive.

And for a lot of us, probably the majority, the responsibility for developing alternatives/successors to the urbanized, auto-centric lifestylr must, almost by definition, lie within the public sectoer. While a basic knowledge of the workings of, and necessity for, a largely-privatized economy has advanced greatly since the 1930's, a substantial portion of the electorate still doesn't grasp even the basics. When the facilities themseves are both costly and immovable, and are often located in territory traditionally viewd as politicall hostile, privatte financing isn't likey to be forthcoming. So we're stuck with, at best, a shaky partnership subject to the fickle winds of politics.

[SooLineRob]

If anone out there can explain to me how this overgrown Lionel Set, staffed by protected employees who don't have to answer to the laws of supply ansd demand. and operated over (and occasionally in conflict with) a system that has to provide much of the physical plant, I'll be waiting. I expect to wait for a long time.....

OK. Here I go...

Mr 2nd Trick,

What the heck do people think railroad employees get paid? What the heck is a "protected employee"? What are you asking?

I've got 16 years' seniority as a Locomotive Engineer (freight) with the same company. The Minot, North Dakota flooding has severed the mainlines (BNSF and CP) through Minot. I've worked (and earned) 3 days pay in 20 days. I'm not being paid "lost wages" or "made whole"; I'm not working. Neither are my co-workers. We're sitting at home, working once a week.

I know a 30 year Amtrak employee that works Amtrak's Empire Builder to Minot. He's not working either. He's not getting paid either. He's sitting at home too.

I realize these instant examples are not topic specific; however I wish to dispell the long-held public opinion that railroad workers get big fat paychecks whether they work or not. Which also dispells the notion that railroad labor's wages are not subject to the rise and fall of supply and demand.

If some fly-by-night operator "buys" the NEC, or any Amtrak route for that matter, the employees will see the result on their W-2's.

This misconception of "protected railroad employees" being insulated from economic reality must cease.

[Jtgshu]

Are those "protected" employees protected from furloughs as well? Im sure that would be news to the tens of thousands of fellas who have been furloughed over the past few years.

In general RR wages are a lil higher than other industries because we need to be actually able to live on them. The nature of the job and lifestyle doesn't allow you to get a second job somewhere to supplement your income. Its easy to get a second job if you work a set schedule in your job - get off of work, go to your other job. But working on call in particular, you simply can't (or shouldn't, of course some guys do) get another job because you don't have a schedule. and of course, i don't mean working under the table for a friends friend construction company, etc.

and for those jealous of Railroad retirement benefits - well here is a lil secret - we (and the railroads contributions) pay more into it than folks pay into Social Security. But we get more back in the end. So its worth it. Can't have something for nothing like folks want with SSI.

That is a good point about RRB tho, and one has to wonder if it really is an "unintended" consequence. I don't think the Congresscritters are dumb enough to mess with RRB, but if they do, oh boy, its gonna get REAL ugly REAL fast industry wide.

[2nd trick op]

My point remains: Taken as a whole, Amtrak bears very little resemblance to any corporate entity seeking to survive, and hopefully, grow in the emerging post-industrial economy. It has a few segments which show promise, and at least as many which are likely indispensible given the new realities of the energy picture, but there are others, particularly Long Distance, which are little more thsn the end product of the trading of political influence. When the politicians finally face up to the fact that the current slump is going to last until a great deal of dead wood and protected "porK' will have to be swept away, much of Amrtrak LD may prove to be a prominent target.

With one exception (the Empire Builder), every Amtrak Long Disrtance route is paralelled by a Greyhound/Trailways route offering several daily departures to Amtrak's usual one, and the availability of feeder service and daylight departures provides the highway passenger carrier with another advasntage. As part of a package strengthening the societal "safety net", we might one day see the revival of a basic transport system geared to the needs of the isolated, the elderly, and the carless, but I don't see the handful of Amtrak "cruise ships"as well-suited to that role.

Our indudstrial sector has been "running on fumes" since the first Bush assumed occupancy of the White House over twenty years ago. In large part, that scenario is the product of societal tends, particulatly the growth in demand for "service indusrty"and a more feminized and sensitied labor force to staff it, that lie beyond the control of any political hack. But the bill will still come due, and too many pitch(wo)men both sides of the aisle will cointinue to ignore it while the pile of wood to be cut continues to grow.

[travelrobb]

From The Hill (again!):

Looking into the proposal at the behest of Democrats on the House Transportation and Infrastructure Committee, the CRS ruled that the proposal to transfer assets in the Northeast Rail Corridor currently owned by Amtrak to the Department of Transportation runs afoul of the constitutional provision that requires compensation for transactions of value.

Meanwhile, tomorrow is "Railroad Day" on Capitol Hill, apparently. Don your engineer's overalls...

[SooLineRob]

2nd Trick Op,

So ... about those protected employees staffing the overgrown Lionel set ... nevermind.

Have a good night!

[Jeff Smith]

The RPA likes the idea, specifically, the common ownership of infrastructure and dispatch.

Of course, for topic updates, don't forget to "like" us! https://www.facebook.com/RailroadNet#!/

http://westfaironline.com/2011/14846-hi ... il-pushed/

In June, U.S. Rep. John Mica of Florida introduced the proposed Competition for Intercity Passenger Rail Act, which would transfer ownership of the Northeast Corridor from Amtrak to the U.S. Department of Transportation. The DOT would be tasked with soliciting bids from the private sector to build a high-speed rail line on the corridor.


...

The Regional Plan Association (RPA) said it sees the new federal bill as a positive first step toward implementing high-speed rail in the Northeast Corridor, but cautioned that the existing corridor’s repair needs totaling $8.8 billion must be addressed by the public sector. Mica’s draft legislation also proposes to open state-sponsored and long-distance passenger rail corridors to competition with Amtrak, which RPA opposes.

“The separation of infrastructure from operations allows both entities to focus on a narrow set of operational goals,” said Robert Yaro, RPA president, in testifying on the bill last month. “This arrangement also facilitates neutral dispatching, which would optimize use of the corridor, reduce delays for both commuter and intercity trains, and allow new private operators to enter the market. To fully realize these benefits, the legislation should in fact go further, authorizing U.S. DOT to acquire the Northeast Corridor rail infrastructure that is currently held by commuter railroads and state transportation agencies. The entire corridor should be owned and managed by one government?chartered infrastructure corporation, ideally one with a long?term outlook and some degree of political autonomy.”

[djlong]

So, get the public to pay for nearly $9B in capital improvements and THEN let the private sector profit from it.

What profits would be returned to the taxpayers who BUILT the damn thing?