Get ready for another multibillion-dollar federal bailout of the deficit-ridden Amtrak system. Congress, eager to fatten up on pork during the rush to adjourn, is ignoring warnings that Amtrak once again is hemorrhaging red ink with no end in sight. They'd rather give Amtrak more money and pretend that it will bring about high-speed trains in the Southeast, Midwest and West.
This new assault on taxpayers is spearheaded by Senate Finance Committee Chairman William Roth of Delaware, who is pushing a bill to allow Amtrak to sell $10 billion in bonds to build high-speed trains. Unfortunately, Amtrak and Congress are redefining what constitutes a high-speed train to include slow trains.
If the bill passes, says Amtrak, someday air travelers will kick the airlines in the shins, shift to trains and -- presto! -- paralyzing airport gridlock will ease. That's a flat-out falsehood. Once Amtrak-style high-speed projects are completed, many trains outside of the Northeast will travel no faster than trains did when Harry Truman was president in 1952. Hence, don't expect the billions more we spend on Amtrak to remove a single flight from the county's 25 busiest airports.
Even if Amtrak could justify another bailout, this one is highly premature. By law, Amtrak must prove it can survive without federal operating subsidies by the start of fiscal 2003. Considering that Amtrak lurched toward bankruptcy only three years ago, pumping boxcar-loads of new money into Amtrak now is a form of insanity.
The new bill offers tax credits to investors in lieu of interest payments on bonds through 2030. But another folly is underestimating the costs. Sen. Frank Lautenberg (D-N.J.) and Rep. Amo Houghton Jr. (R-N.Y.), who along with Roth dreamt up this incredible ploy, predict taxpayer costs could reach $2.3 billion. But Ron Utt, a senior fellow at the Heritage Foundation in Washington, said of the government's implicit interest payments: "The loss of tax revenues to the U.S. Treasury would total $16 billion if interest rates remain unchanged at 8 percent"
No one knows what all this money will buy. A recent General Accounting Office report said Amtrak hasn't yet produced cost estimates for developing high-speed rail outside the Northeast. The Amtrak Reform Council doesn't know, either. And the Transportation Department's inspector general, Ken Mead, told a Senate committee on Sept. 26 that the costs certainly will be much higher than Amtrak claims.
Another unscrupulous feature: The bill's tax-credit provision transfers costs from Amtrak's books to Treasury Department ledgers, creating another off-book Amtrak subsidy. …