Monday, September 6, 2010

Obama Knows Transportation

In a Labor Day speech today in Milwaukee, Wisconsin, President Obama called upon Congress to dump $50 billion (yes, again with a 'B') into transportation. There are two issues that I must point out.

The first is the Keynesian business that government spending spurs the economy. If that were the case, then why stop at $50 billion? Obama's plan includes rebuilding 150,000 miles of roadway and 4,000 miles of rail. The rail, he says, will be 'paid for' and will not add to the deficit. I am here to tell you, that if the government knows anything, it is the transportation business.

Which brings me to my second point. The U.S. Government look no further than Amtrak, Uncle Sam's very own passenger rail company. If we take a quick glance at the Amtrak consolidated financial statements from 2008 and 2009 we will see just how good at business it really is. In 2008, Amtrak posted a net loss of $1.13 billion dollars. Not to be outdone, Amtrak lost $1.264 billion in 2009. According to SubsidyScope, Amtrak loss money on 41 of its 44 routes in 2008; ranging anywhere from $5 to $462 per passenger.

But, Doug, you say, surely this is a sign of the times. Amtrak is suffering from the economy like every other business. That may be true, but according to the summary of a Department of Transportation Inspector General's report from 2001:
1) Amtrak’s financial performance has not met expectations and its ability to meet its self-sufficiency mandate is in serious jeopardy; 2) Amtrak’s efforts to achieve self sufficiency will fail if additional capital is not forthcoming; 3) Amtrak will require substantial Federal appropriations, even after it achieves self-sufficiency
So, for at least the last 10 years, our beloved government has know that Amtrak is a money pit. But, to keep the locomotives running, the U.S. engineers keep shoveling good money into the furnace to make those locomotive engines run.

It looks like a transportation stimulus might not be the best elixir for the economy after all.

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