June 7, 2010
In the mid-1990s, Amtrak president Thomas Downs claimed that the perpetually taxpayer-dependent railroad was “on a glide path to profitability.” In reality, Amtrak was on a glide path to bankruptcy without continuing taxpayer subsidies.
Documents recently obtained by the Washington Times revealed the existence of a previously undisclosed seven-year government investigation into attempts by Amtrak officials to falsify financial data:
What authorities ultimately unraveled was that two former Amtrak officials, in fiscal 2001, either booked false or incorrect accounting entries in Amtrak’s monthly financial statements or else failed to report the activities. In turn, these same misleading accounting entries helped make Amtrak’s monthly financial results appear closer to budget than they really were.
To longtime Amtrak critics, the Washington Times discovery was hardly a revelation. In a blog post entitled, “What a Surprise, Amtrak Lies,” Randal O’Toole notes that Amtrak’s deceptions have been going on for years. In his book End of the Line, former Amtrak Reform Council member, Joseph Vranich, wrote about Amtrak’s attempts to manipulate its numbers during the period in question:
Council staff questioned the new methodology and the “improved” financial performance of many routes, but Amtrak staff provided no explanation for the change. After repeated requests to senior Amtrak executives, and after the council staff enlisted the help of the Senate Commerce Committee, Amtrak eventually provided a fiscal year 2001 report in the format used in earlier years. And, to no one’s surprise, council staff discovered that most trains were showing greater losses from fiscal year 2000 to fiscal year 2001. Clearly, the trend was inconsistent with Amtrak’s official position at that time that Amtrak was on the glide path to operational self-sufficiency, and Amtrak’s accounting gimmicks had been designed to cover up the disappointing performance.
A Cato essay on Amtrak also documents the government railroad’s reputation for painting an artificially rosy financial picture:
An independent analysis of Amtrak’s routes found substantially larger losses than reported by Amtrak. The GAO says that Amtrak has “omitted or misallocated key expenses in several areas, substantially understating operating expenses in reports that managers use to assess performance.” When the GAO recommended that Amtrak report under SEC regulations, Amtrak responded that “it would not be cost effective.”
Not cost effective? What is really not cost effective are taxpayers forking over billions of dollars a year to an inefficient government-run railroad that only accounts for 0.1 percent of the nation’s passenger travel. With the government running trillion-dollar deficits, now is the perfect time to privatize Amtrak.