Posted on 06/28/2002 7:43:17 AM PDT by xsysmgr
Amtrak's threat to shut down because of a "surprise" cash shortfall was a totally unnecessary event. If ever the government had a false crisis, this was it. We easily could have known more back in February about Amtrak's financial hemorrhaging.
But we didn't because Sen. Joe Biden (D, Del.) helped kill a report that would have exposed the genuine threat of an impending Amtrak bankruptcy.
Some background: A five-year-old law required the Amtrak Reform Council to send a "restructuring plan" to Congress once it found that the railroad can't survive without big subsidies. The council did so on February 7. The law required Amtrak to simultaneously submit a plan for its "complete liquidation" to the Transportation Department's inspector general, who would review it for "accuracy and reasonableness" prior to it going to Capitol Hill on the same day.
Then, Congress would approve one plan or the other, or ignore both and create a hybrid plan to stabilize the future of rail-passenger service. Opportunities could be created for private companies to substitute for Amtrak under certain conditions.
But Amtrak and labor-friendly senators feared the liquidation plan because it would expose how Amtrak's debt was spiraling out of control, unveil the railroad's Byzantine accounting system, reveal the details of bank loans — some of which Amtrak treats as a state secret — and clarify which Amtrak trains lose the most money.
Sen. Biden rushed to squash the report, and with the help of Senate Majority Leader Tom Daschle (D, S.D.) and Senate Commerce Committee Chairman Fritz Hollings (D, S.C.) slipped an amendment into the defense-appropriations bill last year barring Amtrak from spending federal funds to prepare the plan. Bingo! With one act Biden overturned a five-year-old law and deprived the public of the right to an earlier notice of Amtrak's dire financial condition.
We could have known about all this in February and avoided a threat that we must help Amtrak immediately or "we'll-shut-everything-down." And we wouldn't have to hear Sen. Biden shift blame the way as he did a few days ago, saying, "The shutdown of the system, quite frankly, is in the president's hands right now. I hope he acts responsibly." That's like John Wilkes Booth trying to blame President Lincoln for going to the theater and putting himself in the path of the assassin's bullet.
It's no wonder pundits have taken to calling Amtrak the Enron of the federal government. Biden, Daschle, and Hollings achieved the same purpose using lawmaking powers that Arthur Andersen's auditors did with paper shredders — to hide from public view the details and scope of a financial disaster in the making.
When government sweeps vital information under the carpet, we all pay a price. One outcome is that the public isn't fully aware that to save little-used, money-losing routes Amtrak threatened to shut down busy trains that are profitable. The General Accounting Office found that the New York-Washington Acela Express and Metroliner trains rack up revenues that exceed operating costs for a $51.3 million profit to Amtrak. Also, it's relatively unknown that Amtrak earns profits on running commuter trains under contract in places like Boston and Los Angeles. What business threatens to shut down profitable divisions to save hopelessly unprofitable ones?
When the senators killed the report, they perpetuated the hoax for months that Amtrak somehow is salvageable. That sits fine with Amtrak, which year after year refuses requests for financial data or issues incomplete and contradictory information. Anthony Haswell, often called the "father of Amtrak," sued Amtrak last year under the federal Freedom of Information Act to force the railroad's managers to disclose financial information on individual routes. The prior year, I resigned from the Amtrak Reform Council over Amtrak's failure to provide necessary financial-performance data.
If Sen. Biden and friends were truly working in the public's interest they would permit the preparation of an Amtrak liquidation plan to allow a full, fair public debate. They also would demand the resignation of the majority of Amtrak's board of directors, which is made up of politicians (appointed by the White House) who've proved time and again that they can't run a business.
Sometimes, somebody's action is so negligent that it's okay to place blame, especially when the entity involved, Amtrak, has lost more than $25 billion with no end in sight. Senators Biden, Hollings, and Daschle owe the nation a mighty big apology for contributing to public deception regarding Amtrak's condition — and for creating a needless Amtrak melodrama.
— Joseph Vranich is the author of Derailed: What Went Wrong and What to Do About America's Passenger Trains, which recommends ways to liquidate Amtrak that are now part of a Capitol Hill debate.
Look for this the next time you see a flying pig.
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