House GOP proposal would privatize high-speed rail along Amtrak’s Northeast Corridor

House Republicans want to dismantle Amtrak, giving private investors the task of building and operating high-speed rail service between Washington and Boston.

They believe that an infusion of private capital would enable the system to be built in 10 years, a third of the time that Amtrak projects for completion of the $117 billion project, and that service would improve if operations were put in the hands of a for-profit company.

At a hearing Thursday, House Transportation Committee Chairman John L. Mica (R-Fla.) condemned Amtrak as having “one of the most dismal records on earth for any rail service, particularly in the Northeast Corridor.”

His plan to privatize the operations in the densely populated region from Washington to Boston was pounced on by Democrats and unions who represent Amtrak employees.

“The railroads didn’t want to run a railroad,” said Del. Eleanor Holmes Norton (D-D.C.), pointing to the demise of private passenger rail service more than 40 years ago. “They went bankrupt on passenger service. They begged the government to take it.”

The Republican proposal would strip Amtrak of the most heavily used portion of its system, with almost 250,000 weekday passengers, and the only rail real estate it owns. It holds title to all but 93 of the 456 miles of track between Union Station and Boston. Elsewhere, its trains travel on track owned by freight rail lines.

Mica believes that private investors will step forward to build and operate high-speed rail in the Northeast Corridor, significantly reducing the annual subsidy required to pay Amtrak to run the rest of the country’s passenger rail service.

“Amtrak receives, $1.5 billion in their annual subsidy,” he said. “If you look at their figures, about $500 million goes to operations. So the other billion is pretty much being poured into the Northeast Corridor because they don’t own any other track.”

Ignacio Jayanti, president of the private equity firm Corsair Capital, told the committee that it would be possible to raise $50 billion to $60 billion from investors over the 10-year period he said it would take to build high-speed rail in the corridor.

“There are significant private-sector dollars that are available,” Jayanti said.

Mica cited as a success story the privatization of two British rail lines by Virgin Trains, saying ridership doubled on lines from London to Manchester, England, and Glasgow, Scotland, and that the service turned a profit while eliminating government subsidies and sustaining rail employees’ wages.

Legislation Mica says he plans to introduce within two weeks will face a partisan split, as was evident at the hearing, where Sen. Frank R. Lautenberg (D-N.J.) showed up to give a hint of what the proposal might face in the Democratic-controlled Senate.

“Privatizing the Northeast Corridor is not a smart or viable prospect,” said Lautenberg, who sits on the Senate Transportation Committee.

Rep. Corrine Brown (D-Fla.) was among those who argued that public transportation systems, whether highways, air travel or railways, all required federal financial support.

“There is no form of transportation that supports itself,” Brown said. “I don’t support cherry-picking the best routes in our system and turning them over to the private sector.”

Amtrak’s defenders said the system has been underfunded since its founding 40 years ago.

“It’s a classic starve-the-beast philosophy,” said Edward Wytkind, who heads the transportation division of the AFL-CIO. “You chronically underfund the company and then you expect it to do great things.”

While Wytkind said he supported private investment in rail service, he said “now is the time to boost investment in Amtrak.”

Ashley Halsey reports on national and local transportation.
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