As General Motors becomes Government Motors it may be instructive to look at the history of the last national foray into the transportation industry.
Amtrak commenced operations in 1971 with $40 million in direct Federal aid and $100 million in Federally insured loans. Officials expected that Amtrak would break even by 1974, but it still hasn't. In fact by 1995 Amtrak was on the brink of a crashing (pun intended) and was unable to continue to service its debts. In response, in 1997 Congress authorized $5.2 billion for Amtrak over the next five years—largely to complete the Acela capital project—on the condition that Amtrak submit to the ultimatum of self-sufficiency by 2003 or liquidation. No surprise, while Amtrak made financial improvements during the period, it ultimately did not achieve self-sufficiency.
Fast forward a few years and in Congressional testimony, the Department of Transportation's inspector-general confirmed that Amtrak would need at least $1.4 billion to $1.5 billion in fiscal 2006 and $2 billion in fiscal 2007 just to maintain the status quo. Most recently the "Rail Safety Improvement Act of 2008", was enacted on October 16, 2008. The bill appropriates $2.6 billion a year in Amtrak funding through 2013.
Taxpayers are still sinking billions of dollars into Amtrak—almost 40 years after buying it. Economist James Langenfeld says the bailout of GM could be an even bigger disaster.
Dr. James Langenfeld the director at the economics consulting firm LECG and professor at Loyola University Chicago was previously a senior economist at General Motors and an analyst at Amtrak. He has an interesting and informed take on this issue. In short he says that taxpayers are still sinking billions of dollars into Amtrak—almost 40 years after buying it. Economist James Langenfeld says the bailout of GM could be an even bigger disaster.
Here we go again.
Amtrak commenced operations in 1971 with $40 million in direct Federal aid and $100 million in Federally insured loans. Officials expected that Amtrak would break even by 1974, but it still hasn't. In fact by 1995 Amtrak was on the brink of a crashing (pun intended) and was unable to continue to service its debts. In response, in 1997 Congress authorized $5.2 billion for Amtrak over the next five years—largely to complete the Acela capital project—on the condition that Amtrak submit to the ultimatum of self-sufficiency by 2003 or liquidation. No surprise, while Amtrak made financial improvements during the period, it ultimately did not achieve self-sufficiency.
Fast forward a few years and in Congressional testimony, the Department of Transportation's inspector-general confirmed that Amtrak would need at least $1.4 billion to $1.5 billion in fiscal 2006 and $2 billion in fiscal 2007 just to maintain the status quo. Most recently the "Rail Safety Improvement Act of 2008", was enacted on October 16, 2008. The bill appropriates $2.6 billion a year in Amtrak funding through 2013.
Taxpayers are still sinking billions of dollars into Amtrak—almost 40 years after buying it. Economist James Langenfeld says the bailout of GM could be an even bigger disaster.
Dr. James Langenfeld the director at the economics consulting firm LECG and professor at Loyola University Chicago was previously a senior economist at General Motors and an analyst at Amtrak. He has an interesting and informed take on this issue. In short he says that taxpayers are still sinking billions of dollars into Amtrak—almost 40 years after buying it. Economist James Langenfeld says the bailout of GM could be an even bigger disaster.
Here we go again.
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