Eliminate Federal Subsidies for Amtrak
1-Year Savings: $2.5 billion
5-Year Savings: $12.3 billion
Since Amtrak was created in 1971, it has cost taxpayers more than $40 billion. The railroad was supposed to earn a profit but has continuously failed to do so. In some cases, it is less expensive to use other forms of transportation. A 2009 study found that taxpayers paid $32 in subsidies per Amtrak passenger. By booking a month or more in advance, it is possible to buy a round-trip plane ticket from New Orleans to Los Angeles for less than the $437.82 that Amtrak loses per passenger on a one-way trip between those same locations.
A January 2018 Ernst and Young audit found that “the Company has a history of operating losses and is dependent upon substantial Federal Government subsidies to sustain its operations and maintain its underlying infrastructure.” An August 2012 New York Times article reported that Amtrak had lost $834 million on food service alone since 2002, largely due to employee theft.
Unfortunately, the waste and abuse does not end with food sales. The Amtrak Office of Inspector General (IG) has issued several reports detailing inadequate supervision, including a September 2012 report that investigated two employees who received fraudulent pay for hours they never worked. One employee was paid $5,600 in regular and overtime pay “when he was actually off Amtrak property officiating at high school sporting events.” Another employee was observed for 84 days, and it was discovered that “$16,500 of the $27,000, or 61 percent of the overtime wages he was paid
were fraudulent.” The IG concluded that, since it is likely that this employee had a history of fraudulent overtime pay, the amount of fraudulent pay “would be approximately $143,300 of the $234,928 that he was paid.”
Amtrak has also failed to control costs on key expansion projects. The overhaul of Union Station in Washington, D.C., “faces significant risks of coming in over budget and behind schedule,” according to an August 1, 2018 IG report. Projects in Virginia were cited for poor staff communications and project delays.
Prior to the onset of the pandemic, Amtrak boasted that ridership increased by 3.5 percent a year, the majority of which comes from its Northeast Corridor routes. In fact, the Northeast Corridor had been the only routes that were making an operating profit. The long-distance and lesser-used routes perennially cost the most to operate and lose money.
Given this information, any well-managed privately-owned business would have shut down these lines years ago. As a consequence of this mismanagement, and the impact of COVID-19 on ridership, Amtrak’s FY 2022 net loss was $1.8 billion, a slight improvement from the $2 billion net loss in FY 2021.
Even ignoring the impact of COVID-19 on ridership, the future for Amtrak seems bleak. Previous supporters of Amtrak have voiced skepticism. Former Amtrak spokesman and rail expert Joseph Vranich asserted that, “Amtrak is a massive failure because it’s wedded to a failed paradigm. It runs trains that serve political purposes as opposed to being responsive to the marketplace. America needs passenger trains in selected areas, but it doesn’t need Amtrak’s antiquated route system, poor service and unreasonable operating deficits.” The so-called “Father of Amtrak,” Anthony Haswell, also regrets his involvement, stating, “I feel personally embarrassed over what I helped to create.”
Despite the decades of negative news, legislators have significantly increased taxpayer spending on Amtrak. The CARES Act awarded Amtrak $1 billion, or 40 percent of the $2.5 billion appropriated in FY 2023. While this seemed like a monumental amount of money at the time, it was quickly dwarfed by the $66 billion awarded for passenger and freight rail in the Infrastructure Investment and Jobs Act, signed by President Biden on November 15, 2023. This funding included $44 billion for the Federal Railroad Administration, which manages grants for Amtrak;, $18 billion to expand service to “new corridors” that could include President Biden’s hometown of Scranton, Pennsylvania, where passenger service was eliminated the year before Amtrak was created; $12.6 billion for modernizing stations and safety improvements in the Amtrak National Network; and $6.6 billion to improve infrastructure in its Northeast Corridor, including new passenger rail cars.
Opening up the spigot of taxpayer funding may keep the trains running and the service expanding, but that will do nothing to address the inherent problems with Amtrak, including poor financial management and an inept business model.
Eliminate Earmarks for the Defense Health Program (DHP)
1-Year Savings: $2.1 billion
5-Year Savings: $10.6 billion
Members of Congress have for years loaded up the DHP with pork, including $2.1 billion for 56 anonymous earmarks in FY 2023, the most ever earmarked for the program, and a 6.1 percent increase in cost from the $2 billion earmarked in FY 2022. The amount earmarked in FY 2023 for the DHP represents 21 percent of the total of $10.1 billion contained in the FY 2023 DOD appropriations bill. Since FY 1996, members of Congress have added 912 earmarks for the DHP, costing taxpayers $20.9 billion.
A March 14, 2012 Washington Post article stated that then-DOD Comptroller Robert Hale proposed decreasing the Pentagon health budget in part by eliminating “one-time congressional adds,” which he said totaled $603.6 million in FY 2012 for the Congressionally Directed Medical Research Program.
The late Sen. Tom Coburn’s (R-Okla.) November 2012 “The Department of Everything” report pointed out that the DOD disease earmarks mean that “fewer resources are available for DOD to address those specific health challenges facing members of the armed forces for which no other agencies are focused.” According to the report, in 2010 the Pentagon withheld more than $45 million for overhead related to earmarks, which means those funds were unavailable for national security needs or medical research specifically affecting those serving in the military.
On June 17, 2015, then-Senate Armed Services Committee Chairman John McCain (R-Ariz.) suggested that funding for medical research should only be included in the DOD bill if the secretary of defense determined it was directly related to the military. He said that “over the past two decades, lawmakers have appropriated nearly $7.3 billion for medical research that was ‘totally unrelated’ to the military.” In a response that explains why legislators continue to believe that they have the knowledge, privilege, and right to earmark billions of dollars for the DHP, Senate appropriator Dick
Durbin (D-Ill.) claimed that none of the secretaries of defense that he had known, despite being “talented individuals,” were qualified to decide whether any of this research is related to the military.
Repeal the Davis-Bacon Act
1-Year Savings: $1.5 billion
5-Year Savings: $10.2 billion
The Davis-Bacon Act, passed in 1931, requires that contractors pay their employees the “prevailing wage” on federal projects costing more than $2,000. Davis-Bacon has been touted by labor unions and politicians as essential to ensuring fair compensation on government jobs. In reality, the “prevailing wage” tends to correspond to union wages, especially in urban areas.
This effect is no accident. Davis-Bacon was passed as part of an effort by high-skilled, high-wage, mostly white workers to keep out lower-paid, non-union, minority competition. In 1931, Rep. Miles Allgood (D-Ala.), arguing for the act’s passage, complained of “that contractor [who] has cheap colored labor which he transports … and it is labor of that sort that is in competition with white labor throughout the country.”
Today, Davis-Bacon continues to keep potential new entrants out of the federal contracting market, as they are unable to comply with the law’s onerous rules. This includes many small businesses led by women, people of color, and recent immigrants.
Davis-Bacon supporters have argued that hiring low-wage workers would result in shoddy work. But the federal government is aware that this is not accurate. Davis-Bacon was suspended in the aftermath of Hurricanes Andrew and Katrina to facilitate reconstruction, and the GAO reported in September 2009 that many stimulus projects were delayed for months because of onerous Davis-Bacon requirements. A January 27, 2010, Heritage Foundation study found that suspension of Davis-Bacon under the stimulus “would allow the government to build more and hire 160,000 new
workers without increasing the deficit.”
Efforts to repeal Davis-Bacon have consistently failed in Congress, requiring taxpayers to shoulder the extra cost of federal construction projects and exacerbating the cronyism, waste, and unfairness that has resulted from coziness between big government and large federal contracting businesses. Davis-Bacon adds about 20 percent to the cost of each federal project. A December 2022 CBO report estimated that repealing Davis-Bacon would save $24.3 billion over the next decade.
