[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                A REVIEW OF AMTRAK OPERATIONS, PART III:
                EXAMINING 41 YEARS OF TAXPAYER SUBSIDIES

=======================================================================

                               (112-107)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 20, 2012

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey            Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois             RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota             DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana               JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri                 TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania         STEVE COHEN, Tennessee
RICHARD L. HANNA, New York           LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana         ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida        DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN, 
    Tennessee
VACANCY
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Joseph H. Boardman, President and Chief Executive Officer, Amtrak    28
Ted Alves, Inspector General, Amtrak Office of Inspector General     28
Peter J. Pantuso, President and Chief Executive Officer, American 
  Bus Association................................................    28
Randal O'Toole, Senior Fellow, Cato Institute....................    28
Ross B. Capon, President and Chief Executive Officer, National 
  Association of Railroad Passengers.............................    28

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Peter A. DeFazio, of Oregon.................................    51
Hon. Eddie Bernice Johnson, of Texas.............................    54

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Joseph H. Boardman...............................................    56
Ted Alves........................................................    70
Peter J. Pantuso.................................................    81

    ``Federal Subsidies for Passenger Transportation, 1960-
      2009,'' Robert Damuth, Economist and Principal Consultant, 
      Nathan Associates Inc., March 2, 2011......................    88
    ``Economic Impact of the Motorcoach Tour and Travel 
      Industry,'' American Bus Association Foundation............   118
    ``Motorcoach Census 2011,'' prepared for the American Bus 
      Association Foundation by John Dunham & Associates, June 
      18, 2012...................................................   119
Randal O'Toole...................................................   134
Ross B. Capon....................................................   143

                       SUBMISSIONS FOR THE RECORD

Slides referenced during the hearing by Hon. John L. Mica, a 
  Representative in Congress from the State of Florida and 
  Chairman, Committee on Transportation and Infrastru3, 5, 7, 9, 11, 13
Joseph H. Boardman, President and Chief Executive Officer, 
  Amtrak:

        Responses to questions from Hon. Bill Shuster, a 
          Representative in Congress from the State of 
          Pennsylvania...........................................    62
        Responses to questions from Hon. Corrine Brown, a 
          Representative in Congress from the State of Florida...    64
        Response to question from Committee on Transportation and 
          Infrastructure, Minority...............................    69
Ted Alves, Inspector General, Amtrak Office of Inspector General, 
  responses to questions from Hon. Corrine Brown.................    78
Peter J. Pantuso, President and Chief Executive Officer, American 
  Bus Association, responses to questions from Hon. Corrine Brown   130
Ross B. Capon, President and Chief Executive Officer, National 
  Association of Railroad Passengers, responses to questions from 
  Hon. Corrine Brown.............................................   151

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[GRAPHIC] [TIFF OMITTED] T6148.005

[GRAPHIC] [TIFF OMITTED] T6148.006



                     A REVIEW OF AMTRAK OPERATIONS,
                    PART III: EXAMINING 41 YEARS OF
                           TAXPAYER SUBSIDIES

                              ----------                              


                      THURSDAY, SEPTEMBER 20, 2012

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m. in Room 
2167, Rayburn House Office Building, Hon. John Mica (Chairman 
of the committee) presiding.
    Mr. Mica. Good morning. I would like to call the Committee 
on Transportation and Infrastructure to order. And I welcome 
everyone this morning. This morning is the third in a series of 
hearings that we are conducting to examine the operations of 
Amtrak, our national passenger rail system. And the first 
hearing that we conducted, we focused on some of the cost of 
food service. And I think the last hearing we talked about some 
of the subsidies for intercity passenger rail service, and also 
commuter rail service involvement of Amtrak. And today we are 
going to look at some of the issues relating to the ticket and 
passenger fare subsidization.
    The order of business will be, first, opening statements. 
And I am going to proceed, as chair of the committee, with my 
opening statements. We will turn to Mr. Rahall. We are starting 
early this morning, and hopefully we will be joined by Members 
from both sides of the aisle who are--I know at least our side 
is in a conference this morning. But we do want to make 
certain, with a short week--and this is actually our last week 
before we return after the general elections--to get these 
hearings in, both the one we did last week, this one.
    I also announce today that we will be doing a series of 
additional hearings on Amtrak during the lame duck session. We 
have at least three planned at this point. And as we get the 
subjects and the background information in preparation for the 
official calling of the hearing, we will notify the Democrat 
side of the aisle, so they can also prepare. But we will 
continue these through this Congress.
    With that, I will recognize myself. Then we will go to Mr. 
Rahall, any other Members that are here. And then we have a 
panel of witnesses, we will recognize them, and proceed in that 
fashion.
    So, again, welcome this morning. And let me say that, once 
again, the purpose of this series of hearings is to review some 
of the financial performance of Amtrak, to look at ways in 
which we can limit some of the expenditures and the subsidies, 
and provide better customer service. As I said at the opening 
of the last two sessions, I consider myself one of the 
strongest advocates for passenger rail service in the United 
States. But we must do that as cost efficiently and effectively 
as possible, always with an eye on the bottom line for the 
taxpayers, particularly in light of the country running 
trillion-dollar subsidies.
    And we do have to look at every operation within each 
committee. Our committee is responsible for transportation, 
and, specifically, Amtrak, one of those activities. And that 
activity has also had a cost subsidization, both in operation 
and capital expenses, in excess of $1 billion a year, almost 
consistently for many years now.
    So, that is the reason we are here. As I said, this is the 
third in a series, and we will continue this series. We did 
look at the first hearing, again, and we found that about $833 
million that Amtrak has lost in providing food and beverage 
services, not an insignificant amount over the last decade. 
Certainly also raised eyebrows that we found--we are going from 
3 years ago, I think, approximately a $79 million subsidy to 
$84.5 million last year, also a significant increase in cost in 
a time when the country is literally on the verge of financial 
bankruptcy.
    So, that was our first hearing. Then last week we looked at 
Amtrak's inability to compete in the commuter rail market. And 
we found that commuter rail agencies saved $107 million over 
that, 11.5 percent, by awarding operating contracts to private 
operators instead of Amtrak.
    And today we will focus again on the needs of the Federal 
subsidy and requirements which have totaled some $40 billion 
since we began subsidizing that operation 41 years ago, an 
average of about $1 billion a year.
    Let me start by pointing out that we have looked at a 
couple of--the route costs. And there was a report done in 
2005, ``Amtrak Management Systematic Problems Require Actions 
to Improve Efficiency, Effectiveness, and Accountability,'' and 
that highlighted some of the subsidization for passenger rail 
service. And then in 1998 there was another study that--and 
actually the last study that I found that actually examines 
some of the cost of subsidization of the various routes. So, 
without objection, we will at least refer to these in today's 
hearing proceedings.
    What we want to do is look at some of the ticket subsidies 
that the taxpayers are incurring. And I have got a couple of 
slides up here, and we will point to them.
    First of all, we have got a taxpayer paying for one of the 
routes, the Southwest Chief. And this shows the Chicago to Los 
Angeles route. The ticket has a warning on taxpayers that every 
single ticket, on average last year, in fiscal year 2011, was 
subsidized by the taxpayers at $49.25. So if we are up to--this 
last year was $28 million or $29 million you multiply that out, 
you get the subsidy. And that is calculated by taking both the 
operational underwriting by the taxpayer, and also capital 
expenses.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.007
    
    Mr. Mica. We have a 5-year average we have calculated of 
the average subsidy per ticket is about $51. It's actually 
$50.97. That average, unfortunately, is staying fairly high, 
hovering around that. That is, again, for every single ticket 
on Amtrak. The average subsidy--Amtrak's average subsidy over 
that period was $1.4 billion per year, and that is a 
significant amount of money.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.008
    
    Mr. Mica. Over the last 5 years, Amtrak does not include in 
that figure $1.3 billion, which in 2009 was given to--provided 
Amtrak as stimulus dollars that went to Amtrak. If you add in 
that average and amortize it over a 3-year period, then the 
ticket subsidy rises to $67.84 per ticket, a extremely high 
subsidy when you look at cost of subsidies.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.009
    
    Mr. Mica. Now, we do know, and it has also been recited by 
members of the committee, that almost all forms of 
transportation are underwritten by a subsidy. However, the 
latest information that we have got here from a report that was 
done several years ago--2008 data--this shows that the average 
subsidy per ticket in aviation was $4.28, mass transit $.95, 
intercity commercial bus at a $.10 per passenger ticket 
subsidy, and Amtrak, the average subsidy at that time was 
$46.33. Again, off the chart in the amount of subsidization by 
the taxpayers. Amtrak has, by far, the highest per-trip 
subsidy, about 11 times that of aviation and 463 times that of 
intercity bus services.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.010
    
    Mr. Mica. Furthermore, our aviation and highway subsidies 
are offset by user fees, while Amtrak subsidies come from the 
General Fund. As we know, with the General Fund right now, more 
than $.40 of every dollar that is spent out of the General Fund 
in the most recent past has been borrowed money. So we are 
actually using a large portion of deficit money to finance some 
of these subsidies for Amtrak.
    In fact, too, it is important to note for the record that 
Amtrak has no service in four States--Hawaii, Alaska, Wyoming, 
and South Dakota--so the taxpayers in those States are paying 
towards Amtrak subsidization of these money-losing activities, 
and getting no service.
    Last week Mr. Boardman argued at the hearing that capital 
support does not amount to a subsidy. Unfortunately, I 
disagree, and I think anyone in business would disagree. 
Someone has to absorb the expense. Amtrak subsidies, whether it 
is for capital or operation are not manna from heaven, they are 
actually dollars out of the Federal treasury, and all the 
taxpayers are paying for them. And if they are out of the 
general treasury, then we are right now borrowing about $.40 on 
a dollar.
    Even if you applied this theory, much of Amtrak's 
operations do not make financial sense. For example, let's put 
up here that--the 10 worst money-losing routes on the system.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.011
    
    Mr. Mica. The worst offender, by far, is Sunset Limited. 
That is Los Angeles to New Orleans. Every ticket on that route 
is--was subsidized in 2011, $375.
    Do we have the--on the Sunset Limited, do I have the 
information on the--just want to--again, I want to use this as 
an example.
    We just checked--and you all can Google it, if anyone can 
Google it, go to Travelocity, KAYAK, or whatever your favorite 
site is, and you can get a ticket on a flight from New Orleans 
to LAX--we checked last night--for $170. That is a 4-hour 
flight. You can also hire a driver and a sedan to pick you up 
at the New Orleans airport for $58, and hire another Town Car, 
a sedan, to take you home, or to a downtown location for $95. 
The total cost--that is with chauffeur-driven car or sedan--
plus an airfare, the airfare on site, was $323. The total 
travel time is 7 hours. It takes, what, 2 full days to get from 
New Orleans to Los Angeles, and the Federal subsidy for this 
train ride is $375. To me, that is absolutely outrageous 
underwriting by the taxpayers. And again, if we put people in 
limos door to door, flew them out there, we would save about 
$50 per ticket, with the current subsidy. So that is just one 
example of some of the loss.
    Let's also compare some of the--Amtrak's biggest money 
losers to private-operated intercity bus service. Let's--and we 
took, for example, from Chicago to Indianapolis. There is a 
head-to-head competition between Amtrak, the Hoosier--the 
Amtrak's Hoosier State costs $23. It takes 5 hours, has one 
departure per day. That doesn't include, of course, the $40-
some ticket subsidy. Megabus, on the other hand, takes--costs 
$22, takes 3 hours and 15 minutes, and has seven departures a 
day. So the Government is not only subsidizing a, again, a 
money-losing route. Passengers are inconvenienced by almost 2 
hours, and they have one choice in Amtrak a day and a total of 
seven departures a day by their competition, Megabus. Amtrak is 
a Government-subsidized, taxpayer-subsidized operation. 
Megabus, on the other hand, is a private sector operation that 
actually makes a profit and pays taxes.
    [Slide.]

    [GRAPHIC] [TIFF OMITTED] T6148.012
    
    Mr. Mica. Furthermore, again, the ticket does not account 
for the $118 Federal subsidy for this service. So the real 
price of the ticket is $141.10, $23 paid by the passenger and 
$118 paid by, again, the taxpayers by the--in this case, 
general treasury. And 40 percent of that is right now being 
borrowed in deficit.
    The bottom line is in many instances Amtrak costs more, 
takes longer, and has fewer options.
    So, those are some of the points that we wanted to make in 
updating the information from 1998 and from 2005. And my goal 
here, of course, is, first of all, to eliminate any of the 
wasteful spending we can. I read recently an article that I 
thought told it all. And this is Progressive Railroading. It 
said, ``At Long Last, a Longer View.'' Heavily quoted by Mr. 
Boardman, the chairman. Also heavily quoted by Joe McHugh and 
the vice president of operations, DJ Stadtler. And they all 
said--and let me quote them--they said, ``Whether taking small 
steps to minimize waste or larger steps to reduce Amtrak's 
required subsidies, all employees will need to get past the 
business-as-usual mindset, and general new ideas.''
    So, that is what this hearing is about. This, again, is a 
very strong advocate of passenger rail service and public 
transit. We have got to find the best ways we can do this, 
eliminating waste, inefficiency, routes that don't make sense, 
looking at cost-effective alternatives. And I think if we do 
that, we can first dramatically expand passenger service. I 
think we can actually increase the employment in Amtrak and 
those involved in this important industry, because instead of 
contracting--I see we have got many people who are workers with 
Amtrak.
    The history of Amtrak to date is when I came to Congress 
there were 29,000 employees. Today--Mr. Boardman can correct 
me--I think it is somewhere around 19,000, and also 
diminishing. If that is the future that you want to look 
forward to, I think it is a very dim future. I think we have a 
potential, instead, to dramatically increase routes, 
operations, and join public-private partnerships, secure 
investments to broaden routes and enhance infrastructure, and 
also provide customer service in ways that we haven't even 
begun to approach.
    So, I agree with the statement of the Amtrak executives 
that we cannot conduct business as usual, and that we have got 
to change our mindset, and that we have got to generate new 
ideas. And I look forward to working in a positive manner to 
accomplish just that.
    In a minute we will hear from our witnesses. And now I 
would like to turn to our distinguished ranking member from the 
great State of West Virginia, Mr. Rahall. Recognize him.
    Mr. Rahall. Thank you, Mr. Chairman. And I appreciate your 
recognizing the many Amtrak workers that are in attendance this 
morning. They work all up and down the Northeast Corridor. We 
want to thank them for their labors and for their interest in 
this issue, and certainly for what they do for our traveling 
public.
    You know, we are here yet again talking about Amtrak this 
morning. The railroad subcommittee has not had a single hearing 
since July 2011. Yet this is the third full committee hearing 
on Amtrak in 7 weeks. And I understand you have more to come. 
While our committee is convened this morning we could be 
focused on other legislative issues, and Mr. Boardman could be 
running a railroad. Gee, what a novel idea. Instead of 
traipsing up here every week for what amounts to the same exact 
hearing: Amtrak-bashing.
    I am wondering if in the next rail title, Mr. Chairman, if 
the Republicans are willing to establish a new line just to 
shuttle Mr. Boardman back and forth between his Amtrak offices 
and the committee room.
    Today's hearing is titled, ``Examining 41 Years of Taxpayer 
Subsidies,'' as if there is something wrong with subsidizing 
transportation. This committee supports big investments in 
transportation and infrastructure on a bipartisan basis. From 
highways to transit and aviation to rail. Amtrak should be no 
different. Investment means jobs. And it means jobs. And it 
means jobs. And improved transportation infrastructure.
    But we know why we are really here. The Republicans want to 
outsource Amtrak's routes to the lowest bidder, a policy that 
they enshrined into their own party's platform last month, and 
borrowed from Mr. Mica's legislation earlier this Congress. The 
Republicans then want to give those winning bidders Amtrak's 
operating subsidy. That makes no sense.
    I have said this before today, and I will say it again. 
Lowest bidder is code for low wages and little to no benefits. 
And here is a perfect example. In 2008, Congress passed the 
bipartisan Passenger Rail Investment and Improvement Act, 
PRIIA, which required Amtrak to develop performance improvement 
plans for the five worst-performing long-distance routes.
    One of those five, identified by Amtrak--now I am not 
quoting from a 1998 study, Mr. Chairman--but one of those five 
is the Cardinal, which serves 53,515 passengers in my home 
State of West Virginia, more than half the passengers on the 
entire route. Mr. Mica has proposed outsourcing this route to 
the lowest bidder in his draft competition for Intercity 
Passenger Rail in America Act of 2011. Without the input of the 
host freight railroad, which is CSX Transportation. The 
Cardinal supports good-paying-wage jobs in West Virginia, and 
it invests over $3 million annually in wages back into our 
economy, not to mention the orders that Amtrak has made in the 
State, which exceed $2 million annually.
    And I want to take this time to congratulate Mr. Boardman 
and Amtrak on its performance improvement plan for the 
Cardinal. It increases service on the route from 3 days a week 
to daily service, which eliminates some inefficiencies on that 
particular route. More service means more jobs for West 
Virginia and for our Nation at a time when jobs should be our 
main focus.
    These types of proposals to improve service on our Amtrak 
lines support job creation in our communities, and they promote 
economic development, and this is what our committee should be 
examining, not looking at ways to dismantle our passenger rail 
service, or play the role of chief in the dining car.
    And I might add the Cardinal is going to continue to 
improve as we have coming to southern West Virginia along the 
route's service by the Cardinal the Boy Scouts of America's 
National Jamboree next year and their Worldwide Jamboree in 5 
years. Truly a game-changer for our economy in southern West 
Virginia. And it would not be possible if it were not for the 
service provided by Amtrak and other modes of transportation.
    But where are we instead? We are here again today 
confronting the Republicans' tortured logic when it comes to 
jobs and investment in our transportation network. The 
Republicans claim they want to create jobs. And I heard the 
chairman say that was his hope at the end of his comments just 
now. But then they also claim they want to reduce Amtrak's 
operating subsidy. In order to do that, you have to increase 
revenue. Except the Republicans want to eliminate routes and 
service, which are the only means that Amtrak has to generate 
revenue.
    So, when you have to reduce operating--then you have to 
reduce operating expenses. And a quick look at Amtrak's 
operating expenses shows us that its two biggest expenses are 
fuel and labor.
    Now, unless the Republicans are willing to go after big 
oil, which I kind of doubt it, then labor is the target. Now, 
they will tell you that they are for creating jobs. We all are 
for creating jobs. But what they are not telling you is that 
they are for creating low-paying-wage jobs, not maintaining 
good-paying union jobs.
    And contrary to what you will hear today, Amtrak has 
actually requested and received less Federal operating 
assistance since enactment of PRIIA. The railroad, to its 
credit, chose to absorb increased operating costs and focused 
on growing its capital program. So it decreased its operating 
grant request and increased its capital grant request for 
fiscal year 2012 and 2013.
    Unfortunately, the railroad ended up with across-the-board 
cuts to both its operating and capital programs. These cuts 
have, of course, yielded predictable results: decreased Federal 
funding has allowed for little more than maintaining the 
current status of the infrastructure in rolling stock. There 
are no available funds for addressing deferred maintenance, 
investing in improvements that would grow the business, or 
replace aged rolling stock.
    In the rail title of H.R. 7, committee Republicans took 
this perplexing logic one step further and proposed permanently 
reducing Amtrak's operating grants. We offered, on our side, a 
sensible amendment to increase funding for capital, which would 
have helped Amtrak upgrade tracks, bridges, and other 
infrastructure, pursue efforts to expand Acela Express 
capacity, advance initial planning work for the Gateway program 
to provide additional capacity into Manhattan for intercity, 
commuter, and high-speed rail services, and continue the 
development of a Next Generation reservation system. That sound 
investment would have supported and created thousands of jobs 
and led to better service. Republicans rejected our proposal.
    What we ought to be holding a hearing on today is how to 
mess up a railroad. We have a hearing, we put the squeeze on 
Amtrak even more, force them to beg for adequate Federal 
funding on an annual basis, and then turn around and criticize 
them for the way they run a railroad in the same breath. Give 
me a break. Give me a break.
    Other nations, which are investing billions in passenger 
rail system must be--have to be--laughing at us. Had we 
invested like we did 41 years ago, we would not have the 
problems Amtrak suffers from today. There wouldn't even be a 
need for a state of good repair program. There wouldn't be a 
need for today's hearings, and Mr. Boardman could be out 
running the railroad, like he should be doing.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank you. Pleased to yield 5 minutes to the 
gentlelady from Ohio, Mrs. Schmidt. And I would ask her if I 
could have 30 seconds, just to lead.
    Let me just respond, because I think the record should be 
clear that my position has always been that we would guarantee 
the wages and benefit for all Amtrak employees, and that none 
would be cast aside in any negotiations.
    And furthermore, when Amtrak employees had to take on 
Amtrak and the Federal Government to secure their benefit and 
wages some years ago, I stepped up to the plate to support them 
when others did not.
    And furthermore, for the record, the subsidization of the 
Cardinal route that was referred to here is $160 per ticket, 
and the loss is $17.8 million a year.
    And finally, that we can do a better job. Even Romania, 
Bulgaria, Russia, and other countries are now looking at 
privatization and actually have implemented it and increasing 
routes, customer service. So the United States is slipping 
further behind as we protect the status quo, which is not 
acceptable.
    Thank you, and I yield back.
    Mrs. Schmidt. Thank you. And, first off, I want to thank 
you, Chairman Mica, for bringing all of these hearings before 
us. As you well know, about a year ago I brought to the 
attention of this committee the cost of food service and how we 
were losing millions of dollars each year, the fact that a hot 
dog that cost Amtrak to produce is $6.10 and yet we sell to a 
passenger for $4.50 shows that we have a problem.
    I do support mass transit, mass transit in all forms. I 
think it is vital to our economic and national security in our 
country. But I also realize that we are over $16 trillion in 
debt, and that debt climbs a couple hundred billion dollars 
each and every day. And so we have to be smarter about the way 
we are spending the taxpayer dollars. Because if we are not, we 
are going over a financial fiscal cliff that will not be good 
for any of us, including the public service employees that 
provide services such as mass transit.
    And so, I think it is imperative that all forms of mass 
transit take a good, hard look at the way they do business. And 
they have to say to themselves, ``Can we do more with less? How 
can we economize our delivery without compromising passenger 
comfort and availability?'' When you look at lines such as the 
Chicago to Indianapolis line, where you offer one route a day, 
and it costs more than if you were to take a bus, obviously 
passengers are going to take the bus. It is more convenient, it 
is less costly.
    So, perhaps we have to look at a different paradigm for our 
rail transportation service. This isn't about us versus you. 
This is about asking all of us to collectively work together so 
that Amtrak can be a viable form of mass transit in the future.
    But I am going to be leaving here at the end of December. 
And I can tell all of you this. If you don't get smart about 
this, the train is going to stop, regardless of who owns the 
gavel, because there is just not going to be enough money at 
the Federal level to provide the services that the folks in 
this country deserve and need.
    I yield back.
    Mr. Mica. Thank you. Mr. DeFazio?
    Mr. DeFazio. Thank you. I have to, given the so-called 
staff report on the Republican side, respond to a couple of 
things. It is a little bit disingenuous at best. They come up 
with this phenomenal number of $51 per passenger on Amtrak. But 
they ignore the bulk of the passengers that are actually 
carried by Amtrak, which I find curious. They apparently used 
only the long-distance routes, and divided that by the 
appropriation to come up with $51. If you take all of the 
passengers carried by Amtrak, you actually come up with a 
number that is $5.62. That is one-tenth this inflammatory 
number that has been put out there.
    And then there is the further allegation that this is the 
only form of transportation that the Federal Government 
subsidizes. Well, that is blatantly not true, and certainly the 
other side of the aisle knows that. Just in the last 4 years, 
we have appropriated $53.3 billion into the Highway Trust Fund 
of General Fund money. Because we haven't changed the user fee, 
the gas tax, since 1993, and it is inadequate to meet the needs 
of a crumbling system. So, $53 billion in 4 years, and the 
total number for Amtrak over 40 years is $41 billion.
    And then, aviation. We talked as though aviation gets no 
General Fund money. Actually, over the last 4 years, aviation 
has gotten $19.8 billion of General Fund money. So both surface 
transportation and aviation have received what would be these 
horrible subsidies that we are talking about that are going to 
Amtrak. And the money going to Amtrak is a tiny fraction of the 
monies that have gone to these other modes. And those other 
modes are also supported by user fees, which are essentially 
taxes on the American people.
    So, you know, let's be a little bit fair here in our 
criticisms. And let's have an honest debate about the future of 
rail transportation, passenger rail transportation, in America. 
Are we going to become--yes, I hear a lot about American 
exceptionalism, American exceptionalism. Well, I guess, you 
know, we are going to be really exceptional. I mean for years 
we have been exceptional. It is the only industrial democracy 
on earth that can't figure out a way to provide health 
insurance to all of its citizens.
    We are becoming exceptional in that we may be the first 
industrialized democracy in the world to end up without a 
postal service, because that has been ignored on the other side 
of the aisle. And now we want to become yet exceptional again 
and be the only major developed nation that doesn't have a 
national rail transportation network for passengers.
    At a time when our population is aging, and air travel is 
becoming more and more and more miserable, I think the numbers 
we are seeing in terms of growth isn't just going to be in 
commuters, isn't just going to be in people avoiding the high 
cost of operating their automobile. It is going to be in people 
who are leisure travelers who are retired and have a little bit 
more time and don't want to go through the TSA experience and 
get clammed in a Spam can, you know, in very uncomfortable 
circumstances.
    So, I see, if we provide the proper equipment, if we 
provide the proper investment, a great future for a national 
passenger rail system. And, you know, we can agree or disagree 
over this. But let's be fair about the numbers we use. Thank 
you, Mr. Chairman.
    Mr. Mica. Thank the gentleman. Mr. Barletta, gentleman from 
Pennsylvania.
    Mr. Barletta. Thank you, Mr. Chairman. I just want to say 
that, you know, I am a freshman. This is only my second year 
here. And prior to coming to Washington, I had started my own 
business, along with my wife. And it was one of the greatest 
experiences that I have had. And it taught me a lot. It taught 
me that you don't only say your prayers in the morning and at 
night, you say them on the way to the post office, in hopes 
that there is a check there so that you can make payroll at the 
end of the week. And I also learned that every year I was 
responsible for the bottom line, and whether or not not only my 
job existed, but the jobs of everyone else existed.
    I then went on to be mayor of my home town, which was 
another great experience, for 11 years. I took over a city that 
was bankrupt. And I made it pretty clear where I was coming 
from. It was never about taking away people's jobs. I would 
tell the employees there that the best way to save your job is 
for our organization to run more efficiently, that you needed 
to depend on management and the business model, so that this 
company can run efficiently. And that is how you save your own 
jobs. It is not by taxpayers throwing more money and continuing 
to use a business model that is clearly not working.
    I don't think there is one person in this room or up here 
that, if this was their private business, would continue to 
operate at a loss. Just in food and beverage. If you owned the 
food and beverage sales on Amtrak, do you believe for 30 years 
you would lose money?
    Now, we can't just have an open checkbook. We all 
understand that. We need to run more efficiently. And there is 
things that Amtrak does well. And we should improve on it. And 
there is things that you don't do well, and it must be fixed. 
We can't depend on the taxpayers to continue to throw money at 
it.
    Now, my district was hurt by a flood, a terrible flood. 
People lost everything. They lost all their possessions, and I 
watched senior citizens cry, I watched a young man cry on a 
porch. And for 1 year, for 1 year, I worked to try to find $15 
million so that we could help the people back home. And you 
know, in the short time that I am here, if we just stop the 
loss in the food and beverage sales on the train, that was $16 
million.
    So, I am not here to threaten or scare. I am here to say 
that I came to Washington on a message from the American 
people. They want their tax dollars spent wisely. So, you know, 
I am going to hang with you here, but I am going to say that I 
am probably not going to be so patient next year if this 
business model continues, because it is just--it is not 
working. The areas that work well, let's improve, and you do. 
There are areas that I am sure Amtrak does better than anyone 
else. But there are also areas that we have to admit must be 
improved. Thank you.
    Mr. Mica. Thank you. Let me recognize Edie Bernice Johnson, 
the gentlelady from Texas.
    Ms. Johnson of Texas. Thank you very much, Mr. Chairman. 
You know, I feel that this committee's time and resources have 
been spent disproportionately on Amtrak hearings, and the 
intent has been less to effect positive policy changes than to 
act as a platform to expound partisan talking points.
    As a nationwide rail network, Amtrak serves more than 500 
destinations with an average ridership of 75,000 per day. 
During fiscal year 2011, Amtrak transported more than 30 
million passengers, the largest annual total in Amtrak's 
history. Amtrak has reduced its Federal operating subsidies by 
50 percent since fiscal year 2004, allowing the rail service to 
cover some 85 percent of its operating expenses on its own. And 
these numbers are something to be highlighted during this 
hearing.
    My colleagues to the right are very critical of the Federal 
funds Amtrak receives. And I think this approach is short-
sighted and wrong-headed. When we compare the investments that 
other countries devote to their passenger rail systems, the 
United States is woefully behind. As a nation, we have 
prioritized investment in service transportation, transit, 
ports, and passenger rail. This should not be any different.
    In addition, every member of this committee knows that we 
must pursue a multimodal approach to accommodate increased 
population and address congested urban areas. According to the 
Federal Railroad Administration, by 2050 the United States will 
add some 100 million residents--this country is simply a magnet 
for attracting people--placing an unparalleled strain on the 
U.S. transportation networks. And rail offers the greatest 
opportunity for sustainable growth supporting these citizens.
    We are at a point now where we simply cannot build our way 
out of these problems. And passenger rail does not only provide 
accessibility to both rural and urban areas, it takes cars off 
the roads and reduces emissions.
    Mr. Chairman, we have a very few days left. As a matter of 
fact, 2 days before we recess for over a month. And we should 
be using this time to pursue more pressing matters like the 
reauthorization of the Water Resources Development Act, which 
committee is meeting as we speak, as a rail title that should 
have been introduced in MAP-21. And I regret that we continue 
to work on a problem where we really don't have much of a 
problem, in lieu of working on problems where we have massive 
problems.
    Thank you, Mr. Chairman. I yield back.
    Mr. Mica. I thank the gentlelady. The gentlelady from 
California, Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chairman. And I will make 
my remarks rather brief.
    Thank Ranking Member Brown. She has been on this issue for 
many years. And I have been very much a strong supporter with 
her of Amtrak. It is vital to California. We have three of the 
five top busiest corridors, the Pacific Surfliner, the Capital 
Corridor, and the San Joaquin Corridors. The Sunset Limited 
travels right through my district, and it is plagued by delays 
because of the issue of the Colton Crossing, which is a rail 
crossing that UP has in that area.
    We need to be able to support Amtrak. If we do not have--
especially in California--assistance in mass transit, we 
already are plagued by many traffic delays, by accidents, by 
road rage, by pollution of the air of the exhaust of the 
vehicles, by all those. And while everybody tells--especially 
my bus operators--that they can handle this, they get stuck in 
traffic, just like everybody else. Amtrak does not. Neither 
does any other rail passenger.
    We need to be able to help. No public transit is 
unsubsidized. All of it is subsidized. And for me to say that 
our European counterparts have a better system, they do. But 
guess who owns the land? The government does. Here we do not 
own any land. The Government does not have the ability to tell 
any of the rail lines or any of the Amtrak lines that this is 
something that we need to expand or put out to bid.
    It is important for both urban and rural. How do we get 
people who don't have the bus lines to be able to carry people 
back and forth into the cities where they can go to work? Or to 
medical appointments, or for school, for education? That is 
vital. And we need to continue to support it.
    Certainly we need to look at cost cutting, in terms of 
being able to have better systems, whether it is in the--as it 
was pointed out--in the beverage section, or in other areas. 
But that is minimal. People rely on rail. We need to continue 
doing that. And also, for safety purposes, ensure that those 
lines are safe, that the rails are safe, that the crossings are 
safe.
    So, many of those things that--I would like to continue to 
look at and see how we are able to support it. And while our 
bus lines are wonderful--I have supported those in my area, and 
especially getting UC&G buses--but they do run on highways that 
are subsidized and funded by the Federal Government. So there 
is money going into--to help them. The bus lines do not take 
care of the pavement.
    So, I would love to hear more about this. I will maybe 
introduce some questions for the record, Mr. Mica. And I thank 
you for this time, and look forward to working with my 
colleagues.
    Mr. Mica. Thank the gentlelady. The gentleman from Florida, 
Mr. Southerland, you are recognized.
    Mr. Southerland. Thank you, Mr. Chairman. And I would like 
to commend you on holding this hearing. And I would like to 
thank the representatives that are representing Amtrak here 
before us today.
    As a new Member of Congress and having a district where 
Sunset rail runs through my district--or used to run through my 
district; it stops west of us now--I am often visited by 
counties and city officials throughout my district, asking that 
Amtrak be restored to my district. It is very difficult for me, 
in having those discussions with them, when learning that the 
subsidy per passenger is $375 per ticket. $375 per ticket.
    I often ask those who do the fly-ins--and they come to my 
office, and they come to ask me about restoring that. And I 
always ask them, well, what time is their meeting with Amtrak 
officials. And many times they say, ``Well, we don't have a 
meeting at Amtrak.''
    And I'm saying, ``Well, let me get this straight. You are 
coming to me, asking me to restore or to support restoring, a 
part of the rail that subsidizes, per ticket, $375. You are 
asking me that. But yet you do not have a meeting with Amtrak, 
urging them that we got to find a better, more equitable way to 
run our operation.'' That just seems like common sense to me.
    And when I learn that the money that is lost through just 
food and beverage, I am blown away by--because I came to 
Congress as a small business owner, having never served in an 
elected position in my life, not locally, not State, not 
Federal. I came from small business straight to Congress. And I 
am telling you that our family business, if we operated it this 
way, we would have been gone a long, long, long time ago. We 
would not have made it to the third generation.
    And so, I am glad you're here. And, Mr. Chairman, I am 
thrilled that we are asking some very difficult questions. We 
all want rail. But I got to say this. We talk about the measure 
of the importance of our investment to rail, and we talk often 
times about what other countries spend. Well, let me say this. 
Many of those countries are not countries any of us want to go 
live. It is nice to visit, but you all know we want to come 
back right here to the United States.
    It is not what we invest as the only question we must look 
at. It is what we receive back as a result of that investment. 
Is it effective? Does it create value for the taxpayer? I want 
you to be successful, because I think we need rail. That is a 
no-brainer. And I am looking at some of the things that you are 
doing in this study. You are asking the right questions, but at 
the same time we need to be courageous when we learn the 
answers that we may learn by asking those difficult questions.
    What is going to be done to immediately implement the 
reforms necessary for us to restore Sunset? This isn't hard. 
And most Americans don't struggle with this. If we are 
subsidizing tickets by $375, I mean, really. How do we get to a 
point to where the American taxpayer is not taken to the 
cleaners here.
    I am thrilled that we are having these discussions. Not for 
standing up and screaming and yelling. No, no, no, no. To get 
down to the core. Let's peel this onion from eight different 
sides, find out what the issues are, solve those issues, so we 
can have a rail system that is the leader of the world.
    Mr. Chairman, thank you for having the courage to have 
this. And also, I want to thank those that are in attendance 
today. And I yield back.
    Mr. Mica. Thank the gentleman. Do other Members seek 
recognition? Well, I'm going to go to Ms. Edwards. She was here 
first, and we will come back to you. The gentlelady from 
Maryland is recognized.
    Ms. Edwards. Thank you, Mr. Chairman. And I want to first 
acknowledge I know here with us today are so many of the good 
workers of Amtrak. I am not just sitting here in Congress, I am 
a passenger and a customer. And I am proud of the service that 
the Amtrak workforce provides us.
    It is disturbing that in the course, at least of this 
Congress, while we have a need to try to figure out how we make 
the kinds of investments in our Nation's infrastructure that 
are going to keep us competitive, that will make sure that we 
strengthen corridors like the one that I live in, in the 
Northeast Corridor, which is so important to the economy along 
the entire northeast stretch, that instead we have spent so 
many hours in this committee figuring out ways not to fund our 
Nation's infrastructure, whether we are talking about our roads 
and our bridges, our mass transit, our rail infrastructure. And 
that is unfortunate, because it means that time has been lost, 
that we are not creating jobs and that we are not engaged in 
the work that is important to this Nation to make sure that we 
stay competitive in the 21st century. And that is a real loss. 
It is a loss for the American public, it is a loss for American 
workers, it is a loss for people who want to work.
    We know that Amtrak has been engaged in a number of capital 
projects to modernize the system, and to repair existing 
infrastructure along the Northeast Corridor. I am looking 
forward to hearing from the panel today about what the real 
effect would be of ending or decreasing Government support for 
Amtrak, and the impact that that will have on the funding of 
these projects and rail traffic along the Corridor, in addition 
to other areas like safety and consumer satisfaction.
    The United States spends .8 percent of our GDP on rail 
infrastructure, which--and I do think it is important for us to 
look at those international comparisons. It is far less than 
the percentage of the GDP that is spent in China and India. 
China spends about 11.7 percent more as a percentage of their 
GDP, and India 3.9 percent. The effect of these--this kind of 
financial contribution and the lack of it in the United States 
has a tremendous ability--a tremendous effect on our ability to 
be economically competitive, not just today but for generations 
in the future.
    And as I look around the room at the former chairs of this 
committee, and I think about past Congresses, generations long 
before I came here made a decision about the importance of a 
Federal commitment to investing in our infrastructure because 
we realize that it is that Federal commitment, that national 
responsibility, that links this Nation and provides for our 
competitiveness, invests in our workforce. And I think that 
this committee is shirking our responsibility when it comes to 
future generations by not investing in the infrastructure in 
the way that we need.
    I look forward to hearing, as well, from the panel. And I 
regret that I won't be able to stay because of other 
commitments, but will certainly look to the record as to the 
projections that will--of the trends that will continue over 
the next--course of the next several years for Amtrak to be 
able to meet 100 percent of its operating requirements from 
revenues, excluding income that is derived from real estate. 
These are really important questions.
    But I have to tell you, as a taxpayer, as a passenger, as a 
customer, I am OK with putting a little bit extra in to make 
sure that we have an infrastructure that is competitive. I am 
OK with putting a little extra in so that we have a workforce 
that is paid a decent wage so that they continue to show up 
every day and are able to take care of their families. I am OK 
with investing in corridors around this country that are not as 
competitive as the Northeast Corridor is, even though I don't 
live there. Those are collective responsibilities, and it is 
time for this Congress to honor those. Thank you. And I yield.
    Mr. Mica. Thank the gentlelady. Pleased to yield now to the 
chair of the rail subcommittee, distinguished Member from 
Pennsylvania, Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman. And I think there are 
more people in here from the Ninth Congressional District than 
I have ever seen before. So I want to welcome all the railroad 
workers and retirees that--hopefully they are wearing that PA-9 
proudly. So glad to have you here today.
    And once again, to explore and examine ways for us to 
improve Amtrak. I think I have made it pretty clear over the 
past 2 years or so that--what my views are on passenger rail in 
this country. And I believe that we need passenger rail in this 
country. But I also believe strongly that we've got to find 
ways to reform it.
    Now, my guess is that most of you guys out there--guys and 
gals that are from the Ninth District--are either working or 
retired railroad workers. And my guess is probably most of you 
work in the freight rail industry. And from the looks of some 
of the gray hair out there, most of you were around in the 
1980s, when we reformed freight rail in this country. We saved 
freight rail. And, in fact, freight rail in this country is the 
envy of the world. We--our Federal Government does not have to 
put money into those freight rail operations. They do it 
themselves. They put massive investment back in there.
    And so, the lesson we can learn--I am not sitting here 
saying that we can turn passenger rail and make it as 
profitable as the freight rails are, but I certainly think we 
can do better. I believe that we can do better. We got to put 
some reforms in place, because we need a strong passenger rail 
in this country. And again, if we do those reforms, we do those 
tough things--and it is going to take labor, management, and 
Congress, all of us sitting down and figuring out a way to move 
forward so that we have a strong passenger rail system in this 
country.
    When you look at the reforms that have occurred in Europe, 
there are some lines over in Europe that have doubled and 
tripled. We see in Pennsylvania the Keystone Corridor. With 
investment and with reforms, we can have the same kind of 
success, I believe, that the Keystone Corridor from Harrisburg 
from Philadelphia--and what does that mean? That means more 
ridership. And if there is more ridership and there is more 
trains, that means more trains to be fixed. That means there is 
more passengers have to be taken care of. That means, I 
believe, more jobs. And over the last 15 to 20 years, Amtrak 
has gone from 29,000 workers to 19,000 workers. And if we keep 
doing the same things, I think it is going to become--there are 
going to be less and less.
    So, the time for us to look at it is now. And it should be 
driven by the fact that the population of the United States of 
America is going to go from--we just--it took us 65 years to go 
from 200 million people to 300 million people, and we crossed 
that line in 2005, I believe. It is going to take us from 
2005--already 2012--about another 25 years we are going to go 
from 300 million to 400 million people. And everybody is not 
moving to Florida and Arizona. When you look at the Northeast 
Corridor and the populated corridors around the country, the 
population gets more dense, which--and we can't--look at I-95 
through the Corridor; you can't add more lanes there. You got 
to figure out ways to transport people.
    And the Northeast Corridor, as the chairman and I have 
worked on, is trying to take a new approach to how do we do 
that. Bring the private sector in. And so many times my 
colleagues on the other side of the aisle make the argument 
that, you know, ``Look what Europe has done.'' I mean look what 
Europe has done. Look what they are doing today. They are 
adding competition to passenger rail. In fact, by 2014, the 
entire passenger rail system in Europe and the European Union, 
there is going to be competition on the lines. And so, what 
they believe is going to happen is better customer service, 
prices will be competitive, and that is going to drive more 
people to use the rail lines.
    So, I think that reform is a good thing. And I hope, as we 
move forward, we can all sit down--it is not going to be easy, 
because when you have something that doesn't work very well, 
and you have to correct it, sometimes you have to have the 
castor oil. The medicine sometimes is a little bit bitter. But 
in the end of the day, it makes the patient better. And I think 
that is where we are, and that is what we have to do.
    And, as I said, the passenger rail is something we need to 
grow in this country. But we need to grow with a new way of 
looking at it with these reforms. Some of these reforms, all of 
these reforms that we are talking about I think do that. I know 
Mr. Boardman has taken some steps at Amtrak and some positive 
things, but I don't think it is enough. I think we have to go 
further, and I think we have to, again, make sure if we are 
going to use taxpayer dollars--which we probably always will 
have a portion of taxpayer dollars--we got to make sure we are 
good stewards of the taxpayers' money, making sure we are doing 
the right thing.
    So, again, I want to welcome our witnesses here today, and 
also the folks from the Ninth Congressional District. And 
again, Mr. Chairman, thanks for having this hearing.
    Mr. Mica. I thank the gentleman. Others seek recognition? 
Mr. Cohen, you are recognized, the gentleman from Tennessee.
    Mr. Cohen. Thank you, Mr. Chairman. I appreciate the 
opportunity to address Amtrak and the issues that we have 
before us. I am a big fan of Amtrak's. I am a big fan of 
passenger rail service. Partly, I think it has to do with my 
age. One of my first memories was traveling on the City of New 
Orleans and the Panama Limited to Chicago. And it was a great 
memory, traveling with my parents to Chicago. And I have done 
it since then many times.
    I also travel frequently to New York from Washington, and 
vice versa, and get great service, and appreciate that service.
    And the other thing is, beside just the memories of the 
nice service that I had in the past, and the opportunities I 
have today in the Northeast Corridor, is the fact that Memphis 
is a transportation center. And we have a hub airport which has 
been decreased in its opportunities to serve our community 
since the merger of Delta and Northwest. As a result of that, 
airfares are higher in Memphis than almost any other city in 
the country. Mid-cities' hubs have been decreased and fares 
have gone up. And the public is very concerned about the 
expense. Many drive to Little Rock to get on Southwest Airlines 
and/or Nashville to do the same.
    I believe in the future, as we have seen airlines 
consolidate, that we are going to see prices continue to go up 
and make it more and more difficult for the middle class that 
continues to be squeezed and eliminated in American society as 
a valued part of our country, that people will not be able to 
afford air traffic, and they are going to need rail traffic 
more and more in the future. And while it takes a lot more 
time, it is economically convenient and necessary to have 
competition to air.
    There are a lot of people in my community can't afford air 
travel, and they take the train to New Orleans, or they take 
the train to Chicago. We would like to have train service out 
of Memphis to go to Nashville and to Little Rock. And in the 
long range plans, there is a study on traffic from Memphis to 
Little Rock to connect with Texas. I think the future in 
America is going to be more rail, not less rail.
    And rail keeps--particularly in the Northeast Corridor, 
where it is profitable--keeps energy costs in line because we 
are not having to have all those cars on the road that are 
buying their gasoline from Middle Eastern or Venezuelan--or 
wherever--sources, which is one of the great problems we have 
as a future of oil, the expense of oil, the expense of a 
defense industry that is set up to protect those oil routes. 
And the more we can do to get away from reliance on gasoline, 
the better off we are.
    So, when you look at Amtrak simply on its cost, you have to 
factor in--or you should factor in--how much we are not having 
to put in to defense costs defending the Strait of Hormuz, 
because we don't need gasoline to move those trains. And if we 
didn't have those trains, and everybody was driving from New 
York to Washington, or Memphis to New Orleans, or wherever, 
there would be more and more concerns about the Strait of 
Hormuz and other areas where we have troops to protect those 
routes to get that oil from the Middle East, and more and more 
lives lost over wars which have been fought over oil.
    So I like Amtrak. I think it has a great future in our 
country. We don't do as much as the European countries and the 
Chinese do to keep it afloat and to put government monies into 
it. It is an efficient, clean energy that otherwise would have 
people in the roads. You couldn't get from New York to 
Washington if the trains didn't run. The highways would be that 
clogged. And it would hurt commerce, but it would also 
contribute more to pollution, more to global warming, and more 
to defense costs to protect those oil routes. Amtrak is the key 
to our future, and competition with the airline industry as 
well.
    So, I thank you. I don't question the fact that there 
aren't possibly ways to save money. And I saw where Amtrak 
agreed with the food and beverage, to look into ways to make it 
more cost efficient. Sure, there can be more cost efficiencies. 
But it--when it is subsidized, it still does a public good, and 
that is why we do it, because it is important that we have a 
good rail system in our country and in the future we are going 
to depend on it more and more.
    So, I thank you for what you provide, the service you 
provide. I certainly look forward to continuing--I hope one day 
I can go from Memphis to Nashville or Memphis to Little Rock. 
And I think that a lot of people in this country would really 
benefit taking a train trip across the country with their 
children. Talk about family values. You get close when you 
learn about America on the rails, and you get to share that 
time with your children.
    I thank the chairman for the time. I thank Amtrak for the 
service. And I--in the proverbial congressional spirit of being 
out of time, yield back the balance of my time.
    Mr. Mica. Thank the gentleman from Tennessee. Others seek 
recognition? Mr. Altmire, you OK? OK.
    I think all the Members have been heard, and thank them for 
their input. We will now turn to our witnesses. And I will 
announce once again that we will be doing at least three more 
hearings during the session after the election. It is called a 
lame duck session. I invite everyone to participate. We will 
probably end on a hearing regarding the Northeast Corridor.
    When I became chairman during the beginning of this 
Congress, the very first hearing I held was a field hearing in 
New York City, at Grand Central Station, about the Northeast 
Corridor. And that was--that will be almost 2 years past. Very 
last hearing we will be doing during this Congress will also be 
on rail. So I am very committed to dramatically reforming 
passenger rail service, increasing dramatically the 
opportunities for employment, making certain that the--those 
who work in the industry get even better wages and treatment, 
and more stable management. And finally, that we do expand 
passenger rail service with a national network in the United 
States of America, and that we actually have high-speed rail in 
the United States in my lifetime. And that may not be that much 
longer.
    So, with that, let me recognize our witnesses. Mr. 
Boardman, who is the president of Amtrak. Welcome back, and I 
thank you. You are actually the inspiration for these hearings, 
Mr. Boardman. You said that, in this Progressive Railroading 
article, ``We want to run this company more as a business and 
less as a Government entity.'' And that is part of my 
inspiration for these continuing series of hearings that we 
will continue to do. And they are all based on the contents of 
what you and your associates, Mr. McHugh and your vice 
president of operations and others who are quoted in this 
article.
    So then we have got also the distinguished inspector 
general of the Amtrak office, Ted Alves. And then we have the 
president and CEO of American Bus Association, Mr. Peter 
Pantuso. And we are pleased to welcome Mr. Randal O'Toole, a 
senior fellow from the Cato Institute. And then back, returning 
for another witness performance is Mr. Ross Capon, who is the 
president and chief executive officer of the National 
Association of Railroad Passengers, and strong advocate for 
railroad passengers.
    Welcome to all of our witnesses today. If you have long 
statements that you would like to be made part of the record, 
you can do that. We would like you to try to summarize. Then we 
can have our discussion.
    Also, in fairness, since this is a Majority report being 
presented today, I will also ask unanimous consent that we 
leave the record open for 30 days for the Minority, the 
Democrat side, to present their views on the report.
    [No response.]
    Mr. Mica. And without objection, so ordered. So everyone 
will have an opportunity for input, both the witnesses, the 
other Members that are here, and others who wish to comment, 
and the Democrat side of the aisle, to contribute to the 
report.
    So, with that, and without further ado--and you can tell 
there is a great deal of interest, Members have come and gone, 
but everyone has strong opinions on this--we are pleased to 
welcome the long-suffering, hard-working, ever-devoted-to-
Amtrak president, Mr. Boardman. Welcome, sir. And you are 
recognized.

TESTIMONY OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, AMTRAK; TED ALVES, INSPECTOR GENERAL, AMTRAK OFFICE OF 
   INSPECTOR GENERAL; PETER J. PANTUSO, PRESIDENT AND CHIEF 
 EXECUTIVE OFFICER, AMERICAN BUS ASSOCIATION; RANDAL O'TOOLE, 
  SENIOR FELLOW, CATO INSTITUTE; ROSS B. CAPON, PRESIDENT AND 
   CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF RAILROAD 
                           PASSENGERS

    Mr. Boardman. Thank you, Mr. Chairman. And now I know I am 
to blame, as well. I thought it was Rocky, since it was, you 
know--this would be Rocky III, there is IV, there is V, there 
is VI here. But I understand. Thank you for having me here 
today.
    Last year, Amtrak actually--and I got my own prop today; I 
saw your ticket up on the wall, and I thought, gee, you know, I 
got a ticket, too, a ticket to ride--and last year Amtrak 
recovered 79 percent of its operating costs from fare box 
revenues. That is really better than any other passenger 
railroad in the United States. When you include the real estate 
and contract commuter revenues, Amtrak covers 85 percent of its 
operating costs.
    Federal taxpayers pay just 15 percent of every dollar that 
Amtrak spends on its operations. And our Federal operating 
grant in fiscal year 2012 was $466 million. That works out to 
$1.48 per American. Less than a small cup of coffee at the 
Starbucks over in Washington Union Station. And the longest 
line at Union Station these days isn't for Starbucks, but 
rather to board our trains.
    Amtrak ridership has grown more than 44 percent since 2000. 
That is a major reason for our inflation-adjusted operating 
need, which is half of what it was in 2004. We set annual 
ridership records in 8 of the last 9 years, and monthly records 
in 11 of the last 12 months. And we will do both again in 2 
weeks. We halved our debt over the last 10 years from nearly $4 
billion to $1.6 billion. On-time performance has improved on 
all of our business lines, increasing to over 88 percent on the 
Northeast Corridor during the first 11 months of fiscal year 
2012, despite all the track work and bridge replacements that 
we are doing to bring the Corridor to a state of good repair.
    We have achieved these accomplishments, even though 
passenger rail is only a tiny portion of the Federal budget. In 
the past 4 years, the Federal Government has appropriated $53.3 
billion from the General Fund of the treasury to bail out the 
Highway Trust Fund. That is 30 percent more than the total 
Federal expenditure on Amtrak since 1971. Revenue generated 
from highway users accounted for only 45 or 46 percent of total 
funding available for highways in 2010. The rest came from 
taxpayers.
    Amtrak has significantly improved financial performance, 
while meeting the statutory obligation to operate a national 
rail passenger transportation system. None of our 15 long-
distance train routes covers its operating costs. But long-
distance trains are heavily utilized. Their ridership grew over 
18 percent from fiscal year 2007 to 2011, and they accounted 
for 43 percent of our passenger miles in fiscal year 2011. They 
provide the only intercity passenger rail service on half of 
our system.
    Most importantly, our long-distance trains are increasingly 
the only public transportation option for many who ride them. 
The Chinatown and other curbside buses are now prevalent 
between Washington and New York, providing service that is 
cheaper than our trains, but it is much slower and subject to 
traffic delays. Our ridership between Washington and New York 
has continued to grow since curbside buses entered the market, 
and even grew more as the buses entered Union Station. But you 
won't see a curbside bus, or increasingly, any bus in the small 
and mid-sized communities served by our long-distance trains. 
And we think that needs to change. And I talked a little bit to 
Peter about that before the hearing, where we can work better 
together in that area.
    While intercity bus service is increasing in a few major 
city markets, it has declined precipitously elsewhere. Bus 
operators and airlines are cutting service to smaller cities 
and rural communities because services lose money. According to 
the BTS, the number of Americans who no longer have access to 
intercity bus or air service, and are served only by Amtrak, 
tripled in just 5 years.
    We also hear a lot about privatization of passenger rail 
services in other countries. In a number of countries, 
including the United States, many commuter and local rail 
services are operated for profit by multinational companies 
that receive government subsidies. Only two major countries, 
Japan and Great Britain, have privatized intercity passenger 
rail to any significant extent.
    Japan privatized its services after the government-funded 
construction of the country's major high-speed rail lines. It 
also provided a huge one-time infusion of funding to subsidize 
future losses from unprofitable services, and continues to fund 
construction of new high-speed rail lines.
    In Great Britain, privatization actually increased public 
funding needs. Government expenditure on passenger rail rose 
from less than $3 billion in 1993/1994, the year privatization 
began in Britain, to over $7.4 billion in 2010/2011. The share 
of the railway system's costs, operating and capital, paid by 
the British public rose from 40 percent to 50 percent. No 
country has succeeded in constructing initial high-speed rail 
systems primarily or exclusively with private funding. Great 
Britain and Taiwan had to take over, at huge public expense, 
the private entities created to develop their initial high-
speed rail lines.
    Finally, I want to emphasize that Amtrak is not satisfied 
with our recent accomplishments. Rather, we aim to do much 
better. We have begun implementing our strategic plan by 
expanding our Safe-2-Safer initiative, restructuring our 
operating departments by business line to improve our bottom 
line and enhance customer focus. We are adopting strategic 
management techniques used by the Nation's largest and most 
successful companies. We have ordered 70 new electric 
locomotives for the Northeast Corridor and 130 long-distance 
single-level cars to replace equipment that is more than 50 
years old, some more than 60 years old.
    We have successfully rolled out our nationwide eTicketing 
program, replacing 19th-century railway processes with 
innovative mobile technology that won an award from CIO 
magazine. We now offer WiFi on most of our trains. Federal 
expenditure on Amtrak during the last 41 years pales next to 
what virtually every one of our European and Asian competitors 
has spent on passenger rail. But Amtrak has provided a high 
return on limited Federal investment we have received. Our aim 
is to continue to do that in the years ahead. Thank you.
    Mr. Shuster. [presiding.] Thank you, Mr. Boardman.
    Mr. Alves, you may proceed.
    Mr. Alves. Good morning, Chairman Mica, Ranking Member 
Rahall, subcommittee Chairman Shuster, and members of the 
committee. Thank you for the opportunity to discuss how 
improvements in the efficiency and effectiveness of Amtrak's 
operations can lead to financial benefits and reduce Amtrak's 
reliance on Federal subsidies. I will address three issues 
today: first, Amtrak's initiatives to improves its operations; 
second, opportunities we have identified where Amtrak can build 
on those initiatives; and third, work we are doing to identify 
additional improvement opportunities.
    Today Amtrak is very focused on improving its operations. 
It has issued a strategic plan with specific goals, metrics, 
and strategies to guide improvement efforts. It is also taking 
action to hold people accountable for results, integrate 
operating departments within geographic regions, realign along 
new business lines, and develop a system to focus resources on 
achieving strategic goals. We support these initiatives, but 
note that, to be successful, Amtrak will need to sustain them 
over the long term, and implement them effectively.
    Our recent work shows that successfully implementing these 
initiatives has the potential to yield significant operational 
improvements. For example:
        --We recently reported that multiple employees 
        defrauded Amtrak by being paid for hours not worked, 
        and committed other serious abuses. We also noted a 
        pervasive lack of supervision by responsible union and 
        management officials. Losses from this one case could 
        be over $100,000. Amtrak acted quickly and aggressively 
        to discipline the involved employees.
        --Significant opportunities also exist to improve 
        management controls over food and beverage operations. 
        We conservatively estimated that $4 million to $7 
        million of onboard food and beverage sales could be at 
        risk of theft because of inadequate management 
        controls. In responding to our recommendations, Amtrak 
        has established a loss prevention unit and a chief 
        customer service position, which will have 
        accountability for improving the program.
        --Lastly, over the years we have identified more than 
        $83 million in overpayments to host railroads. These 
        errors went undetected because Amtrak did not have 
        adequate management controls for its invoice review 
        process. Over the last 2 years, Amtrak has established 
        an invoice review process that should help to avoid 
        future overpayments.
    An underlying cause of each of these deficiencies is a 
breakdown in management controls. A sound system of controls, 
including well-defined and applied policies and processes, is 
critical to efficient and effective business operations.
    In that regard, earlier this year we reported that Amtrak 
does not have an enterprisewide framework to manage risk. 
Central to such a framework is a strong management control 
system. We recommended that Amtrak ultimately implement a risk 
management framework for the entire company, but focus 
initially on its strategic goal to improve financial 
performance. The company is in the process of considering how 
it would implement such a system.
    Turning to our future work plans, key issues we plan to 
address include:
        --Reviewing how Amtrak manages its capital investment 
        projects. Effective management of capital projects is 
        critical, given that Amtrak spent almost $1.7 billion 
        on capital investments in 2011,
        --Completing a series of forensic audits in the 
        acquisition and procurement area. This work is designed 
        to identify opportunities to reduce losses to causes 
        such as duplicate payments, and
        --Reviewing the adequacy of contract management for two 
        multiyear procurements valued at over $800 million.
    In closing, we believe the keys to improving Amtrak's 
operations and reducing reliance on Federal support are 
sustaining and fully implementing its ongoing strategic 
initiatives, and continuing to develop and implement new 
initiatives, including a risk management framework.
    Mr. Chairman, this concludes my statement, and I will be 
happy to respond to any questions that you or other Members may 
have.
    Mr. Mica. [presiding.] I thank the inspector general. And 
we will get back to you and Mr. Boardman and others. We will go 
through all the panelists first.
    Let me recognize Mr. Peter Pantuso, president and CEO of 
the American Bus Association. Welcome, and you are recognized.
    Mr. Pantuso. Thank you, Chairman Mica and members of the 
committee. Thank you very much for allowing us to testify this 
morning.
    All segments of the private bus industry provided nearly 
700 million passenger trips in 2010. It is a number comparable 
to domestic airlines and many times more than those provided by 
Amtrak. And ABA's 800 members provided approximately 60 percent 
of those trips. Our industry offers quality, efficient, safe, 
and cost-effective transportation.
    According to a paper presented in 2011 at the 
Transportation Research Board, curbside and intercity bus 
travel has more than doubled in the Northeast Corridor in the 
last couple of years. Growth across America has been 
remarkable. Greyhound's annual passenger volume is now over 20 
million passengers, and Megabus, a relative newcomer to the 
industry, moves 8 million passengers a year. These two carriers 
alone provide nearly as many passengers as Amtrak does in their 
record year.
    In addition, the bus industry creates a huge economic 
benefit of $112 billion. That includes 1 million jobs 
throughout the transportation, travel, and tourism industries. 
Private buses are also the most fuel-efficient and carbon-
efficient mode of mass transportation. These services are 
provided by an industry made up mostly of small business men 
and women that receive virtually no or little subsidy.
    The cost efficiency of bus travel is well documented. A 
round-trip ticket from DC to New York, for example, by bus, 
will cost somewhere between $36 and $58, or if you are lucky, 
you can do it for as little as $2, when the current Amtrak 
schedule prices the same round-trip fare between $98 and $300. 
And there is really only a modest difference in time between 
the regular train service and bus service.
    The American public is hungry for more transportation 
options, as evidenced in a study released just last week by the 
Natural Resources Defense Council. The NRDC found that three 
out of four Americans are frustrated with their lack of 
transportation options. A major barrier to offering real 
transportation choice is a combination of an uneven playing 
field and modal stovepipe funding.
    The private bus industry's advantages in cost, 
efficiencies, and flexibility argue for complete inclusion of 
intercity bus transportation and the intercity transportation 
system. If it is Congress' decision that there should be some 
areas where transportation needs to be subsidized, we propose a 
different paradigm. A subsidy should be limited. Transportation 
service must move to a point of operational efficiency, 
including all current and future costs.
    One example that works very well is Boston Express. They 
provide bus service between Manchester, New Hampshire, and 
Boston South Station. Twenty-seven trips take place a day, 
round trips, and Boston Express has carried over 2 million 
passengers in only 4 years, while achieving a 94-percent fare 
box recovery. New Hampshire had a choice of bus or rail. They 
chose intercity bus.
    Where population density does not warrant massive capital 
investment required for rail operations, buses should be 
considered as the primary intercity option. States should be 
given funding flexibility to determine how best to serve the 
needs of their traveling public. This is not unlike what we 
have proposed in the essential air service: Give communities 
the option to provide the most cost-effective and most frequent 
service in a given corridor. Once the corridor has been fully 
developed, then consider other options, whether they are more 
costly or not.
    Transportation facilities should be multimodal. Now, it is 
not that Amtrak doesn't serve a vital part of the Nation's 
transportation system, but there also should be room for other 
modes.
    As I mentioned earlier, intercity bus provided nearly 700 
million passenger trips, serving more communities with more 
schedules, costing less money, using little or no subsidies, 
and, in some cases, more amenities than our national intercity 
rail or airlines. Imagine what this industry could do if the 
barriers to competition were removed, or if States were given 
more flexibility in using their transportation dollars.
    In closing, Mr. Chairman, let me also suggest that, while 
it may appear that ABA and Amtrak are on different pages, we 
very much serve the same customer. We very much have the same 
goal of getting people out of cars. The automobile is the 
competition for the bus and the train. They are not in 
competition with one another. And, as Mr. Boardman pointed out 
earlier, we actually work quite well together in many 
corridors. And he also reminded me that he is one of our 
largest bus customers, spending more than $20 million a year in 
bus services.
    I thank you and the committee for your time, and I am 
certainly happy to answer questions.
    Mr. Mica. Thank you, and we will defer. Let's hear from Mr. 
Randal O'Toole, senior fellow with the Cato Institute.
    Welcome, sir, and you are recognized.
    Mr. O'Toole. Thank you, Mr. Chairman and members of the 
committee, for inviting me to speak today. I have been in love 
with passenger trains ever since I was 5 years old and rode my 
first passenger train, which was the Great Northern Western 
Star, from Grand Forks, North Dakota, to Portland, Oregon. I 
have literally been obsessed with passenger trains ever since. 
But I don't happen to think that other people should have to 
subsidize my particular preferences or hobbies.
    When Amtrak was created by Congress in 1970, I was young 
and naive enough to believe that a national rail transportation 
system could be operated efficiently, and could provide 
attractive service. Unfortunately, Amtrak has proven me wrong. 
At that time, in 1970, rail fares averaged about two-thirds per 
passenger mile as much as air fares. And so rail was the lower 
cost option. Since then, Amtrak has made rail into the high-
cost option in almost any corridor and almost any route. Today, 
Amtrak rail fares are more than twice as much as airfares per 
passenger mile. Amtrak has--rail fares have increased since 
then, in terms of inflation-adjusted money, whereas airline 
fares have declined.
    And so, Amtrak is not competitive in lots and lots of 
different routes. It is not hard to look up online routes such 
as Portland to Oakland, Oakland to New York, Chicago to 
Detroit, Chicago to Minneapolis, where air fares are lower than 
Amtrak fares. And, of course, the airlines operate more 
frequently and faster. Buses, too, are far more efficient than 
Amtrak. The fares are far lower than Amtrak. And there is 
numerous routes across the country where buses are more 
frequent and faster than Amtrak, as well as being less costly.
    It is not just the fares, though. We also have to count the 
subsidies. And people like to say that all forms of 
transportation are subsidized. But the subsidies are hardly 
equal. According to the Bureau of Transportation statistics, 
subsidies to the airlines, which are mostly at the Federal 
level, average about $.02 a passenger mile. Subsidies to 
highways, which are mostly at the local level, average about 
$.01 a passenger mile. By comparison, subsidies to Amtrak 
average between $.25 and $.30 a passenger mile, and have done 
so consistently, in terms of inflation-adjusted dollars, since 
1975.
    So, we have Amtrak fares averaging $.30 a passenger mile, 
compared to about $.13 for airlines, Amtrak subsidies averaging 
$.30 a passenger mile, compared to about $.02 for airlines, 
$.02 or $.03 for airlines. The total result is that Amtrak 
costs four times as much as airlines, eight times as much as 
buses, and roughly four times as much as driving. This means 
that Amtrak is completely uncompetitive, compared to other 
systems.
    Now, Amtrak will tell you that most of those subsidies go 
for capital improvements, and shouldn't be counted against a 
year-to-year operating revenues. But that is not true. In fact, 
much, if not most, of what Amtrak calls capital improvements is 
not a capital improvement. It is maintenance. Replacing a 50-
year-old train car, replacing a worn out locomotive, replacing 
a dilapidated bridge or other infrastructure is maintenance. It 
is just as much maintenance as replacing the spark plugs on 
your car or replacing the furnace filters on your home. It is 
not a capital improvement. There are some capital improvements 
in Amtrak's budget. But much, if not most, of what they call 
capital improvements is maintenance.
    Now, with the high cost of Amtrak, it is no surprise that 
Amtrak is essentially an insignificant player in the national 
travel market. While people say they want to keep Amtrak going, 
they hardly ever use it. Nationally, Americans, before the 
recession began, traveled almost 20,000 miles per year per 
capita. About 2,000 miles of that was by air, about 15,000 
miles of that was by automobile. About 19 miles was by Amtrak, 
one-tenth of 1 percent. The average American rode Amtrak 19 
miles.
    Now, since then, Amtrak has increased its ridership, and 
per capita ridership has gone all the way from 19 miles to 21 
miles. That is still less than it was in 1990, when it was 24 
miles. But that 21 miles, or even 24 miles, just does not sound 
significant compared to the 1,850 miles the average American 
flies, or the 14,000 miles that the average American travels by 
car today.
    Because Amtrak carries so few people, the savings in 
energy, the savings on air pollution, and the savings on other 
things that Amtrak provides are totally insignificant. And, in 
fact, they are diminishing. Airlines and driving is becoming 
energy efficient far faster than Amtrak. By 2030, Amtrak will 
be the brown form of travel. It will be the form of travel that 
consumes the most energy per passenger mile, and emits the most 
pollution per passenger mile.
    Now, what should be done about Amtrak? Does Amtrak have the 
problems it has because it is--passenger trains are an obsolete 
form of travel? Or does it have these problems because 
Government is an inefficient manager of any mode of 
transportation? I think the answer is some of each.
    And I don't think the answer to the problem is going to be 
to contract out or otherwise try to reform Amtrak. Contracting 
out can save money. The city of Denver--the State of Colorado 
requires that Denver's regional transit district contracts out 
half of all of its bus service, and operates only half of it 
with in-house. The half that is contracted out to private 
operators, private operators pay comparable wages to the 
regional transit district. Some of them are even unionized. And 
yet they charge taxpayers only 55 percent as much per bus 
vehicle mile as the regional transit district spends on its own 
buses. So that saves money. And yet, contracting out still 
leaves Amtrak's major problem, which is that routes will be 
determined politically, and not based on demand or economics.
    I think the real solution, ultimately, is going to be 
privatization. And if we privatize we might lose a few trains. 
We are probably going to lose the Sunset Limited. It is just 
not an efficient train. But there are other places where 
private operators will come in and make a big change. When 
Canada ended service between Calgary and Vancouver, a private 
operator came in. It has been operating profitably ever since. 
They now have four different routes, and they have begun 
operating service down to Seattle, Washington.
    I think if we had private operations, we would start seeing 
private operators--cruise trains, if you want, in the West, 
business trains in major corridors in the east--continue to 
operate passenger trains without subsidies. And I think this 
should be done in the context of a broader effort to end 
Federal, State, and local subsidies to all forms of 
transportation.
    Thank you very much.
    Mr. Mica. Thank you. Very interesting testimony.
    And we will turn now to Mr. Capon, who is the president and 
chief executive officer of the National Association of Railroad 
Passengers.
    Welcome, and you are recognized.
    Mr. Capon. Thank you very much, Mr. Chairman. We have 
strongly supported--and I would ask that my full statement----
    Mr. Mica. Without objection, all--any statements, 
additional information or data, will be made part of the record 
from all of our witnesses. Proceed.
    Mr. Capon. Thank you. We have strongly supported the 
Federal Government's investment in Amtrak. We think the 
investment has been worthwhile and brought important benefits 
to the Nation, including both to passengers and others. We 
think it looks smarter today than it did 20 years ago, and will 
probably look smarter still 20 years hence.
    Amtrak fares are not ``completely uncompetitive.'' The 
ridership keeps rising, which is one indication that the public 
wants it. Part of the reason the ridership is going up is 
gasoline prices are also going up. And part of the reason is 
that young people are more interested in being connected than 
they are in driving, compared with 10 years ago. And the senior 
population is growing, which increases the need for all forms 
of alternatives to driving.
    As has previously been suggested in the opposite context, 
Amtrak has not been giving away the store; the fares have been 
rising. But you can get a very misleading impression by looking 
at national statistics, systemwide statistics, on Amtrak 
because the fares are very competitive in most markets. The 
Acela fares, as you know, are very high because the market 
there is dominated by business travelers who are willing to pay 
a lot in congested markets. And so, the result is that Amtrak 
is really a series of systems. And giving a single average fare 
for nationwide Amtrak is very misleading.
    I have a long list in my testimony of benefits that Amtrak 
provides, both for the riders and for others, including bus 
companies, as Mr. Pantuso noted. Amtrak and the bus companies 
work very well on many fronts. Just on July 31st, the Oak Ridge 
National Laboratory report, ``Transportation Energy Data 
Book,'' came out showing actual energy consumption by mode. 
This shows that in the most recent year they have covered, 
which is 2010, Amtrak improved relative to trucks, automobiles, 
and aviation. Amtrak is 41 percent more energy efficient than 
personal trucks, 34 percent more efficient than automobiles, 17 
percent more efficient than domestic commercial aviation. They 
don't have the data for intercity buses, so they don't include 
it. But I would emphasize that those numbers are not 
theoretical ideas about what could happen if the train was 
full; those numbers are based on actual energy consumed and 
actual passengers traveled.
    There has been a lot of criticism about the long-distance 
trains that is evidently based on the theory that most of the 
people are riding from one end of the route to the other. On 
page three of my written statement I show that, for example, on 
the Southwest Chief 35 percent of trips are over 1,000 miles, 
34 percent of trips are 501 to 999 miles and only 8 percent of 
the passengers are riding all the way from Chicago to Los 
Angeles. I think there is a similar pattern on the Sunset 
Limited. It is not about New Orleans to Los Angeles. But I did 
look at the fare yesterday. And the coach fare on the Sunset 
Limited is actually somewhat lower than Greyhound.
    I think that I will agree with Mr. O'Toole on one point, 
and that is that subsidy per--or the cost per passenger mile is 
a more accurate measure than cost per passenger. To a large 
extent, when we rank Amtrak routes by loss per passenger, we 
are simply really ranking them by the length of route. The 
Southwest Chief, which you had cited critically, actually in 
terms of a subsidy per passenger mile, is slightly lower than 
the average--it is one of the stronger routes.
    I need to talk about food service. Mr. Crosbie, in 2005, 
before this subcommittee testified--he was the Amtrak vice 
president of operations--that the primary purpose of onboard 
food service is to enhance ticket sales and ridership, not 
serve as a profit center. In 1981, when Congress passed the 
break-even mandate, committee reports urged Amtrak to attribute 
up to 10 percent of ticket revenues to food service for 
purposes of determining compliance with that provision. And I 
believe Amtrak has calculated that they are breaking even, even 
if just 5 percent of ticket revenues are attributed to food 
service. The point being that if there is no food service, a 
lot of the revenue--a lot of the ticket revenue--is going to 
disappear, because people won't ride the train.
    We feel that a lot of the investment in Amtrak is 
investment and not a subsidy. I won't repeat--I think Mr. 
DeFazio made the point about the number of riders that Amtrak 
handles when you take into account the infrastructure that 
Amtrak owns.
    We believe that the mode-specific trust fund itself 
constitutes a huge subsidy, because it directs investment into 
modes based on their current dominance, rather than on their 
usefulness in solving problems our children and grandchildren 
will face. In most other countries, fuel taxes are higher and 
go into the General Fund. In most other countries, the tracks 
are owned by the government, which is free to assign them to 
private operators. In this country, most of the tracks that 
Amtrak uses are owned by private railroads that are not 
interested, in most cases, in having other companies--whose 
stability they are not sure of--use their tracks.
    I think Amtrak should be given credit for a couple of 
innovations that certainly improve the bottom line. One is the 
fact that when the Web was developed, they were very early--I 
think Amtrak was selling tickets on the Web before most 
airlines. And Amtrak has, in spite of the intense complexity of 
its system, because of the number of intermediate stops that 
trains make, it now has eTicketing on a nationwide basis. I 
have actually had to use Amtrak in the past couple of months on 
a couple of trips, and eTickets are much more efficient for the 
passenger, because you no longer have to figure out where can I 
get to the station to buy the ticket, or where is there a Quik-
Trak machine. You just make the purchase online, and Amtrak 
immediately sends you an eTicket, which makes travel much 
easier.
    I think I will leave it at that. Thank you very much for 
your attention. And I know you will read every word of my 
written statement.
    Mr. Mica. Well, thank you. And thank you for appearing 
again before the committee, and all of our witnesses, for their 
contributions today.
    And we will start questioning, and I will take the first 
round. Again, Mr. Boardman, I said I was inspired by some of 
your comments, particularly the one that said, ``We want to run 
this company more as a business and less as a Government 
entity,'' and I know that has been your goal from the beginning 
of your tenure.
    And let me just say, too, I think you understand, Mr. 
Boardman, that I am fairly conservative, from a fiscal 
standpoint. I am a strong supporter, as you know, of passenger 
rail. I think we should be having four times as much service 
and twice as much employment, and more routes, et cetera, but 
they have to make sense.
    You are aware that there is a--you know, there was a wave 
last time of how many Members that came that were pretty 
conservative. And you know after this election--you all do know 
that there is another wave coming. And that wave is going to 
also be met here by a tsunami which is called the fiscal 
financial cliff of the United States of America, where $16 
trillion--now, I can't solve the problems for the whole 
Government. I will have a very narrow scope of responsibility 
within the jurisdiction of this committee.
    So, my goal is to see how we can expand service for 
passenger rail, how we can do it with less subsidization. I 
think that is your goal, too, is it not? I think you cited 
that. Is that your goal, Mr. Boardman?
    Mr. Boardman. [Nodding.]
    Mr. Mica. Yes. OK. So that--I think we have a similar 
purpose and goal, as strong advocates in passenger rail.
    Mr. Capon, you spoke of the benefits as far as energy and 
efficiency. And certainly rail--I will be glad to give the 
statistics that--I have been trying to put a commuter rail line 
in since December of 1992 in central Florida, and fighting 
sometimes Neanderthal thinking that people don't understand, 
even who are fiscal conservatives, that rail can be very, very 
cost effective, energy efficient, as far as emissions, for the 
atmosphere. And also, it has a difference between bus and other 
modes, because the buses are still stuck in traffic. I mean, 
again, it is a great option. But we do have to look at 
efficiencies and how we can bring costs down.
    My point is, too, that if you think I am tough on Amtrak, 
there is another group coming in January. And you ain't seen 
nothing yet as far as, again, the steps they are going to have 
to take to get the country's finances in order. And every 
agency and activity financed by the Government is going to face 
similar scrutiny.
    So, my intent, from the first hearing, was to dramatically 
increase the timeframe that we have for putting in high-speed 
rail, put it in the Northeast Corridor, where we own that line, 
as--Mr. Boardman, isn't that the only corridor that we own that 
is conducive to high-speed rail? Is that correct?
    Mr. Boardman. [Nodding.]
    Mr. Mica. Just answer----
    Mr. Boardman. Oh. Yes.
    Mr. Mica. ``Yes,'' OK. And we should have 10 times the 
service, 10 times the passengers, and the whole country 
benefits by that, folks. So, if you want to come out and try to 
keep the status quo and keep things going as they are, I think 
you are undoing yourself and what you propose to support.
    So, that is the purpose of the hearing. And Mr. Boardman is 
doing his best to bring in efficiencies. We bring in the 
inspector general. We task him at looking at where there is 
waste and inefficiency in this agency. And we have inspector 
generals for almost every other activity. He has pointed out 
today that we have a lack of management.
    Mr. Alves, did you not say that the primary shortcoming 
with some of these losses is lack of management?
    Mr. Alves. The underlying problem----
    Mr. Mica. Management controls.
    Mr. Alves. Management controls, yes, the underlying----
    Mr. Mica. Right, OK.
    Mr. Alves. Go ahead.
    Mr. Mica. Yes. And Mr. Boardman--and actually, I recommend 
this Progressive Railroading article to folks, because others 
are quoted in here--and how he is trying to restructure the 
activities so there--it can be run more like a business and get 
responsive--positive response from each of the activities.
    Capital investments. Now, that concerns me, and I am going 
to ask the staff to do some further investigation. And if you 
would, work with our staff because--did you say $1.7 billion in 
capital investments?
    Mr. Alves. Yes. And that includes money from all sources.
    Mr. Mica. Stimulus?
    Mr. Alves. Yes.
    Mr. Mica. And what is also cited. And you see that as--the 
oversight and accountability for that as an issue?
    Mr. Alves. Yes. That is such a large amount of money, we 
want to make sure that there are----
    Mr. Mica. That it is properly--and you cited there were 
duplicate payments?
    Mr. Alves. This is one of the things that we are going to 
look for in this forensic analysis.
    Mr. Mica. OK. All right. Well--and I also direct our staff 
to work with you and look at the same thing. We have 
congressional staff and I have investigative staff. We 
corroborate and we try not to interfere or duplicate, but we 
also want to get the facts where there are losses, and get the 
information to Mr. Boardman, so he can make the management 
controls that should be instituted, if we have a $1.7 billion 
capital program and we have problems there.
    The other thing that concerned me is you had mentioned also 
continued losses in--I guess there is some cash practices, 
either for tickets or for food service. And we still have a 
cash system. This was brought up at another hearing. And, Mr. 
Boardman, how far are we now from going to a cashless system 
for food service or other areas where we have seen losses that 
we might be able to avoid?
    Mr. Boardman. Mr. Chairman, from 3 weeks ago we haven't 
moved.
    Mr. Mica. OK. So that is still the same.
    Mr. Boardman. It would be--we do have the point of sale 
service that we are expanding. And I believe it will be 
probably done in the next fiscal year, where that helps us a 
lot.
    But there are other things that really have to happen. And 
I think that the IG has recommended, and I have agreed to, a 
pilot program where we could see what the issues would be to 
implement that more widely.
    Mr. Mica. Well, again, I think, coming from a business 
standpoint, I am sure there are vendors out there, if a tender 
was put out, that could change the system out relatively 
quickly with a modern, state-of-the-art billing, without cash, 
and cut our losses. Just a suggestion. Just another area that--
in which I think we can improve our operations and our losses.
    The Sunset Limited, Mr. Boardman, it is the--by all 
accounts--Mr. O'Toole, and I think everyone had confirmed that 
the underwriting and subsidy for the Sunset Limited is the 
highest. Anyone disagree with that?
    Mr. Boardman. Yes.
    Mr. Mica. You do? There is a route that is more subsidized?
    Mr. Boardman. Yes.
    Mr. Mica. What is it?
    Mr. Boardman. It is the Chief.
    Mr. Mica. The Chief is worse? The Chief, we get 177, Los 
Angeles to Chicago. Money being at loss we have is 375. Again--
but they both are losing money in a significant amount per----
    Mr. Boardman. All the routes lose money, significant money, 
in the way that it is calculated.
    Mr. Mica. And I was quite interested, Mr. O'Toole. You said 
that in Canada they had changed out some of those routes and 
actually now--did you say they were profitable, some of the 
routes that were, say, less traveled but also had potential for 
rail crews or--I forget exactly how you phrased it.
    Mr. O'Toole. Well, it was a cruise train. I was actually on 
the very last run of a Canadian train from--a Government-
subsidized Canadian train from Calgary to Vancouver. And that 
was in 1990. And immediately after the government ended that 
train, a company sprang up called the Rocky Mountaineer, and 
they operate cruise trains from Vancouver to Calgary going 
through Banff. And since then they have expanded. They go to 
Whistler, they go to Jasper, and they now have trains coming 
from Seattle, as well as Vancouver. They operate on private 
tracks, Canadian Pacific and Burlington Northern Santa Fe 
tracks, and as well as Canadian National. And they apparently 
have good relations with the railroads and offer three classes 
of service. It is a little expensive, but it gives people great 
opportunities to go sightseeing and to enjoy trains at a very 
high-quality level.
    Mr. Mica. OK. Mr. Boardman, is--would there be any 
possibility of looking at some of these routes--and I know we 
have--in PRIIA and others--of possibly tendering them out to 
see, and maybe looking at a change in the route schedule, as 
long as we protected the employees' benefits, salaries, things 
of that sort, if an operator would come in and look at 
performing them with a lower subsidy or, God forbid, you know, 
breaking even or turning a profit? Any thought to that, Mr. 
Boardman?
    Mr. Boardman. Yes, I have got a couple different thoughts, 
Mr. Chairman. One is--and I think Mr. O'Toole identified it--is 
the Rocky Mountaineer that he was talking about. Their new 
Seattle service will actually be operated by Amtrak.
    [Laughter.]
    Mr. Boardman. But the real network need that we are dealing 
with has to make sure that everything works together and 
connects together. And I know you know that.
    Mr. Mica. Yes.
    Mr. Boardman. But every one of our trains and the character 
of the trains is changing constantly. For example, the Empire 
Builder today, one of the fastest-growing areas is Williston, 
North Dakota, because of the energy boom that has occurred up 
there. And we have had to change the way we really operate 
that. We also have to improve the security on that. Part of 
what no other mode really has a responsibility for that Amtrak 
has is to maintain a police and security force. And that is 500 
folks at Amtrak to do something like that.
    So, a lot of times, when you really look at what the cost 
is, and what the subsidies are, it really is an apples-oranges 
comparison, much more difficult to start pulling it apart, 
piece by piece.
    Mr. Mica. Well, you mentioned security. And on the airlines 
we have a $2.50 passenger charge for security. You can do three 
segments, maximum of $5. Would you think the user should pay 
the security cost, which--would that help you with your bottom 
line?
    Mr. Boardman. Well, I think they do pay--part of what we 
really looked at here on the operating--covering 79 percent of 
our operating costs really is the passengers are paying a very 
large amount. And with that, with some of the folks that----
    Mr. Mica. Well, again, my point was on the money-losing 
routes that stand out, that have fairly significant--I mean $37 
million for Sunset Limited, Southwest Chief--I see where you 
are getting your figure. Actually, in net operating loss, 
Sunset Chief is the big enchilada. It is $63 million of loss on 
that route. But there are many more passengers, 354,000 as 
opposed to 99,000. So I see what you are saying.
    Mr. Boardman. That train operates 7 days a week, as opposed 
to 3.
    Mr. Mica. Yes, exactly. But----
    Mr. Boardman. OK.
    Mr. Mica. But is there any thought to, again, looking at a 
different model or operator?
    Mr. Boardman. Well, the Congress has regularly told us to--
--
    Mr. Mica. Right.
    Mr. Boardman [continuing]. Look at these kinds of things. 
And they have been looked at. And we still have the obligation 
of running the trains.
    Mr. Mica. But there is no--have there been active 
solicitations for----
    Mr. Boardman. No solicitations, no.
    Mr. Mica. And you wouldn't consider that, even----
    Mr. Boardman. I mean we use----
    Mr. Mica. Even with----
    Mr. Boardman. We use private contractors----
    Mr. Mica. Even with protections that I outlined?
    Mr. Boardman. We use private contractors for services, but 
not to operate the trains, no.
    Mr. Mica. There is a constant diatribe I hear from the 
other side, ``Oh, Mica wants to lower wages and all of that.'' 
And I have never said that. I have always said whatever we did, 
if we brought in a private contractor in the Northeast Corridor 
to enhance that service, that they would have to guarantee--
actually, I think by most of the contracts they are guaranteed 
anyway. Even if we eliminate the route we have provisions for 
guarantees that have been written in.
    The--just see here. One of the things that I have been 
working on--and actually, I am very proud of this, coming at 
the end of this congressional session--is next Tuesday morning 
at 10:00 they are going to dedicate--or at least a formal 
opening--of Union Station. And what we have done there is I 
insisted that we have buses, we have intercity transportation, 
we have rail and Metro all connect together. They said it 
couldn't be done, and we are actually doing it. And I would 
thank Assistant Secretary Porcari, who helped when everyone 
said it couldn't be done. We are doing it.
    Because people will not use mass transit or transit in the 
United States if it does not connect. So whether it is in 
Miami, where we are doing a--where we have done a $1.7 billion 
intermodal center that connects rail, tri-rail, commuter rail, 
Metrorail, bus, all forms, rental cars, in a $1.7 billion 
state-of-the-art facility, or Union Station, we need to make 
certain that we connect. And whether it is a big city in New 
York, Washington, or Miami--and I have had the privilege of 
representing St. Augustine, Florida, the oldest community in 
the United States--we have actually, in our small, intermodal 
center, we have--we brought the different modes all together. 
Because you cannot have national passenger service without 
intermodal connections. Isn't that correct?
    And did you say you have 700 million passengers that you 
carry?
    Mr. Pantuso. That is correct, Mr. Chairman. The bus 
industry moves about 700 million passengers annually. And I do 
want to thank----
    Mr. Mica. You guys make a profit?
    Mr. Pantuso. Absolutely, they make a profit.
    Mr. Mica. That is unheard of. We want to make sure--Steph, 
write that down. This witness has said--because I want to write 
it down for Ms. Brown. She always gives me a hard time that we 
can't move people and make a profit, but we--and I think we 
have got a couple of public systems that actually turn a 
profit.
    But you were about to compliment me, and I don't want to 
interrupt you.
    [Laughter.]
    Mr. Pantuso. Mr. Chairman, I do want to thank you and, as 
you pointed out, Secretary LaHood and Secretary Porcari, 
certainly Congresswoman Norton, for the efforts that you made 
in getting the bus into Union Station. It is a marvelous 
intermodal facility. But for decades you have had to drag your 
bags blocks to go down to the Greyhound or, when it existed, to 
the Trailways terminal. And we certainly thank you for making 
the change to Union Station happen. We think it is a benefit--
it is not only a benefit to the motorcoach industry, it is a 
benefit to the train. It is also a benefit, most importantly, 
to the passengers, who----
    Mr. Mica. Yes, you are the largest surface carrier in the 
United States of passengers. And to not have them connect in, 
or have this all work together--working on that in central 
Florida. I have got a meeting with the Secretary in a week or 
two about a connection into an intermodal center in our 
commuter rail with bus service. So--and I hope we make that a 
requirement in the future of all of our projects that have 
Federal funds.
    Mr. DeFazio, did you have questions?
    Mr. DeFazio. Yes. Thank you, Mr. Chairman. If we go back to 
the proposal in H.R. 7, which would mandate outsourcing the 
long-distance routes to the lowest bidder, but then would 
transfer the operating grants to the lowest bidder, I am 
puzzled as to how the taxpayers come out ahead on that one. So 
I--can anyone help me with that?
    Mr. Boardman. Mr. DeFazio, I don't think they come out 
ahead.
    Mr. DeFazio. OK.
    Mr. Boardman. I think they actually come out behind, 
because it will be more expensive to actually coordinate these 
routes.
    Mr. DeFazio. Right. And then, isn't there a provision in 
the contract--now, Mr. Mica said that he proposes that they 
would--any Amtrak employees who worked on that route would get 
full pay and benefits and go there. But where then does the 
lowest bidder--how do they operate more--less expensively, if 
they have to pay--if they are going to carry the same pay and 
benefits as Amtrak?
    Mr. Boardman. I don't think they do. And the bigger 
problem, really, is going to be the freight railroads, and what 
they say about having anybody additionally operate on that 
line, or even if they can.
    Mr. DeFazio. Right, because you can't just sign over your 
rights to operate on those routes.
    Mr. Boardman. That is correct.
    Mr. DeFazio. So that would--the new private operator would 
have to renegotiate with the big rail carriers who, as I know, 
are not really----
    Mr. Boardman. We even have----
    Mr. DeFazio [continuing]. Enthusiastic about----
    Mr. Boardman. We have to do that, as well.
    Mr. DeFazio. Yes. So, then I guess I am puzzled as to where 
the savings comes. And I guess I don't see there are savings.
    Then, secondly, to Mr. O'Toole, the real solution is to end 
subsidies for all modes of travel, let people decide which they 
prefer, based on their own personal preferences and budgets. 
So, you are actually advocating that we not have a Federal 
Aviation Authority and we don't control the airspace of the 
United States of America, and coordinate safety in traffic? Or 
are you just proposing that that would somehow be done by 
somebody, not by the Government, and the money would come from 
somewhere?
    Mr. O'Toole. There are numerous countries around the world 
that have privatized their----
    Mr. DeFazio. Yes. I am very familiar with that--if I could 
interrupt--I have been on aviation 26 years, and it has been 
disastrous. They have had to go back in and subsidize the 
private companies that took over in Britain, in Canada, and 
everywhere else. There is no successful model of operating a 
system of any great size more efficiently and contracting it 
out. Hasn't worked.
    So, we have the largest, most complex, safest system in the 
world, and you are saying we are going to contract it out, we 
are going to save money, and we will not contribute any Federal 
money to it, and the airlines and the passengers will pay for 
the whole thing? Is that the proposal?
    Mr. O'Toole. I don't see anything wrong with expecting 
passengers to pay for their trips. Most of the benefits of 
transportation----
    Mr. DeFazio. There are no benefits to the greater economy 
of the United States of America to have a network of aviation 
in this country. There is nothing beyond the people that get on 
the planes or the freight--there is no benefit to it, so it 
should be paid for solely by the freight airlines and by the 
private airlines who would then pass on all the cost to their 
customers.
    Mr. O'Toole. Most of the benefits of travel goes to people 
who are doing the traveling or the shipping. And so they should 
be the ones to pay the cost. Yes, there are some side benefits, 
but----
    Mr. DeFazio. So the Federal Government would no longer 
control the airspace of the United States.
    Mr. O'Toole. That is right.
    Mr. DeFazio. Boy, that is wild. That is totally wild.
    [Laughter.]
    Mr. DeFazio. OK. So, let me ask, then--you know, as I 
pointed out, there is a subsidy there. And then we have the 
subsidy--we have a national--you must be a devolutionist, 
probably, right? No, I am serious.
    There is a theory, a well-developed theory out there in 
the, you know, the Libertarian right-wing think tanks of 
devolution. It is being advocated by Grover Norquist and 
others. The Federal Government should not be involved in 
coordinating our national transportation system on the surface. 
It should be devolved to the States. Grover hasn't decided 
whether or not they could get the Federal money, or whether 
they just have to pay for it themselves. I have been traveling 
around with a poster of the Kansas Turnpike 1956, when it ended 
in a farmer's field in Oklahoma, because they couldn't deliver 
on their proposed section until we had a national program.
    So, we are going to--are we going to pass back the duties 
for developing any sort of a national transportation system to 
the States and territories?
    Mr. O'Toole. Oklahoma completed its side of that highway 
just a little after Kansas did. I know that is a famous old 
story.
    The truth is that local and State highway departments have 
been very good at cooperating and making sure that their roads 
connected up ever since we started building roads----
    Mr. DeFazio. Let's use an example. The Port of Los Angles. 
The Port of Los Angeles should get no Federal assistance, and 
it should, even though the freight coming into the Port of Los 
Angeles doesn't end up in Los Angeles, for the most part, but 
gets dispersed throughout the United States, they should carry 
all the burden of getting the freight out of Los Angeles for 
the rest of the country.
    Mr. O'Toole. Why not? The rest of the country ends up 
paying for that freight, and they end up paying for that 
shipping.
    Mr. DeFazio. All right.
    Mr. O'Toole. Our home State of Oregon was the first State 
to pass a gas tax in order to pay for roads. And since then, 
most of the cost of roads have been paid for by users.
    Now, I agree there are subsidies. I think we should get rid 
of those subsidies. But the idea that some modes are subsidized 
so therefore they should all be subsidized, we need to somehow 
compensate subsidies, we end up with competing subsidies, we 
end up with political allocation of resources----
    Mr. DeFazio. Can you name a country that has gone down this 
route, withdrawing all Federal support, all national support 
for their transportation infrastructure in the air, on rail, 
and on the ground? Can you name one? Because as far as I can 
see, all our competitor nations are spending a hell of a lot 
more money than we are on these modes, and they are beating us, 
and ours is falling apart, and theirs is getting better. But 
you are recommending something else.
    Mr. O'Toole. If you are looking at Europe, you find all 
over the place countries are building roads throughout Europe 
using public-private partnership.
    Mr. DeFazio. Right.
    Mr. O'Toole. Countries grant a franchise, and then the 
private companies put up all the money to build the road, and 
they pay for it out of tolls, and the----
    Mr. DeFazio. I am familiar with the----
    Mr. O'Toole [continuing]. Users pay all of the costs.
    Mr. DeFazio. I am familiar with isolated instances where 
that is done. But they are still putting more money into and 
assessing much higher gas taxes than we are. They are obviously 
subsidizing their government with gas taxes, in addition to 
transportation.
    So anyway, thank you, Mr. Chairman. It is an extraordinary 
view of the future that I hope doesn't come to pass.
    Mrs. Schmidt. [presiding.] I don't think anyone here wants 
to eliminate Amtrak or eliminate Government help with Amtrak.
    I think what--the purpose of this--these hearings are to 
get Amtrak to understand that we do not have an unending pot of 
gold here to help you remain operational. And so, together, we 
have to look at ways to make Amtrak more efficient and use less 
tax dollars in the process.
    Now, Mr. Boardman, I know that I have probably gone on too 
long about the food service aspect and how we can possibly 
streamline the ways, and so I am not going to ask the question. 
But I remember a few weeks ago your reluctance to make it a 
cashless transaction, even when it was suggested that cashless 
transaction would save dollars. So, we can't have the kind of 
reluctance that I feel is coming from some folks out there to 
change the paradigm. What we have to do is find a way to change 
the paradigm so that Amtrak continues to run, so that when my 
grandchildren need to get on a rail and go somewhere, that that 
rail is there.
    So, I want to ask you this, sir. This is a new question. 
Over the last 41 years, Amtrak has been in existence and has 
needed nearly $40 billion in taxpayer subsidies to remain 
afloat. Now, I don't care about the other groups. I am talking 
about Amtrak. This year, you received $1.4 billion in 
subsidies. Now, let's fast forward that to 2022. How much money 
do you think Amtrak is going to need? What is their financial 
situation going to be in 10 years if you needed $1.4 billion in 
subsidies this year? That is the question.
    Mr. Boardman. I don't know, Mrs. Schmidt. I think we could, 
you know, investigate something like that, and look at it. But 
it depends on what Congress really wants from us, in terms of 
high-speed rail, and some of the other services.
    Mrs. Schmidt. Let me go back to that, sir. Before I came 
here, I started my life as a township trustee. And we looked at 
5-year windows and 10-year windows for our modest pot of gold 
that we had of the taxpayer dollars. What could we do to 
provide police and fire? How could we also provide amenities? 
What could we do with the surface issues that we had, receiving 
very few Federal and State dollars? What was our 5-year 
projection and our 10-year projection? When I got to the State, 
I was on the financial committee that actually looked at 
budgets. And we again looked at a 5-year and a 10-year 
projection.
    So, I think my suggestion to you, sir--and I will go to 
another question--is that perhaps maybe when you look at your 
financial situation, you don't do what many people in 
Government do and only look at a 2-year window. Look at that 5-
year window and that 10-year window and say to yourself, ``How 
can I become profitable? How can I use less tax dollars? What 
do I need to do, and what does the Government need to do to 
help me get to that end?''
    And I think if you do that, the fiscal cliff that we will 
face--and we are going to face it in the next 12 to 24 months--
you can't continue to monetize our debt and not see the fiscal 
cliff before us. And that means that all people are going to 
suffer in some fashion. And it also means the new people that 
are going to come and replace people like me are going to be 
perhaps a little more radical in their approach to what 
Government should be doing for its citizens. And so, I am 
cautioning you that, in order for you to continue to provide 
needed service for our country, that you have to look at ways 
of doing it better.
    So my second question to you is can you produce--maybe not 
for this session, but for the next session--a 5-year and a 10-
year window, so that you can really look at ways to prioritize 
and economize, and allow yourself to do what George Voinovich, 
when he was Governor of Ohio, commonly said, ``Do more with 
less''?
    Mr. Boardman. Perhaps I misunderstood your first question. 
We do have capital plans and we have operating plans for the 
future. The difficulty has been, of course, that Congress only 
gives us an appropriation 1 year at a time. So, a lot of times, 
especially with our capital funding, we have to keep moving 
back, and don't--we can't move forward in the way that we 
believe that we should, because the dollars aren't there 
necessary for us to make that happen.
    Mrs. Schmidt. Well, I am going to go to my next question. 
But when I was a township trustee, we had a 2-year window to 
look at at the State, and we had a 1-year window to look at at 
the county level. And yet we did 5- and 10-year projections, 
based on that.
    Mr. Boardman. Yes, ma'am, we do that.
    Mrs. Schmidt. My second question to you is since 2008 
taxpayer subsidy per ticket has increased more than $3. Do you 
believe this is a management failure in getting costs under 
control, or is there something else driving that cost?
    Mr. Boardman. We actually--and I think we disagree on 
this--we actually have reduced the amount of operating requests 
that we have made, not increased. When you look and you add the 
capital into the equation, then yes, that increases. But there 
has been major capital improvements with bridge replacements 
and other capital services that increase that cost because of 
the way it has been calculated.
    Mrs. Schmidt. Well, then I think we have got a point of 
disagreement. But I want to go to another question, sir.
    The inspector general has reported inadequate internal 
controls stemming from weak or poor management and oversight in 
such areas as food and beverage service, overpayments on--of 
on-time performance incentives, overtime use, and mechanical 
maintenance. How will the reorganization efforts currently 
underway improve internal controls and management oversight of 
the areas identified by the inspector general?
    Mr. Boardman. Several different ways. One of the things 
that came out today in our October Ink magazine, which I think 
is particularly--and I don't know if Congress gets this 
magazine--there is a program called CSPMI, which stands for 
Customer Service Performance Metrics Integrator. And what is 
happening is we are changing the way we manage. And this is 
right down to the bottom level of customer service and customer 
focus.
    I think Ted is right, and he has been very solid in trying 
to provide the kinds of guidance that Amtrak would need for 
improving management for the future. And internal controls and 
risk management have a very important element in what we need 
to get done. But it needs to start right at the bottom and all 
the way to the top, and not just always at the top.
    And part of the difficulty at Amtrak has been the very 
rapid turnover of managers and initiatives to make these 
improvements that need to get done. And they need to be done by 
the men and women that really do the work, because they are 
ready and they are able and they do a damn good job. We need 
them to have the tools necessary to make this happen.
    Mrs. Schmidt. OK. I could argue or try to figure out 
different ways to help you get to where you need to go, but I 
have one final question. And I am looking at the 10 worst-
performing routes. And the Hoosier State Indianapolis, that is 
not that far from my house. It is a 2-hour drive. Chicago is a 
5-hour drive. And I have learned in my lifetime that--I used to 
fly to Chicago. I now drive; it is easier. I have always driven 
to Indianapolis because it is just easier for me to get to from 
point A to point B.
    But you only had 37,000 passengers in 2011 from Chicago to 
Indianapolis. Now, I understand that you always have a loss 
leader in any business model. But you apparently have 10 loss 
leaders. This is the one that has the fewest ridership. If you 
stop that route, how much money would you save, and how much of 
disruption of service overall would occur for Amtrak?
    Mr. Boardman. I don't have the numbers in front of me, 
Congresswoman, but I can tell you that there is another purpose 
for that particular route itself. We call it the hospital 
train. And while you could make a joke, I suppose, out of that, 
it really is the fact that equipment that needs to be worked on 
at our major Beech Grove facility is attached to that, that 
train, every night. Every morning, the ones that are finished 
go back to Chicago, which is our hub. So it provides us the 
ability to move our equipment back and forth. And while we were 
doing that, we decided we would try to give service to 
passengers, as well.
    Mrs. Schmidt. Follow up, and then I will turn it--am I the 
only one here? Oh, I will turn it to Mr. Harris. Is there 
another way to get that equipment without using a rail service 
that is so costly? Or would it benefit to just have the 
equipment and the engines, so that you wouldn't have to have 
the food service and all the other people there?
    Mr. Boardman. There isn't any food service on that train at 
all. And we could put them on flatbeds, I guess, and take them 
down. And I am making a joke there. There is no way we would do 
that. We would need to use that route to get our equipment to 
and from Beech Grove while we had the major maintenance 
facility there.
    Mrs. Schmidt. OK. Mr. Harris?
    Dr. Harris. Thank you very much. I only have a couple of 
questions.
    Mr. Boardman, if you could separate out the Northeast 
Corridor, what percent does the fare box pay of the cost on the 
Northeast Corridor?
    Mr. Boardman. All of it.
    Dr. Harris. So is it even, in fact, more than 100 percent? 
I mean----
    Mr. Boardman. Yes----
    Dr. Harris [continuing]. Subsidized----
    Mr. Boardman. We subsidize Congress with that one. I call 
it subsidizing Congress.
    Dr. Harris. Right.
    Mr. Boardman. And that is that we don't receive the amount 
that we need from Congress for operating assistance for the 
rest of the system. Part of that money comes from the Northeast 
Corridor.
    Dr. Harris. And what is the occupancy rate or the--how many 
percent of your seats are filled on the Northeast Corridor?
    Mr. Boardman. Actually today, which is Thursday, everything 
on Acela will be filled from about noon until about 6:00.
    Dr. Harris. But over time. I mean because when--I know I 
get on airplanes now, it seems no matter what day I fly, they 
are mostly filled. So I know there are some days that are peak 
days. But when you average over time, what is the average?
    Mr. Boardman. I will get back to you with that. I don't 
have the average. But it is pretty high.
    Dr. Harris. On the Northeast Corridor.
    Mr. O'Toole. It is about 65 for the Acela, and----
    Mr. Boardman. I would rather get back to you, sir.
    Dr. Harris. Sure. That is fine. If you could get me that 
answer, I would appreciate that.
    And the--has--what has Amtrak done in order to increase 
that utilization? I mean have they done--and I think, last time 
I traveled to New York and looked at the fares, you do some 
fare adjustments. I mean like the airlines do----
    Mr. Boardman. Yes, we do.
    Dr. Harris [continuing]. You raise and lower fares as you 
approach----
    Mr. Boardman. Yes.
    Dr. Harris [continuing]. And you don't fill seats and all. 
OK.
    Mr. Boardman. We call it revenue manage.
    Dr. Harris. Revenue manage. OK. That is great.
    Now, Mr. Pantuso, let me say in your testimony--or I should 
say Mr. Boardman's testimony, he says that, you know, you won't 
see any bus in some of the small and mid-sized communities that 
our long-distance trains serve. How do you address that issue 
of if--you know, we say that Amtrak has to make money on 
everything, that in fact, small communities would lose service?
    Mr. Pantuso. Well, there is a couple of answers to that. 
First of all, we are serving more than 3,000 communities across 
the country, as compared to about 400, I think, or 500 
communities that Amtrak serves. So we are already serving a lot 
more communities than any other mode of transportation.
    Secondly, there has been some pull-out in some communities. 
I think Greyhound, a number of years ago, began pulling back 
the route system to be more of a point-to-point service. They 
still serve many, many, many thousands of communities around 
the country. But there certainly are places that have lost 
service because it wasn't profitable or it wasn't affordable. 
There was obviously no subsidy to continue running those buses. 
Companies that I represent run their businesses as business 
people. So if they can't afford it, if they are losing money, 
they pull out of communities.
    But the other thing we have seen in a lot of rural 
communities is a better partnership between the intercity bus 
service and local transit providers, where in some cases the 
intercity provider might be running a route system. For 
example, maybe the coaches are going down I-35 out in the 
Midwest, and they are connecting with a transit system that 
might be 20 miles away, bringing customers to and from that 
main trunk system. So, there is a lot of partnerships, but we 
still serve more than any other mode of transportation.
    Dr. Harris. And you--and I imagine that, you know, part of 
the reason a bus company might choose to discontinue service in 
one of these locations is that it is competing with trains.
    Mr. Pantuso. In some cases, that might be the case. I would 
guess, for the most part, throughout the Midwest that probably 
isn't the case.
    Dr. Harris. So both are serving the communities, both buses 
and trains?
    Mr. Pantuso. In some cases.
    Dr. Harris. In some cases. Now, in your testimony, you 
said, you know, page five, you know, ``Imagine what we could do 
if the barriers to competition were removed.'' What barriers 
are you talking about? What are the barriers to competition?
    Mr. Pantuso. The transportation system in the United 
States, unfortunately--and I don't have to tell you, you are on 
the transportation committee--but it is built in a stovepipe 
environment. You know, rail has funding, air has funding. Roads 
have funding. There is very little cooperation, in some cases, 
among the modes. Airplanes or airports sometimes exclude bus 
systems from even coming in to the airport, because they don't 
want to give up their parking revenue.
    In other cases we have seen from different modes predatory 
pricing that, even though you have gotten good bus service in a 
system, you might see rail or another mode come in and try to 
knock that out. That doesn't make any sense. The systems ought 
to be working together for the passengers' benefit.
    Dr. Harris. So specific barriers you would say are the--are 
what?
    Mr. Pantuso. Well, certainly one is funding. One is access 
to broader funding. I think in MAP-21 some of that is being 
corrected by allowing the bus to interact more with public 
facilities, and having more access to some of the public 
dollars so that, again, the dollars can be spent where they 
make sense, not just on a mode because that is where the 
funding has been.
    Dr. Harris. OK. Yes--no, thank you very much for that.
    Mr. O'Toole, you have anything to add to that?
    Mr. O'Toole. Well, I think there is a feeling that somehow 
the Federal Government can pass out the money efficiently and 
accurately where it is needed, and I don't share that belief. 
Mr. DeFazio was expressing incredulity that I thought that we 
shouldn't subsidize the Port of Los Angeles. And yet his own 
district has the Port of Coos Bay, which competes directly with 
the Port of Los Angeles and doesn't get to take advantage of 
the same subsidies, although he would like to send subsidies to 
the Port of Coos Bay.
    I would like to end all subsidies, and let the chips fall 
where they may. If shipping wants to go through the Port of Los 
Angeles, if people want to take a train, if people want to take 
a bus or fly, let them do it, but let them pay their full cost, 
and not have the expectation that I can live in Wolf Point, 
Montana, and have the Government subsidize mass transportation 
for me.
    Dr. Harris. So in my district, which has rural areas, I 
mean, what would you--should there be any program to 
incentivize availability of transportation?
    Mr. O'Toole. I live in a rural area. I live in a community 
of 140 people. And it is a very rural area. I don't even get 
cell service where I live. And I don't think the Government 
should subsidize my cell service. We certainly don't have bus 
service, and I don't think the Government should subsidize my 
bus service. When I decided to move there, I knew I wouldn't 
have access to those things. If I need access to those things, 
I will move to a place where I need to have access.
    We are a mobile society. The average American moves 10 
times or more in their lifetimes. So if people need that at 
some point in their lives, they can move to a community that 
has that. I don't think that everybody in the United States is 
entitled to Government support of their internet, their cell 
service, their transportation, and everything else, regardless 
of where they live and what the cost is in that location.
    Dr. Harris. Thank you very much. And thank you, Madam 
Chairman.
    Mrs. Schmidt. Thank you--is the mic on? This concludes the 
hearing. Any Member that wishes to have any remarks has up to--
how many days--30 days for the remarks.
    I want to thank the panel for your patience with all of us, 
and look forward to seeing you in the future.
    [Whereupon, at 12:02 p.m., the committee was adjourned.]
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