Amtrak's Free Pass: Why "Value" Isn't an Excuse for Endless Subsidy

Rethinking the Role of Government in U.S. Passenger Rail

We’re excited to share another post by our summer intern, Cameron Ewine. Cameron is a rising Junior Economics Major at University of Maryland.

When it comes to federal subsidies, few programs enjoy the kind of persistent political immunity that protects Amtrak. As the new administration aims to implement spending cuts and create entire departments focused on government efficiency, such as the aptly named Department of Government Efficiency (DOGE), it’s worth turning attention to long-standing drains on taxpayer dollars.

Advocates for Amtrak insist that America's passenger rail service should be judged not by profitability, but by its purported "value." Jim Mathews of the Rail Passengers Association recently authored an article and an op-ed arguing that Amtrak should not be viewed as a transportation company but rather as a public utility. He contends that just as we don’t ask the Air Force or the Centers for Disease Control and Prevention (CDC) to turn a profit, we shouldn’t demand it from Amtrak either.

But this argument rests on selective legal interpretations, fuzzy math, and a dangerous disregard for market discipline.

Bad Analogies: Amtrak Is Not the Air Force

Advocates of rail transportation subsidies, Mathews among them, often argue, "We don't ask the Air Force or CDC to make a profit." But this is a red herring. The military and the public health infrastructure are quintessential public goods: non-rivalrous, non-excludable, and essential to national survival.

Passenger rail, by contrast, operates in a competitive, multimodal transportation market. It is not uniquely irreplaceable. People have alternatives: cars, buses, planes. Treating Amtrak like a military base deliberately obscures the fact that it is a commercial enterprise cloaked in bureaucratic privilege.

Misrepresenting the Law: Not Required to Profit, But Expected to Behave Like a Business

The myth that Amtrak was never intended to make a profit is a piece of revisionist storytelling. Just look at Amtrak’s original 1971 mission statement. It’s true that the Amtrak Improvement Act of 1978 softened the original language, adding the phrase “operated and managed as a for-profit corporation.” But this was no hall pass for perpetual losses.

The statute still reflects Congress’s intent for Amtrak to function like a business: minimizing waste, competing effectively, and aligning costs with revenues. That vision has simply not been realized. No private company in history has survived more than 50 years without turning a profit, yet Amtrak continues to do just that — on the taxpayer’s dime.

Mathews argues: “At the time, the folks who wrote that measure acknowledged that it was more aspirational than anything else. And in 1978, lawmakers recognized their error. And they changed the law.” This is like starting a 1600-meter race and deciding at the 700-meter mark that you're too tired, so you move the finish line to 800 meters and declare victory.

The notion that removing a strict profit mandate justifies endless subsidies is a fundamental misreading. Amtrak may not be required to make a profit, but it was never meant to become a perpetual subsidy sponge.

Amtrak’s operational inefficiencies stem in part from labor contracts, rigid staffing regulations, and politically protected unions. These factors drive up the cost per passenger mile, especially compared to international systems, particularly private ones. This is what happens when profitability is deprioritized from the outset.

False Dichotomy: "Value" vs. Profit

Framing this as a choice between “value” and “profit” is a rhetorical sleight of hand. In reality, both matter. All government spending should be judged by the value it creates relative to its cost and by whether superior alternatives exist.

Mathews’s claim that Amtrak generates $326 million in economic activity from a $57 million subsidy may sound compelling, until you realize the methodology often overstates benefits, undercounts costs, and ignores opportunity costs. What else could that $57 million accomplish? It could fund targeted infrastructure upgrades, smarter rural mobility programs, or expanded broadband access — with far greater returns.

And if deployed with discipline and ambition, such investment might even support the development of a high-speed rail system akin to Japan’s Shinkansen.

The Shinkansen Model: What Real Reform Looks Like

If Amtrak's defenders want to point to national infrastructure investments like the Air Force or CDC, they should also reckon with what successful passenger rail looks like in practice. Japan’s Shinkansen system offers a compelling counterexample.

After privatizing its national railways in the 1987, Japan transitioned its bullet train operations to regional, for-profit companies such as JR East, JR Central, and JR West. These firms now operate some of the most punctual and financially sustainable rail services in the world —without ongoing operational subsidies.

This stark contrast with other systems is not the result of cultural or technological superiority; rather, it is the result of structural supremacy. Because multiple private companies are competing, operators in Japan must be more thoughtful in managing costs, investing wisely, and attracting riders. While the government has played a role in funding infrastructure, the companies themselves are held accountable for performance, profitability, and customer satisfaction.

Thanks to this system, the Tokaido Shinkansen, the most profitable and traveled line in Japan’s rail system that runs between Tokyo and Osaka, turns a consistent profit and carries more passengers annually than the entirety of Amtrak’s system.

Meanwhile, Amtrak continues to hemorrhage taxpayer money while serving fewer riders with lower reliability. If Japan can run high-speed rail efficiently through privatization and market incentives, Amtrak’s defenders have no excuse. The model for success exists, it just requires the political will to stop romanticizing failure.

Private Passenger Rail Success: Brightline as a Modern Example

In the great state of Florida, there exists a shining example of what private passenger rail can accomplish. Brightline is a privately funded rail service that runs between Orlando and Miami. Unlike Amtrak, Brightline operates for profit with high efficiency, and has cultivated a loyal customer base.

In fact, a trip from Orlando to Miami takes two less hours on Brightline than on Amtrak. Brightline succeeds in providing affordable, enjoyable service for the very reason Amtrak so often fails: a focus on profitability. To achieve this, Brightline provides modern, high-speed rail combined with excellent customer service.

Brightline runs 15 trains a day, compared to Amtrak’s two. And by focusing on a profitable route and responding to market demand, Brightline offers a model of what U.S. passenger rail could look like if freed from the constraints of government dependence.

Amtrak, by contrast, can only offer slightly lower prices because of the massive government subsidies. The real cost of Amtrak is hidden in taxes, making its supposed affordability misleading.

Long-distance passenger rail in the U.S. has proven inefficient and overpriced, and planes can cover the same distance at a lower cost. But by leveraging the power of private ownership and the market viability of high-density routes, the U.S. could build a system of intercity rail that is affordable and customer focused.

Brightline's success demonstrates that, with a focus on profitable corridors and market-driven innovation, nationwide private rail can thrive without relying on perpetual government subsidies.

Anecdotes Aren't Analysis: The Empire Builder Isn't the Whole Story

The Empire Builder route may generate modest benefits for towns like Cut Bank, Montana. But cherry-picking one route's purported impact does not justify subsidizing a money-losing system with dozens of underperforming lines.

Long-distance routes are notoriously unprofitable, with massive losses per passenger mile. Meanwhile, the more successful Northeast Corridor, where Amtrak does operate with something approaching market logic, is forced to cross-subsidize inefficient lines elsewhere.

This is not value creation. It's internal wealth redistribution masquerading as national investment.

Why should taxpayers in Mississippi or Iowa be forced to subsidize luxury sleeper service for a handful of riders in remote parts of Montana?

Sentiment over Substance: "Don’t Talk About Profits" Is a Cop-Out

To suggest that we stop talking about profits is to suggest we stop talking about accountability. When government programs lose money year after year, we have a duty to ask whether they are delivering results that justify their costs. Substituting feel-good rhetoric for rigorous evaluation is how we end up with bloated agencies and entrenched inefficiency.

If Amtrak creates value, it should prove it the same way any other enterprise does: by demonstrating cost-effectiveness, responsiveness to demand, and a willingness to reform.

Consider the example of the French rail system. Although publicly operated, it is still run with a clear focus on financial performance. While France may never fully recoup its original infrastructure investments, its national operator routinely generates operating profits — proof that public ownership and market discipline are not mutually exclusive.

On the other end of the spectrum is China, which now boasts the world’s most extensive high-speed rail network. But its achievements come at significant ethical and procedural costs. Chinese authorities bypass environmental reviews, property rights, and public opposition through authoritarian means. They often redraw maps at will, displace communities, and push forward without legal recourse or public accountability. The results are efficient in terms of construction timelines, but deeply problematic from a human and legal standpoint.

By contrast, California’s high-speed rail project has been paralyzed by the opposite extreme: a mountain of permits, environmental reviews, legal challenges, and political gridlock. This bureaucratic over-correction has rendered meaningful progress nearly impossible.

These two models — China’s top-down force and California’s bottomless regulatory tangle —highlight a common failure: one sacrifices liberty, the other sacrifices efficiency.

We don’t have to choose between these extremes. But we do need a model that respects individual rights and environmental standards while also enabling streamlined, accountable governance. And that starts by insisting that programs like Amtrak operate under clear performance expectations, not political exceptionalism.

Conclusion: Stop Romanticizing Rail

None of this is to suggest that we should abandon the idea of a robust interstate rail system. I believe that the country is better off with strong transportation networks that give citizens the ability to choose for themselves how to travel.

Japan is our most compelling model: By skillfully combining private-sector industry efficiency and accountability with public-sector capital and infrastructure funding, it is possible to build a rail system that delivers both value and profit.

Subsidies are meant to use taxpayer dollars for goods and services that will help the public and provide them with tangible value. They are not meant to deliver false promises and poor services. Unfortunately, Amtrak has consistently failed to deliver on this front.

It is time to reconsider our interstate rail system and explore alternatives, such as phased privatization or open-access competition. For instance, inviting private rail companies to bid on routes or lease Amtrak’s assets with performance benchmarks could drive efficiency and innovation.

Ultimately, the question remains: Can Amtrak truly deliver value without regard for profit?