More Scrutiny Won’t Fix Amtrak’s Subsidy-Driven Model

Not once in its 55-year history has Amtrak turned a profit. “Today, we are on track to achieve operational breakeven in [fiscal year] 2020,” the company announced in fiscal year (FY) 2019, while incurring an $881 million accounting net loss. Amtrak’s abysmal financial performance over the following six years might have been explained away by Covid-era misfortune. The railroad promised in its 2025 report to Congress: “Amtrak’s passenger train service will become operationally profitable by FY 2028.” But its prospects for profitability have always been as feeble as its business model.

Only lawmakers, to whom the government-owned railroad corporation is ultimately accountable, can chart a new course for Amtrak. However, the Amtrak-related provisions of the BUILD America 250 Act offer no meaningful correction. The bill, released by the House Transportation and Infrastructure Committee, would instead authorize more than $31 billion in federal grants over the FY 2027–2031 period.

Unconditional and growing subsidies are a bad incentive to improve financial performance for any enterprise—but even more so for a structurally unprofitable, taxpayer-backed monopoly. Amtrak, which is not bound by competitive forces to become more innovative and entrepreneurial, will only grow more expensive and inefficient. Tasked by Congress with operating a national intercity passenger rail system, it serves 40 passenger routes—between cities as far apart as Chicago and Seattle and including rarely used connections such as New York City to Pittsfield, Massachusetts—and loses money on almost all of them.

Bus and air travel offer a superior value proposition even for many shorter-distance routes—outperforming Amtrak on the basis of fares or travel time. Moreover, Amtrak’s long-distance routes cannot be reformed to achieve profitability. Traveling from New York to Chicago takes nearly 20 hours on Amtrak, which cannot rival a roughly three-hour flight. Nor can a 43-hour Amtrak trip from Chicago to Los Angeles offer any practical advantage over a flight of about four and a half hours. Train tickets on these routes can cost hundreds of dollars—often double or even triple typical airfares—all while taxpayers heavily subsidize each trip. In fact, taxpayers were left to cover (at least) $140 per long-distance passenger trip, on average, after passengers paid their fares.

Amtrak’s accounting practices are the one area in which the railroad has proven itself inventive. Amtrak reported an adjusted operating loss of $607.8 million in FY 2025. On the basis of this metric, Amtrak plans to cut its losses to $460.6 million and $307.9 million in FY 2026 and FY 2027, respectively, seemingly inching toward breakeven. However, these metrics omit, among other things, depreciation—a major expense for any capital-heavy enterprise. Amtrak’s FY 2025 net loss thus comes to $1.76 billion. Furthermore, accounting terminology aside, $328 million in state-supported route subsidies, $159 million in amortized state capital assistance, and $125 million in state government capital assistance revenue cannot sensibly be considered market earnings. Stripped of these “revenue” sources, Amtrak’s gap between earnings and expenses would be closer to $2.37 billion.

The BUILD America 250 Act rightly aims to curtail the railroad’s arcane accounting practices. In addition to requiring Amtrak to reconcile its “adjusted” operating numbers with the official financial statements reviewed by auditors, the bill would direct the Department of Transportation’s Inspector General (IG) to review Amtrak’s internal practices to “prevent accounting errors, manipulation, or misuse of funds.” Adoption of the IG’s 2026 report recommendations would be mandatory, and states would be permitted to use independent reviewers when disputing Amtrak invoices.

If enacted, these reforms would improve operations. But the railroad states plainly, “Amtrak’s statutory mission and goals make no mention of profitability. Indeed, they make clear that profitability is not Amtrak’s objective.” While Amtrak contends that its mission is “to provide efficient and effective intercity passenger rail service that maximizes the benefits of federal investments,” expecting greater scrutiny of Amtrak to make the railroad more efficient is like expecting a house without smoke alarms to satisfy fire codes because a regulator threatened an inspection.

Without a deep restructuring of Amtrak, including alterations to its core mission, the railroad will simply carry on operating long-distance trains that even in 2018 accounted for 86 percent of its federally subsidized operating losses while bringing in only 20 percent of its passenger revenue. Meanwhile, taxpayers will continue to subsidize, for example, an average of $362 per passenger on the New Orleans-to-Los Angeles Sunset Limited.

Granted the certainty of federal subsidies and endowed with de facto monopoly privileges, Amtrak has little incentive to improve. Exposing the sheltered national railroad to competition—whether through privatization, competitive tendering, or public-private partnerships—is the only effective corrective action.