Derailed by Amtrak: The Money Drain

Train Wreck

40 Years in the Wilderness

– By: Larry Walker, Jr. –

Since 1971, the federal government has invested a total of $32.4 billion into the National Railroad Passenger Corporation (a.k.a. “Amtrak”). In return for this lucrative investment of taxpayer’s dollars, Amtrak has accumulated total net losses of $27.1 billion. If we were to average our investment over the last 40 years, it would equal approximately $810 million per year, yet in 2009 and 2010 U.S. taxpayers have pumped in an additional $1.6 billion and $2.4 billion, respectively. Thus it appears that Amtrak’s drain on our collective pocketbook is increasing. Likewise, if we were to average Amtrak’s losses over the past 40 years they would equal approximately $677 million per year, yet in 2009 and 2010 U.S. taxpayers have incurred losses of $1.5 billion and $1.4 billion, respectively. So it appears that our losses are also accelerating.

Paid In Capital


Comprehensive Loss

According to the latest independent auditors’ report, which was issued on December 16, 2010, “The Company has a history of substantial operating losses and is dependent upon substantial Federal government subsidies to sustain its operations…. Without such subsidies, Amtrak will not be able to continue to operate in its current form and significant operating changes, restructuring or bankruptcy may occur. Such changes or restructuring would likely result in asset impairments.” And that is exactly what needs to happen. Any entity which is run-by, backed-by, or subsidized-by the federal government and not able to sustain itself without reliance on the general fund should be either privatized, or shut down. The following excerpts are from the independent auditors’ report:

1676 International Drive
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Independent Auditors’ Report
The Board of Directors and Stockholders
National Railroad Passenger Corporation:

{….} The Company has a history of substantial operating losses and is dependent upon substantial Federal government subsidies to sustain its operations. The Company is operating under continuing resolutions through December 18, 2010 as discussed in Note 2 to the consolidated financial statements. The Company expects to receive additional interim Federal government funding under continuing resolutions until the fiscal year 2011 funding is approved. There are currently no Federal government subsidies appropriated for the fiscal year ending September 30, 2012 (“fiscal year 2012”). Without such subsidies, Amtrak will not be able to continue to operate in its current form and significant operating changes, restructuring or bankruptcy may occur. Such changes or restructuring would likely result in asset impairments. {….}

December 16, 2010



The National Railroad Passenger Corporation (“Amtrak” or the “Company”) is a passenger railroad. The United States government (the “Federal Government”) through the United States Department of Transportation (the “DOT”) owns all issued and outstanding preferred stock. Amtrak’s principal business is to provide rail passenger transportation service in the major intercity travel markets of the United States. The Company also operates commuter rail operations on behalf of several states and transit agencies, provides equipment and right-of-way maintenance services, and has leasing operations.

Operations and Liquidity

Amtrak was incorporated in 1971 pursuant to the Rail Passenger Service Act of 1970 and is authorized to operate a nationwide system of passenger rail transportation. The Company has a history of recurring operating losses and is dependent on subsidies from the Federal Government to operate the national passenger rail system and maintain the underlying infrastructure. These subsidies are usually received through annual appropriations. In recent fiscal years appropriated funds for Amtrak have been provided to the DOT, which through its agency the Federal Railroad Administration (the “FRA”), provides those funds to Amtrak pursuant to operating funds and capital funds grant agreements, respectively. Amtrak’s ability to continue operating in its current form is dependent upon the continued receipt of subsidies from the Federal Government.


Audited Consolidated Financial Statements – Fiscal Year 2010

I love traveling by Amtrak but, to be honest, I have only ridden with them two or three times in the last 40 years. Amtrak, we love you, but you’ve got to go. If Amtrak is not able to make a profit, and thus return money to its investors, namely us, then what good is it? I could have flown to Cleveland for half the price that I paid for a sleeper car, and in a couple of hours versus the twenty-four that it took Amtrak. I literally can’t believe that having paid over $1,500 to ride from Atlanta to Cleveland, and back, that these guys can’t make a profit. I mean come on. Investing more public money into new rails and high speed trains is not the answer. Do you really believe that more people will ride trains if they were just a little bit faster? One can only imagine how much higher the fares (and losses) would be after such nonsense.

Capitalization (click to enlarge)

It’s time to fish, or cut bait. If the private sector can’t make Amtrak profitable, then it can’t be done. Private investors are not dumb enough to continue investing in something month-after-month, year-after-year which has never and will never return a profit, nor are taxpayers. If Amtrak were owned by the private sector, it would be no more. That’s just the way it is in the real-world. At the same time, if there is any hope at all, it lies within the private sector. It’s easy for the government to keep flushing good money down the drain, because it’s not their money. It’s our money, so let us make the choice. No one said it was going to be easy. It’s time to dump Amtrak.

The mandate: Amtrak will make the necessary structural changes to become profitable without additional governmental subsidies, and will return the taxpayers investment to the U.S. Treasury by the end of this fiscal year. If Amtrak continues to incur losses over the current fiscal year, then at close of business on September 30, 2011, its assets shall be sold and all proceeds returned to the Treasury.


Source: Audited Consolidated Financial Statements – Fiscal Year 2010

Postal Service OIG Discovers $75 Billion Overpayment, Again


Will Obamacare Go Up In Flames Too?

– By: Larry Walker, Jr. –

“You’ve got a lot of private companies who do very well competing against the government — UPS and FedEx are doing a lot better than the Post Office.” ~ Barack Obama (Aug. 2009)

According to an article posted on, on June 28, 2010, the United States Postal Service, Office of Inspector General (OIG) discovered that the Postal Service had made a $75 billion overpayment to the Civil Service Retirement System (CSRS). However, the same problem had already been reported by the OIG back in April of 2004. Apparently nothing was done to correct the problem in 2004, and it doesn’t appear that anything has been done about it to date. (If this has since been resolved, please comment below, and point me to your reference.) Following is an excerpt from the aforementioned article:

In what could be the best game of Monopoly™ ever, Postmaster General John Potter may have just drawn a card that reads “Inspector General finds error in your favor. Collect $75 billion dollars.”

The Inspector General for USPS took a closer look at the Civil Service Retirement System and found massive overpayments dating back decades.

Michael Thompson, Director of Capital Investments for the Postal Service Office of Inspector General, explained for Federal News Radio, “the Postal Service, since 1972, has overfunded by $75 billion its share of civil service retirement and the reason for that is because the methodology that’s used is not comparable to the methodologies that’s used for all the other federal retirement funds.”

Thompson said the Office of Personnel Management, in deciding how much the Postal Service should pay into the CSRS, is currently using a different method developed in 1974. They’ve said they aren’t going to change unless Congress tells them to, according to Thomson.

“The money is sitting in the civil service retirement fund. It’s not as though the money is not there. It is there. It’s just that the Postal Service has continually paid more than it should have paid.”

All it would take, according to Thompson, is for either the OPM to make the change or for Congress to legislate it. That might seem simple enough, but with so much money involved, no one’s getting off the dime, literally.

The article mentioned above is in line with a memo issued by the OIG on June 18, 2010 (excerpt below). I’m just wondering if anyone has “gotten off the dime” as of yet? I mean I know it’s only $75 billion, but one has to wonder just how many unresolved $75 billion overpayments are floating around Washington D.C., with its $14 trillion in debt and all. Where was it that the buck was supposed to stop again?

June 18, 2010


SUBJECT: Management Advisory Report – Civil Service Retirement System Overpayment by the Postal Service (Report Number CI-MA-10-001)

This report presents the results of our review of the Civil Service Retirement System (CSRS) Overpayment by the U.S. Postal Service (Project Number 10YO036CI000). This report discusses the $75 billion CSRS overpayment by the Postal Service in fiscal years (FY) 1972 through 2009. The objective of this review was to assess the facts concerning this overpayment and identify any possible solution(s) to correct the overpayment to the benefit of the Postal Service. This review addresses financial risk.

Now if you look back through the records of the OIG, you will discover that a similar memo was issued back in April of 2004 (excerpt below). The 2004 memo stated that the Postal Service was making overpayments to the CSRS, and implied that the problem had been corrected. In fact, the memo states that, “Had the overpayments continued, the Postal Service would have overpaid its obligation by over $100 billion.” Well, apparently the problem wasn’t resolved, because a little over six years later the Postal Service had in fact, overpaid the CSRS by $75 billion. I wonder what happened to the other $25 billion!

April 9, 2004


FROM: /s/ (Scott Wilson for) David C. Williams, Inspector General

SUBJECT: Postal Service’s Funding of the Civil Service Retirement System (Product Number FT-OT-04-002)

This memorandum presents our opinion on the issues surrounding the Postal Service’s funding of the Civil Service Retirement System (CSRS) (Project Number 03XD009FT005). The objective was to analyze the outstanding issues pertaining to the Postal Civil Service Retirement System Funding Reform Act of 2003 (Public Law 108-18) and to provide our perspective on how the legislation affects the Postal Service and its stakeholders. We have included the differing viewpoints and positions that have been generated by affected groups, including the Department of the Treasury (Treasury), the Office of Personnel Management (OPM), the General Accounting Office (GAO), the Postal Rate Commission, the President’s Commission on the United States Postal Service (the President’s Commission), mailers, competitors, and the Postal Service.

GAO discovered that the Postal Service’s amortized payments to OPM for its CSRS liability were too large. Had the overpayments continued, the Postal Service would have overpaid its obligation by over $100 billion.

It looks like the federal government is just bleeding money on all fronts. Where government backed entities, like the Postal Service, should be turning a profit, instead we find, as the Washington Examiner reported in April of 2010, that “without serious reform [the Postal Service] was set to lose $7 billion in 2010 and $238 billion over the next 10 years…” Perhaps it’s time to end the era of government-sponsored, government-owned, and government-backed entities? One has to wonder, at this point, just exactly what they are backed by – an unlimited ability to incur debt? The time to repeal Obamacare is now. The time to cap the debt ceiling is now. Enough is enough.

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Other References: Will Obama create the Post Office of health care?