Discretionary Spending Option 17
Function 400 - Transportation
Eliminate Funding for Amtrak and the Essential Air Service Program
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
|Billions of Dollars||2017||2018||2019||2020||2021||2022||2023||2024||2025||2026||2017-2021||2017-2026|
|Change in Discretionary Spending|
|Payments to Air Carriers (Under the Essential Air Service program)|
|Change in Discretionary Spending|
|Essential Air Service Program|
|Change in Mandatory Outlays||0||-0.1||-0.1||-0.1||-0.1||-0.1||-0.1||-0.1||-0.1||-0.1||-0.4||-1.0|
This option would take effect in October 2017.
The federal government subsidizes intercity travel in various ways. For example, the National Railroad Passenger Corporation—or Amtrak—received appropriations of about $1.4 billion in both 2015 and 2016 to subsidize intercity passenger rail services, including $1.1 billion in grants for capital expenses and debt service and about $0.3 billion in grants for operating subsidies. The 2015 grants represented close to 90 percent of Amtrak’s capital spending and 7 percent of its operating expenses (excluding depreciation costs). Another form of federal subsidy for intercity travel is the Essential Air Service (EAS) program, which received $175 million in discretionary budget authority and an estimated $103 million in mandatory budget authority in 2016; the latter came from fees charged to foreign aircraft that fly through U.S. airspace without landing. The EAS program—created by the Airline Deregulation Act of 1978 to maintain airline service in communities that had been covered by federally mandated service—subsidized air service in 61 communities in Alaska, 2 in Hawaii, and 111 in the continental United States (CONUS) as of November 2016. Based on EAS data available for those CONUS communities, the federal subsidy per airline passenger in 2015 ranged from $8 in Joplin, Missouri, to $985 in Thief River Falls, Minnesota.
This option would eliminate funding for Amtrak and discontinue the EAS program. It would yield savings of about $16 billion in discretionary spending from 2018 through 2026, the Congressional Budget Office estimates. That amount consists of $14 billion in savings from eliminating funding for Amtrak and $2 billion in savings from eliminating the discretionary component of the EAS program (identified separately in the budget as Payments to Air Carriers). Discontinuing the EAS program would also yield savings in mandatory spending totaling $1 billion over that same period, CBO estimates.
One argument in favor of the option is that when the Amtrak and EAS subsidies were first authorized in the 1970s, both were viewed as temporary measures. They were intended to help Amtrak become self-supporting and to aid communities and airlines as they adjusted to deregulation.
A second argument for the option is that both subsidies support transportation services that are of some value to particular groups of users but that are not commercially viable and provide little if any benefit to the general public. According to that argument, states or localities that highly value the subsidized rail or air services should provide the subsidies. States are already required to provide support for Amtrak service on rail lines less than 750 miles long in amounts determined by a cost-allocation method that Amtrak developed in consultation with the states to ensure that those lines cover their operating costs. Some analysts have called for the federal government to extend that requirement to Amtrak lines longer than 750 miles. The EAS program also has cost-sharing requirements, although they affect only the three communities in the program that are less than 40 miles from the nearest small hub airport: Those communities must now negotiate a local cost share before their participation in the program will be renewed. Communities not in the EAS program have used various methods to develop or maintain air service, including guaranteeing airlines a minimum amount of revenues (in some cases, using federal grants to back the guarantees), waiving fees, and taking over ground-handling operations.
The main argument against eliminating either Amtrak or EAS funding is that rail or air transportation service to some smaller communities would be curtailed without the federal subsidies. Amtrak’s long rail lines could be particularly vulnerable because reaching agreement among all of the affected states on how to replace the federal subsidies could be difficult. Eliminating service on existing lines could cause hardship for passengers who currently rely on them and might undermine the economies of affected communities.
Another argument against eliminating support for Amtrak is that the amount of such support needs to be analyzed in relation to federal subsidies for travel by highways and air. Rail travel has certain advantages over those alternatives for society, including a better safety record and lower emissions of air pollutants and greenhouse gases. Those advantages could be lost under the option: Eliminating funding for Amtrak’s capital investment, which currently relies almost entirely on federal support, could undermine the future viability of passenger rail service in the United States.
An additional argument against discontinuing EAS is that not enough time has elapsed to assess the effects of recent efforts to control the program’s cost. In 2014, the Department of Transportation (DOT) announced that beginning in 2016 (using data from 2015), it would resume enforcing a $200 per-passenger subsidy cap for CONUS communities within 210 driving miles of a medium or large hub airport. (DOT suspended enforcement of that cap between 2007 and 2014, when disruptive conditions in the airline industry made compliance with the cap very difficult for some communities.) In August 2016, DOT determined that 30 communities had subsidy costs that exceeded the $200 cap; 12 of the 30 also failed to meet a requirement established by lawmakers in 2012 that CONUS communities within 175 miles of a medium or large hub airport have a daily average of at least 10 passengers boarding planes. The department used its authority to grant temporary waivers to 8 of the 30 communities on the grounds that they had experienced significant disruptions in their air service; the other 22 communities could apply for waivers as well. An additional cap enacted by lawmakers in 2011 limits the subsidy per passenger to $1,000 for all CONUS communities, regardless of their distance from a hub airport; 3 communities with subsidy costs above that limit lost their eligibility in 2016.