August 1, 1979
Page 21780
Mr. MUSKIE. Mr. President, I have listened with a great deal of interest to the debate. I am sorry I could not get over earlier, but we are in the midst of budget markup.
I think it appropriate to point out that in that markup, on the basis of what Congress has done up to this paint, our budget deficit is going to climb to $34 billion, probably close to $35 billion, by the end of the markup this week.
Here we are, adding, if we were to support the Melcher amendment, another $300 million a year in budget authority and $300 million in outlays to the transportation function, adding that much more to the deficit.
Mr. President, the Senate now has before it S. 712, the Amtrak Improvement Act of 1978. As reported this bill represents a sound approach to Amtrak. I want to compliment the Commerce Committee on the responsible approach it took toward a very difficult legislative problem. Under the leadership of its chairman, Senator CANNON, and the chairman of the Surface Transportation Subcommittee, Senator LONG, the Commerce Committee reported a bill I believe is deserving of the Senate's support. Unfortunately, there are floor amendments — that I will discuss later — which could transform the bill such that it would not be worthy of support.
Mr. President, as I understand it, S. 712 as reported basically supports the implementation of the Department of Transportation plan for restructuring Amtrak's routes and services. That DOT plan was requested by the Congress in 1978 after several years of frustration in trying to improve Amtrak's operating results and to control the level of Federal subsidies required by Amtrak. The DOT plan recommends a responsible reduction in Amtrak's route mileage through elimination of the least economic, least patronized routes.
The Commerce Committee modified some aspects of the DOT plan, primarily in recognizing problems in restructuring certain routes and in providing an expanded opportunity for State governments to support continuation of services they wished to see continued.
This resulted in an increase of $49 million in the amounts authorized in S. 712. These additional amounts were not assumed when the first budget resolution targets were approved by the Congress, but I accept the committee's judgment and I support that particular increase because it appears to still provide for a reasonable approach to the Amtrak situation.
I believe that all Senators share my desire for restraint in the growth of Federal spending, and that they also recognize the need to devote available resources to areas providing substantial public benefit. Therefore, if they will take a dispassionate view of the DOT restructuring proposal, I believe that they must agree that funding should be concentrated where rail service shows some evidence of being a reasonable transportation alternative, and not on routes that DOT has called hopeless.
Mr. President, I cannot support pouring ever-increasing Federal funds into services which meet no objective criteria.I note that Amtrak's revenue contribution toward operating costs has been falling since fiscal year 1973, and has now reached a ratio of approximately 1 to 3. That is, on the average, Amtrak collects only about $1 of revenue for each $3 of operating expenses which it incurs! And I would remind you that this is the average. The least economic routes, those which would be eliminated by the DOT plan, show considerably worse results than this system-wide average. Fortunately, S. 712 wisely includes a provision that seeks to improve Amtrak's ratio of revenue to operating expenses, and sets a goal of 1 to 2.
It is also worthwhile to consider Amtrak's overall cost levels that underlie these ratios. In fiscal year 1978, Amtrak's average cost of service came to 25.5 cents per revenue passenger mile, and the deficit or loss associated with that service was 16.5 cents per passenger mile. That means that Federal taxpayers provided Amtrak with operating subsidies of 16.5 cents for each mile travelled by each Amtrak passenger.
Mr. President, we have other modes of transportation that are willing and able to provide passenger service at considerably less cost, and to make a profit while doing so. For example, the airlines were able to make a handsome profit in 1978 while charging fares that averaged only 8.5 cents per passenger mile. Another example is provided by the intercity bus industry, which consistently has been able to realize a profit, in spite of heavy Federal subsidies to one of its principal competitors, Amtrak, while charging fares equal to or slightly less than Amtrak.
Speaking of the intercity bus industry, it is worth a brief aside to note that the willingness of this industry to compete against a rival transportation mode that is being excessively and unfairly subsidized by the Federal Government is steadily evaporating. Therefore, I for one am certain that if we continue to subsidize Amtrak in an unreasonable and extravagant manner, then we can be sure that the intercity bus industry is going to demand and may eventually get similar subsidies. The effects on the Federal budget, of course, would be disastrous.
Mr. President, I would like to remind the Senate of the budgetary consequences for Federal subsidies to Amtrak that would be expected to result if we were to continue the Amtrak rail network as it exists today. According to estimates by the Congressional Budget Office, the additional subsidies required in order to continue to support Amtrak's current rail network would exceed congressionally-approved budget targets by up to $0.3 billion for fiscal year 1980, and by $1.4 to $1.7 billion over the next 5 years. Mr. President, the Congress has approved budgetary targets in the first budget resolution that assume restraint in the Amtrak deficit, and I believe that we should make a serious effort to stay within those targets. I therefore strongly urge the Senate to reject any attempt to freeze the existing Amtrak system.
I take this position with full awareness of recent energy shortages. Those trains that would be discontinued under the DOT plan carry few passengers and are not energy efficient. In fact, a CBO study shows that trains outside the heavily traveled Northeast corridor actually waste energy. I quote:
On average, Amtrak outside the Northeast corridor is less energy efficient than the average auto.
Even with substantial improvements in ridership and other optimistic assumptions about the future, operation of the current Amtrak system will not save energy. If, on the other hand, the proposed route reductions do take place, then real energy benefits could be realized. This is because Amtrak, relieved of the requirement to service low-ridership routes, could shift equipment to where it is needed to carry additional passengers on high-ridership routes.
Now, Mr. President, before I comment on the amendments that are pending to S. 712 as reported, I would like to discuss briefly the companion legislation under consideration in the House. In particular, I want to warn my colleagues that there are serious problems with the House-reported Amtrak bill. The House bill, H.R. 3996, contains several unacceptable provisions that do violence not only to the budget targets just adopted by the Congress, but also to sound budgetary principles and procedures. I will discuss briefly the three most serious problems with the House bill.
First, the House bill, when measured on a comparable basis, implies direct authorizations which exceed the budget resolution assumptions by almost $200 million, to permit continued Amtrak operations over numerous routes scheduled to be eliminated under the DOT plan. Taken in conjunction with its treatment of Amtrak debt, my next point, full funding of the House bill would amount to a rejection of the DOT plan. Its enactment, therefore, could essentially eliminate the potential savings of the DOT plan, and insure that the Congress will not be able to live within the fiscal year 1980 and future-year budget targets approved for transportation.
Second, the House bill would end the current policy of making annual appropriations for the repayment of Amtrak debt. Amtrak capital expenditures have been financed in large part through Federal loan guarantees. These guarantees have been transformed into off-budget direct loans through purchase by the Federal Financing Bank. Amtrak's current loan balance with the FFB is roughly $680 million, but existing additional commitments assure that the loans eventually will exceed $800 million. Because Amtrak has literally no prospects of ever repaying these loans from operating revenues, they are essentially bad debts. The Senate bill recognizes this fact by continuing the practice established in 1978 of authorizing appropriations of $25 million annually to retire the debt. That is to say, S. 712 recognizes that off-budget loan guarantees were an inappropriate funding mechanism, and provides for gradual budget recognition of the Government's losses on its Amtrak investment.
The House bill, by contrast, would end this responsible approach, and instead would simply wipe the slate clean on Amtrak's bad debts. It would do this by creating a form of so-called preferred stock which Amtrak would issue to the FFB, which would be required to accept it in satisfaction of its loans. Next, the FFB would give the stock to the Treasury, which would be required to accept it in payment of its loans advanced to the FFB to finance the FFB's loans to Amtrak. The end result of this financial sleight of hand would be that the Federal Government had loaned to Amtrak and lost over $800 million which was never reflected in any Federal budget.
Mr. President, this not only would constitute extremely bad budgetary practice, but also would establish a very dangerous precedent in the treatment of off-budget Federal loans and loan guarantees, over $200 billion of which are now outstanding. If off-budget direct and guaranteed loans need never be reflected on budget, even when they go bad, then the incentive to abuse their exemption from the budget will be increased immeasurably, and the definition of the budget as a statement of the Federal Government's fiscal operations will be eroded to the point where it has no real meaning. The FFB was not created to facilitate this sort of financial manipulation and budgetary gimmickry, and such perverted use of its financing mechanism is probably the best way I can think of to assure that the agency is eliminated altogether.
One further point on forgiveness of Amtrak's outstanding debt. As proposed by the House bill, forgiveness of Amtrak's debt would eliminate Amtrak debt service expenses of about $63 million per year which are now funded from the overall Amtrak authorization. Therefore, one additional effect of the House provision is to raise the Amtrak authorization available for operating subsidies by another $63 million, yielding a total effective authorization that is very close to that which is estimated as required to continue all existing Amtrak routes and services. This underscores what I indicated before — the nature of the House bill strongly suggests that it represents no intention whatever of implementing the DOT plan.
Mr. President, the third aspect of the House bill that I find particularly troublesome is its authorization of Federal payment of state and local real estate taxes owed by the bankrupt railroads in the Northeast and Midwest. Apparently, this provision was added at the request of various State and local governments which, like numerous other creditors to bankrupt railroads, are seeking Federal assumption of their claims. CBO estimates the cost exposure of this provision to be $400 to $500 million in fiscal year 1980 alone for currently bankrupt railroads eligible under this bill. Further, if the precedential nature of the provision were ultimately to affect all rail bankruptcies, or bankruptcies in other industries, the budgetary implications clearly could amount to billions of dollars per year. Clearly, therefore, this is not the kind of provision we can afford in this time of necessary fiscal restraint.
Taken together, these three House provisions could cause the first budget resolution targets for transportation to be exceeded by $0.6 billion to $0.7 billion in both budget authority and outlays, while at the same time opening a budgetary loophole which could generate abuse involving additional billions of dollars.
Mr. President, these provisions, which are currently included in the House version of S. 712, are not acceptable as part of a responsible approach to dealing with Amtrak's continuing difficulties. I strongly believe that a bill that included these provisions would be worse than no bill at all. I would, if necessary, urge the Senate to reject a conference agreement which incorporated them. Further, I believe that the President should and would veto any legislation that included such questionable provisions.
I strongly urge the Senate conferees to stand firm against further increases in the authorization levels, and against incorporation of any of the other budget-breaking, and budget-mocking, items which are in the House bill.
In sharp contrast to the approach taken on the House side, the Senate Commerce Committee in the legislation which it reported, steered a prudent course toward improving the Amtrak program while recognizing budgetary considerations. S. 712 as reported pulls no budgetary punches.
However, I am sorry to say that amendments are now being considered that could seriously compromise the responsible approach which the Commerce Committee selected when it voted to report S. 712.
Mr. President, I have followed with interest the development of these amendments to continue on a trial basis the operation of additional trains. I recognize that many Senators were concerned about reducing train service in light of the energy shortages and Amtrak ridership increases that occurred early this summer. And indeed, it seems to me that the continuation, on a trial basis, of trains that are in fact experiencing real, sustainable, increases in ridership which would place them on an equal footing with the poorest performers included in the DOT plan warrants serious consideration. I was prepared to support a modest increment for routes in this category and the administration expressed its willingness to request additional funding.
Unfortunately, the amendments that are before us go much further and could be detrimental to the preservation and improvement of Amtrak services over those routes where rail service might be a reasonable and appropriate transportation alternative. The criteria have been weakened to include trains that, even with ridership increases, would not have qualified for the original plan.
Other trains will be operated based on regional balance, a euphemism for trains that cannot meet even the weaker criteria. Worst of all, I find little assurance that the performance of these additional trains will be measured against objective criteria or that they will be eventually discontinued if they are found lacking.
Taken all together, the amendments that represent the final compromise position will increase funding authorizations by $120 million over the level requested by the administration for the original Amtrak plan. Measured on a comparable basis, the House-passed bill increases authorizations by almost $200 million. I am not prepared to support funding increases of this magnitude. We face an extended period of tight budgets, and our limited Federal assistance must be applied where it makes sense, both with regard to our overall transportation system and with regard to energy conservation. These amendments do not measure up in either context.
Burdened by several amendments which increase funding authorizations and permit the continued operation of questionable trains, trains that do not save energy and are unlikely to attract riders, I cannot support the overall legislation. Further, I do not believe that the Budget Committee will be willing to accommodate funding for all of these authorizations in the second budget resolution ceilings in light of the overall budgetary picture. Therefore, I intend to vote against any amendments that would serve to increase the cost of S. 712 as reported, and I urge other Senators to do likewise.
Mr. President, I think my statement's relevance to this amendment and to other amendments that have been considered in the Senate will be clear to those who read the RECORD. I do not think it is necessary for me to say anything further.
This is a very closely contested debate. I think the issues in which I am interested have been reported.
I am opposed to the Melcher amendment because of the budget prospects, and to the Leahy amendment for the same reason.
I am for the bill as it came out of committee, and my complete statement indicates why.
Mr. MELCHER. Mr. President, before the chairman of the Budget Committee leaves the Chamber, I think it is important to note that what we are talking about is an increase on figures that are already outdated. But if we use those outdated figures, the increase is about up to $112 million over and above what we are talking about with the Leahy amendment.
I know what the Senator from Maine meant to say when he said—
Mr. MUSKIE. I made it clear that I am against the Leahy amendment.
Mr. MELCHER. But the Senator identified my amendment as entailing $350 million.
Mr. MUSKIE. Let me clarify it.
Mr. MELCHER. All right.
Mr. MUSKIE. The original Amtrak plan, largely adopted by the committee-reported bill could have saved up to $300 million, budget authority and outlays. Any additions would reduce those savings.
The Leahy amendment, which is a combination of several, I have not priced out. If I had the price tag, I would put it in.
Mr. MELCHER. I can supplement that, about $112 million
Mr. MUSKIE. The Senator's, amendment, which would freeze the system, he has explained his rationale in offering it — would restore us to the present system and cost up to $300 million a year more than assumed in our budget targets.
It is not to suggest it is that much more costly than the Leahy amendment.
Mr. MELCHER. I thank the Senator.