POLITICS

Amtrak Food Would Be Privatized With House Proposal -- With Taxpayers Paying For Losses

02/06/2012 03:17 pm ET | Updated Feb 06, 2012

A House GOP proposal would force Amtrak to privatize operation of its cafe cars -- but the federal government would still be required to pick up part of the tab for the private provider's hot dog and Heineken offerings.

The measure introduced by Rep. Jean Schmidt (R-Ohio), part of the much larger and controversial surface transportation bill now under debate, takes aim at Amtrak's onboard food and beverage service, which loses some $60 million a year, according to the congresswoman.

The measure's language, however, outlines the limits of what even its proponents think privatization can accomplish. The proposed legislation states the federal government would pay out "any portion of appropriations for Amtrak necessary to cover a net loss" from the food and beverage service. So even if the private providers save Amtrak some money, the federal government would still be required to cover any losses from the private businesses' operations. Amtrak has argued that food and beverage services operate not as a money-making proposition, but somewhat as a loss-leader, an amenity to lure passengers to spring for train tickets.

Schmidt's office did not immediately respond to a request for comment.

But Ed Wytkind, president of the transportation trades department at the AFL-CIO, argued the "net loss" subsidy is a symbol of Republican hypocrisy. Nearly 1,900 unionized members provide onboard food services on Amtrak. "You can't make this stuff up," Wytkind told HuffPost. "It is the best deal you could possibly write for some food service company."

Conservatives have said private companies would operate more efficiently. But, Wytkind asked, "If they're so confident about it, why do they have to hold them harmless?"

The measure would limit the government's losses "to the extent that such net loss was anticipated in the bid selected." Amtrak's food and beverage services have long been a target of Republicans' ire. Amtrak spends $2 for every $1 it makes off food and beverages, in part as a result of high labor costs, according to a 2005 Government Accountability Office report.

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