Monday, August 6, 2012

Privatizing Gains and Socializing Losses

Oftentimes when politicians speak of privatizing government functions they seek to allow the efficiencies of the market to lower the costs. For instance, when municipalities hire private companies to run golf courses the private companies can do so at a lower labor cost because they do not have to pay unionized government workers to mow grass and work at the snack bar.  Other times, the reason is more nefarious, to provide for a chosen "winner."

Recently Amtrak's food and beverage service has been under the microscope for posting HUGE losses in the last decade: $833 Million!

Rep. Jean Schmidt has sponsored a bill to require Amtrak to solicit bids for its food and beverage services.  As Jean herself said, "This is an easy fix."  Well, Jean's bill is a fix alright.  The bill, which is nominally aimed at eliminating these losses, continues to subsidize losses incurred by the private companies who bid on the contract.  As such, all this bill does is allow for private companies to be the beneficiaries of the Amtrak subsidy rather than Amtrak.  This is nothing but a shell game!

From the Bill:

    (7) SUBSIDY FOR NET LOSS- The Federal Railroad Administration shall provide directly to the entity providing food and beverage service on Amtrak trains any portion of appropriations for Amtrak necessary to cover a net loss resulting from the provision of such service, but only to the extent that such net loss was anticipated in the bid selected.

So, on those routes where there is profit to be made, the gains will be privatized; and where there are losses, the losses will be subsidized.

Jean's bill does little more than change who benefits from the government subsidy.  This is just another naked attempt by Congresswoman Schmidt to pretend to be a conservative!

Proving once again the wisdom of the voters on March 6, 2012.

1/3/13 cannot come soon enough!

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