Alternatives for Eliminating Amtrak's Debt to the Government

PAD-80-45: Published: Mar 28, 1980. Publicly Released: Mar 28, 1980.

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The Amtrak Reorganization Act of 1979 requires the Comptroller General to recommend appropriate means for eliminating certain obligations of the National Railroad Passenger Corporation (Amtrak). The Act specifies that the Comptroller General consider (1) the likelihood of obligation retirement from profits of the corporation; (2) the ability of the corporation to continue to carry its debt service within the context of operating subsidies, fairly and accurately reflecting current operating costs; (3) the extent to which debt incurred by the corporation prior to the effective date of the Act should be recognized as unrecoverable; and (4) the feasibility of converting such obligations into stock issued by the corporation.

The obligations consist of $850 million in loans which were originally borrowed from private lenders protected by Government guarantees. The loans were subsequently converted to direct Federal loans from the Federal Financing Bank which were not included in the budget. Budget and deficit totals were understated, creating problems in accountability such as lack of full disclosure of budget information and loss of congressional budgetary control. As a result, certain budgetary principles were violated. Currently, a portion of the Government funds provided to Amtrak under the loan guarantee is protected by security agreements which pledge certain Amtrak equipment to the Government in case of default or liquidation. Under the existing agreement, retirement of Amtrak's loans would terminate this protection.

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