Amtrak is one of the big money sinks for taxpayer cash. The subsidized rail system loses about a billion dollars a year, which means taxpayers cough up roughly forty dollars for each passenger it carries. You would expect a shaky operation with huge subsidies to work under strict oversight, but Amtrak executives had other ideas.
In June 2009, the inspector general of Amtrak, Fred Weiderhold, completed a report that concluded the “independence and effectiveness” of the inspector general’s office was being “substantially impaired” by Amtrak management, as reported in the Wall Street Journal. Coincidentally, Amtrak management chose that moment to conclude Weiderhold’s career. He was paid over $300,000 to sign what amounted to a non-disclosure agreement on his way out. The brass tapped Lorraine Green, formerly vice president for human resources, to be his replacement. One cannot easily discern a linear career path between Human Resources and the office of the inspector general.
Amtrak has a long history of doing things they would happily pay three hundred grand of your money to keep quiet. Executives have filed false accounting reports to paint fanciful pictures of operational health, intermittently punctuated by sudden announcements that doomsday will be imminent unless more subsidies are offered. Politico says Weiderhold found over $100 million in mismanaged legal fees from 2002 – 2005, and yet was sacked because he was “no longer the effective inspector general that our company needs,” as an internal memorandum puts it.
Senator Chuck Grassley (R-IA) and Representative Darrell Issa (R-CA) had a feeling Weiderhold might have been cashed out because he was a bit too effective. They also noticed the Amtrak board removed Weiderhold without notifying Congress, as they legally obligated to do, thirty days before dismissal. Weiderhold was given 24 hours to clean out his desk, then skedaddle with his severance check stuffed in his breast pocket. Today Grassley and Issa released a report of their findings, and it’s not pretty.
“Amtrak failed to comply with the Inspector General Act for way too long,” Grassley stated. “Forcing its Inspector General out of office without notice or consultation with Congress is only the latest example. Naming an interim inspector general from Amtrak management with no relevant experience only added insult to injury. All of this undermined the independence of the Office of Inspector General. Like any entity that receives billions of tax dollars, Amtrak needs independent oversight, and I hope this controversy has helped Amtrak learn that valuable lesson.”
I find myself less hopeful than the Senator. He’s obviously right about the crucial importance of independent oversight when billions of tax dollars are on the line. When taxpayers get tired of subsidizing Amtrak, where do we go to vote it out of existence?
Liberals always trumpet “infrastructure” as one of the vital reasons for perpetual tax and spending increases. Well, Amtrak is infrastructure, and look at how it’s managed. Oversight is difficult in massive government agencies. How is a guy like Weiderhold – very good at his job, according to everyone except Amtrak brass – supposed to stand up to a board of entrenched bureaucrats waving a pile of freshly printed bills in one hand, and a non-disclosure agreement in the other? He’s not the only inspector to get rough treatment after asking too many questions in this Administration. Remember Gerald Walpin, the AmeriCorps inspector general sacked by President Obama, and smeared as an Alzheimer’s patient when he objected? Grassley and Issa remember him, and go as far as naming him in their report on Weiderhold.
The ultimate “oversight” of a corporation is the market, and a disinterested government apparatus that enforces clear regulations. Private companies have been dissolved for the kind of accounting shenanigans Weiderhold uncovered at Amtrak. Corporations with Amtrak’s inept business model rapidly implode from their losses. Try hanging around at an Amtrak depot and asking the passengers how much they paid for their tickets. Everyone of them will give you the wrong answer, because none of them will include the $40 average taxpayer subsidy. In the chaotic fusion of government and industry, no one knows what anything actually costs. The least government can do is keep an unblinking eye on the people who are spending our money to provide things we would not purchase voluntarily.