The USA used to have a vibrant, comprehensive system of privately-operated passenger trains. The private railroads operated the trains without government assistance, and paid taxes on their passenger-related assets as well. New Orleans was once served with passenger service by eight different railroads, and when New Orleans Union Passenger Terminal opened in 1954 there were still seven different railroads operating 22 passenger trains in and out of New Orleans every day – Southern Pacific operated 3 (Los Angeles and Houston), Texas & Pacific operated 2 (Ft. Worth), Missouri Pacific operated 2 marketed as Gulf Coast Lines (Houston, over the IC to Baton Rouge), Kansas City Southern operated 2 (Kansas City), Illinois Central operated 4 (Memphis and Chicago) along with the Gulf Coast Lines trains to Baton Rouge, Southern operated 3 (New York and Chattanooga), and Louisville and Nashville operated 6 (Cincinnati, New York, Jacksonville). Shreveport had passenger service radiating out in every direction (Dallas, Houston, Port Arthur, New Orleans, Meridian, Hope, St. Louis, and Kansas City).
Even during the heyday of passenger trains when 25% of all trips were made by rail, the business was never as profitable for the railroads as operating freight. Many of the railroads justified maintaining high-quality passenger service as a commitment to the communities they served, and also as good advertising for their profitable freight business, but when the passenger losses threatened to run the railroads out of business completely they had no choice but to cut passenger service. A gradual period of decline started in the 1950s with the taxpayer-financed construction of the Interstate Highway System, along with taxpayer-financed airports (and even airlines). The predatory government subsidies going to the highways and airports/airlines made railroad competition for passengers impossible, and the only solution for the railroads was to cut passenger service and eventually exit the business entirely. Then in 1967 the USPS canceled nearly all of the railroad mail contracts (the mail operated with the passenger trains), and the rapid disappearance of this revenue stream accelerated the cancellation of many trains. By the time the government-operated Amtrak took over in 1971 Baton Rouge and Shreveport were completely without passenger service, there was no rail passenger service on the Mississippi Gulf Coast, and New Orleans was down to just three trains (tri weekly to Los Angeles, one daily to Chicago, tri weekly to New York on the Southern Railway).
Amtrak was created by Congress and signed by President Nixon in 1971 to supposedly rescue rail passenger service, but it was never meant to survive. Nixon was convinced not to veto the Amtrak legislation on the premise that Amtrak’s failure would lead to an orderly shut down of nationwide passenger trains, but Congress instead chose to barely continue funding operations – but never enough for the company to expand into a comprehensive nationwide service. Amtrak has been starved of capital for new equipment pretty much from day one, and it has come under constant attack for its money-losing long distance trains. Every executive administration after Nixon, regardless of political party, has not been friendly to Amtrak to some degree with some seeking to eliminate it entirely. Obama has proposed spending serious money on Amtrak, but there is such acrimony between the President and Congress that Amtrak’s budget has basically remained flat. The bottom line is that the USA really has no rational transportation policy. Highways and airports continue to receive large amounts of taxpayer money (regardless of merit), but very little in comparison goes to Amtrak. Highways and airports have trust funds paid for by either gas/ticket taxes, but these revenues only pay about 2/3 of the cost of highways and airports with the general fund having to pay for the rest. If Amtrak received what the FAA receives out of the general fund each year, Amtrak’s budget would be about $5+ billion per year instead of $1.4 billion.
The future probably will involve some degree of private investment if we’re going to see any expansion of service. A lot has changed since the 1960s when the railroads exited the business (congested Interstate Highways and flight hassles) and some of them may re-enter the passenger business. The private Florida East Coast is investing $2 billion to establish passenger service between Orlando and Miami. Perhaps Amtrak will evolve into a different form with a private company operating the sleeping/dining cars and charging market fares for their services.