Photo by Steve Roberts

Potentially-important news on Amtrak’s Northeast Corridor. The popular passenger route’s locomotives are going to be replaced with 70 state-of-the-art and energy-efficient models by 2013, thanks to a massive, low-interested federal loan secured by the national rail carrier. Transportation Nation says this is “big news”

in part because federal money for Amtrak is rarely for new equipment. State of good repair projects— like signal upgrades, bridge repairs, switch maintenance—generally rise to the top of the federal funding list. Today’s announced loan is also the largest, by leaps and bounds, so far issued under an obscure and, some say, underused federal loan program that has not been tapped to its full potential thus far.

The new locomotives will be built in the United States, and are expected to create around 250 jobs. Transportation secretary Ray LaHood is even describing the loan as a job creation measure in addition to a means of upgrading passenger rail service:

Transportation Secretary Ray LaHood said besides the deal fitting into the president’s plan of improving the intercity passenger rail system, the loan is part of a job-creating strategy. It also comes as economists have worried about the pace of factory orders for durable goods.

“The Obama administration is committed to making strategic, long-term investments that create jobs and boost the economy now,” LaHood said. “This financing plan is already putting Americans back to work at assembly plants and supply companies in Ohio, Pennsylvania, California and Georgia.”

This probably isn’t the sort of thing LaHood—or, for that matter, any member of the Obama administration—should be bragging about. The administration is exchanging $562 million in taxpayer-backed liabilities for 250 jobs. In the likely scenario that federally-subsidized Amtrak can’t fully repay this federally-backed loan, taxpayers will be on the hook for up to $2.2 million per job created. Now, there’s reason to believe that transit-targeted stimulus is better for the economy than other forms of government spending. But even by the most restrained, non-ideological assessments, the 2009 economic stimulus cost about $225,000 per job, which was still enough to lead one economist to question whether the government shouldn’t have just paid 2.6 million temporary employees $60,000 for one year. The Amtrak loan is federal spending that will create jobs. But that doesn’t make it an effective “job-creating strategy;” if it is, then the administration’s economic brain trust has truly run out of ideas.

The loan’s stimulative effects are dubious. But will it greatly improve safety or travel time on the Northeast Corridor? It’s hard to say. This blog post at industry magazine Railroad Age discusses the loan’s job-creating potential, but says nothing about what sort of impact the new locomotives will actually have on service. At least intuitively, newer rolling stock means less time and money wasted on maintaining a deteriorating fleet, which should make for more efficient (and maybe even cheaper) passenger rail service. But that’s not how federal administrators are selling it:

“The RRIF program is a model of how we can leverage federal dollars to spur private investment and build up the economy,” said Federal Railroad Administrator Joseph C. Szabo. “It provides steady, affordable financing for major rail construction and expansion projects, and best of all, it comes at zero cost to the taxpayer.”

Given how much the federal government spends on servicing Amtrak’s debt in a given year (about a quarter-billion dollars in FY 2010), this probably won’t come at “zero cost the taxpayer.” Of course, it’s hard to be pessimistic about major government investment in passenger rail infrastructure. But it’s also hard to shake the sense that this isn’t really that big a deal, and that there are other transit-related initiatives the government should be spending its money on. In a small way, this loan illustrates the need for a national infrastructure bank.