Shooting Themselves in Their Feet

After fiscal conservatives successfully scuttled a House transportation bill that would have ended pork and allowed Congress to minimize deficit spending, the Senate has passed a bill that is full of pork and will practically mandate deficit spending. The good news, such as it is, is that the bill only reauthorizes federal spending for two years, meaning–if the House passes a similar bill–the whole debate can begin again in a year-and-a-half.

The Washington Post calls this bill an “overhaul” of federal transportation programs, but the Huffington Post points out that it is hardly “transformative.” Instead, it is basically the 2005 bill with a few minor tweaks here and there, none of which should please fiscal conservatives. These include disincentives for states to lease their roads to private toll concessionaires, increased funding for “TIFIA” loans, and greater federal safety oversight of public transit and tour bus companies.

Most importantly, the bill keeps continues to fund most transit programs out of gasoline taxes, which means transit agencies will remain almost completely divorced from transit riders. When 80 percent of your funds come from taxes, not user fees, you just don’t have much an incentive to cater to users. Despite claims of “soaring transit ridership, ridership has essentially been flat for the past six years (compare 2010 and 2011 with previous years on p. 10).

Analysts project that the gas tax that provides most of the funding for surface transportation will bring in less than $80 billion in revenues in the next two years. The House bill would have spent $50 billion a year, causing fiscal conservatives to go ballistic. The Senate bill proposes to spend nearly $55 billion a year, putting it even more in the red.
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Besides spending less money, the House bill had several other virtues. It separated transit funding from the gas tax. It removed all earmarks and made all gas tax funds into formula funds, so there was no pork coming from the gas tax. Keeping pork out made it likely that Congress might be willing to devolve transportation to the states in the next go-around, but given all the pork in the 2005 bill, Congress is not likely to devolve it today.

Fiscal conservatives were hoping for an amendment that would allow states to opt out of federal funding by raising their gas taxes by the 18.4 cents that the federal government collects, thus cutting out the feds as middle man. The Senate predictably and decisively rejected this amendment by 68 to 30. Senator Boxer argued that the amendment would “devolve” the highway fund, which of course was the whole point.

Authorization for federal transportation spending expires on March 31, so the House has just two weeks to either pass the Senate bill, pass something close enough that the Senate can agree in conference, or extend authorization for another six months or so. If the House goes along with the Senate bill, this will prove an example of fiscal conservatives shooting themselves in the foot: in an effort to kill a fairly good but not perfect bill, they ended up with a terrible one. Let’s hope they stir up as much of a fuss in opposition to the Senate bill as they did the House bill.

Update: One piece of pork in the Senate bill is a provision giving federal forest counties yet another extension of funds to make up for reduced national forest and BLM timber sales. This mainly affects counties in Western Oregon, which historically received close to half of all those funds each year. This obviously has nothing to do with transportation and is just one more earmark. Timber sales began declining more than two decades ago, and Congress has given the counties money supposedly on a temporary basis until they find alternate sources of funds, but the counties have never done that and rely on bailout after bailout each year.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

25 Responses to Shooting Themselves in Their Feet

  1. Dan says:

    the Senate has passed a bill that … will practically mandate deficit spending

    The slow recovery means we need more stimulus. As you know, austerity doesn’t work.

    DS

    • sprawl says:

      As we all know, spending money you don’t have, also doesn’t work.

      • Dan says:

        As we all know, governments do it all the time, and have throughout history, always, ever.

        Has something on this planet suddenly changed where reality no longer works and public finance has a new paradigm without us knowing or being told? We are not talking resource limits as I don’t think we are quite there yet, so what is suddenly so new?

        Do tell!

        DS

      • Dan says:

        sprawl Reply: March 15th, 2012 at 9:05 am

        If you keep spending more money than your taking in, you end up where we are today. It is unsustainable.

        Yes.

        This is much, much different than spending money you don’t have, also doesn’t work, however.

        DS

    • FrancisKing says:

      Economies go from boom to bust, with the growth trend line running through the middle. The correct spending rate is the trend line. Above this (trying to keep the boom artificially alive) digs the country deeper into difficulties. Spending the amount of income given by the bust pushes the country into a flat spin. Money from the boom needs to be stored until the bust.

      This is not news. It’s in Genesis (Genesis 41) which just goes to show how much time the religious spend reading the Bible, and how much time they spend hectoring others and spending their money for them.

  2. Southeasterner says:

    “Fiscal conservatives were hoping for an amendment that would allow states to opt out of federal funding by raising their gas taxes by the 18.4 cents that the federal government collects, thus cutting out the feds as middle man. ”

    This sounds like a disaster. How are you going to ensure the states actually use the tax to fund road transportation? What if Indiana decides to not invest in badly needed resurfacing of interstate highway 70 and 80 and instead invests in an alternative project? If Indiana ops out of the federal tax and pays its own way then doesn’t that mean the federal tax for other states could potentially be reduced which would could lead to cross state fueling and overall less tax revenue for Indiana to fund projects?

    This sounds like economic suicide. If we have 50 different state agencies controlling the interstate highways and implementing their own toll systems, taxes, privatization policies we could greatly increase the costs on our interstate roads.

    There is a certain economies of scale that can be achieved at a federal level that cannot be done at a state level. Decentralizing urban planning or state roads is one thing but decentralizing control of assets that are critical to our national economy is dumb.

    Instead of decentralization a true fiscal conservative would see the economies of scale and potentials for efficiency and propose the following:

    A) Remove the federal gas tax completely
    B) Implement a nationwide system of road pricing (and a common automatic user fee collection system) on the federal highways that is strictly for the funding of highway maintenance
    C) Implement controls on maintenance bids with a bipartisan committee and strict guidelines for when maintenance such as when resurfacing is required
    D) Allow states to opt into the federal road pricing plan with state highways and give them the option to remove or reduce state gas taxes

    • Dan says:

      This sounds like economic suicide

      Agreed. The euphemism used in this post, “economic conservatives”, hides the fact that these people are not economic conservatives but rather bad children trying to break things.

      DS

      • Southeasterner says:

        I think we need to differentiate between people who are actual fiscal conservatives and people who think they are fiscal conservatives because they are anti-guvment spending. It seems like ” fake fiscal conservatives” are backing the same slow growth structure of the EU by replacing a standard national bureaucracy with 50 different state level bureaucracies which will increase the cost of doing business in the US substantially.

        The reason for strong growth in China isn’t because they have 33 provinces regulating industry 33 different ways, its because they are taking full economic advantage of their size and national efficiencies…something we used to do here in the US when we actually cared about national economic growth.

        • Dan says:

          I agree, but if you go around touting yourself as a ”fake fiscal conservative”, you are going to make it harder to redistribute wealth to yourself or your friends. One must invent euphemisms to hide what one is doing.

          DS

    • C. P. Zilliacus says:

      A) Remove the federal gas tax completely

      But we still have a national highway system (and I mean that it is still nationwide, not the NHS).

      B) Implement a nationwide system of road pricing (and a common automatic user fee collection system) on the federal highways that is strictly for the funding of highway maintenance

      What about widenings (yes, they are needed) and other additions (also needed) to the network?

      And total reconstructions (there are many sections of the Interstate system will need this).

      C) Implement controls on maintenance bids with a bipartisan committee and strict guidelines for when maintenance such as when resurfacing is required

      Why? The states do a pretty good job of deciding when highways need to be resurfaced.

      D) Allow states to opt into the federal road pricing plan with state highways and give them the option to remove or reduce state gas taxes

      And what happens if a state opts-out?

  3. LazyReader says:

    I tend to think that if states did opt out, they would be in far greater motivation to build roads with the money as opposed to anything else. They probably wouldn’t built rail lines or super road boondoggles like the Big Dig. Once they realize that they will get no more money (short of what they’ll collect next year) than what the state budget has allotted, they’ll be more reluctant to toss money around. What usually happens in the federal scheme is some highway department will get money in the form of an emergency referendum. A last ditch emergency fund to repair some stuff and look good in front of the press. More desperate solutions become apparent and practical solutions may present itself. Necessity is the mother of invention, I tend to think desperation is an even better motivation. Indiana Governor Mitch Daniels leased the Indiana toll road to a private company. He got back billions for his taxpayers. Even if not every road or a vast majority of roads are private, I’d like to think that the growing trend would force government to consider the idea of seeking out better ways of building the roads cheaply themselves. “There’s nothing like the prospect of a hanging to focus the mind”. No one likes to be humiliated or embarrassed, even government; the idea of private road providers operating with greater efficiency or speed than current public roads is not enough to deter government incompetence. But then they look at how smooth the road is, how clean it is, how free of debris, reduced litter, less noise (less honking) and noise barriers, or the side of the roads are more aesthetically pleasing. It often takes years of residential bickering and petitions to get road agencies to build sound barriers, private firms may include them to begin with rather than risk getting sued for causing a disturbance. The success stories may encourage government to operate more like the private sector at least in terms of being efficient.

    • Southeasterner says:

      There is absolutely no reason why you wouldn’t be able to privatize the interstate highway system at a national level and capture economies of scale (for both the highway operator and the users). If Indiana has found the greatest way to manage a highway then lets institute it nation wide not on an ad hoc basis.

      Having 50 (well 48) different operators with 50 different toll or tax systems isn’t exactly efficient when you are trying to truck goods across the country. The tolls in Indiana, Pennsylvania or anywhere else is already a good example of the inefficiency that has been created by decentralizing control of the interstate highways. Creating bottlenecks at toll booths or using various different standards for electronic payment is not something a country should be doing to drive down the costs of doing business.

      • the highwayman says:

        The IRS could install GPS tracking devices in every vehicle. $1 for every mile driven go a long way to make things better.

      • C. P. Zilliacus says:

        There is absolutely no reason why you wouldn’t be able to privatize the interstate highway system at a national level and capture economies of scale (for both the highway operator and the users).

        I would not like the idea of one firm having a national highway concession. The French system of having many companies holding long-term concessions to operate and maintain its Autoroute system.

        If Indiana has found the greatest way to manage a highway then lets institute it nation wide not on an ad hoc basis.

        Indiana was able to privatize its East-West Toll Road because it was not built as part of the Interstate system (even though it is signed as part of two Interstate routes.

    • C. P. Zilliacus says:

      They probably wouldn’t built rail lines or super road boondoggles like the Big Dig.

      What was wrong with the Big Dig was lack of tolling/pricing. Had there been bondholders instead of a federally-funded megaproject, I don’t think the costs would have been nearly as out of control.

      I actually like the idea of putting urban freeways below-grade.

      • LazyReader says:

        Yes, I like the idea of large city freeways being placed underground. I wish they would do that to Jones Falls expressway in Baltimore. But do you honestly think they could do that to all of Los Angeles freeways? Like the Antiplanner said before, the Big Dig was not a highway project, it was a city beautification project. The goal was not to expand highway capacity but to turn an elevated highway into a tunneled highway with at best a slight increase in capacity so even if they tolled it, I doubt it would have worked to ease congestion very well. Did Governor Romney ever return the money in political contributions he recieved from employees of Aggregate Industries (the principal suppliers of concrete for the tunnel portions) after investigations of sub-standard materials and tens of thousands of leaks.

        • C. P. Zilliacus says:

          Yes, I like the idea of large city freeways being placed underground. I wish they would do that to Jones Falls expressway in Baltimore.

          Parts of I-83 (or, as the locals call it, the JFX) could be considered for undergrounding, though I have never heard any serious discussion of same.

          But do you honestly think they could do that to all of Los Angeles freeways?

          No. But there may be some places where strategic undegrounding might make sense.

          Like the Antiplanner said before, the Big Dig was not a highway project, it was a city beautification project.

          That’s a reasonable description, though it is my understanding that the old Central Artery was falling apart and would have needed significant and expensive repairs had it not been replaced.

          The goal was not to expand highway capacity but to turn an elevated highway into a tunneled highway with at best a slight increase in capacity so even if they tolled it, I doubt it would have worked to ease congestion very well.

          Pricing would, of course, allow better management of the traffic flowing through the project.

          Did Governor Romney ever return the money in political contributions he recieved from employees of Aggregate Industries (the principal suppliers of concrete for the tunnel portions) after investigations of sub-standard materials and tens of thousands of leaks.

          I don’t know the answers to that. Though in Romney’s defense, the idea of the Big Dig was conceived back when Tip O’Neill was Speaker of the U.S. House of Representatives.

        • the highwayman says:

          The problem with the Big Dig is that they didn’t build a North Station-South Station suburban train link.

  4. Sandy Teal says:

    The only time you hear about Keynesian economics is during a recession when they want to throw borrowed money around. You never hear from the Keynesians when the recession is over and they are supposed to cut spending and bank money for the next recession.

  5. LazyReader says:

    @ C.P. Zilliacus: Your partially right. There was a proposal, to turn Jones Falls expressway into a Boulevard/Canal. There have been calls to tear down the elevated part of the JFX and replace it with a boulevard, to extend the Jones Falls Trail to the Inner Harbor by following the JFX, and so on. Along with that they would redo other transportation corridors that pass over or feed into the JFX to redo the maze of highways that cut Druid Hill Park off from Reservoir Hill or rebuild Charles Street to accommodate a streetcar line, for example. While I wouldn’t support the tram I would endorse a bus rapid transit line. What’s not included in the standard proposal would be a higher speed, high capacity toll tunnel to handle the traffic and replace the expressway. And the tunnel for the removed highway would be under there. They have pictures that show what it might look like and the idea would be also to have a canal system going through kind of what like Austin has (or is it Dallas?). Anyway the first step: uncover the Jones Falls and transform it into a sunken recreational canal and promenade/bikeway that connects Druid Hill Park to the Inner Harbor like in the past and offer a tree shaded boulevard with a retail & residential stuff. And connect downtown to midtown.

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