Obama’s Transportation Plan

President Obama’s latest transportation “vision” is as unrealistic as Governor Brown’s plan to pay for high-speed rail with cap-and-trade revenues. Obama proposes that Congress spend $302 billion on surface transportation over the next four years, or $75.5 billion a year. This is nearly $25 billion more per year than Congress is spending today, which is already $10 billion more per year than federal surface transportation revenues.

In the 2012 round of transportation reauthorization, the debate was whether to limit spending to actual revenues of about $40 billion a year or continue spending at historic rates of about $50 billion a year. Senate Democrats prevailed at the $50 billion rate, but only by agreeing to limit the bill to just two years instead of the usual six. That compromise expires this year just before the Highway Trust Fund runs out of money due to overspending.

In 2012, revenues (mainly from fuel taxes but also excise taxes on truck tires, trucks, buses, and trailers) in 2012 were $40.2 billion. By law, $5.0 billion of this was dedicated to transit. Congress actually spent $8.2 billion on transit while $41.1 billion nominally went to highways (but in fact some of this also went for transit and other non-highway programs). Spending increased by more than revenues in 2013 and 2014.

In fact, Congress has been spending more than revenues since at least 2001, draining the Highway Trust Fund’s reserves which were once well over $20 billion. Between 2008 and 2012, Congress supplemented the fund with $41 billion in general funds. In 2013, it added another $12.6 billion, and if spending continues at current rates it will have to add $15 billion more in 2015. Despite claims that these represent subsidies to highways, no supplements would have been necessary had Congress not diverted billions of dollars to transit each year and mandated that spending exceed revenues.

Given the Republican’s animosity to deficit spending combined with both parties’ reluctance to raise taxes, Obama’s plan to increase deficit spending by 250 percent, from $10 billion to $35 billion a year, is no more than a fantasy. His proposal to rescue the Highway Trust Fund with another $63 billion supplement from a “one-time transition revenue” resulting from his proposed Pro-Growth Tax Reform is equally unrealistic, both because Congress is unlikely to pass Obama’s proposal unaltered and because there are better things to do with the money should reforms produce any one-time transition revenues.

What the president really wants is more grant programs like TIGER, which allow the Department of Transportation to both reward the president’s political supporters and support social-engineering projects such as streetcars and transit-oriented development. TIGER and similar grant making programs are not about transportation; they are about political pork barrel.

What fiscal conservatives should want instead is a plan that limits expenditures to be no greater than revenues; ties expenditures to the source of those revenues (i.e., fuel taxes to highways); and eliminates porkish competitive grant programs. Even in the unlikely event that Congress raises gas taxes rather than transitions to vehicle-mile fees, that platform will improve transportation at all levels because it will give transport agencies incentives to respond to users rather than politicians and crony capitalists. The best would be for Congress to not increase taxes, thus forcing state highway agencies and local transit agencies to rely more on user fees than taxes.

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4 thoughts on “Obama’s Transportation Plan

  1. Sandy Teal

    The Antiplanner needs to attack the real culprit that facilitates all this wasteful spending. That is the “matching funds” approach to transportation funding, whereby the federal government bribes local governments to pretend to show interest in transportation projects so that they get gifts from DC even if they don’t need the project.

    The local governments and proponents only sell these boondoggles by telling people that it is free money from DC regardless of whether the local people want it or need it.

  2. aloysius9999

    The drug cartels should take money laundering lessons from Congress who have invented uncounted ways to make public money come back as campaign bribes.

  3. JOHN1000

    $302 billion over 4 years? Sounds huge and the article and the comments all make perfect sense.

    However, let’s not forget that $700 billion in stimulus $ was spent – ostensibly for these same purposes. If all (or even a small part) of the stimulus $ was actually spent on necessary infrastructure, there would never be any need to spend more than revenues.

    Until the stimulus $ are accounted for (which will never happen), there should be no more funding beyond revenues. Otherwise, we playing a continuous shell game – one that Ponzi and Madoff would have been embarrassed to run.

  4. C. P. Zilliacus

    The Antiplanner wrote:

    The best would be for Congress to not increase taxes, thus forcing state highway agencies and local transit agencies to rely more on user fees than taxes.

    Randal, no objection to what you wrote above.

    But more than a few members of Congress specialize in demagoguery when it comes to tolling – either bashing existing toll road operators (consider Virginia’s Dulles Greenway), or objecting to plans to impose tolls on exiting highways (I-95 in Virginia and I-95 in North Carolina).

    I-95 in North Carolina is in especially bad condition, and long sections of it need widening and top-to-bottom reconstruction. The previous (Democratic) administration started a planning process that may well have led to tolls and an entirely new I-95 across the Tar Heel State. The current (Republican) administration effectively ended the plan to toll all of I-95, but has not proposed a motor fuel tax increase.

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