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Administration Blinks in Budget Showdown

By | | News commentary, Transportation
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The Trump administration released its proposed 2018 budget yesterday to great fanfare and gnashing of teeth over proposed cuts to the so-called safety net. The truth is that the document released yesterday actually has less information in it than the budget blueprint that was released a couple of months ago.

More significant is the decision of Secretary of Transportation Elaine Chao to provide $647 million of the $1.75 billion needed to electrify commuter trains in San Francisco, a project opposed by every Republican member of Congress from California. The Caltrains commuter trains carry just 4 percent of San Francisco Bay Area transit riders, and the environmental assessment for the project predicts (on page 3-159) that, by slightly speeding trains, electrification will increase ridership by less than 10 percent. The project will be completed in 2021, just about the time that shared, self-driving cars start to take away far more riders than electrification could ever hope to add.

Caltrains electrification is just one of nearly two dozen transit projects funded in the recent 2017 appropriations bill that have no full-funding grant agreements, and Trump’s budget blueprint proposed to sign no more such agreements. The other projects are just as ridiculous as Caltrains, but unlike Caltrains many actually have the support of local Republicans. Now that Chao has caved on Caltrains, how is she going to be able to resist funding the other projects? Continue reading →

The Sausage Gets Made

By | | News commentary, Transportation
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Fiscal year 2017 is more than half over and Congress has finally passed a spending bill for the year. This has led to endless debates over whether Trump won, the Democrats won, or anybody won. However, Trump proposed a “budget blueprint” for fiscal year 2018 that said little about 2017, while this spending bill is for 2017, so it would be premature to say that Trump won or lost.

Among other things, the budget blueprint called for halting funding to transit capital projects (“New Starts”) other than projects that have already received full-funding grant agreements (or, in the case of small starts, small starts grant agreements). In other words, any project on this list that is not marked “FFGA” or “SSGA” in the fourth column would not be funded under Trump’s budget. Continue reading →

Federal Budget Outlook

By | | News commentary
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Republican and Democratic responses to Standard & Poor’s negative outlook on the federal debt are so predictable they could have been scripted years ago. Democrats want to address the deficit by soaking the rich; Republicans want to cut supposedly vital programs such as Medicare and Planned Parenthood.

The problem with soaking the rich, as economist Kurt Hauser points out, is that it doesn’t increase overall revenues. As the above graph from American Thinker shows, since World War II, tax rates on the wealthy have ranged from 25 percent to 90 percent, yet total tax revenues have never varied much from 19 percent of GDP. As Reason’s Nick Gillespie emphasizes, the lesson is that, if you want to eliminate the deficit, you have to reduce spending to 19 percent of GDP.

Continue reading →