Vanishing Automobile update #61

The Interstate Highway System:
What Worked, What Did Not

July 5, 2006

June 29 marked fifty years since President Eisenhower signed the bill creating the Interstate Highway System, one of the most successful federal programs ever. Interstates opened up the country to the average family who could not afford plane or train fares; they enabled rapid, low-cost movement of freight; and they greatly increased highway safety. But they also took far longer to complete than originally projected and many of the routes, particularly in cities, were subject to acrimonious conflict.

Here are just a few indicators of the success of the Interstate Highway System:

The Interstate Highway System was the classic product of the Progressive-era ideal of scientific managers running publicly owned programs in the public interest. Most Progressive programs began with a high level of esprit de corps that sooner or later descended into bureaucratic in-fighting, budget maximizing, and political pork-barreling.

Because of the way it was designed, the Interstate Highway System remained above the fray for longer than most such programs. Yet federal transportation policy ultimately succumbed to pork-barrel politics, so it is worth reviewing just why the highway system succeeded while federal transportation spending today is mired in earmarks and inane rail projects.

What Made the System So Successful?

Three factors made the Interstate Highway System work: decentralization, the engineering mindset, and incentives. Although it was a federal program, the Interstate Highway System was actually planned, designed, built, and maintained by state highway departments. The Bureau of Public Roads -- later the Federal Highway Administration -- enforced minimum standards, such as lane width and curvature -- most of which had been developed by the state engineers -- but otherwise was really little more than a pass-through funding agency.

The state highway agencies were historically pretty independent from politics, having their own sources of funds in the form of state gas taxes and other highway user fees. Most states had highway commissioners appointed by their governors, but on-the-ground decisions were really made by the civil engineers who worked for the highway bureaus. As highway historian Bruce Seely says, the engineers were the policy makers, at least from the 1920s through the early 1970s.

Engineers were exactly the type of scientific managers the Progressives had in mind when they advocated public ownership of roads, dams, and other resources. Engineers concentrated on things they could quantify, like safety, efficiency, and durability. They established two clear goals for transportation improvements: safety and the efficient movement of passenger and freight traffic. Interstate highways were the highest expression of these goals.

Initially, incentives reinforced the engineering view. With their funding coming from gas taxes and other user fees, highway engineers had an incentive to build roads in places where they would be used. They resisted pork-barrel attempts to build "roads to nowhere" because such roads would not generate enough usage to pay for themselves.

Congress added to this incentive with a formula distributing federal gas taxes to the states based on state populations and road miles. While Congress tinkered with the formula when reauthorizing the gas tax every six years, once the formula was in place each state knew almost exactly how much federal funding it would get and would have an incentive to spend this money as effectively as possible.

Given congressional politics, such a formula seems inevitable. Yet Congress failed to create a similar formula when it started funding mass transit in 1964. Nor did it impose a formula when it started distributing a share of gas tax revenues to public transit agencies in 1981. With no formula in the law, the default transit formula became "first-come, first-served," leading transit agencies to seek the most-expensive transit solutions they could find in order to get "their share" of federal transit funding.

Why Did Federal Transportation Policy Fail?

When Congress was debating the Federal-Aid Highway Act in 1955, engineers estimated they could build the entire system in twelve years for $23 billion. In fact, the system was not declared complete until thirty-five years later at a total cost of $129 billion. Even today, some short sections remained unfinished.

After the system was more-or-less complete, the money kept pouring in. With no firm goal for the money, it might not be surprising that Congress turned highway funds into pork. The truth is a bit more subtle and involves the transfer of policy-making and planning power from engineers to urban planners. One reason for this transfer was the inflation of the 1960s and 1970s.

Induced by the Viet Nam war, this inflation was largely responsible for both the delays and the increased construction costs. Inflation revealed that gasoline taxes were a poor method of funding highways because a cents-per-gallon tax could not keep up with increased construction, fuel, and other costs.

Things might have been better if the taxes had been charged on a percentage basis, rather than in cents per gallon. But even that would have proven inadequate when Americans responded to higher gas prices in the 1970s by buying more fuel-efficient cars. Between 1973 and 1983, total driving increased by more than 25 percent, yet the fuel consumed increased by only 5 percent.

Congress and the states raised gas taxes, of course. But increases failed to keep up with inflation and increased fuel efficiency. When you fill your gas tank today, you only pay half as much tax for every mile you drive as your parents paid in 1960. To make matters worse, inflation in construction costs was greater than the general rate of inflation.

Tolls are an obvious supplement to gas taxes. But, with the exception of routes that had been tolled prior to 1956, Congress forbade the use of tolls on interstate highways. With a shortfall in funds, construction slowed, but the growth in driving did not. Environmental studies required after passage of the National Environmental Policy Act delayed construction and increased costs still further. When new urban interstates finally opened, they were quickly clogged by the previous growth in driving, leading to the myths that new roads induced driving and that cities "can't build their way out of congestion."

Today, many people believe that neighborhood-destroying interstates were imposed on cities by heartless engineers. The truth is that the engineers' original plan called for the interstates to by-pass the cities. It was only the intervention of big-city mayors and downtown interests that led Congress to amend the bill in 1956 to include interstates through cities, not around them. The mayors and downtowns were supported by urban planners of the day who saw interstates as a way to clear slums that they believed were blighting the inner cities.

Would cities have been better off without freeways penetrating into the hearts of downtowns? Answering that question could take an entire book, but the short answer appears to be "no." The freeways did nothing to accelerate residential suburbanization, which began long before 1956. The freeways may actually have protected some jobs in downtown areas by reducing inner-city congestion, but they encouraged the growth of other jobs in suburban areas at the intersections of beltline roads and radial roads.

In any case, controversies over freeway locations, increased costs, and the apparent failure of freeways to reduce congestion caused engineers to fall out of favor. Urban planners promised they could do better than the engineers at accounting for the "public interest," such as the effects of transportation on land uses, air pollution, watersheds, neighborhoods, and other resources.

Unlike the engineering standards of safety, speed, and durability, however, planners had no scientific way of measuring the public interest. Back in 1950, in a book published by the Bureau of Public Roads to promote the idea of an interstate highway system, an economist named Shorey Peterson argued that it was best to stick to readily quantifiable engineering standards. Attempting to account for "the public interest," Peterson noted, would lead to "the wildest and most irreconcilable differences of opinion" and make transportation funds "peculiarly subject to 'pork barrel' political grabbing."

Peterson's prediction came true. Prior to 1980, Congress left road location decisions to state engineers. In 1982, however, it included a handful of earmarks, or pork-barrel projects, in its transportation bill. These steadily grew to some 7,000 earmarks in the 2005 bill. By placing politics above efficiency, these earmarks effectively reduce the effectiveness of federal transportation spending.

Earmarks in Highway Reauthorization Bills

Year    Earmarks
1982        10
1987       152
1991       538
1998     1,850
2005     7,000*

Source: Heritage Foundation
* Approximate

Meanwhile, with no scientific basis for the comprehensive planning they had promised, many planners decided their role was simply to get people to drive less. They traded away safe and efficient transportation in order to increase congestion and transfer highway money to expensive transit projects, ideas that gained them the support of transit agencies and rail construction companies.

Despite the problems, Congress ratified the takeover by urban planners when it imposed a comprehensive planning process on state and regional transportation agencies in 1991 and allowed metropolitan areas to spend "flexible funds" on either roads or transit. At the same time, Congress allowed states to start tolling federally funded roads. Although experiments in such tolling began slowly, new tolled interstates can now be found in Colorado, Minnesota, Texas, and other states.

What Should Congress Do Next?

Congress will reauthorize the gasoline tax in about four years and the debate has already begun about what new policies should be included in this law. Some people think Congress should turn at least 15 cents of the 18-cent federal gas tax over to the states. Others think Congress should develop a grandiose, twenty-first-century version of the Interstate Highway System. Between these two extremes, here are a few things that should be considered based on the lessons of the last fifty years.

  1. Congress should repeal all of the long-range transportation planning requirements it has imposed on states and regions. At best, these requirements delayed congestion relief and at worst they created opportunities for special interest groups to control regional transportation policy to the detriment of the residents of those regions.
  2. Instead of long-range planning, Congress should emphasize that the number one priority of federal transportation funding is safety and the number two priority is the efficient movement of passengers and freight.
  3. Congress should also repeal the legal ties between federal transportation funding and air pollution. The evidence clearly shows that pollution is reduced by controlling emissions at the tailpipe, not by attempting to control how much people drive through transportation planning.
  4. To restore decentralized decisionmaking, Congress should resist the admittedly powerful temptation to earmark the next transportation bill. Earmarks are only necessary to override local judgments about the best way to spend funds, and it most cases local judgments are likely to be better than the opinions of politicians and central planners, especially if the local judges base their decisions on quantitative crtieria such as safety and efficiency rather than subjective attitudes such as that transit is morally superior to autos or that highways reduce people's sense of community.
  5. Congress should eliminate flexible funds and distribute federal transit funds based on the populations and annual number of transit riders in each metropolitan area. Including transit ridership in the formula will give transit agencies incentives to fund projects that will cost effectively increase ridership.
  6. Congress should consider replacing the ninety-ten formula under which federal gas taxes pay for 90 percent of interstate highway construction of interstates. A fifty-fifty formula would spread federal funds to more roads and give more states incentives to consider innovative ways of providing the local match, such as tolls.

These steps would improve the effectiveness of federal transportation dollars, restore control of transportation decisions to engineers, and reduce the incentive to use highway user fees as pork barrel.

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