As most Antiplanner readers probably know, Congress last week decided to test whether the nation with the world’s dominant currency can borrow another trillion dollars or so without risking its economy. Before passage of the bill, the national debt was $21 trillion, and the bill will add at least $800 billion to that and probably more.
The good news is that the 2018 spending bill contains very few earmarks. The bad news is that it calls for so much spending that it didn’t really need any. For example, although it never names the Gateway project — Northeast Corridor improvements including new tunnels under the Hudson River which the Trump administration doesn’t want to fund — the bill includes more than $500 million that will probably go for that project.
Specifically, the bill spends $650 million on the Northeast Corridor, which is $292 million more than was authorized by previous Congressional law. Amtrak itself received $50 million more than was authorized. This includes $35.5 million to start service on new routes, such as New Orleans-Jacksonville, a route that stopped running when Hurricane Katrina hit much of its infrastructure.
For public transit, the administration has said that it wants to continue to fund capital improvement projects for which funding agreements have been signed, but it doesn’t want to sign any new agreements. The bill does not require the administration to sign new agreements, but it includes $1.5 billion for New Starts — $671 million more than the administration asked for — and $400 million for small starts projects — $400 million more than the administration recommended.
Since the administration’s recommendations only partly fund many of the New Starts projects, with the expectation that further funding would come in 2019 and later, it could probably spend the entire $1.5 billion New Starts money on projects with grant agreements. However, it could have a serious problem spending $400 million on small starts without violating its vow not to fund any new ones.
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The administration also wanted to kill the Transportation Investment Generating Economic Recovery (TIGER) program, since the economy has presumably recovered from the Great Recession that inspired that program. This program is highly politicized and much of the money has been wasted on foolish projects including — as Reason magazine was quick to point out — the expensive bridge that fell and killed six people while it was under construction in Florida on March 15. Instead of killing TIGER, Congress tripled it, thus insuring there will be plenty of money to go around for projects that, of course, aren’t earmarks.
In short, fiscal conservatives in Congress and the administration were completely rolled by pork-barrel politicians in both parties. New York and New Jersey Democrats were responsible for the funding of the Gateway project, but large numbers of Republicans were complicit in the overspending.
Here are some hard economic principles. First, the national debt can only be sustained if the economy grows enough to pay the bills. Second, economic growth depends on investing our limited resources wisely. Third, spending money on transportation infrastructure is wise only if that spending leads to more economic activity in the form of increased freight or passenger travel; merely shifting people from mode or another doesn’t qualify. Finally, projects funded out of user fees rather than tax dollars or deficit spending are more likely to grow the economy because they are more likely to generate new travel or other real economic benefits.
Based on these principles, the transportation portions of the 2018 spending bill will do more harm than good to our economy, and the same is probably true for many other parts of the bill. By making spending meet political tests rather than economic ones, it insures that more money will be wasted on things that won’t grow the economy. Thus, the bill brings the nation one step closer to bankruptcy.
All the more reason to tax and spend rather than borrow and spend. It seems that as soon as politicians can borrow and spend then voters are happy to approve spending. As soon as taxes go up because spending goes up then voters are much more concerned about the spending and the cost benefits of such spending.
Not much here to like. terrible.
But when one party says that unless you give us what we want. we will not fund the military and will let vets dies at VA hospitals (like they did under Obama). And they can do this without being attacked or criticized so they will never stop.
The President (who is under 24/7 attack by the media and the Dems) said he had to protect national security – the other guys didn’t care. And he gets the blame.
“The President who is a Dem…”
Fixed it for you.
As soon as taxes go up because spending goes up then voters…
…vote the tax-raising politicians out. Some Americans gush over all the welfare goodies handed out in the EU countries but have no idea how much the average worker pays in taxes in those countries. If the politicians decided to crank up taxes to 50% on the average American, s/he’d probably be immediately recalled.
“vote the tax-raising politicians out.”
Why hasn’t anyone ever even come up with that idea before? OMG! Yes! Vote them out!
Wait…
What’s that? you ask.
Who will replace them?
More corrupt, psychotic, sociopaths otherwise known as politicians?
Because that will work.
If only we voted in the right people to rule our lives for us everything would be so great!
I think there’s a meme out there on the internet about if only the right socialists are in charge everything would be perfect.
The Antiplanner wrote:
For public transit, the administration has said that it wants to continue to fund capital improvement projects for which funding agreements have been signed, but it doesn’t want to sign any new agreements. The bill does not require the administration to sign new agreements, but it includes $1.5 billion for New Starts — $671 million more than the administration asked for — and $400 million for small starts projects — $400 million more than the administration recommended.
Given the maintenance backlogs of nearly every rail transit system in the United States, if federal money is going to be spent on rail, why not get rid of New States and designate all of those dollars for reducing that backlog instead? I am aware that even a sum like $1.5 billion is small when compared to maintenance needs of rail (WMATA in Washington has asked for and is getting about $500 million new tax dollars (most of it coming from state and D.C., not the federal government) just to deal with maintenance and repairs).
Since the administration’s recommendations only partly fund many of the New Starts projects, with the expectation that further funding would come in 2019 and later, it could probably spend the entire $1.5 billion New Starts money on projects with grant agreements. However, it could have a serious problem spending $400 million on small starts without violating its vow not to fund any new ones.
Unless and until Congress and the states want to tax motor fuels at the same rates as some of our more transit-focused friends in Europe (for example, the tax on motor fuel in Great Britain is currently £ 0.5795 per liter, which is about 82¢ in U.S. currency for one liter, or about $3.10 per U.S. gallon), we need to abandon the fantasy that most drivers are going to abandon their cars for rail transit, and that in turn means not funding any New Starts in the U.S.
Unless and until Congress and the states want to tax motor fuels at the same rates as some of our more transit-focused friends in Europe, we need to abandon the fantasy that most drivers are going to abandon their cars for rail transit…
It’s not money so much as it’s density. We could throw tons of money at collective transportation in the US but our metropolitan areas, with a couple of exceptions, just aren’t dense enough for it to work. That’s why the planners are so enamored with stack and pack, despite the preferences of the vast majority of Americans to live in single family homes.
Yeah, Frank, that was the point the Founders made and why they wrote the Constitution the way they did. Everyone is corruptible. Occasionally we have candidates running on a Good Government platform but voters astutely see through those platitudes. The best we can hope for is are regular party changes, else we end up like Russia or Chicago. Hillary, for instance, would just have been an extension of the Obama thugocacy. So voters sensibly elected a different thug.