Federalism

Road to Ruin

Federal highway taxes should be spent on interstate highways, not urban transit.

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America's highway system is not delivering the high-quality transportation a competitive economy needs. Congestion gridlocks our urban expressways, costing Americans $76 billion per year in wasted time and fuel. The interstate highways, begun 50 years ago, are wearing out and will need repairs and reconstruction costing many hundreds of billions of dollars. Two national commissions have estimated that the shortfall in productive highway investment (federal, state and local) is in the vicinity of $60 billion to $90 billion per year.

We invented the federal Highway Trust Fund in 1956, promising motorists and truckers that all proceeds from a new federal gas tax would be spent on building the interstate system. They aren't. Congress has expanded federal highway spending beyond interstates to all types of roadways. And ever since 1982, a portion of those "highway user taxes" have been diverted to urban transit. Today, the federal role in transportation includes mandating sidewalks, funding bike paths, and creating scenic trails.

As a result, spending exceeds gas-tax revenues and the Highway Trust Fund is broke. Some claim this is because the 18.3-cents-per-gallon federal gas tax needs to be raised. But drivers can fairly put the blame on the fact that 25 percent of gas-tax funds are diverted to non-highway uses.

A key to fixing the problem is to identify what should be federal and what should be state and local responsibilities. In principle, only the interstate highways—our key arteries for interstate commerce—should rise to the level of the federal government. Other highways, streets, sidewalks, bike paths, local transit lines, etc., are more properly state and local concerns.

Reserving the federal Highway Trust Fund just for highway improvements would mean a 25 percent boost in federal highway investment—about $11 billion per year, a good start toward repairing our aging infrastructure.

But what would happen to urban transit if gas taxes went back to being spent solely on highways? Proper federalist principles would make transit a matter for metro areas and local governments to fund themselves, but realistically, that's not going to happen anytime soon—this Congress will continue to fund local transit projects. But a good case can be made that if the federal government is going to support transit, bikeways and sidewalks, it should do so out of general revenues, not highway-user gas taxes.

Under the Obama administration, the Federal Transit Administration is increasingly partnering with the Department of Housing and Urban Development (HUD) and Environmental Protection Agency to promote "livable and sustainable communities." In fact, they are evaluating transit and streetcar proposals on this "livable" basis rather than on their transportation cost-effectiveness. If transit is primarily for community development and not for moving large numbers of people from point to point, Congress should fund it like community development. After all, today's Federal Transit Administration started as the Urban Mass Transit Administration and was located within HUD.

With the Highway Trust Fund drowning in red ink, taxpayers have twice bailed it out using general-fund monies—$8 billion in 2008 and $7 billion in 2009. Congress is likely to shore up the deficit in the same way this year. Those sums are roughly equal to what the transit administration gets from the Highway Trust Fund each year, so it would be more straightforward simply to shift them to general-fund support. Highway money then goes to highways. Congress sends money to its preferred "livable" transit projects from the general fund.

The bottom line is that our interstate system is deteriorating, which could be devastating to our economy. Trucks haul 66 percent, by value, of all goods moved in America on these highways, and projections show that this volume will increase 2.5-fold by 2035. We can't continue to siphon money away from them.

President Obama frequently talks about how government needs to regain the trust of taxpayers. Congress can reclaim some trust by spending highway taxes on what they said they would: highways.

Robert W. Poole Jr., an MIT-trained engineer, is director of transportation studies at Reason Foundation. This article originally appeared in The Washington Times.

NEXT: Government Workers Are Earning More than You. Sucker.

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  1. Vanishing Point?

    1. Yes. One of the greatest pointless movies ever.

  2. All taxes go into the general fund.There’s no way of knowing what portion of the tax goes to road.Let’s just eliminate the federal tax and let the states collect it themselves.

    1. Lock. Box.

  3. Killer Kowalski!

    Movie? 2 stars. Soundtrack? 5 stars

    1. “Way down around Vicksburg, around Louisiana waaaaaaaaaaaaaaay…”

  4. promising motorists and truckers that all proceeds from a new federal gas tax would be spent on building the interstate system.

    “See, that’s where you went wrong. You trusted me.”

  5. Why should the government be spending anything on highways in the first place? Why is the government even in the transportation business?

    The Feds created the Interstate Highway System at the expense of a privately run transportation system. You might remember them. We called them railroads. And this was a political decision to bolster and subsidize the automobile industry.

    That all said, we have a transportation SYSTEM. Government subsidizes all of it, including the airlines, so why not rail? Why do people have this bias against rail and insist that it makes a profit? No other mode does. No other mode ever will. Get over it.

    If the trust fund can’t keep up with the maintenance of the roads, then maybe its time to start abandoning some of the highways. Or sell them off.

    1. Just when I think you couldn’t get any dumber you say something like this and totally redeem yourself: Or sell them off.

    2. A lot of the reason the Feds built the interstate system was to facilitate the movement of military troops and supplies.

      1. Yeah, right.

        That was a marketing ploy to get Congress to go along. You want to get a big spending bill passed? Put the word “Defense” somewhere in the title, and you’re good to go.

        1. I think that may apply to non-big-spending bills too. i.e. DOMA – Defense of Marriage Act. ;o)

      2. I thought it was “for teh childrens”?

    3. The Feds created the Interstate Highway System at the expense of a privately run transportation system. You might remember them. We called them railroads. And this was a political decision to bolster and subsidize the automobile industry.

      This was probably the most profound intervention in the American economy to date, and very few libertarians recognize it. In fact, many (including Reason.com/org’s Bob Poole) actually think that the intervention goes the other way ? against cars and for mass transit.

      1. I’m old enough to remember that the reason the government got into transportation is because thats what The People wanted.

        1. +5

      2. STEVE SMITH WANT TO RETURN TO DAYS OF WAGON CARAVAN, EXPANDS POOL OF POSSIBLE RAPE TARGETS.

    4. WTF is the prog obsession with trains?

  6. it would be more straightforward simply to shift them to general-fund support.

    “Straightforward”?
    Congress?
    Now you’re just being silly.

  7. I would have no problem if the government auctioned (that’s AUCTIONED, not GAVE AWAY) the right to manage portions of the “transportation system”.

    When Daniels did the deal with McQuarie for the Indiana Toll Road, one of the primary reasons put forth to the public was “We (the State of Indiana) are too stupid and politically venal to run this road efficiently.” Last I heard, the world had not come to an end due to private management of that public asset.

    1. When NJ wanted to hand over management of its toll roads to private companies, the furor and uproar was vehement. People assumed the worse, as usual: private companies would rape motorists for profits and let the roads go to hell, etc.

      Many never considered that there might be some competitive advantage to keeping tolls low and roads in good repair to avoid lawsuits, etc. No,it was that teh EVUL CORPRAYSHUNS were going to ruin our awesome state.

      1. When all the toll roads in a state are run by the same private company, there is no real competition. If you have to drive from Chicago to New York, you have to either drive 100 miles out of your way by going up through Michigan and back down again, or you can go through Indiana and deal with the owner of the Toll Road.

        1. When all the toll roads in a country are run by the same private government, there is no real competition.

      2. A local interstate I travel regularly runs about 5 cents per mile, plus a 25 cent transaction fee. The federal gas tax is 18 cents per gallon, or about one cent per mile in a typical vehicle. Therefore, either

        1: The federal government is about five times as effective at building roads as the private sector

        or

        2: The federal government is actually spending five times more on the highway system than it claims

        or some combination thereof.

        Please note that I actually *underestimated* the price of the toll road, as I wasn’t including the fact that its original construction was subsidized via the way the bonds were set up, that it keeps a fraction of the gasoline taxes collected along its route, and that it can collect monopoly rents at all the service stations.

  8. This is silly. We aren’t siphoning money away from the transportation of goods on highways; we are subsidizing that with taxes on gas. Most of the highway maintenance is required because of damage caused by trucking, not passenger cars, but taxes on fuel are mainly paid by those driving passenger cars. This allows big businesses to operate more cheaply by lowering the costs of shipping materials in and products out. In other words, the “economy of scale” is, at least partly, a byproduct of subsidizing truck transport. This is anti-competitive. The solution is not to keep gas taxes focused on interstate highways; it is to require truckers to pay an amount proportionate to the damage they cause.

    1. I’d like to see some research on this to see if they pay a fair portion compared to damage caused.

      But, until you put 200-300 gallons in your car to fill up, I don’t think you can claim to put as much money toward the highways as those guys do.

      1. “One legal 80,000 pound GVW tractor-trailer truck does as much damage to road pavement as 9,600 cars. (Highway Research Board, NAS, 1962).” http://www.saferoads.org/issues/fs-trucks.htm

        That truck might get six miles per gallon, i.e., it might use as much gas as five cars, but it causes the damage of thousands of cars.

        1. Un-fucking-possible. F=MA

          If you are yanking x-Lbs. of stuff with a tractor and then you decide to yank x*100-Lbs the energy required goes up in proportion to the mass. The road impact goes up in equal proportion too.

          Unless truck/tractor engines are 9,600X more efficient than car engines that link is bullshit.

          1. I don’t know about the link, but this is definitely bullshit: Your suggestion that road impact is linearly proportional to vehicle weight, simply because of Newton’s 2nd law. Materials will degrade in non-linear fashion (e.g., x load causes y damage, but x*100 may cause y*1000 damage).

          2. If you are yanking x-Lbs. of stuff with a tractor and then you decide to yank x*100-Lbs the energy required goes up in proportion to the mass. The road impact goes up in equal proportion too

            According to this logic putting 10 marbles on a glass panel for a week will cause the same damage as putting a bowling ball on a glass panel for 10 seconds.

      2. Just look at parkways where trucks are prohibited — they can have thin beds yet last fuckin’ forever! Pelham Pkwy. near me is a striking example; practically the only wear is in the right lane, where the buses run.

    2. Tractor trailer tabs are significantly higher than those for my ten-year-old car.

  9. Those 70’s Challengers were awful cars.

    1. Look, weirdo. Just because you can’t take a screwdriver to a carb doesn’t mean the car is awful.

  10. I recommend reading this book: Traffic: Why We Drive the Way We Do (and What It Says About Us) by Tom Vanderbilt

  11. I recommend reading this book: Traffic: Why We Drive the Way We Do (and What It Says About Us) by Tom Vanderbilt

    1. We get it. We get it.

      1. Jimmy two times, two times.

  12. Only a few roads can support themselves financially. Part of the reason government builds them, is so that roads that couldn’t directly support themselves are nonetheless built. I can think of plenty of scenarios where roads would not be a great return on investment, yet yield positive externalities.

    Cross-subsidization has long been part of transportation and communications infrastructure.

  13. I think federal gas tax was a very good tax until the 1970’s. Say waht you will about government ownership but in the 1960’s you had a tax paid only by people who used cars and trucks based on how far they drove and the money went strait to roads, the interstate was paid off.

    This is how gas tax is used in Europe and it makes no sence. People don’t want to use the train they want to drive, so we take money from driving put it into trains to make them the way people like. So instead of taking money from people for doing an activity and putting it inot the infrastructure for that activity we throuw it away. By contrast the toll operated roads in Europe are a great model for America to follow.

  14. what a load of bullshit. Only 20% of federal road (not including mass transit) construction is payed for through the gas tax. So eliminate the supposed 25% that is funneled to non-interstate construction and the gas tax would pays for 25% of interstate construction. Lucky me I get to continue subsidizing the interstate system and I get to pay more for public transit on top of it.

    1. My state contributes $1.50 for every $1.00 it takes in.
      $$$ should be spent where they generate the most commerce, not some backwater.

  15. I have a question for Mr. Poole regarding his math. In paragraph 3, he correctly states that 25% of the funding goes to non-highway uses. That means that 75% theoretically goes to the highways. Therefore, wouldn’t returning these funds to the highways mean a 33% increase in highway funding, rather than the 25% figure he uses in paragraph 5, since 25% is 1/3rd of 75%?

  16. I don’t remember there being any authority in the federal constitution for collecting taxes on roads or spending taxes on roads. “Regulate commerce between the several states…” doesn’t even faintly allude to “building roads and highways”. (Won’t even mention bike paths, light urban rail and the rest.)

    We got the Interstate system because then-General Eisenhower saw the German Autobahn and how effective it was in moving the Wehrmacht’s men and tanks and logistics around. He fell in love with the idea and started it when he was Prexy. Doug MacArthur said Ike was the best clerk he ever had; truth, that. Ike’s love of the autobahn never collided with the military realities in North America, since the Interstate matched other economic and political interests; as always, new pork ideas are welcomed with no critical eye and open tax purses.

    Railroads always had state and local “help”, particularly in the formation of limited liability organizations of one kind or another. Read the histories of the big RR’s: NYC, PRR, etc. All of ’em started with government monopoly of right of way and limited liability for owners at a minimum. Too much $$$ in it for the politicos to leave it alone.

    Neither states nor Fed have any legitmate authority to spend on roads, railroads, canals, etc etc. Ruins all the pork and gravy I know, but that’s the only “principle” I recognize when it comes to deciding the limits of govt action: constitutions and what powers the people can give to governments.

    So, get out of that, too, Uncle Sam and all you little pork-lovers down at the state and local levels: vamoose, it ain’t none of your business either.

    1. Article I Section 8

      “To Establish Post Offices and Post Roads”

      The Federal Government’s business is roads. Let them focus all of their energies on that and get their shit out of socializing health care and god knows what else.

    2. Congress has the power “To establish Post Offices and Post Roads.” Art. I sec. 8. A post road is a road over which mail is carried. As long as the roads are used to transport mail, Congress can build and maintain them.

      1. Congress also has power to provide for national defense. So the federal highways are double Constitutionally provided.

        1. I believe that national defense was a main justification for the interstate highway system. Most of them go straight past major military bases. Heck, I-185 ends inside Ft. Benning.

    3. The Great Northern was not only the first railroad to have no federal assistance but the only American railroad to have never declared bankruptcy.

  17. Right on! If you (the government) are going to forcibly take my money, at least, use it for its stated purpose.

  18. What’s blackening the American highway system more than anything is the general ignorance and selfishness of drivers. Better driving would lead to less spending on gas, and less complaining about the whole issue.

  19. Poole is wrong when he says “only the interstate highways?our key arteries for interstate commerce?should rise to the level of the federal government. Other highways, streets, sidewalks, bike paths, local transit lines, etc., are more properly state and local concerns.” NO! Federal & state highways should be privately built and managed facilities, paid for with user fees like tolls and subscriptions, not fuel taxes or taxes of any other kind.

  20. This is completely backwards.

    The government (at all level)has been SUBSIDIZING roads for many decades out of other revenue sources: income tax, property taxes etc. The subsidy for transit is jusifiable because it must compete with an already heavily subsidized car and truck system.

    Properly stated, you have a typical mess of government subsidies, to which the proper libertarian solution is to end all of them. If anything, gas taxes should be raised significantly to repay the subsidies doled out to roads over the past decades.

  21. The other flaw in the article is a failure to properly identify the cost benefit of non-highway transportation, and proper ways for each means of transportation to pay for itself.

    For roads, you cannot efficiently toll usage except on major arteries. How do you pay for costs of suburban streets? Do we use GPS, but at what costs to personal liberty? How do you charge for congestion?

    Under the current scheme, road users are subsidized as they do not incur the full costs of their externalities, including wear and tear on the road, congestion, police, emergency vehicles, etc. In major metropolitan areas, mass transit, walking, cycling, etc is a major benefit to cars, as it reduces congestion and wear on the roads: just look at the traffic when there is a strike or other service disruption in DC, Philadelphia or NYC.

    Since road users directly benefit from having more people not directly competing for the same limited resource, and have their access to said resource already subsidized, how do you get such road users to pay for it? You could have congestion charges, or HOT lanes (as Cato suggests), but there are questions of how to build and charge people appropriately. The technology is only now developing. Accordingly, you can argue from an economic perspective that the government should subsidize non road transportation out of taxes on road transportation, since direct benefit of reduced congestion etc cannot be priced and collected in an efficient manner.

    This is not an argument for rampant subsidies to heavily unionized and inefficient government transit. It is, however, an argument that you cannot simplistically argue against any subsidy without a full accounting of the existing economics of the transportation system.

  22. Dear Reason Readers,

    . This is really an essay in Transport Socialism

    . The writer does not understand the
    economics of External Costs (has the writer ever studied economics?)

    . Also does not account for the fact that gas taxes, registration, etc,
    only pay for about half of road
    construction and maintenance by the 3 levels of Government

    . The article does not account for the possibility of competition from
    other transport services; e.g rail,
    air, sea; if these were not injured by
    Govt subsidies, grants, etc for roads,
    cars, trucks, petroleum gas etc.

    . Rail uses less than one-third of the fuel per passenger or freight carried
    and has a much smaller wheelprint;
    one train can do the work of 300 trucks

    Brian Buckley
    The Policy Centre

    1. You make a critical point by pointing out that our road system only covers about half of its own costs across the entire government (and this *includes* the fraction of the gas tax diverted to public transit). Oddly enough, the “public” transportation systems libertrians despise actually brings in a bit more than half of its revenue at the fair box. Overall, it is about a wash.

  23. If we tax gasoline enough, fewer people will be able to afford to drive, and will have no choice but to use the shitty mass transit they’re already paying for, anyway. That sounds like some sweet, yummy Liberty to me!

    1. Thanks, Ernie, your comment made me laugh (in a good way).

      In all seriousness, its not liberty when you have the government deciding who to subsidize. This should be much more a matter of the market and personal choice. The current car-based system has been subsidized for so long, and in so many ways, that people don’t even realize it.

      If gas went to $8-10 gallon, things would change. However, most of the other industrialized nations already pay that, and still manage to drive around. Their public transit is also a lot better. I’m not saying that we have to be like Europe, only that it wouldnt be the end of the world. Australia is much more like the USA in being a car-based, spread out, free market country. They still survive and actually manufacture 6 and 8 cylinder cars with gas at twice the US price.

      Finally, its not particularly liberty promoting when the US is heavily dependant on foreign oil. So many other countries, BECAUSE of their of gas taxes, have better balance of payments and can withstand oil shocks

      Also, if you raised gas taxes, you could actually reduce the number of regulations, such as subsidies to various transit systems, highways (a favorite bit of pork), and the bizarre mandated fuel economy standards.

  24. So, truck transportation will increase by two and a half times by 2035? Who came up with that projection? Are they entirely missing the manufacturing revolution that will put most production into people’s homes long before then?

    I’m sure that the politicians have been underfunding highways for years in their regular short-sighted way, but it’s looking more and more like it won’t make much difference. Same reason I’m not terribly concerned by the fact that Social Security is a joke.

  25. By giving the power to subsidize or favor any form of transportation over another (they have been legislating for highways/autos and against rail for a century), we are boxed into a corner now defending medicine and the internet.

    To boot: http://bit.ly/9kvSoO

  26. It is interesting and informative article. Thank you.

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