There Should Be No Federal Funding for Mass Transit

As a matter of sensible public policy (and well as fealty to the Constitution), the federal government should not be involved in transportation.

But since I don’t expect the current crowd in Washington has any interest in getting rid of the Department of Transportation, perhaps we should have a more modest goal of eliminating subsidies for mass transit.

After all, there’s no reason why taxpayers across the nation should be subsidizing the cost of railway, bus, and subway travel in a handful of cities.

Getting rid of these handouts would save a decent chunk of money. Here’s a chart from Downsizing Government, which shows the history of pre-pandemic spending by the Federal Transit Administration.

But that chart is now out of date since politicians have used the pandemic as an excuse to dramatically increase the burden of federal spending. Including big handouts for mass transit.

And now they want to raid taxpayers for more transit money as part of a spending spree on infrastructure.

The Wall Street Journal editorialized about this topic a couple of days ago.

Democrats are accusing Republicans of holding up the Senate infrastructure deal over funding for mass transit. Here’s what’s really going on: Republicans have bowed to most Democratic demands. But now Democrats are also insisting that they acquiesce to spending ever more to rescue broken rail and bus systems in big liberal cities. Mass transit typically receives $13 billion in federal funds each year, and Congress provided an additional $70 billion for urban transit last year in the myriad pandemic spending bills. That’s more than six times the normal transit budget and more than the annual operating and capital spending of every transit agency in the U.S. combined. …But most mass transit systems face a larger structural budget problem that pre-dated the pandemic: Ballooning operating costs from generous labor contracts and pension payments, which are siphoning off money from system improvements and repairs. Many systems have also been losing riders due to lousy service… So Democrats want Republicans to bail out those cities and their public unions. Republicans have agreed to a $48.5 billion supplemental appropriation for mass transit in the deal. But in addition Democrats are demanding that 20% of transportation spending from the highway trust fund—financed by gas tax revenues—go toward transit.

This is throwing good money after bad.

In a column for the Foundation for Economic Education back in 2019, Hans Bader explained that mass transit in an inefficient money pit.

Mass transit is largely a failure and continues to decline despite growing subsidies to many mass transit systems. Light rail systems are white elephants. …South Korea is abolishing its celebrated high-speed rail line from its capital, Seoul, to a nearby major city because it can’t cover even the marginal costs of keeping the trains running. Most people who ride trains don’t need maximum possible speed, and most of those who do will still take the plane to reach distant destinations. …most Japanese don’t take the bullet train either; they take buses because the bullet train is too expensive. Bullet trains do interfere with freight lines, so Japanese freight lines carry much less cargo than in the United States, where railroads—rather than trucks—carry most freight, thereby reducing pollution… California’s so-called bullet train is vastly behind schedule and over budget, and will likely never come close to covering its operating costs once it is built. …Just the first leg of this $77 billion project will cost billions more than budgeted. And the project is already at least 11 years behind schedule.

Government is a big reason why transit is so inefficient and expensive.

Industry expert Randal O’Toole wrote about the harmful impact of socialized systems back in 2018.

Public ownership of transit has significantly increased the cost of transit, creating another disadvantage for the transit industry relative to other modes of travel. Before 1964, transit systems in most American cities were private and profitable, albeit declining. In 1964, Congress gave cities and states incentives to take over transit systems, and within a decade nearly all had been municipalized …followed by a staggering decline in transit productivity. In the decade before 1964, transit systems carried an average of about 59,000 riders per operating employee. This plunged after 1964 and today averages fewer than 27,000 riders per employee… It is doubtful that any American industry has suffered a 54 percent decline in worker productivity over 30 years unless it was another industry taken over by the government and inflicted with all the inefficiencies associated with government control and management.

We’ll close with this chart from O’Toole’s study, which shows total taxpayer subsidies over time.

The bottom line is that government transit systems are a lot like government schools. More and more money gets spent over time with worse and worse results.

Except maybe mass transit is even worse because of absurd cost overruns.

P.S. Click here and here to learn more about the boondoggle of government-funded rail.

P.P.S. Click here to learn more about the boondoggle of government-funded subways.

Read Full Post »

The Boondoggle of Long-Distance Passenger Rail

Infrastructure often is a good thing. Government-financed infrastructure is a questionable thing. Infrastructure financed by Uncle Sam is a bad thing. Those three rules guide my thinking and make for a perfect introduction to this must-watch video from Reason on high-speed rail.

The core message from the video is that Californian’s disastrous experience with high-speed rail should be a warning for the entire nation.

Simply stated, the government is incapable of doing infrastructure without jaw-dropping cost overruns.

But even if – by some impossible miracle – the government spent the money wisely and efficiently, long-distance rail doesn’t make sense.

Why? Well, if I do a tweet-of-the-year contest for 2021, this entry from Rory Cooper would be an early favorite to win the prize.

Instead of expanding the federal government role, it’s time to end Washington’s involvement.

That means shutting down the entire Department of Transportation.

But let’s focus specifically on Amtrak. Chris Edwards wrote wisely on the topic for the Foundation for Economic Education.

The federal government does a lot of things poorly… After the government helped ruin private passenger rail in the post-WWII years, it took over the remaining passenger rail routes in the 1970s under the Amtrak brand. Amtrak was supposed to become self-supporting, but it has consumed tens of billions of taxpayer dollars over the years. …Amtrak operates 44 routes on 21,000 miles of track in 46 states. Amtrak owns the trains, but freight rail companies own nearly all the track. A Pew analysis found that Amtrak loses money on 41 of its 44 routes… The few routes that earn positive returns are in the Northeast, and the biggest money losers are the long-distance routes. …the best fit for the future would be a privatized Amtrak. Privatization would allow for innovation and cost-cutting to improve service and make rail more financially viable. A private rail company (or companies) could…end harmful union rules. It would be able to close the routes that are losing the most money and shift resources to the core routes to improve service quality.  Congress should get out of the passenger rail business and give rail the private-sector flexibility it needs to better compete against other transportation modes.

Amen. If inter-city rail travel makes sense, it can and will attract funding from the private sector.

Sadly, President Biden wants to move in the opposite direction. His so-called infrastructure plan makes taxpayers foot the bill.

The White House wants $80 billion for rail, though it’s unclear how much money would be allocated specifically to Amtrak compared to other rail projects.

What is clear, by contrast, is that the money will be wasted and America’s economy will be harmed.

P.S. Biden’s “stimulus” boondoggle included a bailout for mass transit, but no funds for intercity rail travel.

P.P.S. If you’re transportation wonk, here’s a very informative 45-minute video on rail and highway transportation.

Read Full Post »

Trump Endorses Obama-Style Budget Blowout for Infrastructure

Back in April, I observed that, “If you would have loudly condemned a policy under Obama but support a similar policy under Trump, you’re the problem.”

We now have a good test case.

The President already has demonstrated – repeatedly – that he likes to spend other people’s money.

But now he’s unleashing his inner Obama, having reached a tentative deal with Chuck Schumer and Nancy Pelosi for a $2 trillion infrastructure blowout.

Notwithstanding the GOP’s supposed belief in the Constitution and limits on the role of the federal government, there are plenty of Republicans on Capitol Hill (especially on the committees that will get to direct this money to various campaign contributors) who will gladly join this spending orgy.

The relevant question, though, is whether there are some good GOPers to stop this boondoggle.

The Washington Post reports that there are some holdouts.

A $2 trillion infrastructure deal outlined this week by President Trump and top Democrats is already losing momentum, as the president’s own chief of staff is telling people inside and outside the administration that the effort is too expensive… Democratic leaders in Congress…said they were pleasantly surprised by the president’s willingness to back a large-scale spending effort. …But the initiative has run into immediate opposition from Republicans who balk at the hefty price tag and from conservative allies who are pushing lawmakers to block it. …Earlier in the administration, Trump praised Sen. Elizabeth Warren (D-Mass.) — a potential 2020 foe — for her ideas because, in his view, she was determined to spend more than Republicans. He would tell aides to get a list of projects and “let’s just spend it,” in the words of one former administration official. …Trump always wanted to spend more. …raising fuel tax rates by 35 cents and pegging them to rise with inflation would generate only about a quarter of the necessary revenue over 10 years. …Getting the remaining $1.5 trillion would involve much more significant tax increases… But even fully reversing the corporate income tax cut, which dropped the rate from 35 percent to 21 percent, would not close the gap

One obvious takeaway from this article is that taxes eventually will increase if Republicans don’t get serious about spending restraint.

Indeed, I’ve already warned that Trump’s profligacy is making tax increases more likely.

And another takeaway is that a blank-check approach would violate my rules for sensible infrastructure policy.

The editors at National Review share my concern about the plan for a bipartisan budget-busting package.

Some time ago, President Trump’s team produced a $1.5 trillion infrastructure plan, which was really a $200 billion infrastructure plan with some wishful thinking attached. …now the president has joined forced with Nancy Pelosi and Chuck Schumer on something new: a $2 trillion infrastructure plan, which also is composed mainly of wishful thinking. …What could possibly go wrong? You can tell this is backward by the fact that the triumvirate has settled on a price tag — an incomprehensibly large one — but is remarkably fuzzy on what’s to be bought with that $2 trillion. …We have been here before, with Barack Obama and his “shovel-ready” projects. The lesson of Obama’s failed stimulus bill — which was in considerable part an infrastructure program — is that doing things backwards does not work. …figuring out how to pay for this is at the bottom of the current agenda. …This is not a sane way to proceed. …The infrastructure scheme deserves to die an early and unlamented legislative death.

It should just “die an early an unlamented legislative death.” It never should have been born in the first place.

I’m not surprised that Trump is supporting a pork-filled budget plan for infrastructure. As I warned back before the 2016 election, he’s a big-government Republican.

What’s not clear, though, is how many GOP lawmakers will support his Greek-style approach to the transportation budget.

Suffice to say that I’m worried. It seems that many Republicans are Bushies rather than Reaganites.

I’ve updated a previous set of images to highlight the problem.

P.S. The correct infrastructure policy for Washington is to have no infrastructure policy. That’s because transportation should be handled by state and local government. Or, even better, the private sector. In my fantasy world, we’d shut down the Department of Transportation and repeal the federal gas tax.

Read Full Post »

To Improve Transportation, More Private Sector or More Federal Involvement?

There are some remarkable stories of the private sector showing initiative when governments fail to maintain infrastructure.

• In response to dithering by government, residents and businesses in Hawaii put up $4 million to fix an important community road.
• Smugglers in Russia repaired a road to facilitate untaxed trade between Russian and Belarus.
• I also wrote about a guy in England who was fed up with the slow pace of road repairs and built a private toll road.

Regarding the final example, here’s a video on his project.

I’m particularly amused that this example of practical libertarianism (I’m guessing without the cost overruns that are inevitable with government) was made possible because zoning laws (normally an obstacle to sensible land use) basically allowed the organizer to ask for forgiveness afterward rather than permission beforehand.

To be sure, these isolated examples are hardly a sign that infrastructure is going to be privatized in the United States.

But maybe we can at least learn a lesson on whether we should have more centralization and control from Washington, versus more decentralization and private-sector involvement.

Regarding the former, Chris Edwards explained for FEE that the federal gas tax should not be increased since politicians impose taxes for the ostensible purpose of building and maintaining roads, but then they divert the money to other programs that buy more votes.

…a federal gas tax increase makes no sense. State governments own America’s highways, and they are free to raise their own gas taxes whenever they want. Indeed, 19 states have raised their gas taxes just since 2015, showing the states are entirely capable of raising funds for their own transportation needs. …Also consider that gas taxes used to be a more pure user charge for highways, but these days gas tax money is diverted to inefficient nonhighway uses such as transit. …About 20 percent of those funds (about $8 billion) are diverted to transit and other nonhighway uses. …In 2016, state governments raised $44 billion from fuel taxes, and they diverted 24 percent—14 percent to transit and 10 percent to other activities. …The states also raised $38 billion from vehicle fees. They diverted 34 percent of those funds—13 percent to transit and 21 percent to other activities.

Regarding the latter, the City Manager of Milford, Delaware, wrote a column for the Washington Post about benefiting from private financing for road repairs.

…when I heard that a Domino’s marketing campaign was paying municipalities to repair potholes in return for credit for the work, I quickly responded. …Our role was easy. In exchange for a $5,000 check, Domino’s wanted its logo and a tag­line saying “Oh yes we did” in spray chalk on the road next to each repair. …In two weeks, they fixed more than 40 potholes of different sizes — about 20 to 25 percent of the potholes that appeared after the winter. …The program has elicited some complaints about what it means that a pizza chain is funding basic government projects. …But we saw this as a great idea for our community. …In many communities, there’s a constant competition between paying for police and paying for everything else. …if we demonstrate good stewardship of our resources, then hopefully fewer people will complain about paying taxes. …sometimes that means letting Domino’s pick up the tab.

Incidentally, sometimes “anarchists” decide to fix potholes without even waiting for permission.

Let’s close with some libertarian-themed humor.

Some people apparently thing that roads wouldn’t exist in the absence of government. This is an anti-empirical sentiment since many of the first main arteries in America were private roads. And we still have private highways being built today.

Not to mention plenty of neighborhood developments and office parks (or even stairs) that are examples of privately financed and privately maintained infrastructure.

Yet there are still doubters, so this sarcastic image is for them.

Speaking of sarcasm, this next image is a clever combination of two concepts.

First, politicians have an insatiable appetite to tax us over and over again.

Second, they don’t fulfill the responsibilities that they claim only government can handle.

The bottom line is that Washington should have no role in infrastructure. And even if you think infrastructure should be handled by state and local government, that definitely does not (or should not) imply a large public sector.

P.S. Here’s some more libertarian-themed infrastructure humor.

P.P.S. To be balanced, libertarians can be mocked because of our disdain for public goods.

Read Full Post »