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Posts Tagged ‘Department of Transportation’

I’ve argued (repeatedly) that we should abolish the Department of Transportation and allow states to make decisions on how to fund and whether to fund transportation projects.

As an interim measure to control federal spending, involvement, and intervention, I’ve explained that Congress should do nothing to increase revenues into the highway trust fund.

Supporters of centralization disagree, arguing that there would be inadequate transportation funding if the federal government doesn’t have a large – and growing – role. Most of them want a higher gas tax to finance an expansion of federal transportation spending.

I’ve never thought this claim made sense. After all, how do you magically get more roads built by sending money in a leaky budget to Washington, only to then turn around and send those funds in a leaky budget back to the states? Seems to me like that’s nothing more than a unsavory recipe for an additional layer of bureaucracy and lobbying.

Well, we now have some very powerful evidence from a report in the Washington Post that states will act – at least once they conclude that “free” money from Uncle Sam won’t be as forthcoming.

While Congress remains stalled on a long-term plan for funding highways, state lawmakers and governors aren’t waiting around. Nearly one-third of the states have approved measures this year that could collectively raise billions of dollars through higher fuel taxes, vehicle fees and bonds to repair old bridges and roads and relieve traffic congestion, according to an analysis by The Associated Press. The surge of activity means at least half of the states — from coast to coast, in both Republican and Democratic areas — now have passed transportation funding measures since 2013. And the movement may not be done yet. …The widespread focus on transportation funding comes as state officials are becoming frustrated by federal inaction in helping to repair roads and bridges described as crumbling, aging and unsafe.

By the way, I have no idea if these states are making sensible decisions. Indeed, based on what was proposed (and rejected) in Michigan, I wouldn’t be surprised to learn that many of these initiative contain wasteful pork-barrel projects (just like when funded from DC). And my colleague Chris Edwards has poked holes in the assertion that we’re facing an infrastructure crisis.

But who cares? The beauty of federalism is that states are free to make their own decisions so long as they’re playing with their own money.

If they waste the money and make bad choices, at least the damage will be contained. And voters presumably have some ability to change the direction of policy if repeated mistakes are made.

To get a sense of how things would work at the state level with real federalism, here are some excerpts from a column in the Tampa Tribune by Karen Jaroch, a member of the Hillsborough Area Regional Transit agency.

…what if you could pay less at the pump? With passage of H.R. 2716 — the Transportation Empowerment Act — this could be possible. H.R. 2716 would devolve the responsibility for our surface transportation programs (including transit) to the states by incrementally decreasing the federal gas tax over five years from 18.3 cents to 3.7 cents per gallon. That reduction would empower the states to fund and manage it — not politicians and Washington bureaucrats. The bill was filed by Florida’s U.S. Rep. Ron DeSantis, R-Ponte Vedra Beach, and cosponsored by Rep. David Jolly, R-Indian Shores, with Sen. Marco Rubio co-sponsoring the bill’s twin in the Senate.

I can understand why Florida lawmakers are especially interested in decentralization.

As you can see from this map and table, the Sunshine State is one of many that lose out because of the redistribution inherent in a centralized scheme.

The real question if why politicians in California, Texas, and Ohio aren’t also pushing for federalism.

Though it’s important to underscore that this issue shouldn’t be determined based on which states get more money or less money. It’s really about getting better decisions when states raise and spend their own money.

Particularly when compared to a very inefficient Washington-centric system, as Ms. Jaroch explains.

Well-heeled lobbyists and those in Congress who would see their power base decline are in opposition. …The feds fund roughly 30 percent of Florida’s transportation infrastructure; however, the costly regulations, red tape and strings they tack on permeate the process almost universally. As a board member of the Hillsborough Area Regional Transit Authority (HART), I’ve witnessed the agency routinely shackled by federal handcuffs that are common when accepting federal funds. H.R. 2716 would wrest control from D.C. bureaucrats and politicians in 49 other states that have never commuted on our streets and roads and instead empower state and local agencies like HART that are better positioned to make these decisions. …A new state-led process would be controlled entirely by Floridians and would be absent the horse trading and infighting between 49 other states, two houses of Congress, a president of a different party and a myriad of federal agencies.

Last but not least, state and local governments will be far less likely to engage in boondoggle spending if they can’t shift some of the cost to Uncle Sam.

P.S. While decentralization is a good first step, the ideal end point is to have more private-sector involvement in transportation.

P.P.S. If you think the federal government’s involvement is bad now, you probably don’t even want to know about some of the ideas floating around Washington for further greedy and intrusive revenue grabs.

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Michael Strain of the American Enterprise Institute looks at the topic of infrastructure spending and I’m left with mixed feelings.

Some of what he writes is very good.

Yes, the claims of an “infrastructure crisis” by President Obama, many liberals…are exaggerated. …yes, existing laws and regulations turn infrastructure projects into boondoggles that take an order of magnitude longer to complete than necessary and cost more than they should.

Amen, particularly with regard to the absurd notion that America is suffering some sort of crisis. The International Institute for Management Development in Switzerland, publisher of the World Competitiveness Yearbook, puts the United States in first place when ranking nations on the quality of infrastructure.

Moreover, the just-released Global Competitiveness Report from the World Economic Forum puts the United States in 12th place for infrastructure, which also is a rather high score (if you want to know where the United States does lag, we’re in 73rd place for wastefulness of government spending, 82nd place for burden of government regulation, and 102nd place for the total tax rate on profits).

And I also agree with his second point about infrastructure programs being very vulnerable to waste (see here and here for jaw-dropping examples).

But I’m nervous that he nonetheless wants to a new program of infrastructure investment.

…conservatives should put that skepticism aside and proceed — as always, with apprehension and great prudence — with a program of infrastructure investment.

Though maybe this isn’t a bad idea. After all, he specifically says that the new government spending would be based on what generates a good rate of return.

We shouldn’t follow the left’s approach to infrastructure stimulus, calculating the number of jobs we’d like to create. …a conservative approach to infrastructure would begin with a question: What are some projects that we actually need to fund? We all know by now that “shovel ready” projects are rare. So we should take some time to actually figure out which projects offer the highest value to society.

Sounds like he’s wised up since he wrote in favor of Keynesian “stimulus” earlier this year.

Unfortunately, later in his most recent article, he does use failed Keynesian theory to justify his call for more infrastructure spending.

A multi-year program will help growth and employment over the next few years, when the economy will probably still need a boost.

But let’s set that aside. If there are sound economic reasons to build a road, I’m not going to be opposed simply because Keynesians support the spending for the wrong reason.

Indeed, I don’t even necessarily object that he entitled his article, “How the government can spend billions of dollars on a new policy and still win conservative support.”

My one real problem with Strain’s column is that he wants Washington to be involved. He specifically refers to:

…the federal government’s share of the money to pay for these infrastructure projects.

Sigh.

We should be eliminating the Department of Transportation, not giving it more money to waste. That’s the answer I give when some people want a higher federal gas tax to fund more transportation spending. And it’s the answer I give when others whine about a supposed deficit in the federal highway trust fund.

The answer is federalism, not more centralization.

Want some very timely evidence in support of my position? Here are some excerpts from a new Wall Street Journal report on how infrastructure programs are ridiculously wasteful.

The most expensive train station in the U.S. is taking shape at the site of the former World Trade Center…the terminal connecting New Jersey with downtown Manhattan has turned into a public-works embarrassment. …How could such a high-profile project fall eight years behind schedule and at least $2 billion over budget? An analysis of federal oversight reports viewed by The Wall Street Journal and interviews with current and former officials show a project sunk in a morass of politics and government. …When completed in 2015, the station is on track to cost between $3.7 and $4 billion, more than double its original budget of $1.7 billion to $2 billion. …“the station is a national symbol for government waste…,” Mr. LaVorgna said.

So why am I citing a boondoggle project in New York City when I want to disagree with Strain’s call for more federal spending?

Because thanks to existing federal handouts, I’m paying for a big chunk of it!

…the Federal Transit Administration…is funding $2.87 billion of the train station project.

And when Uncle Sam is paying part of the tab, state and local politicians are more than happy to squander money in hopes of memorializing themselves.

The terminal’s delays and cost overruns were “certainly unfortunate,” said Mr. Pataki, a driving force in the early years of the World Trade Center redevelopment. “But I think 50 years from now, people are going to say, ‘Wow, they did it the right way.'”

But let’s ignore headline-seeking and glory-hunting politicians. What we should care about it getting good value when the government spends our money.

My point is that we’re more likely to get acceptable results (not great results since I realize that waste isn’t limited to Washington) when state and local governments are raising and spending their own money.

When other people pick up the tab, by contrast, you get absurd examples of waste.

P.S. I also heartily recommend this National Review column on getting the federal government out of the infrastructure business.

P.P.S. And don’t forget that the private sector should play a bigger role in building and operating roads.

P.P.P.S. I’m in Mexico City, having just spoken to the Society of Trust and Estate Professionals on the latest developments in the campaign by high-tax nations to cripple tax competition.

They had a nice gala dinner last night, which was the favorite part of the trip for the Princess of the Levant.

photo1

Since I’m a policy dork, I was much more enthusiastic about rallying opposition to bad policies such as FATCA and a global network of tax police.

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I’m a big believer in federalism, both as a matter of policy and politics.

So you won’t be surprised that I’ve called for the abolition of the Department of Transportation. On more than one occasion.

But when you’re trying to convince politicians to give up power and money, it takes a lot repetition. So, to paraphrase what Ronald Reagan said to Jimmy Carter, here we go again.

I want to emphasize one part of the interview. I’m agnostic on the issue of whether America as a whole needs more infrastructure spending, but I’m sure some parts of the nation could use more roads.

But that doesn’t mean that Washington should be in charge of that spending.

My colleague at Cato, Chris Edwards, is an expert on these issues. Here’s what he recently wrote about the various schemes in DC to fund more transportation spending with higher taxes.

HTF spending on highways and urban transit adds up to $53 billion a year, while the HTF rakes in $39 billion in revenues, mainly from the federal gasoline tax. That leaves a gap of $14 billion. President Obama wants to fill the gap with corporate tax revenues, but that bad idea is dead on arrival in Congress. Senator Bob Corker (R., Tenn.) has a different idea. His bill, co-sponsored by Senator Chris Murphy (D., Conn.), would hike the federal gas tax by 12 cents per gallon. …Corker’s position is the opposite of conservative. If Tennessee needs more money for roads, it can raise its own gas tax any time it wants.

And here are some of the numbers that Chris put together showing that highway spending has been rising rather than falling.

Elizabeth Nolan Brown of Reason adds more context.

About 27 percent of highway and transit spending currently comes from the federal government, via the HTF, while states kicking in about 38 percent and 35 percent coming from municipalities. The HTF isn’t set to “run dry” in August, as many are reporting, but it did tell states to expect an average 28 percent reduction in aid at that point unless Congress acts. …there’s nothing stopping states from taking this matter into their own hands. Since 2013, seven states have raised fuel levies, reports Reuters… When left a little more to their own devices, it seems states get innovative. They develop localized solutions. They experiment.

Let’s close with one interesting piece of data. The International Institute for Management Development recently published its World Competitiveness Yearbook.

The good news is that the United States maintained its hold on first place. That’s a lot better than we’re doing in the Economic Freedom of the World rankings.

But what’s particularly relevant and fascinating is to see America’s scores in the various sub-components of the Yearbook. The United States may rank only 22 out of 60 nations for government effectiveness, but we beat every nation for infrastructure.

So if we have an “infrastructure crisis” in the United States, it certainly doesn’t show up in either the hard data or the business leader opinion survey that generate those rankings.

P.S. Back in 2011, I shared a couple of serious videos about bitcoin.

On a lighter note, here’s “bitcoin girl” encouraging more people to use this private money.

But since I don’t want anyone to accuse me of bias, fans of the Federal Reserve can enjoy this alleged film clip from Ben Bernanke’s childhood.

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More than three years ago, I wrote that the Department of Transportation should be dismantled for the simple reason that we’ll get better roads at lower cost with the federalist approach of returning responsibility to state and local governments.

I echoed those sentiments in this CNBC interview.

Since there’s only an opportunity to exchange soundbites in these interviews, let me elaborate on some of the reasons why transportation should be a state and local responsibility.

1. Washington involvement is a recipe for pork and corruption. Lawmakers in Congress – including Republicans – get on the Transportation Committees precisely because they can buy votes and raise campaign cash by diverting taxpayer money to friends and cronies.

mitchells-first-theorem-of-government2. Washington involvement in transportation is just the tip of the iceberg. As I said in the interview, the federal budget is mostly a scam where endless streams of money are shifted back and forth in leaky buckets. This scam is great for insiders and bad news for taxpayers.

3. Washington involvement necessarily means another layer of costly bureaucracy. And this is not a trivial issues since the Department of Transportation is infamous for overpaid bureaucrats.

4. Washington involvement gives state and local politicians an excuse to duck responsibility for low-quality infrastructure. Why make adult decisions, after all, when you can shift the blame to DC for not providing enough handouts.

While I think I made some decent points in the interview, I should have addressed the assertion that our infrastructure is falling apart. My colleague at the Cato Institute, Chris Edwards, effectively dealt with this scare tactic in his recent Congressional testimony.

I also should have pointed out that a big chunk of the gas tax is diverted to boondoggle mass transit projects.

Last but not least, I’m disappointed that I failed to connect some very important dots. Gov. Rendell and the CNBC host both fretted that the current system isn’t producing a desirable outcome, but they’re the ones advocating for a continuation of the status quo! Heck, they want even more of the system that they admit doesn’t work.

Sigh.

P.S. While I obviously want to get rid of the Department of Transportation, it’s not at the top of my list for the most wasteful and counterproductive federal bureaucracy.

P.P.S. On a completely separate topic, I can’t resist sharing this Ramirez cartoon.

And since we’re making fun of our Statist-in-Chief, here’s some satire about the award Obama received from Steven Spielberg.

The teleprompters are a nice touch, reminiscent of some very amusing jokes here, here, here, and here.

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As part of his latest “stimulus” scam, President Obama argues that the federal government should spend more money on infrastructure.

Yet there is widespread evidence that politicians use such projects to squander money – often in exchange for contributions from contractors and construction unions.

There’s a very unfortunate example of this phenomenon in my backyard. Fairfax County is part of a $7 billion (that’s not a misprint) project to extend the metro (subway) system to Dulles Airport.

The project is way over budget (which happens 99 percent of the time with government spending projects).

But what’s really remarkable is that supporters of the boondoggle now admit they lied to taxpayers.

What’s noteworthy isn’t the lie. Heck, they always lie and underestimate costs (and then pretend the subsequent cost-overruns were unpredictable and unforeseen).

But not many proponents actually ‘fess up and admit that taxpayers were intentionally deceived.

Here is some of what the DC Examiner said in an editorial denouncing the duplicity and mendacity of the project’s chief bureaucrat.

Metropolitan Washington Airports Authority Chairman Charles Snelling finally admitted that he deliberately misled the public when he stated it was “beyond dispute” that Dulles Rail was “on time and on budget.” Turns out it is neither — a fact Snelling and his fellow MWAA Board members knew all along, stripping the last pretenses of transparency and accountability from one of the largest infrastructure projects in the nation. Snelling later acknowledged that construction managers warned MWAA that the opening of Phase I would be delayed six months and that unexpected expenses were depleting the project’s contingency fund. …Snelling’s less-than-candid assurances were an attempt to deprive taxpayers of a true accounting of this runaway project before November’s county and state elections. But what do you expect when you sever the critical tie between voters and officials with the authority to spend public funds? Unaccountable political hacks like MWAA board members, who cannot be removed — even by the governor of Virginia — have no incentive to spend the people’s tax dollars wisely — or even to tell them the truth, for that matter.
 The answer, at least in part, is to do the opposite of what Obama is proposing. Abolish the Department of Transportation and get the federal government out of the business of funding local infrastructure.

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