April 22, 2015 11:54 AM
Back in 2012, I warned that California’s bill (now law) that would explicitly recognize the legality of automated vehicles and order state regulators to develop a detailed safety framework would tie the hands of innovators. In those days, Google was the chief proponent of such legislation, with California Gov. Jerry Brown signing the bill into law (sponsored by now-Secretary of State Alex Padilla) at Google’s headquarters, with Google co-founder Sergey Brin looking on.
That 2012 law spawned a series of chaotic regulatory actions at the California Department of Motor Vehicles, which has still failed to implement the required licensing and operations regulations and which also imposed regulations that forced Google to dial back its efforts to produce and test a fully automated vehicle on public roads. Ironically, these now-forbidden operations were likely completely legal before California enacted its autonomous vehicle law in 2012.
Fortunately, Google appears to have learned from its mistakes and is now opposing a similar piece of legislation in Texas. The technology giant isn’t explaining its about-face in the Longhorn State, but the automakers’ chief lobby, the Alliance of Automobile Manufacturers, was more candid:
The Alliance of Automobile Manufacturers, which represents 12 automobile manufacturers including General Motors and Ford, was more forthcoming. Spokesman Dan Gage said the group was concerned that the bill might create state-specific standards related to safety or manufacturing that could tap the brakes on the development of the technology.
“We don’t feel that legislation in this area in Texas right now is necessary,” Gage said. “The concern is by putting pen to paper you actually could prematurely limit some of those types of developments.”
Gage said many of his group’s members are testing autonomous vehicle technology, but he could not say whether any are doing so on Texas roads or highways. Such testing would likely be legal here, as Texas law does not address self-driving vehicles, according to state officials. Google drove its self-driving car on Texas roads during a trip to Austin to promote the technology in 2013.
April 9, 2015 2:46 PM
A new study from the University of Florida asserts that because Illinois instituted an alcohol tax increase in 2009 and the rate of alcohol-related traffic fatalities have declined 26 percent since 2009, the tax must certainly be responsible for the decline in deaths. Of course, news outlets have begun touting the study as evidence that increasing taxes results in fewer deaths. Are they right?
A team of UF Health researchers discovered that fatal alcohol-related car crashes in Illinois declined 26 percent after a 2009 increase in alcohol tax. The decrease was even more marked for young people, at 37 percent.
So, was it the alcohol tax increase that led to the state’s declining alcohol related traffic deaths? To answer that question, one need only examine the rate before and after the tax increase went into effect and compare it to the rest of the United States. Looking at these numbers (provided by DISCUS), it becomes clear that the rate of alcohol related traffic fatalities was declining faster in the year before the tax increase went into effect. Furthermore, since the state jacked up the alcohol taxes, Illinois has experienced a slower decline than the rest of the nation.
Repeat after me: correlation does not equal causation. The study’s authors claim that since the 2009 tax increase went into effect, Illinois saw a 26 percent reduction in traffic fatalities. That certainly is an impressive decline. But just because two things correlate, doesn’t mean that there is a causal relationship. For example, just because the divorce rate in Maine correlates almost one-to-one with the rate of margarine consumption in the U.S., it doesn’t mean one caused the other.
Furthermore, the whole nation saw a decline in alcohol-related traffic deaths between 2001 and 2011.
March 30, 2015 12:11 PM
Today, Secretary of Transportation Anthony Foxx unveiled the administration’s latest surface transportation reauthorization proposal. Like the previous White House bill, the latest iteration of the GROW AMERICA Act is unlikely to go anywhere on Capitol Hill. The president’s proposal to fund much of his increased infrastructure spending relies largely on a one-shot tax repatriation scheme, something that will do nothing to improve the long-run fiscal position of the Highway Trust Fund. In addition, the White House proposal would make the very wasteful TIGER discretionary grant program permanent. See this post for more on what good and bad surface transportation policy looks like.
But the administration’s GROW AMERICA 2.0 proposal isn’t all bad. In fact, it contains two very smart elements that Congress should attach to their own reauthorization package.
First, the administration proposal would repeal the current prohibition on states tolling their own Interstate segments, codified at 23 U.S.C. § 129, while also repealing the three-slot Interstate System Reconstruction and Rehabilitation Pilot Program, which was established by the Transportation Equity Act for the 21st Century of 1998 and has failed to promote Interstate reconstruction through tolling. Contrary to popular belief, the states, not the federal government, own and operate the Interstate Highway System. Currently, the only tolled segments of the Interstate system were grandfathered in by the Federal-Aid Highway Act of 1956. No federal-aid funds can be used to maintain these roads, which constitute a little over 6 percent of the Interstate Highway System. Tolling offers a number of advantages over fuel tax or non-user funding. Reason Foundation’s Bob Poole has developed a plan to reconstruct and modernize the Interstate Highway System through the use of all-electronic highway tolling, something policy makers should consider as an alternative to gas tax increases and Highway Trust Fund bailouts.
Second, the current cap on tax-exempt private activity bonds, which bring financing parity to infrastructure development by allowing the private sector to take advantage of similar debt instruments as the public sector, would be raised from $15 billion to $19 billion (see 26 U.S.C. § 142(m)(2)(A)). Ideally, this cap would be repealed, but increasing it is at least a step in the right direction.
To be sure, there is little in the latest GROW AMERICA Act for free marketeers to love. But Congress would be wise to take seriously the administration’s recommendations on Interstate tolling and private activity bonds.
For more on federal surface transportation reauthorization, see CEI's agenda for Congress, Free to Prosper.
March 9, 2015 3:37 PM
A lot of misinformation and scaremongering swells around transportation infrastructure policy in Washington. We are told our highway network is on the verge of collapse (false), that the federal role is the most critical component of government transportation infrastructure funding (false), and that things will only get worse unless we submit to massive federal gas tax increases (false). To be sure, there are many transportation projects that should be completed over the next two decades. But the “crisis” is politically manufactured. The infrastructure lobby does no one any favors by overstating the problem and supporting reckless and inefficient tax-and-spend policies.
The “Crisis” in Context: Blame Mass Transit?
Let’s start with the problem. As of January, the Congressional Budget Office (CBO) is projecting a 10-year $168 billion shortfall in the federal Highway Trust Fund (HTF). By 2025, CBO is projecting that the outlays from the HTF’s Highway Account will exceed revenues and interest by $16 billion (47 percent), with outlays from the HTF’s Mass Transit Account exceeding revenues and interest by $6 billion (150 percent). The HTF’s Mass Transit Account is in much worse shape over the long-run. It is also important to note that virtually every penny of the HTF’s Mass Transit Account is diverted revenue collected from drivers—2.86 cents of the 18.4-cents-per-gallon federal gasoline excise tax and 24.4-cent federal diesel excise tax is dedicated to the Mass Transit Account.
Why is there a Mass Transit Account in the Highway Trust Fund? Because President Reagan made a foolish decision in 1982 to dedicate 1 cent of the federal fuel excise taxes to mass transit, as urban liberals would have otherwise refused his gas tax increase for Interstate projects on equity grounds (fuel taxes can be quite regressive). So, this misguided horse trade from The Gipper is why nearly 20 percent of all federal surface transportation funds are now directed to mass transit, a mode that accounts for less than 5 percent of commuting trips. But it gets worse. Less than 2 percent of total trips, both commuting and non-commuting, are completed by mass transit in the United States. When we consider expenditures from all levels of government—federal, state, and local—we observe that mass transit receives approximately 25 percent of the nearly $210 billion spent annually on surface transportation. That’s 25 percent of total funding for less than 2 percent of trips.
In most places in the U.S., transit is a white elephant mode backed by powerful environmentalists, developers, and unions that does nothing to mitigate traffic congestion, which was its primary stated purpose in the 1970s when the federal government first began making large capital grants for local transit systems. More troubling, the U.S. Department of Transportation currently estimates that America’s mass transit systems have an $86 billion deferred maintenance backlog and that transit agencies need to increase annual system preservation spending from $10 billion to $18 billion just to tread water. No one knows where this additional money will come from, yet politicians continue pushing disastrous transit system expansion plans.
If we were to redirect federal highway-user revenues that are currently automatically directed to mass transit from FY 2016-2025, CBO’s projected HTF revenue-outlay imbalance would be reduced from -$168 billion to -$77 billion over 10 years. Ending the major highway-dollar diversion to transit is unlikely to happen, but it is important to remember that political pandering to the transit lobby is responsible for more than half of CBO’s current projected HTF fiscal woes. But even without ending HTF diversions to mass transit, given the federal government’s small role relative to those of state and local governments, that projected $168 billon HTF shortfall would only account for about 8 percent of total surface transportation expenditures through FY 2025 assuming no increases in state and local spending. Some “crisis,” eh?
February 12, 2015 2:06 PM
Earlier this week, I appeared on a Cato Institute panel organized by Cato’s Matthew Feeney, author of a new report on for-hire vehicle safety issues. Video of the event, which also included Center for Economic and Policy Research’s Dean Baker, can be found here.
The panel was titled, “How Should Ridesharing Be Regulated?” Naturally, being a general skeptic of regulation, I titled my presentation, “Why Should Ridesharing Be Regulated?” I noted that modern municipal taxicab regulations were crafted by the then-powerful streetcar lobby in response to new competition from jitneys and buses that occurred around 1915. By 1922, the streetcar industry’s main trade association, the American Electric Railway Association, was already crowing about its rent-seeking successes:
In many instances, municipal action has solved the question, but the situation demands general power in regulatory bodies to prevent competition of jitneys and busses with essential street car service. In the meantime, regulatory bodies and the public realize that transportation by electric railways will always be necessary…
Yes, those “always necessary” streetcars soon disappeared from the streets of U.S. cities, but the streetcar lobby’s efforts resulted in an entrenched taxicab cartel that supported the same types of anti-competitive regulations. Most major U.S. cities adopted regulations that established operating caps and minimum fare requirements through the Great Depression. Until the late 1960s, these rules went unchallenged. The 1970s saw a wave of several dozen cities deregulate their taxicab markets. Unfortunately, a number of the experiments were flawed and resulted in a number of cities reversing course and reregulating their taxicab markets. (For more on the regulatory history of the taxicab industry and the related economic research, see Reason Foundation Vice President Dr. Adrian Moore’s excellent literature review here.)
Then Uber came. Cities are now facing great pressure to deregulate or at least accommodate Uber, Lyft, Sidecar, and similar services that directly compete with taxicabs. However, I worry that some of these efforts, particularly the accommodationist strategy favored by Uber, risks locking in business models and restricting future innovation—particularly with the looming rise of autonomous vehicles.
One thing that really gets my libertarian blood boiling is that “ridesharing” only becomes regulated when the driver turns a profit. Hitchhiking is legal and essentially unregulated in most U.S. states. Anonymous commuter carpools like D.C.’s slug-lines are entirely unregulated, although there are social etiquette “rules” that “slugs” are expected to respect. In fact, not only is charging your carpooling passengers for gas and even mileage depreciation legal and unregulated up until profitability, many government agencies actively encourage it. The bias against commerce runs deep in the U.S., despite our reputation as a highly individualist, pro-market nation—this just shows how horrible the anti-commerce biases are in other countries!
I discuss this and more on the panel. Watch the whole thing here.
February 4, 2015 1:32 PM
The President’s FY 2016 Budget
On Monday, the White House released its DOA FY 2016 budget. Like President Obama’s previous budgets, this one has no chance of going anywhere, with the latest iteration primarily lending itself to lame congressional Republican “Groundhog Day” jokes. The White House is expected to release its updated DOA highway bill, a “GROW AMERICA Act 2.0,” sometime in the coming weeks. Until then, we won’t know in detail the policies the White House hopes to see on surface transportation.
However, we know it will take the form of a six-year, $478 billion reauthorization that will rely on a $238 billion bailout of the Highway Trust Fund to be funded by a tax on foreign corporate earnings. The White House plan would also make the TIGER grant program permanent, “dramatically” (their word) increase transit spending, and attempt to turn the Highway Trust Fund into a general transportation slush fund in order to boost politically correct spending on high-cost/low-value passenger rail projects.
But there appears to be some good in there too. To the president’s credit, he is a strong supporter of private infrastructure investment and plans to expand the role of Private Activity Bonds (PABs). As he mentioned in his State of the Union address, President Obama wants to create a Qualified Public Infrastructure Bond (QPIB) program to support more public-private partnerships in airports, transit, solid waste disposal, sewer and water, and other types of surface transportation that aren’t currently permitted under the existing PAB framework.
While not mentioned, we hope President Obama’s GROW AMERICA Act 2.0 also includes a provision that would end the current federal prohibition on states tolling their Interstate segments for reconstruction purposes. Last year’s GROW AMERICA Act included such a provision. This is something Congress should seriously consider as they scramble to come up with new irresponsible strategies for bailing out the ailing Highway Trust Fund. Instead of a federal highway handout, they should give the states a hand up by empowering them to fund and finance more of their own infrastructure.
January 29, 2015 12:13 PM
It was just announced that Sens. Rand Paul (R-Ky.) and Barbara Boxer (D-Calif.) would introduce the Invest in Transportation Act of 2015. The bill aims to offer an incentive to U.S. companies that are currently keeping $2 trillion in foreign earnings overseas to return some of these earnings. The repatriated earnings would then be subject to a favorable tax rate of 6.5 percent. While tax repatriation may be a good idea, it has nothing to do with infrastructure. Any tax revenue collected on returned overseas earnings should flow into the general treasury, not used to bail out the Highway Trust Fund.
This huge violation of the user-pays/user-benefits principle is surprising given Sen. Paul's reputation as a libertarian-leaning fiscal conservative. The user-pays principle is the bedrock of sound transportation policy, as it offers a number of advantages over general revenue finding, including:
- Fairness: Highway users benefit from the improvements their user fees generate.
- Proportionality: Users who drive more pay more. Users who impose disproportionate costs, such as heavy trucks, are charged more.
- Funding Predictability: Highway use and therefore highway user revenues do not fluctuate wildly in the short-run.
- Signaling Investment: Revenue roughly tracks use, which provides policy makers with an important signal as to how much infrastructure investment is needed to maintain a desired level of efficiency.
Sen. Paul joins a list of Republicans such as Sen. Roy Blunt (R-Mo.) who have endorsed similar unprincipled repatriation-based infrastructure funding in the past. Unfortunately, Sens. Paul and Blunt have good company in the current Congress. As it stands, the GOP's "conservative" solutions to Highway Trust Fund insolvency include raising the federal gas tax, a tax repatriation bailout, and creating a dangerous new non-user "drilling for roads" revenue stream. There is not even discussion of reducing outlays from the Highway Trust Fund to meet projected revenues. In fact, the last time the Republican-controlled House of Representatives was able to vote on a non-binding motion to instruct that simply stated Congress would not spend more surface transportation money than it was projected to collect in user taxes, it received just 82 votes. No, every serious proposal from congressional Republicans involves bailouts, bailouts, and more bailouts.
Meanwhile, President Obama has endorsed expanded highway tolling and leveling the financing playing field for public-private partnerships, two important measures long supported by free-market conservatives and libertarians. Will Congress's self-described fiscal conservatives embrace markets, spending restraint, and federalism, or will they support road socialist policies that move them to the left of the Obama White House?
January 26, 2015 9:39 AM
The Niskanen Center is a new libertarian think tank that we at CEI look forward to working with on a number of issues. However, one where we are unlikely to agree is on the virtues of a real-world tax on carbon emissions. Sarah E. Hunt had a post last week over at the Niskanen Center's Climate Unplugged blog arguing that Senate EPW chairman Jim Inhofe's recent defense of the federal gas tax as an infrastructure user tax is at odds with his antipathy to a carbon tax.
Now, I have criticized Sen. Inhofe's blindspot on infrastructure spending in the past, as he has long admitted he is "a big spender in two areas: national defense and infrastructure." But is Sen. Inhofe's position on the federal excise taxes on motor fuels really contradictory? Under closer examination, the answer is no.
Sen. Inhofe supports fuel taxes in the way they have been used since 1956, when Congress greatly expanded the federal-aid highway programs to construct the Interstate Highway System. Built upon the user-pays/user-benefits and pay-as-you-go principles, Congress directed the proceeds from highway user taxes into the Highway Trust Fund, which was intentionally designed to bypass the general treasury and annual appropriations battles. Multi-year highway (and later transit) program reauthorization legislation then specified outlays to various formula-based disbursement programs that flow to state departments of transportation, with Congress setting total outlays to approximate projected revenues over that period.
Of the four major fuel tax increases since the modern federal-aid system was established, two were solely infrastructure revenue-raisers, one was half user-tax and half deficit reduction, and one, the last increase in 1993 that brought the current rate up to 18.4 cents per gallon of gasoline, was intended solely for deficit reduction. That 4.3-cent increase from 1993 aimed at deficit reduction was redirected to the Highway Trust Fund in 1997. This is where the federal gas tax rate sits today.
Note that promoting environmental benefits appears nowhere above. Regardless of your position on federal fuel taxes, they have never been used for any purpose other than dedicated infrastructure funding and, very occasionally and temporarily, deficit reduction.* In recent years, the traditional federal-aid system has started to break down, with Congress refusing to either reduce outlays to meet projected revenues or increase the fuel tax rates. Instead, Congress has bailed out the Highway Trust Fund with over $50 billion in general funds over the past decade, moving the U.S. in a road socialist direction.
January 15, 2015 11:54 AM
In recent days, a growing number of congressional Republicans have signaled a willingness to increase the federal excise tax rates on gasoline and diesel. As I noted earlier, there is no fiscal conservative case for raising the federal gas tax. Thankfully, the editorial board of The Wall Street Journal this morning decided to inject a much needed dose of fiscal conservatism into the debate, calling for an abolition of federal highway taxes and spending programs:
Some highways do need repair and modernization, and the U.S. does need more roads to relieve congestion and encourage trade and economic activity. The real crisis isn’t the amount of money but how it is spent.
The 47,714 miles of the interstate highway network would likely be less complete absent federal support, but the system was officially finished in 1992. It is less rational for drivers nationwide to send so many dollars to Washington for Congress to apportion among winners and losers as they did under Eisenhower. Today, the costs of transportation can be reasonably borne by the people who enjoy the benefits, which will generate more accountability and fewer political boondoggles.
Almost three-quarters of highway spending is already supplied by state and local governments, and if the federal role is reduced, they can decide either to increase their own gas taxes; fund roads some other way, such as tolls or public-private partnerships; or use tax dollars for other priorities like schools. States can build cheaper in any case, since the Davis-Bacon prevailing wage rules and Buy America procurement provisions that accompany federal funding don’t apply.
Democrats always want to raise the gas tax. When prices are high, that’s the best time to encourage drivers to buy an electric car or take the bus. When prices are low, they can skim some of the proceeds for other spending. The mystery is why Republicans would go along.
I'm not sure about that last line about Democrats. While some Democrats, along with senior congressional Republicans, have called for increasing federal highway user taxes, this position puts them to the left of the Obama White House, which has stuck to its guns and continues to oppose raising the highly unpopular gas tax. Among some bad policy recommendations, the Obama administration has actually endorsed a very sensible, fiscally conservative proposal that would lift the current federal prohibition on states tolling their own Interstate Highway System segments. This is something we at CEI have advocated for years and have again included it in our forthcoming Agenda for Congress.
Automated Vehicles Update: Big Feature at CES, California Rules Delayed, Georgia Cautious on RegulationJanuary 9, 2015 12:16 PM
It’s been a few months since I last checked in on automated vehicles (AVs), commonly called driverless cars or autonomous vehicles. Below are some developments of note.
- California misses operations and licensing rule deadline. When the California legislature passed its AV bill in 2012, it ordered that the state Department of Motor Vehicles fully implement it by the end of 2014. While the final rules on testing came into effect in September 2014, the agency announced in late December it would not meet the January 1 deadline to implement its AV operations and licensing rules. AV policy observers have been watching the California rollout closely, given that California is the largest state and a first mover, which means other states are likely to follow its lead. Unfortunately, California’s AV statute is proving burdensome for robocar innovators. As written, it requires that a licensed driver be in the driver seat with the ability to retake manual control at any point following a transition period. Some developers are seeking full automation, where there is no ability for drivers to take manual control. To meet the new California testing regulations, Google was recently forced to add a steering wheel to its latest prototype.
- CES showcases vehicle automation. The annual Consumer Electronics Show just wrapped up in Las Vegas. Ford CEO Mark Fields delivered a keynote address discussing his company’s push toward vehicle automation, among other topics. Fields predicted the first generation of automated vehicles will be on the road within five years. My colleague Wayne Crews, who attended CES, worries that some of the AV policy discussions seem to be trending towards public utility–style common carrier regulation, under the unsupported assumption that AVs will be exclusively or even largely fleet vehicles, at least in the current way we tend to think about fleet vehicles. This would be a huge mistake. Brad Templeton, one of the most interesting thinkers on vehicle automation, also attended CES and offers his thoughts on the AVs showcased here, here, and here. Anyone interested in AVs should be sure to follow Brad’s blog for regular updates.