The Highway Bill and Sen. Jeff Bingaman’s Anti-P3 Propaganda

I’ve written extensively about federal surface transportation reauthorization, which is currently pending in conference. CEI, along with The Independent Institute and Reason Foundation, will be holding a Capitol Hill briefing tomorrow at noon titled, “Reforming Federal Surface Transportation Policy: Problems, Solutions, And A New Path Forward.”

The Highway Trust Fund is facing imminent insolvency. This is the result of keeping federal fuel excise tax rates at the same level since 1993. Since then, inflation has eroded about one-third of those dollars’ buying power. Rather than attempt to fix this very serious problem, the Senate’s Moving Ahead for Progress in the 21st Century Act (MAP-21) merely kicks the can down the road. We find this unacceptable.

In addition, MAP-21 — which is more accurately described as a 15-month extension relying on 10 years of revenue — contains some very undesirable provisions. It mandates the installation of electronic onboard recorders for commercial motor vehicles, something the independent trucking industry expects will cost $2 billion. Now is certainly not the time to saddle our nation’s small businessmen with additional, unnecessary regulatory burdens.

Non-germane policy changes include the RESTORE Act, which includes a seven-year reauthorization of the Department of Interior’s Land and Water Conservation Fund (Sec. 1701) — a land-grab tool used by environmentalists. In total, MAP-21 contains $6.8 billion in new non-highway program spending.

It also contains a particularly loathsome amendment offered by Senator Jeff Bingaman that attacks the public-private partnership (P3) model. Even some self-described fiscal conservatives are siding with Bingaman, relying on farcical misinformation that argues that P3s somehow constitute double-taxation. Nothing could be further from the truth. In reality, these P3s are friendly to taxpayers in that they reduce public costs and the risk associated with construction (cost overruns) and financing — while bolstering state treasuries in the short-run. If you have not read it already, I highly recommend Indiana Gov. Mitch Daniels’ excellent rebuttal to Sen. Bingaman’s falsehoods and distortions in The Washington Post.

One of the main advantages of P3s is that it allows the private partners to shed costly Big Labor project labor agreements and prevailing wage standards that routinely increase the cost of construction by over 10 percent. This is why the most consistent enemy of private sector provision of highway facilities is the labor movement, particularly those unions that represent overpaid government workers. Fiscal conservatives who have been duped by Bingaman and Company need to recognize that rather than benefiting taxpayers, restricting the deployment of P3s will benefit only one major constituency: Big Labor.

We have reached a point where burying our heads in the sand is no longer a viable option.

Much of the Interstate system is nearly 50 years old, which means in the near future that these segments will need to be completely reconstructed from the roadbed up. So the question is not if we reconstruct the system; rather, it is who pays for this construction.

The politics of transportation — at least on the federal level — are broken. We need new solutions that preserve the user-pays/user-benefits principle while harnessing new technologies and approaches to facilities construction, management, and financing. We simply cannot continue with the status quo.