A Highway Bill Everyone Can Hate
House Speaker John Boehner recently noted, "In the past, highways bills represented what was wrong with Washington: earmarks, endless layers of bureaucracy, wasted tax dollars and misplaced priorities."
He is correct that past highway bills have epitomized Washington's corrupt, unserious and inept standard operating procedure. Unfortunately, that same characterization also applies to the current highway bill now moving its way through the House.
The American Energy and Infrastructure Jobs Act has the distinction of being the first highway bill to be hated by almost everybody. Fiscal conservatives, progressives, budget hawks, transit advocates and environmental activists have all called for its defeat.
The bill does have some positive elements. It would halt the harmful decades-long practice of diverting up to 20 percent of federal fuel tax revenue to mass transit, effectively ending the driver-to-transit-rider transfer. While transit may be important to urban residents and commuters in a handful of large cities, it has nothing to do with a national transportation program, which should presumably focus on promoting interstate commerce.
More than one-third of all transit trips in the United States take place in the greater New York City area. Only about 5 percent of Americans use mass transit to get to work, a figure that has remained flat for decades. More than 85 percent of Americans commute to work by car. And trillions of dollars' worth of freight are delivered annually by trucks on our roads.
President Obama has sought more federal urban transit spending. Such an increase would disproportionately benefit a small percentage of the country that also happens to be its wealthiest -- largely paid for by America's drivers. The House bill's transit funding reform is a welcome response to the Obama administration's anti-automobile, pro-urban transit policies.
In addition, this reauthorization bill is the first to include an energy provision that would open up oil and gas production on federal lands and in offshore areas. Noble as this goal may be, it should not be linked with transportation. By this expanded drilling, the bill creates a new revenue stream for the Highway Trust Fund from oil and gas lease royalties.
This mechanism -- dubbed "drilling for roads" by critics -- would undermine the longstanding highway funding principle that drivers should pay for the roads they use. The Highway Trust Fund was created with this in mind, and is primarily funded by federal fuel excise taxes. With each highway bill reauthorization, Congress estimates future tax receipts and then sets the funding level.
In recent years, however, revenues have been failing to cover federal expenditures, which has led Congress to bail out the Highway Trust Fund instead of cutting spending or raising revenue. And as drilling royalties are typically directed into the general fund, the House bill's funding scheme amounts to a bailout.
The user-pays principle helps restrain spending and keep investment mismanagement in check. Ending it would compound the serious problems the U.S. transportation system already faces.
It is clear that our existing transportation infrastructure is in trouble. Much of the Interstate Highway System is nearing the end of its intended life cycle and will need to be completely reconstructed. Revenue from highway users has plateaued while construction costs have greatly increased. Road congestion now costs the U.S. economy over $100 billion annually.
Solving these problems should start with winding down the federal government's funding role in surface transportation. The status quo, says Harvard economist Edward Glaeser, is responsible for "more largesse and little check on spending efficiency."
If state, regional, and municipal authorities are made responsible for funding their own infrastructure, they will have an incentive to innovate and take advantage of the tools they need to do so. These include replacing fuel taxes with electronic tolling, implementing congestion pricing, and leveraging private financing through public-private partnerships. Current federal policy either explicitly prohibits or implicitly discourages wider adoption of these smart and innovative financing strategies.
The current House bill does nothing to address these problems. Contrary to the promises of House Republican leadership, this legislation would perpetuate the reckless, wasteful spending that has long characterized highway bill reauthorizations.