A better way to fund roads
–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-
Just as motorists began the summer driving season, U.S. Department of Transportation Secretary Ray LaHood told Congress that the Highway Trust Fund will run out of money by August. Rising gasoline prices and the recession mean less driving, and less driving means lower revenues from gasoline taxes for the Highway Trust Fund.
At the same time, President Obama wants to spend $13 billion as a downpayment on high-speed rail, an expensive form of transportation that will reach only small segments of the country and that will not substitute for highways. The money would be better spent on developing a more stable source of revenue for highways, based on miles driven rather than gasoline used, that would help to reduce traffic congestion and greenhouse gas emissions.
When the Highway Trust Fund ran out of money in 2008, Congress transferred $8 billion to the fund from general revenues as a repayment from 1998, when the fund was in surplus, and $8 billion was moved into general spending. This year, if Congress transfers money, it would be a direct expenditure, with no fig leaf. Without a transfer, work on many projects would stop or slow down.
The federal government financed the interstate highway system by means of a fuel tax because that was the best method available. Legislation passed in 1956 provided that, on completion, the federal tax would be repealed and funding restored to the states. The highway system is now complete, so there is no rationale for continuing federal involvement in financing state roads.
The $13 billion allocated for high-speed rail would be better spent to encourage the states to adopt a new way of charging for road use. Driving is the primary method of transportation for Americans. They own about 235 million registered passenger cars, vans, pickup trucks and sport utility vehicles, and drive over 2.5 trillion miles a year.
Mechanisms for improving road finance were addressed earlier this year in a pathbreaking bipartisan report by the National Surface Transportation Infrastructure Financing Commission entitled Paying Our Way: A New Framework for Transportation Finance.
The only responsible choice in this situation is to start a shift that pulls us away from needing such a high Trust Fund for roads. If Americans drive more than any other country it isn’t likely because they all want to do so. If you could get to the same place equally fast (if not faster because of traffic) and save money doing it on your commutes to work… you would. But the sad fact is, that even in the best cities in America rail and other mass transit is a laughable alternative to driving a car. We have to start somewhere, so a rail system that doesn’t hit a lot of places just yet, I’m all for. When it grows, as long as it maintains good speeds and regular departures, you will see a shift away from the individual propulsion pods we call SUVs.