29.1.18

LIVING AT THE EXPENSE OF OTHERS.

Perhaps in the Speech from the Throne State of the Union message, Our President will clarify what he'd like to do about fixing the "crumbling" (read publicly-financed) roads, sewers, and airports.  Yes, I'm going to be specific about that distinction.  Railroads are also part of "infrastructure" and one reason they don't get mentioned is the propensity of investors, where the return on investment justifies, to build faster bridges and add tracks through rough places.

Our President might be toying with changing the way in which the federal government pays for internal improvements.  The Interstate Highway system, for instance, required the states to put up ten percent of the money for construction, while the other ninety percent went through Washington.  The states remained on the hook for policing and snow removal, as well as maintenance, and, not surprisingly, we ended up with potentially more mileage than the states could maintain, and, from time to time, new federal appropriations to make good on the repairs.  That's not the only way in which states get inefficiently much road capacity.

Propose, though, that the states take more ownership of their roads, and let the cries rise up to Heaven.
Instead of the grand, New Deal-style public works program that Trump's eye-popping price tag implies, Democratic lawmakers and mayors fear the plan would set up a vicious, zero-sum scramble for a relatively meager amount of federal cash — while forcing cities and states to scrounge up more of their own money, bringing a surge of privately financed toll roads, and shredding regulations in the name of building projects faster.
Considering the more recent record, starting with the Interstates and continuing through "urban renewal," perhaps trying something new, including more toll roads, and more local responsibility might not be such a bad thing.
The White House defends its approach as an overdue shift from decades of federal spending and control.

"The Washington establishment still thinks that infrastructure can only be built correctly if they make all the decisions and control the purse strings, but one look at the crumbling bridges and roads across America shows that approach has failed," deputy press secretary Lindsay Walters said in a statement. "Instead of sending taxpayer money to DC only to have it eventually trickle back down to communities along with a host of new restrictions and requirements, the President wants to allow communities to keep more of their funds and make their own decisions, and to simplify the federal bureaucratic maze.”
But sending the money to Washington and commingling it with other peoples' money prolongs the fiction that the stuff is cheaper, at least for the projects that get funded.
For most transit agencies, accustomed to a 50 percent federal share for most capital investment grants, reducing that to 20 percent is “a nonstarter,” transit consultant Jeff Boothe said. He said it could disrupt work in communities where voters approved ballot measures to raise money for projects.
Perhaps transit authorities will take steps to extend the life of their rolling stock rather than replace buses or cars more quickly, which is what capital grants do. We might also see fewer proposals for recreational streetcar projects. In Milwaukee, for instance, is it really a civic liability that until recently the city was the largest metropolitan area without one?

John Tierney is thinking along similar lines where misappropriation of public money is concerned.
The goal is to stimulate grass-roots creativity along with $1 trillion in spending, as Trump promised during his campaign, with most of the money coming from user fees and local tax dollars, not Washington.

This philosophical shift appalls many members of Congress, especially Democrats who want to go on showering federal largesse on their union supporters, but it’s the only practical way to pay for the necessary work. It’s also the only way to force localities to focus on cost-effective projects, instead of squandering other people’s money on boondoggles like the infamous “bridge to nowhere” in Alaska or the bullet train to nowhere in California.

Making local taxpayers and users pay for their bridges, roads, and transit systems may sound radical, but it was the standard approach during America’s rise as an industrial power in the nineteenth and early twentieth centuries. New York built the Brooklyn Bridge and the subway system on its own, mostly by relying on private companies. Why should it need help from Washington just to maintain them? Why should taxpayers in Texas subsidize the outrageously inflated costs of running and upgrading New York’s subway system? If New York politicians want to reward campaign contributors and union supporters with sweetheart contracts, they should give the bill to their own constituents.

Washington didn’t take on a major infrastructure role until the Great Depression, when both Herbert Hoover and Franklin Roosevelt justified federal programs as a way to combat unemployment and promote economic growth. Those rationales are still used today despite the abundant evidence, most recently from the Obama administration’s stimulus program, of how ineffective such federal spending is. Politicians of both parties like to believe that it takes wise central planners to coordinate a nation’s infrastructure—a myth typically justified by pointing to the Interstate highway system, begun by Dwight Eisenhower in the 1950s and lauded by its boosters ever since as “the greatest public works project in history.”

In reality, though, the Interstate system is the most powerful illustration of how a perfectly sound and seemingly simple project can be ruined by central planners. There was no need to nationalize highways, which had traditionally been a state responsibility. Pennsylvania and other states pioneered the expressway era with their own network of turnpikes, which generated plenty of revenue to maintain the roads while repaying the bondholders who financed them. But then Eisenhower and Congress, arguing that a highway network was necessary for national defense, concentrated money, power, and decision-making in Washington.

The new Interstate system, financed by gas taxes, seemed to work well at first. Drivers marveled at how they could zoom on open highways without stopping at traffic lights or toll booths. But the Interstates were ultimately doomed by the inherent inflexibility and political deal-making of a centralized system. The highways were needlessly expensive, particularly in cities. In order to get urban members of Congress to go along, Washington bribed them with extra money to build highways that obliterated neighborhoods; the projects would never have been built if cities and states had been spending their own money. The damage to cities was compounded by Washington’s one-size-fits-all requirements to build highways with wide lanes and shoulders—an attractive safety feature for an expressway through the prairies of Kansas but one that doesn’t make sense in a dense urban neighborhood.  Worst of all, the central planners outlawed tolls on new federally funded highways, thus preventing states from using a financing mechanism that would have ensured proper long-term maintenance and could be used to reduce congestion at peak times.

The result, half a century later: a highway system that no longer works. It’s horribly congested and in bad shape physically. Much of the system needs to be rebuilt because the highways are at the end of their useful life, yet there’s not even enough money to maintain the existing roads. That’s partly because gas taxes haven’t kept up with inflation and partly because Congress has been raiding the highway “trust fund” for non-highway projects like transit systems, museums, bike paths, and trails for snowmobiles and horses.

But that’s also the good news: the shortage of government revenue means that politicians must look for alternative sources. They’ve turned to private companies to maintain and build highways in Virginia, Indiana, Florida, Colorado, Texas, and other states.
We'll be watching.

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