Hoping for Leadership

What should be the role of the federal government in shaping transportation policy? This question is much bigger than simply spending and oversight; it cuts to the core of what representative democracy means in the first place.

I spent the last week at the Eno Center for Transportation’s Leadership Development Conference in Washington, D.C. While there, I met congressional staffers, administration officials, lobbyists, think tankers, and others who are actively involved in shaping American transportation policy. It was an honor to be selected to participate, and I hope I represented Georgia Tech and our transportation program well (with help from Josie Kressner and Chris Silveira).

A few quotes from the sessions, before I get into my own opinions. ¹

Congress makes policy through inaction, and this has been increasingly the situation. … We are at an important pivot in national transportation policy. If nothing happens, we (the U.S.) may stagnate or decline. – Emil Frankel, Bipartisan Policy Center

Transit management is like a youth soccer game. Everyone is yelling at you, but it’s still kind of fun. – Nat Bottigheimer, WMATA

Senators and Representatives aren’t willing to abandon their key constituencies unless they think there will be a deal, because that makes them look stupid. It doesn’t look like there will be a deal. – James O’Keefe, U.S. Senate Environment and Public Works Committee

We need to take this country to the next level. … Big things are always controversial. – Ray LaHood, Secretary of Transportation

We can’t have our communities die because young people refuse to come back. – Therese MacMillan, Federal Transit Administration

Transportation is not a science, it’s a political art form. People who think otherwise are going to be frustrated. – James Corless, Transportation for America

The situation is a bloody mess. No one has the guts to raise the fuel tax. – Peter Ruane, ARTBA

The Situation

Since the last surface transportation authorization law (SAFETEA-LU) expired in 2009, the US Department of Transportation and its state-level counterparts have been relying on temporary extensions of that previous legislation. This is unsustainable because the funding levels specified in SAFETEA-LU are significantly more than the revenues currently collected by the federal fuel tax, which has not been raised since 1991.

The House of Representatives passed new authorizing legislation which cuts much dedicated funding for alternative transportation projects and authorization to build the Keystone XL oil pipeline from Canada. The purpose of these two provisions ² was to ensure that no democrats would vote for the bill; otherwise, Republicans could be accused of cooperation. The Senate passed MAP-21, which is a somewhat short-term (18 month) authorization bill containing some new policy relating to performance measures and oversight; this measure passed with a robust and bipartisan 74 vote majority.

The House leadership was unwilling to vote on MAP-21, so several key members of both chambers are trying to hammer out a compromise between MAP-21 and the poisoned House extension. No one is very optimistic that this will be possible. House republicans are unwilling to involve democrats in the process, and the Senate would not pass the House bill. The White House has been conspicuously absent throughout, unwilling to risk its remaining limited popularity on bold legislation. Either federal transportation funding will expire with the legislation on June 30th, or another extension will be passed and the new Congress may revisit the issue next year.

How I See It

The American transportation industry is in many ways a creature of the interstate system. Building large highways across every state required immense capital outlays at the federal level; Nebraska and Mississippi (among others) could not afford their pieces of the puzzle, and the national importance of the system justified the cost-sharing required. The economic benefits of this project were real and immediate, and created the bias towards large capital projects among voters and professionals. Fixing pavements or paying bus drivers is not very sexy when there are highways to be built, after all.

But now that the interstate system is built, what is the federal role in maintaining it? And what should be the federal role when smaller, more local projects are involved? Many cities and states have passed bond issues to pay for local transportation projects (Atlanta is voting on this July 31st), and most states collect their own gasoline taxes to pay for maintenance of state roads and interstates. Why not allow states to collect all the money they need to maintain their roads, and the cities who want to build transit may?

Case Study 1: Los Angeles Ports

The Port of Los Angeles and the Port of Long Beach in southern California are extremely important for imports and exports, but their operations impose immense externalities on the surrounding communities in the form of pollution and deteriorating pavements. Further, heavy congestion on the Alameda corridor raises freight costs, and subsequently goods prices. There has been talk of building a dedicated tollway or rail link; the issue is that the community where the project is located would not derive most of the benefit, passing it instead to national consumers and exporters. The prevailing wisdom is that this is the type of project where the federal government should provide a facilitating, or even a dominant, role.

I might also make the argument, however, that the Los Angeles ports are competing with other ports, such as Galveston, Oakland, and Seattle, that may have better landside access through natural means, or as a result of communities that provided this infrastructure independently. If the federal government were to pay for the construction of the Alameda corridor, it would be giving preference to a port that had not earned its competitive advantage, and the market distortions might be unpredictable. Why not let the community and the ports authority figure out how to share the costs of the project?

Here’s how I see it happening: the community decides it can’t tolerate the port traffic any more, and threatens to impose restrictions if the port doesn’t help pay for new infrastructure. The port raises its operating fees, which are passed on to consumers in the form of higher prices. Consumers will either pay the higher price and generate revenue for the project, or adjust their consumption to the point where demand for the port is at a more natural level. Were the project funded with taxes, consumers face the same dilemma: pay more of their income for goods, or go without the goods. In the first case, the market determines what the appropriate level of trade is, and in the second it is the government doing so.

What if shippers don’t want to pay the increased per-container fees that the port imposes? The ships would then go to Oakland, and congestion in Los Angeles would be reduced. Some Los Angelinos may lose their jobs, but others would be created in Oakland, and the LA community would have to decide if they wanted jobs or pollution, or if they wanted to pay for the road. Again, all these decisions are happening at the local level, rather than 3,000 miles away by senators from Montana and Kansas.

Am I missing something? Do you disagree? Please comment below. I will run more of these case studies in the next few weeks.