Reason Foundation

http://www.reason.org
http://www.reason.org/news/show/highway-trust-fund-faq

Reason Foundation

Rethinking the Highway Trust Fund

Frequently asked questions about Interstate 2.0 proposal

Robert Poole and Adrian Moore
August 3, 2010

Below are answers to the most frequently asked questions about our new policy study Restoring Trust in the Highway Trust Fund.

Q: What is the biggest problem your Interstate 2.0 proposal is intended to solve?

A: Our Interstate 2.0 proposal is intended to meet the well-documented need to increase investment significantly in our country’s most important highways, without an increase in the federal gas tax.

Highways are the lifeblood of goods movement, with trucks handling 62% of all freight ton-miles and 92% of all freight by value. Rail will continue to grow, especially intermodal, but nearly all projections show that rail’s share of all goods movement is unlikely to increase over the next several decades. Hence, it’s vital to expand and modernize the key highway corridors that deliver the goods—especially the Interstates. Yet neither the current House bill not the U.S. Department of Transportation’s draft Strategic Plan would significantly increase highway capacity. Likewise, urban freeway congestion costs Americans more than $100 billion a year in wasted time and fuel and reduced productivity. Adding networks of priced express lanes to urban Interstates, and rebuilding interchange bottlenecks, would bring significant congestion relief to our urban areas.

Q. Why doesn’t your proposal go all the way, completely devolving the federal highway and transit program to the states and metro areas?


A: Facilitating interstate commerce is one of the basic provisions of the Constitution, for good reason. Under the Articles of Confederation, states were erecting tariff barriers to interstate trade, which is why the commerce clause was put into the Constitution, creating one of the world’s largest free-trade areas. A seamless nationwide system of super-highways made sense in 1956 and makes even more sense in 2010. Interstate 2.0 could foster this idea by, for example, removing the current patchwork of truck size and weight standards that undercut trucking productivity and needlessly increase fuel use in freight hauling. And by linking all significant ports and international airports to the system, the revamped Interstate system would reduce congestion and facilitate continued growth of international trade.

Q: By limiting your proposal for federal support to just the Interstate system, aren’t you drawing too narrow a scope? A significant portion of all truck traffic moves via highways that are part of the much larger National Highway System (NHS). Shouldn’t those highways be included?

A: One key aspect of our proposed Interstate 2.0 would be to add links to the Interstate system to reflect 21st-century America, not the America of the 1940s on which the Interstate system map was based. Places like Las Vegas and Phoenix weren’t large cities when the Interstate system was designed, but they are today. Hence, certain NHS routes are likely candidates for upgrading to Interstates under our proposal. However, all Interstate 2.0 projects would have to demonstrate a benefit/cost ratio of 1.5 or better; this would avoid Congress designating new Interstates to nowhere.

Q: The Obama administration, Rep. James Oberstar, chairman of the transportation committee, and the congressionally-created Policy & Revenue Commission all favor making energy conservation and environmental protection goals of transportation policy. Why does your proposal seem to focus only on improved mobility?

A: The principal goal of transportation is mobility. Considerations such as energy efficiency and emissions reduction are constraints on transportation, not goals, per se. Whatever laws and regulations Congress enacts on energy and emissions must be complied with by transportation providers, just as they must be complied with by manufacturers, electricity producers, etc. But the goal of a steel company is not energy conservation; it’s making steel, subject to whatever constraints are imposed by the laws of economics and the laws of the government.

Q: Won’t transit advocates strongly oppose your proposal, since it would no longer allow federal gas-tax money to be spent on federal transit grants?

A: The transit coalition obviously prefers the devil they know to the devil they don’t know. However, the reality is that Congress loves giving out transit grants at least as much as it loves highway grants, so there is essentially zero chance that Congress would stop funding mass transit projects. In fact, over the last two years Congress has allocated more general fund money to bail out the Trust Fund than two years’ budget for the entire Federal Transit Administration. Some transit advocates are starting to realize that with no chance of a federal gas-tax increase, they will have an increasingly tough time keeping (let alone expanding) transit’s current share of Highway Trust Fund monies.

Q: Your proposal would shift about $10 billion per year from transit and other non-highway programs and from aid for state highways, into an expanded Interstate program. Wouldn’t this either (a) force states to increase their own gas taxes, or (b) lead to deteriorating state highways?

A: States would have many better options than a gas-tax hike. First, recognize that federal highway dollars buy only about 70% as much as state highway dollars (due to all the costly regulations that come along with the federal money). Second, faced with the responsibility of funding their own state highway programs, states would have much stronger incentives to set their own priorities, rather than trying to fund every project on Congress’ wish lists. Third, freed from current federal regulations, they could make wider use of tolling as an additional users-pay revenue source. They could also make wider use of smart project delivery tools such as design-build and long-term public-private partnerships, to get more value per dollar spent.

Q: Why should the federal government use our transportation tax money to fund only highways and not transit, high-speed rail, and other forms of transportation?

A: The revenue in question comes entirely from those who use highways: owners of cars and trucks. It was originally agreed to as a “user tax” and is still often called a “user fee.” In the early days of the Interstate program, those words meant what they said. People by and large accepted the federal fuel tax because it meant they (as highway users) would get better and less-congested highways. But over the last three decades, Congress has bloated the program in numerous ways, many of which provide little or no benefit to highway users. If Congress wants to fund streetcars and recreational trails (which we don’t think it should), it should use general-fund money, not taxes that are supposed to be for the benefit of highway users. They have made the idea of a highway trust fund something of a joke. Our proposal would restore the legitimacy of the trust fund concept.

Q: Wouldn’t Congress simply earmark your new Interstate program, creating new Interstates to nowhere?

A: An integral part of our proposal is performance requirements. It’s not just Congress that may push for poorly justified projects. Some states might also propose upgrading every NHS route to Interstate status, regardless of how much or how little traffic it carries. We envision strong functional criteria for any candidate addition to the Interstate system, including a benefit/cost ratio of at least 1.5.

Q: This seems like almost a utopian proposal. Do you think anyone is actually likely to support it?

A: The government’s budget deficit and debt are sky-high, as is frustration with Congress. In that context, a proposal that simultaneously devolves significant authority away from Washington, DC, while at the same time increasing needed investment in vital infrastructure may attract more support than you imagine. The various highway user groups (such as the auto clubs and trucking organizations) are the most likely ones to support this highways-only proposal, along with the growing less-government contingent in the new Congress. By showing that an important national infrastructure need can be met without a federal tax increase, this proposal may win support from taxpayer groups. Reformers opposed to earmarks may see our proposal as a step in the right direction. Given the centrality of the Interstate system to goods movement, coupled with no chance of a federal fuel tax increase, this proposal might also be attractive to the goods movement coalition.

More On This Report: Full Study (.pdf)
Executive Summary

Frequently Asked Questions

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Adrian Moore is vice president of Research at Reason Foundation.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy

Adrian Moore is Vice President, Policy


Print This