Whatever remained of the fig leaf claim that the US has a “user pays” system of road finance disappeared completely with the passage of the so-called FAST Act.
It would be better to call the new transportation bill the “Free Ride” Act, because that’s exactly what it does: gives auto users something for nothing. It’s more money for road building, scraped together from arithmetically questionable raids on the Strategic Petroleum Reserve and the Federal Reserve Bank, and a series of other gimmicks.
As we pointed out earlier, this legislation represents the triumph of the asphalt socialists—in their view, our transportation problems can be best solved by more subsidies for the old policies. As Yonah Freemark observes, the biggest chunk of this subsidy comes from a transfer of $53 billion from the Federal Reserve System. In effect, bank robbery is now national policy for road finance.
Live feed from Congress. Credit: Henry Burrows, Flickr
As everyone now knows, the 18 cent per gallon federal gas tax that has been the mainstay of the Highway Trust Fund hasn’t been raised in two decades and the combined effects of declining driving, more fuel efficient vehicles, and inflation have pushed the fund to bankruptcy. But rather than ask users to pay a higher fees—reflecting the higher costs of maintaining roads—Congress ruled out a gas tax increase, and instead did in a big way, what its done several times in smaller ways before: bail out the Highway Trust Fund with general funds. Because of budget rules, the general fund diversions have to be “paid for”—which Congress did by a series of one-time accounting devices and asset sales.
And Delaware Senator Tom Carper argued, “the bill is paid for is simply irresponsible…Congress is passing the buck by using a grab bag of budget gimmicks and poaching revenues from unrelated programs for years to come in order to pay for today’s transportation needs.” Financial blogger Barry Ritholtz called it the “dumbest way” possible to pay for infrastructure.
But it’s not just the revenue side of the new transportation bill that’s rotten. On the spending side, the FAST Act leaves largely unchanged the practice of allocating most revenue to state DOTs. Those departments, in turn, disproportionately allocate money to new highway construction, rather than more sustainable transportation needs. The bill sets up a new National Highway Freight program which will allocate about $1.25 billion annually to the states by formula and another $900 million annually for “Nationally Significant Freight & Highway Projects” to be awarded on a competitive basis for “multi-modal” freight projects. But 90 percent of the funds are earmarked for highways, and since virtually all roads carry at least some truck traffic, it’s far from clear that these funds will be anything other than yet another pot of funding for subsidized road construction.
Credit: Nick Douglas, Flickr
As is now common with major congressional legislation, it will take further days or weeks of sleuthing by the experts to discover and understand all of the bill’s arcane provisions. This 1,300 page bill is no exception. If you’re looking to understand some of the ins and outs, a good place to start is the official U.S. Department of Transportation summary. Transportation for America’s more opinionated view of the FAST Act’s the best and worst provisions is here; their verdict: the net result is to use tomorrow’s dollars to pay for yesterday’s ideas. And Deron Lovaas of the Natural Resources Defense Council aptly describes the bill as the “sum of all lobbyists”—noting a number of obscure provisions that are only distantly related to transportation policy.
There will be no doubt much back-slapping and congratulation that Congress has finally passed a long-term transportation bill after a series of short-term, patchwork fixes. But in reality, Congress has done nothing to address the underlying causes of the decline in national transportation funds—the steady erosion of the gas tax by inflation, improved fuel efficiency and stagnation of driving levels—and has utterly failed to craft a solution that asks the users and beneficiaries of the transportation system step up and pay for its costs.
What Congress has done is completely demolish the “user pays” idea, and simply kicked the can down the road—this time by five years, rather than 90 days or six months. There’s nothing sustainable about the one-time revenue sources Congress has thrown into the pot here: once they’ve raided the Fed’s balances, for example, they can’t do it again. But in five years, when the one-time money runs out—sooner, if Congress’s creatively optimistic estimates of the revenue produced by its gimmicks aren’t realized—we’ll be facing exactly the same underlying problems.
Chief among them is that our transportation system has excess demand for service because most users aren’t confronted with a price that reflects the cost of providing roads. Subsidized auto travel has lead to sprawling, car-dependent automobile travel patterns that generate additional traffic, congestion, pollution and crashes—and further burden the transportation system. The opposition to gas tax increases, and tolling, shows that most road users simply don’t attach any value to system expansion, or that they favor more spending on roads—but only as long as they personally don’t have to pay for it.
So maybe the FAST Act isn’t such in inappropriate name for this legislation: It will serve as a continuing reminder that instead of a serious and responsible solution, Congress simply chose to pull a fast one.
Pulling a FAST one
Whatever remained of the fig leaf claim that the US has a “user pays” system of road finance disappeared completely with the passage of the so-called FAST Act.
It would be better to call the new transportation bill the “Free Ride” Act, because that’s exactly what it does: gives auto users something for nothing. It’s more money for road building, scraped together from arithmetically questionable raids on the Strategic Petroleum Reserve and the Federal Reserve Bank, and a series of other gimmicks.
As we pointed out earlier, this legislation represents the triumph of the asphalt socialists—in their view, our transportation problems can be best solved by more subsidies for the old policies. As Yonah Freemark observes, the biggest chunk of this subsidy comes from a transfer of $53 billion from the Federal Reserve System. In effect, bank robbery is now national policy for road finance.
As everyone now knows, the 18 cent per gallon federal gas tax that has been the mainstay of the Highway Trust Fund hasn’t been raised in two decades and the combined effects of declining driving, more fuel efficient vehicles, and inflation have pushed the fund to bankruptcy. But rather than ask users to pay a higher fees—reflecting the higher costs of maintaining roads—Congress ruled out a gas tax increase, and instead did in a big way, what its done several times in smaller ways before: bail out the Highway Trust Fund with general funds. Because of budget rules, the general fund diversions have to be “paid for”—which Congress did by a series of one-time accounting devices and asset sales.
And Delaware Senator Tom Carper argued, “the bill is paid for is simply irresponsible…Congress is passing the buck by using a grab bag of budget gimmicks and poaching revenues from unrelated programs for years to come in order to pay for today’s transportation needs.” Financial blogger Barry Ritholtz called it the “dumbest way” possible to pay for infrastructure.
But it’s not just the revenue side of the new transportation bill that’s rotten. On the spending side, the FAST Act leaves largely unchanged the practice of allocating most revenue to state DOTs. Those departments, in turn, disproportionately allocate money to new highway construction, rather than more sustainable transportation needs. The bill sets up a new National Highway Freight program which will allocate about $1.25 billion annually to the states by formula and another $900 million annually for “Nationally Significant Freight & Highway Projects” to be awarded on a competitive basis for “multi-modal” freight projects. But 90 percent of the funds are earmarked for highways, and since virtually all roads carry at least some truck traffic, it’s far from clear that these funds will be anything other than yet another pot of funding for subsidized road construction.
As is now common with major congressional legislation, it will take further days or weeks of sleuthing by the experts to discover and understand all of the bill’s arcane provisions. This 1,300 page bill is no exception. If you’re looking to understand some of the ins and outs, a good place to start is the official U.S. Department of Transportation summary. Transportation for America’s more opinionated view of the FAST Act’s the best and worst provisions is here; their verdict: the net result is to use tomorrow’s dollars to pay for yesterday’s ideas. And Deron Lovaas of the Natural Resources Defense Council aptly describes the bill as the “sum of all lobbyists”—noting a number of obscure provisions that are only distantly related to transportation policy.
There will be no doubt much back-slapping and congratulation that Congress has finally passed a long-term transportation bill after a series of short-term, patchwork fixes. But in reality, Congress has done nothing to address the underlying causes of the decline in national transportation funds—the steady erosion of the gas tax by inflation, improved fuel efficiency and stagnation of driving levels—and has utterly failed to craft a solution that asks the users and beneficiaries of the transportation system step up and pay for its costs.
What Congress has done is completely demolish the “user pays” idea, and simply kicked the can down the road—this time by five years, rather than 90 days or six months. There’s nothing sustainable about the one-time revenue sources Congress has thrown into the pot here: once they’ve raided the Fed’s balances, for example, they can’t do it again. But in five years, when the one-time money runs out—sooner, if Congress’s creatively optimistic estimates of the revenue produced by its gimmicks aren’t realized—we’ll be facing exactly the same underlying problems.
Chief among them is that our transportation system has excess demand for service because most users aren’t confronted with a price that reflects the cost of providing roads. Subsidized auto travel has lead to sprawling, car-dependent automobile travel patterns that generate additional traffic, congestion, pollution and crashes—and further burden the transportation system. The opposition to gas tax increases, and tolling, shows that most road users simply don’t attach any value to system expansion, or that they favor more spending on roads—but only as long as they personally don’t have to pay for it.
So maybe the FAST Act isn’t such in inappropriate name for this legislation: It will serve as a continuing reminder that instead of a serious and responsible solution, Congress simply chose to pull a fast one.
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