Continuing part one of a series, Reason Foundation’s Shikha Dalmia discusses the good, the bad, and the ugly choices Obama could make for Secretary of Transportation from a libertarian perspective:
Infrastructure spending is likely to be a big element of President-elect Obama’s economic stimulus plan. However, for this idea to succeed, Obama will have to: One, direct existing funding toward projects that serve genuine economic needs such as highway capacity expansion – rather than pie-in-the-sky schemes such as bullet trains and a national electricity grid backed by wind-power, ideas that Obama flirted with during his campaign. Two, try to obtain new funding for these projects from the private sector through the creative use of such arrangements as public-private partnerships. This is particularly important because the country’s infrastructure needs are enormous, thanks to years of neglect – but a large increase in gas taxes, as some recommend, would be ill-advised, especially during a recession. To advance these goals, the new secretary will have to be ready to do battle when Congress prepares to reauthorize the current surface transportation law, SAFETEA-LU, which is due to expire next fall. The law establishes the framework for the transportation projects that the federal gas tax will fund for the next six years. There will be a concerted push from some of the ultra-liberal legislators this time to divert an even larger share of gas tax revenues from road projects and toward mass transit projects, supposedly to reduce greenhouse gas emissions and advance other green ends. Some even want to divert funds from the highway trust fund to expand Amtrak and build a dozen all-new high-speed rail lines. There is also talk of including in this law a California-style global warming plan that would discourage driving by requiring regional transportation plans to be based on “smart-growth” land-use plans, on the tenuous grounds that high-density, mixed-use development is a cost-effective way to reduce the amount of driving, and hence greenhouse gas emissions. The gas tax is a quasi user tax in which the motorists pay for the facilities they use. Using this money on things other than roads and bridges would not only produce a huge misallocation of resources, but it would also effectively force motorists to subsidize facilities of other users. The secretary ought to resist this on grounds of both equity and utility. The other big issue that the next transportation secretary will confront is the revamping of our antiquated, 1960s air traffic control system, which is careening toward a crisis of capacity. Addressing this crunch by rationing the number of flights during peak periods to what the system can handle, as some suggest, would raise airfares and leave fewer options for air travelers. The better way to handle the problem would be by deploying something called the Next Generation Air Transportation System (NextGen). This system would double or triple air traffic capacity by, among other things, using state-of-the-art satellite-based air traffic control technologies. But implementing this system in a timely and affordable form will require extricating air traffic control operations from the Federal Aviation Administration’s bureaucratic shackles and spinning them off as a separate “company” with the authority to fund the $25 billion revamp through revenue bonds paid by user fees. President Bill Clinton and Vice President Al Gore unsuccessfully pushed for a corporate entity to take over air traffic control in 1994 as part of the Reinventing Government campaign. Congress blocked it then, and is unlikely to relinquish control without a nasty fight now. The new secretary should have both the inclination and toughness to stand up to it. The candidate who is best suited for this job is, in fact, the current Secretary of Transportation, Mary Peters. She began her term in 2006 and since then she has repeatedly drawn attention to the imminent bankruptcy of the National Highway Trust Fund and the need, therefore, to explore leasing arrangements with private companies to build new toll roads and to implement congestion pricing – an idea that Obama has praised – in our most-congested urban areas as well as airports. Peters has proven herself to be an able administrator. More to the point, she would offer creative and sensible ways for Obama to deliver on his idea of using infrastructure projects to stimulate the economy without burdening taxpayers. Nor would it be so unprecedented for Obama to extend her term given that President Bush appointed former Democratic Congressman Norm Mineta as his first transportation secretary. It would speak well of Obama to reciprocate that gesture in a spirit of bipartisanship – while hiring the best person for the job. Top among our second-tier picks would be Pennsylvania Governor Ed Rendell. Although he has expressed reluctance to take this position, he would be a good choice if he were to change his mind. After some initial hesitation, he became a strong – but ultimately unsuccessful – champion of leasing the Pennsylvania Turnpike to private operators and using the revenues generated for other transportation-related projects. Beyond transportation-related issues, Rendell is a tough fiscal manager who is always looking for creative ways to enhance the efficiency of government. As mayor of Philadelphia, he outsourced a number of municipal services such as street sweeping to private vendors, producing better service at a lower cost for city residents. As governor he also authored something called the Strategic Sourcing Initiative under which the state government procured goods and services from wholesale vendors, producing savings of about $72 million for state coffers. He has a history of backing mass transit projects, however, and has little experience in aviation-related issues. Also acceptable would be Mort Downey, deputy secretary of transportation in the Clinton administration. Although he is a big booster of transit and rail boondoggles, he is realistic when it comes to funding the nation’s transportation needs through public funding alone. In a 2007 article he coauthored in Traffic World, he insisted that transportation planners “should have access to the largest possible toolbox of financing mechanisms, strategies, and options. Accordingly, there is an importantÃ¢â?¬â??indeed a necessaryÃ¢â?¬â??role for PPPs as part of an overall infrastructure program.” He has been a proponent of innovative ideas such as HOT (High Occupancy Toll) lanes for congestion relief. Under this concept, motorists who want to escape traffic can pay variable-priced tolls that rise and fall during rush hours to get into a free-flowing lane moving at the maximum speed limit. Other names in the running that would have a few positives include Jane Garvey, former FAA chief. She is open-minded about considering innovative options for highway financing. However, she starved the air traffic system of funding, partly because she didn’t have the gumption to standup to the demands for a sweetheart contract by the controllers’ union. In the same league would be Steve He
minger, executive director of the San Francisco Bay Area’s Metropolitan Transportation Commission and a member of the National Surface Transportation Policy and Revenue Commission. He doesn’t have any aviation background, but showed some real skill in persuading his diverse political board to approve California’s first network of HOT lanes. Among the names mentioned in various reports thus far, the two worst picks for the job would be Minnesota Rep. Jim Oberstar who is currently chair of the House Committee on Transportation and Infrastructure and Oregon Rep. Earl Blumenauer – both Democrats. They routinely advocate spending gas tax revenues on everything but highways and are huge champions of mass transit, regardless of a project’s effectiveness. Oberstar, a bike enthusiast, is arguably the worse of the two because he also has a taste for larding highway pork on favored constituencies. Oberstar also launched what is tantamount to a federal war against state’s seeking public-private partnerships when he dashed off a letter to all 50 governors, discouraging them from using them – and even threatening to undo them if he determined that they “do not fully protect the public interest and the integrity of the national [transportation] system.” Evidently, it did not matter to him that PPPs have produced billions of dollars in savings and new revenues for Chicago, Indiana and many other cities and states. His missive triggered a mini-revolt by some governors such as Texas’ Rick Perry. Oberstar would be a great friend of the decrepit transportation status-quo, something that America’s economy can ill afford.