March 5, 2004 | WebMemo on Smart Growth
Dear Mr. President:
Your advisors were absolutely correct in threatening a veto of any highway bill that would add to the deficit or raise taxes. With budget deficits approaching $520 billion per year and many of your opponents threatening to undo the tax cuts that have allowed America to sustain the strongest economy in the world, a firm stand against runaway spending will pay big dividends in the struggle to restore fiscal responsibility to congressional budgeting.
If you ultimately prevail in this disagreement over highway spending, the compromise solution should last for no more that two years, to September 30, 2006. The extra year and a half such an extension would provide should be used to develop a plan to fundamentally overhaul the current program. At its heart should be a new management system that imposes quantitative performance goals on federal and state transportation officials and that redirects spending to benefit the motorists who fund the system with their fuel taxes.
Under the current system, special interests absorb as much as 40 percent of all federal highway spending, and that share is growing as Congress grants other influential constituencies access to the trust fund. As a result of this leakage and other pervasive inefficiencies, $700 billion (inflation adjusted) of federal highway spending since 1970 has added only 7 percent to our road system, a performance that makes the proverbial $600 Pentagon hammer a benchmark for cost-effective government.
While your veto threat did not deter the Senate from passing a highway bill that will add another $10 billion per year to the deficit through the remainder of this decade, it did stop the House, at least, from moving ahead with its defective highway proposal. It also put a stop to the $125 billion hike in the regressive federal fuel tax that many in the House wanted to impose on motorists.
Although it is too early to predict the final outcome on highway spending totals, you have clearly gotten Congress's attention and forced many members to rethink the extent to which they want their tenure to be remembered as one of wretched excess. And now that you have their attention, and while Congress is grudgingly rethinking its position on highway spending, I would encourage you use this respite to ask your advisors to rethink their own views on highway legislation.
More specifically, you should ask them if they are prepared to confirm that the highway bill they crafted for you last year - titled SAFETEA - would significantly enhance the mobility and safety of the millions of motorists who pay to fund the highway trust fund. If they cannot guarantee that outcome, then the breathing room your veto threat and a two-year extension would allow should be used to rewrite the bill in a way that meets that goal.
As your advisors embark upon this legislative rewrite, you should announce to voters - and especially to motorists who pay the fuel tax - that whatever plan you ultimately submit to Congress will pander to them and not to the big spenders whose influence in Washington has risen to alarming levels. How bad has such pandering become? When informed that the White House would not agree to anything above $270 billion over six years, leaders of the Transportation Committee expressed concern that a figure that low might preclude the thousands of pork-barrel projects they had already promised members and lobbyists.
To date, the disagreement between your advisors and Congress has been over levels of spending. Cost is an important issue and should be resolved in your favor, but any resolution based on dollars alone would still leave the nation hobbled with a grotesquely inefficient federal transportation program that spends enormous sums of money to achieve pathetically meager results. Regrettably, the only big difference between your proposal and that of Congress is that your bill proposes to misspend a quarter of a trillion dollars over the next six years, while Congress wants to match your misspending and raise you another $60 billion or $120 billion. Either way, American mobility and transportation quality are the losers.
Fortunately for the long abused motorist, you have a once-in-six-years opportunity to put an end to this mess. The most important change you could make would be to restore the program's purpose to that of improving highway transportation, mobility, and congestion relief by creating a program that establishes explicit and measurable goals related to maintaining the quality of our interstate system, enhancing mobility, reducing pollution, and relieving congestion.
Such clear and measurable goals defined the federal highway program in the first several decades of its existence. Created in 1956 to fulfill the well-defined objective of building a high speed, limited access, interstate system that stretched coast-to-coast, border-to-border, and connected all the major cities in between, the program achieved that goal in a timely and cost effective way, at least by today's standards. But once the interstate system was completed in the early 1980s, the program lost its clear sense of purpose and quickly evolved into the nation's largest spoils system. Where once it had the goal of providing America with the best transportation system in the world, today its purpose is little more than to accommodate a growing list of influential constituencies lucky enough to have their hands in the piggy bank.
In devising a better alternative, it will be tempting for many of your advisors to adopt a Washington-knows-best policy and replace the old and obsolete mandates and prohibitions with more modern mandates and prohibitions. But if we have learned anything about Washington programs, it is that new mandates and prohibitions will soon become as counter-productive as the ones now hobbling motorists.
As your advisors go back to the drawing board to develop a better federal transportation program, they should take as their first principles the concepts guiding the original version of your "No Child Left Behind." In the education plan you submitted, school systems were given wide latitude in how they chose to invest federal education money. But in return for accepting that money and the wider discretion that came with it, school systems were also required to achieve measurable improvements in student performance, or else face harsh penalties. It was this link between money, performance, and accountability that made your education proposal both compelling and unique among federal spending programs.
There is no reason why a new federal highway/transit program could not be devised with similar performance-based incentives. Just as there are many acceptable standardized tests by which to measure a student's educational achievement, so too are there many quantitative measures of congestion, mobility, safety, pollution, and road quality to which state and/or regional transportation officials could be held accountable in return for money received and discretion granted.
While this approach may seem novel and risky to many transportation traditionalists, the concept has already been implemented in the federal education program, and before that many states had already imposed their own performance standards on their local school systems. Virginia's "Standards of Learning" is an example of a state-imposed forerunner of the federal program. In transportation, the Texas Governor's Business Council last year recommended that the state adopt quantitative standards and performance measures for its Department of Transportation, and in late 2003 such a system was implemented as a way to guide the state's transportation investments in alternative modes, technologies, and places. It's time to do the same at the federal level, and a two-year extension of the current law should be enough time to develop the plan and submit it to Congress.
While this sort of accountability will certainly leave tens of thousands of road builders, state and federal bureaucrats, and public transit system officials less than happy (just think of the teachers who opposed "No Child Left Behind"), the tens of millions of motorists who pay their salaries and contracts will be overjoyed. Sounds like a winning plan in an election year.
Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.