Financing the Nation’s Infrastructure in Our Age of Cutbacks

» The United States suffers from a deficit of long-term thinking about transportation funding.

The message from the White House on transportation financing over the past few weeks was ambiguous at best. President Obama, frustrated by Florida Governor Rick Scott’s rejection of federal aid for a high-speed rail line between Tampa and Orlando, suggested that it would be foolish for states to abandon investment in infrastructure, arguing that these projects are essential to the advancement of the American economy in the 21st Century. In a year filled with discussion about how to reduce the federal deficit, the Administration has been a major supporter of increasing funding for new transportation projects that it hopes will help the U.S. “win the future” — starting with a proposed $53 billion for high-speed rail over the next six years.

At the same time, the White House and Secretary of Transportation Ray LaHood have been remarkably opaque in describing their conception of how the federal government will pay for these projects. Even as the Administration’s Fiscal Year 2012 budget suggested that transportation programs would be funded without burying the country deeper into debt, Mr. LaHood was unable to describe for skeptical senators how exactly that could be done considering the current and future expected limitations of the federal fuel tax, which has been set at a low 18.4¢ per gallon since 1993. He repeated the Administration’s recession-based argument against increasing that tax or implementing a vehicle miles traveled tax, the only user fee that is a realistic replacement for the fuel tax. Other potential funding sources, like selective tolling or public-private partnerships, will provide only marginal expansions in funding.

Though certain members of Congress have promoted doing as much, there is no majority support for such tax increases in the Democratic-controlled Senate and even less in the GOP-led House. If there was once a sense that the government has a responsibility to guarantee the good condition of the nation’s roads and rails, that feeling has evaporated from the consensus.

All that seems to be acceptable is passing continued extensions of the existing transportation bill, first approved in 2005 and in theory supposed to be replaced in 2009. That funding is by most estimates too limited to account for the nation’s continued population growth and the age of its existing infrastructure, which is rapidly falling apart due to funds being too thinly spread around. The now-popular concern about the ballooning national debt has taken its toll, and the nation’s mobility systems will suffer.

To make matters worse, states — which conservatives claim they want to take more power — have abdicated responsibility. The decisions by Florida, New Jersey, Ohio, and Wisconsin governors to give up on major rail improvement projects says something about those conservative politicians’ feelings about spending on any ground transportation other than highways, but this problem extends beyond the matter of transport mode. Indeed, most states have kept their respective fuel taxes at relatively low levels even as their own needs have increased. Calls for reducing taxes continue to define the national political scene, despite the fact that as a percentage of gross national product, taxes are the lowest they have been in 60 years. This inconvenient fact, however, does not seem to bother many policy-makers.

The private sector, whose ability to solve all of our problems is frequently promoted by politicians across the spectrum, has unsurprisingly not swooped in to save anything.

Indeed, the only actors who appear to be taking any responsibility on these matters are the citizens of municipalities across the country who have supported sales tax increases over the past few years to pay for improved transportation. While federal and state actors have mostly kicked the can around — defunding some things to pay for others, relying on debt to fill gaps — the inhabitants of cities and counties from Los Angeles to Charlotte to Denver have approved increases.

With diminishing aid from higher levels of the government, these cities have few choices other than looking to increase their local taxes. L.A. Mayor Antonio Villaraigosa wants federal loans to speed up by 20 years L.A. County’s 30-year transportation investment plan — a reasonable idea since in the long term it would do nothing to the U.S. treasury — but the nation’s second-largest metropolitan area will need more than that, especially in those latter twenty years, since even the 30/10 program Mr. Villaraigosa has advocated will not do enough to resolve Southern California’s transportation woes. Will cities like L.A. be able to convince their voters to take even more of the burden?

States could play a far more important role in assuming the costs of upgrading transportation systems, but they are frequently handicapped by the dominance of rural and exurban interests, especially after 2010’s Republican wave.

Which leaves the federal government. The Obama Administration’s attempts over the past two years to make the argument that government investments in infrastructure have had bipartisan support for more of the past century has arguably backfired in the face of a stridently anti-government-investment Tea Party and its apparent backers in the Congress, many of the increasingly conservative members of the Republican Party. Attempting to differentiate themselves from the Democrats, the GOP has taken a no-compromise approach and will fight any increases in spending.

Without persuasively arguing for a tax increase to pay for such transportation improvements, the White House sounds depressingly like the Bush Administration when it was defending the Iraq War by arguing that it could be accomplished with no public sacrifice. President Bush, rather, encouraged us to increase our personal consumption, as if that would somehow compensate for the massive tax cuts his Administration had pushed through a cowardly Congress. We now suffer from the resulting consequences. Does Mr. Obama think he can get away with the same thing, when his Administration cannot identify a sound funding source?

Investments in transportation, as cities have proven, are popular. If provided a compelling argument, voters are willing to pay more to get access to better roads, transit systems, and railways. The question for the Obama Administration is not so much how much it wants to spend, but rather what defense it will mount (if any) for increasing taxes to pay for that spending. Whatever the current political atmosphere, we are not going to substantially improve the nation’s transportation system without doing so.

52 Comments | Leave a Reply »
  • OctaviusIII

    I don’t have much hope for funding any new massive spending bill before 2013. So far, the Administration has been easily cowed by those who believe taxes are robbery by the government and until it has a new mandate to govern I cannot imagine a new transportation bill passing.

    In a sense, however, the fact that municipalities are “the only actors… taking responsibility” is a vindication of small-government conservatives who favor a devolution of powers to the local level. Abolish the Department of Transportation, they’d say, and do similarly for the states. Let the people of the counties and cities around America vote taxes for themselves to fund the projects they care about.

    • Sure, but I’d argue neither the county nor city level is an appropriate one for making sound transportation planning decisions. One of the reasons we’re unable to break from automobile dependency is the sanctity of local land use decisions. Neither states nor the federal government are able to dictate that planning occur at a regional level – local interests reign supreme.

      • True, but back in the 1950s, the local land use decisions were influenced by the federal government’s sample zoning codes. Even today, federal parking generation and trip generation tables are a major reason for why engineers browbeat municipalities into widening roads and providing too much parking.

        • Woody

          Wonder if Ray LaHood even knows this. He’s been busy trying to clean those proverbial stables, but there’s still huge piles of stink everywhere.

          • I have no idea. I wish I knew who had the ear of the people in charge of transportation policy.

          • Jack Hope

            I always found it interesting that Ray LaHood is apparently a Republican and given the circumstances that’s obviously a wise choice for Obama to have made. Given the fact that a Republican can’t convince other Republicans to take Federal money with few or no strings attached, money that will undoubtedly bring jobs, investment and improved infrastructure, this shows the level of overwhelming political dysfunction that is playing out.

    • Nathanael

      To be fair, the Tea Party’s backers routinely support increased federal taxes. Just not on large corporations or the rich. Increased taxes on the poor, used to pay for extra wars — that, your right-wing Republican Congressman will vote for almost every time. Watch what they do, not what they say.

      I’m not sure there are any genuine “devolution to the local level” conservatives in public office (I’m sure they exist, but they don’t seem to have any seats in Congress). If there were a significant number, we wouldn’t have had any of the Bush administration’s big-intrusive-federal-government policies.

      • Andrew

        Ron Paul, although more of a libertarian than a conservative, is probably one example of a congressman wanting the states and local governments to handle matters not given to Congress by the Constitution… aka the 10th amendment.
        And he’s voted against probably every big government bill during the Bush Administration.

    • Buckeyeman

      Well aren’t most politicians cowed by the kinf of people you’ve dsribed? For that matter aren’t most voters cowed by that ideology as well?

  • archie

    Ironically, it might be the generally anti-tax rural areas that will be hurting the most as federal transportation funding dries up since they are the most heavily subsidized in the current model. My biggest fear, however, is that this does NOT happen and the fed ends up starving urban areas (that are actually taxing themselves to pay for their infrastructure and thus appear to be more “self-sufficient”) disproportionately to rural areas, tipping the subsidies scale even further in favor of the non-self-sustaining rural areas.

    • Exactly. It’s bad enough that taxes disproportionately leave urban areas for exurban and rural ones. It’s even worse that a higher local tax burden doesn’t reduce that locality’s federal and state tax bill either. That’s the problem with the small government local control rhetoric. We probably could build some very extensive urban transit and even suburban interstate-grade highways, and all manner of infrastructure, schools, hospitals, etc., using only city and county taxes. However, that doesn’t work when we’re already shelling out the bulk of our paychecks to satisfy state and federal income tax bills.

      A reversal of the established taxing and funding paradigm would go a long way to solving these problems. Instead of sending the bulk of our tax money to the states and the feds and then having to beg to get them back, they should have to beg the cities and counties to release tax funds for state wide or national projects. It’s bottom up instead of top down.

  • Woody

    Everybody interested in rail should be pushing to get things cleared, planned, and ready. We will need to have dozens of projects truly “shovel ready” for the next recessionary crisis, coming soon.

    When things get bad enough, and I expect very bad soon enough, either Congress will newly find the wisdom of more stimulus spending, or the voters will get a new Congress. Then it’s gonna be, ‘Grab a shovel-ready project and let’s go!’

    Once I read a heavy summation of a heavier academic report on Why we have recessions. Reason One, the foreigners will mess things up by doing something stupid (wars, embargoes, trade wars, currency manipulation, the stuff foreigners do). Reason Two, our very own Congress will mess things up by doing something stupid (provide examples here or repeat those of foreigners). Can’t recall the third reason, perhaps because those two reasons convinced me that recessions are truly inevitable and I stopped reading.

    I can’t predict *when* the next recession will arrive. But my armchair observations tell me that with the Tea Baggers and Ayn Rand cultists rushing over the cliff, and Obama always trying to meet them “half way”, the current Austerian policy will not end well at all. MUCH more pain ahead. But the retrograde policy may end as soon as the next election, if the cutbacks cut back any hope of employment growth.

    Then the states and cities with complete plans on the shelf will get to spend A LOT of money getting things done before employment ever normalizes.

    Note that same prescription will apply if the consequences of Peak Oil arrive in a wave.

  • Monty

    “American Infrastructure Bonds”© or AIBS can fully fund the proposed I-Bank at $30 billion without tolls or fees and without raising taxes, either, at the state or federal level. Why aren’t they being explored?

  • Andrew

    “…the Administration has been a major supporter of increasing funding for new transportation projects that it hopes will help the U.S. ‘win the future’ ”

    I think we’re going to lose the future.

    • Wad

      The future is lost. All America has going for it is the hopes that fortunes reverse for our competitors.

      Does anybody really expect Brazil, Russia, India, China or any junior partner in any trade agreement to slow down their economic ascendancy while the U.S. catches its breath? The world is beating America at its own game.

      Here’s a … ahem … graduation address of mine to college grads.

      “Ladies and gentlemen, tomorrow you will not wear caps and gowns and your degrees will hang proudly on a wall. You have accumulated a wealth of knowledge and a fountain of idealism. You are the future.

      The present looks bleak. If you want tomorrow to look much better than today, I have one word of advice for you. It is literally one word.

      Run.”

      The rest is on MetroRiderLA, following my predictions for transit in 2011.

      • Nathanael

        If we could get sane government, we could have a comfortable transition into post-imperial status, as the UK did.

        We seem to be unable to get sane government at the moment. The Republican Party is obviously completely hopeless, having been taken over by believers that the Rapture will be next week, and businessmen out to loot the country as fast as possible and to hell with everyone else; the Democratic Party, unfortunately, is at least 50% wafflers who compromise “half way” with these lunatics. I’m not sure how to get a majority of sane people in the government, but it probably involves abolishing the antidemocratic, malapportioned US Senate, as well as the electoral college. Which is not going to happen until things fall apart even further.

        • EngineerScotty

          If you consider the post-colonial history of the UK, it involved a generation of essentially socialism.

          If you consider the post-Imperial history of Germany, OTOH, the results are far more frightening.

          That said, I’m not quite as pessimistic as Wad’s speech, or the Vonnegut-esque character giving Wad’s speech, if one assumes a bit of artistic license on Wad’s part. For one thing, Wad himself doesn’t seem to be running for the exits, at least not yet. For another, many of the rising superpowers cited in the speech have numerous social problems of their own–places like Brazil and Russia are seeing economic booms, but are fraught with corruption, crime, and/or violence on a scale well beyond that found in US. China is certainly on pace to displace the US as the world’s leading economy; the rest of them, not so much. For a third, the good citizens of Wisconsin, at least, seem to be figuring it out–future generations may well sing praises to Scott Walker for single-handedly breaking the spell. :)

          For a fourth–despite all the brickbats lobbed at Obama in this thread for taking an insufficient hard line against an obviously dysfunctional GOP, he’s still one of the sharper political minds in DC, and has shown a remarkable ability to snatch victory from the jaws of defeat–the portrait that some on the left paint of Obama as a willing tool of big business is every bit as wrong as the portrait the right paints of him as a scheming Marxist interloper.

          • John W

            Sorry – when was this “generation of essentially socialism”? There’s this prevalent view, especially among Americans, that sees things as either-or. But in reality, capitalism and socialism are two end points of a continuum – there are no, as far as I know, any pure capitalist or socialist states: for the former, you’d need to have zero taxes (i.e. every local street would have to be privately built or built on subscription), and for the latter, there would be no currency. So I’m not sure what this essentially socialist state was, or how it differs much from how things are now. The only thing that I can think of that restricted personal choice in personal expenditure had nothing to do with post-imperialism and everything to do with scraping a win out of WW II – i.e. rationing. Or am I missing something?

            • No, he’s right. Postwar Britain was quite socialistic, with rationing and travel restrictions early on, nationalized industries, very strong unions, and public housing. It all went away when Thatcher came to power, but it existed for a while.

  • These are times for real Republican Reps to stand up to the anti-infrastructure nutjobs that don’t have a clue about good governance. Its been conclusively proven worldwide that countries emerge from recession quicker when they invest wisely, cut overall spending and tax the right things at the right levels.

    By every K-12 education, healthcare, sustainable energy and transportation measure, the USA is falling behind while producing more millionaire-billionaires paying far less taxes than any other Democratic nation. The middle class is gradually shrinking while rightwing nutjobs attack the only president trying to prevent it from happening. Sorry Clinton fans, he didn’t make the big infrastructure investments. He benefited from additional internet/computer jobs that kept the economy humming. to his credit, Clinton stayed out of unnecessary wars.

    Its amazing how so many middle class Republican voters are duped by rightwing nutjobs to think of President Obama and Senator Reid as tax-the-rich socialists. They are literally voting against their best interests and those of their children. If Obama, the Demo-led Senate and a handful Repub Reps don’t put country over hate-politics to reverse the infrastructure underinvestment, we are witnessing the gradual fall of “modern Rome” in the next 25 years.

    • Drewski

      Y’know, you’re right, and Thomas, I’m damn glad you said it. There are a majority of Chinese who view their mega infrastructure projects as gestures of both national pride and national (economic) security. People around the world do the same in their countries. They know they’re being taxed, and they view a new railway, highway, metro, or streetcar line as another way their country/region/city is expressing its influence, prosperity and longevity.

      Compare that to the US. Let’s try this one idea. If, for example, the Federal Transit Administration somehow came up with cash to pay for electrification and full grade separation of the VRE line to Manassas VA, do you think Virginia or the lineside cities would agree to it if it included limits on development more than 5 miles from the line? Of course they wouldn’t. Even if the locals had the power, they’d be sued out of it in state or Federal court. The state/commonwealth does have the Constitutional power to determine land use, but there’s not one state in the country which has ever taken a truly hard-line stance on this. Not one state in recent history has completely ruled out development which would inevitably outstrip existing infrastructure capacity.

      Imagine the difference in Greater DC if developers in Maryland or Virginia had to keep their projects within a specified distance of existing corridors? Imagine that the McMansion Country of places like Loudoun County was essentially banned? Imagine that a Metro extension only allowed development of surface area within a specific radius of new stations. Imagine retaining diversity of density with this policy, while preserving government’s ability to control development as a way of maximizing the value of public infrastructure expenditures. Oh, and maybe allowing local government to work to maintain the value of a homeowner’s property, by thwarting careless development.

      Look at Germany. There are no commercial flights between Berlin and Hamburg. There are ICE trains every hour during the day. In the US, we can build a grade-separated Interstate across the Dakotas, but somehow it’s crazy to talk about a 150-225 mph train from Denver to Albuquerque. Really? That’s “crazy”, but the analog of that is exactly what’s happening in Spain, like from Madrid to Valencia. Spain is allegedly broke, but Spain and its local governments are still spending on transportation. Spain is hurting, but building for the future. Japan’s population is in decline, but Japan just opened another HSR line.

      Where is our pride? Where is our identity? Where is our willingness to demand that our rich pay like everybody else does? Why do we eviscerate our personal and national wealth to appease wingnuts like the Koch brothers? We have great cities, and more than can be great–why do we let speculators and fraudulent mortgage lenders shape our landscape, instead of a legitimate respect for true market risk, and true ownership? As soon as you answer that, you answer why we don’t have true HSR in the US. Simply put, we’re too busy distracting ourselves from our own reality, like the rich family in “The Good Earth.” (Which I’m re-reading now.)

      • Drewski,
        The attacks on California, Illinois, Florida or Virginia HSR don’t have a logical basis. It leads me to conclude that either specific parties haired hacks to protect their profit interests or contrarian journalists are making a name for themselves to stay employed. In either case, nation be damned.

        As you alluded, the most telling evidence about these critics is they don’t blink an eye about expanding Interstate Freeways in sparsely populated states – the most inefficient use of tax dollars for transportation.

    • Woody

      ThomasD, You say it’s been “conclusively proven worldwide that countries emerge from recession quicker when they … cut overall spending … ”

      I don’t think any such thing has been proven.

      For 40 or 50 years that has been the standard IMF-imposed program on developing countries that went off the tracks. Sure, many of them needed to cut their spending because much of it was wasted, and that’s not good for an economy.

      But cutting spending is a policy prescribed by bankers and for the bankers, but not necessarily a policy for the economy or the people.

      I’m not sure how many of those IMF-plan adoptees emerged from recession “quickly”. There’s certainly some argument that countries that rejected the IMF formula, i.e. Argentina about a decade ago, have actually outperformed those that drastically cut government spending. (This a transportation blog, so let me inject that Argentina has been rebuilding railroads and adding to the Buenos Aires subway system.)

      The argument of John Maynard Keynes was that when an economy slows down too much and can’t get going on its own, the solution is to have government borrow and spend until real recovery is in place. This way the government creates demand to soak up the oversupply of unemployed labor and unused production (think vast housing tracts across the Sunbelt or half-busy factories in the auto industry, etc).

      In our country’s experience with the Great Depression, once Roosevelt started following Keynes’ advice, the economy grew over 10% a year. But the Repubs were crying that spending was getting out of hand. To appease them and appear moderate, FDR turned around to cut way back on spending on make-work and infrastructure projects. A sharp, deep recession promptly followed. Any similarities between FDR’s 1938 budget and the 2011/2012 budgets are NOT coincidental. Fasten your seat belts.

      But to finish up, with the outbreak of World War II, every patriotic Congresscritter said, Damn the deficit, spend what we must to win the war. Budget deficits soared along with the national debt. When GIs came home to an economy swimming in money, they easily found jobs, and a boom began. For almost 30 years the US coasted along in a post-war glow, thriving while the national debt shrank almost every year measured as a percent of the country’s economy.

      So in our own history, cutting spending in hard times makes times harder, while having the government spend can restart growth and lead to a solid recovery.

      • ThomasD, You say it’s been “conclusively proven worldwide that countries emerge from recession quicker when they … cut overall spending … ”

        Woody wrote, I don’t think any such thing has been proven.

        ThomasD responds, its the degree of spending cuts that matter — not draconian cuts and not to health, education and transportation infrastructure. In fact, health care for all must be strengthened to help Americans live longer healthier lives like Europeans and Japanese do compared to us. America’s millionaire-billionaires, if they don’t want a Egypt-like populist uprising down the road, must accept that it is both fair and wise to be taxed higher — they and their children will still be rich.

        Military must be cut and tax loopholes must be eliminated. Only after all those things have been done should we consider raising Social Security retirement to age 66.

        • Adirondacker12800

          should we consider raising Social Security retirement to age 66.

          It already is 66 for anyone born after 1942, 67 for anyone born after 1959.

  • Jack Hope

    Unfortunately, the crisis in infrastructure is merely symptomatic of the far deeper crisis in the United States that virtually no one is willing to even consider: that the United States is lurching towards a systemic institutional breakdown that will profoundly disrupt every aspect of American life. The failure to build for the future is just the beginning of this and the most obvious manifestation.

    This is a problem that surpasses the usual politics and although both political parties in the US are to blame, the anti-government forces can take most of the credit for pushing this along. When an institutional system promotes those who dismantle the institution, it cannot survive. When a culture rewards those who refuse to govern, the government is not long for this world. Inertia can carry it a long way, but sooner or later the end will come. You can already see it in the collapse of American infrastructure.

    The American Right has got one thing right in their recent rhetoric: America is broke. Not financially, but in its very system of government. Until that’s fixed, I’m not holding my breath that the general decline in infrastructure will be arrested.

    • Nathanael

      The American Right is quite right that the system of government is broken. Of course, a responsible party would attempt to patch it up (perhaps offering Constitutional amendments for a national popular vote for President, or the abolition of the Senate, or proportional representation in the House); they attempt, time after time, to make it even worse.

  • BLambert

    You could’ve just written “The United States suffers from a deficit of long-term thinking” and still been on the nose with this article.

  • It’s hard for me to support an increase in the gasoline tax when I know that the lion’s share of the money will go to highways (and probably highway expansion as opposed to maintenance) instead of transit and pedestrian/bike projects.

    Hence, Republicans’ unwillingness to increase taxes has the ironic effect of making it harder to expand the sprawl-inducing highway system. Maybe you can argue it’s fair that highways get most of the money given how people travel, but I still think it’s a mistake not to radically rebalance the modes we invest in.

    So, be careful what you wish for :)

    • Chris

      Yeah I tend to agree. There’s few more damaging factors in transportation policy than the involvement of the federal government. It just doesn’t make sense that in order to expand the subway in New York, with money raised from taxes on New Yorkers, we need to funnel that cash through a body where 49 other states are equally represented.

  • Mike O

    > taxes are the lowest they have been in 60 years.

    This link is good, however it represents “Internal” revenue.

    Tariffs – about 25 billion – are about the same size as excise taxes, so the premise that taxes are the lowest in 60 years is valid.

    I feel tariffs could play a bigger role in reducing the debt.

    • Andrew

      Tariffs on imported goods is probably the only form of taxes that will actually help bring jobs back to this country.

      • Wad

        Andrew, probably not anymore.

        Trade is no longer like-for-like goods. Trade is under a more complex system of balance of payments.

        When we trade with a foreign country, we usually import their goods for public consumption. But … they don’t return the favor.

        What gives? Well, the U.S. doesn’t trade for labor; it trades for value.

        A foreign country doesn’t want American goods or services, for rational or irrational reasons. However, it receives dollars in exchange for the goods and services it has sold. Those dollars can’t be expatriated, so the dollars must stay in the U.S.

        The foreign countries instead tie up the dollars in American capital. The dollars typically don’t leave the finance markets. They’ll be invested in Treasurys, stocks, bonds, commercial paper, commodities or real estate. Not much of this translates down to the consumer or the worker.

        What would happen if the U.S. sets up a tariff wall? Our trading partners would pull their capital out of the markets, and the U.S. wouldn’t have the capital to meet domestic demand, let alone export markets.

        You’d see the 2008-2010 tight credit and unemployment become a permanent condition of the economy.

      • When you say it’ll bring jobs back, are you counting the loss of jobs coming from retaliatory tariffs?

      • Ocean Railroader

        The US has to do something with the run away imports in that we can not win angist someone who will work for a dollar a day or even a dollar a hour and will work for a month with two days off and work ten hour days seven days a week it is simple in that respect.

        There is also something that is over looked in the US is that a lot of people need working jobs where they can work in a factory and get paid a good living in that not everyone has the time or money and resources to get a to spend eight years and $50,000 plus dollars master’s degree and get a super high tech job. We need start thinking about getting our good jobs for the bulk of us back.

        • Germany has a pretty good approach for 2 year trade schools after high school. If I’m not mistaken, federal taxes even pay for their education. Who wins? Every German, because their whole society is uplifted by a solid tax-paying blue-collar class. Their GDP coming out of the recession is growing faster than ours.

          • Max Wyss

            Actually, these trade schools are supplementing formal apprenticeships. So, after leaving the “regular” school, and not going for “higher education”, you will choose a profession you want to learn, and sign up with a company in that trade, and parallel to your practical apprenticeship, you attend the trade school (for theoretical professional knowledge and general education). The duration of the school depends on the duration of the apprenticeship (2 to 4 years). The schools are public, and if there is an admission fee at all, it is more on the symbolic level.

            The result are rather well trained people with a good skill set.

            • Max,
              Thanks for the added insight about German trade school education. Why can’t we do something similar in America?

              • Because, back in the 1900s, the US came up with something better: academic high school for everyone. This was partly about opportunity, and partly about turning Jews and Italians and Poles into Americans by means of shared education. As a result of the more egalitarian education, for several decades the US was much more socially mobile than Europe.

                The problem is that since then, high school has become nearly universal in all developed countries, and the US system of higher education is expensive and elitist. As a result, the US now lags in education and social mobility.

  • Mike O

    America imports about $ 2 trillion. Tariffs are about 1 percent of that. Raising tariffs 5 percent would yield $200 billion. But a 5 percent tariff would not start a trade war. And would not change buying habits much.

    There is already a 2.5 percent tariff on imported cars. Nobody seems to notice. Also imported pickup trucks have a whopping 25 percent duty – the famous “Chicken Tax”. What, you never heard of it? My point exactly.

    A general tariff, indexed to unemployment (say 2 percent steps for each point of unemployment over 6 percent) would hardly be considered an “attack” on one country’s products, and would serve to create jobs.

    As far as exports, we do export 1.3 trillion in stuff, granted it should be bigger. But I do agree, dollars wind up being invested, mostly in non-job creating investments.

    • A general tariff, indexed to unemployment (say 2 percent steps for each point of unemployment over 6 percent) would hardly be considered an “attack” on one country’s products, and would serve to create jobs.

      Tell that to the WTO.

      • Andrew

        The WTO wants our jobs and money to go away…
        At least that’s the impression that I get…

        • The WTO is a forum where different countries agree to reduce tariffs on one another’s products. If anything, it’s biased in favor of rich countries. Biased intellectual property agreements, farm subsidies, export assistance, and aid dumping are allowed; tariffs, which are the only weapon available to developing countries, are not. Besides, since most countries have entrenched protectionist lobbies, most will jump at the opportunity to be allowed to issue retaliatory tariffs.

  • Barry Gore

    The Feds should set a stable price range for gasoline, something around $4 per gallon, and then have an adjustable tax at the rate necessary to make up the difference when the price falls below that level. A tax should be imposed on oil speculation when the level goes above the set range. This would then provide the revenue necessary to fund surface and air transportation infrastructure, and reduce the volatility. How can politicians say that raising the tax something like 15 cents is too much, when in the last month the speculators have raised the price more than a dollar?

    The White House let Oberstar go down in flames instead of getting behind his transportation bill, which would have provide a crucial second stimulus.

    A new federal level rail authority (i.e. a SNCF) should fund and contract for a national rail system and cut out the crazy politics at the state level. At some point the United States needs to become a nation, but for now we are de-evolving into squabbling states vs. federal fights with a group of tin-pot dictators at the helm

    • Alas, the voters of Minnesota made their choice and it was not Oberstar. I can’t speak for the rest of Oberstar’s policies, but I am certain that however replaced him to 3 grades behind in representing 21st century transportation needed today.

      “A new federal level rail authority (i.e. a SNCF) should fund and contract for a national rail system and cut out the crazy politics at the state level.”

      I fully agree. The core competence of Federal Railroad Admin is freight rail and freight rail has a completely different biz model the HSR and improved commuter rail. After the budget passes, America needs a Federal HSR agency.

  • Bill Coke

    It might be worth noting that the great railroad expansions in the 19th Century including the transcontinental railroad were funded with private capital and huge infusions of federal money. And much of this took place during the Civil War with Lincoln’s leadership.

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The Site / The Fight

  • by Yonah Freemark
  • Twitter: @yfreemark
  • yfreemark (at) thetransportpolitic (dot) com
  • Le progrès ne vaut que s'il est partagé par tous.

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