Sunday, May 29, 2005

The $284 billion Transportation Equity Act: A Legacy for Users (TEA-LU) which recently passed by the House and is now going through the Senate, raises a natural question: What kind of legacy are we talking about? Congressmen brag about relieving congestion and saving lives, but a quick overview of this spending bill indicates a legacy of high taxes and politicized redistribution of taxpayer dollars.

Significant federal involvement in highways began in 1956, when President Eisenhower signed legislation to build an interstate highway system. Since all U.S. citizens could benefit from a national network of highways, this project looked like a legitimate federal function. The federal government would use fuel tax revenues collected in the Federal Highway Trust Fund to provide 90 percent of the funding, for a total of $25 billion over 13 years. However, as government projects tend to do, the interstate system required much more time and money than initially anticipated: Construction wasn’t completely finished until the early 1990s and the Highway Trust Fund that was supposed to expire in 1972 has instead been renewed several times.

As the interstate highway system neared completion, the Highway Trust Fund should have closed up shop. But as President Reagan noted, “A government bureau is the nearest thing to eternal life we’ll ever see on this earth.” Instead of reducing its involvement in highway administration, the federal government created new ways to spend tax dollars in the “post-interstate era.” The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) broadened the focus of federal highway aid to include all forms of transportation, as well as pollution and energy considerations. Today, nearly any project even remotely related to transportation is eligible for federal funds and politicians are predictably eager to take advantage.

Congress constantly uses the Department of Transportation’s (DOT) budget as a pot of money to deliver pork-barrel projects of dubious value. In 1982, the highway bill contained 10 earmarks that cost taxpayers $362 million. In the 1991 ISTEA, the number of special interest projects increased to 538 and cost $6.23 billion, figures that pale in comparison to this year’s estimated 3,700 pork projects at a price of $12 billion. For instance, the bill includes $3 million for the National Packard Museum in Warren, Ohio; $1.5 million for the Henry Ford Museum in Dearborn, Mich.; and $14 million for the Children’s Museum in Indianapolis. It also includes a $100 million bridge to connect two tiny towns in South Carolina, even though the state’s own governor, Mark Sanford, has questioned the project’s worth.

The federal government certainly has no business building or modernizing museums in Indiana or Ohio. Nor does it have any business in other local projects such as repairing or building city streets, country roads, bridges or mass transit systems. Yet today, many of DOT’s activities include these types of projects that are properly state, local and private-sector responsibilities. It makes no sense to collect federal gasoline taxes from the states, send the money to Washington, pass it through a bureaucratic web of 100,000 workers at DOT and then send it back to the states — with strings attached — to complete local projects.

The redistribution of taxpayer money among the states is made even more inefficient by the heavy influence of political greed. Depending on how influential their congressmen are, some states get huge windfalls from the federal money-go-round, and others get swindled. By comparing federal spending by state to taxes paid by residents of each state, you find that states such as Florida and Texas routinely receive less than 90 cents for every dollar they send to Washington while Alaska gets more than $ 5 .

It is not that surprising that Alaska would want this system to survive. But why should taxpayers from Florida and Texas pay for a $125 million bridge to connect Gravina Island and the town of Ketchikan in Alaska? That they do might be connected to the fact that the chairmen of the transportation-related committees in the House and Senate are both from Alaska. This year, the two chairmen managed to direct $722 million of pork to their state.

In the coming days, as congressmen try to hammer out a final highway bill, they should recall the “interstate era,” when federal highway funding concentrated on truly national infrastructure projects. They should resist the urge to leave users a legacy of high taxes for pork projects. But if they cannot, President Bush should also look to history for inspiration — and not just recent history, but all the way back to 1830, when President Andrew Jackson vetoed a bill to provide federal funding for a Kentucky road because it was “a measure of purely local character.”

The federal government should cease funding local transportation projects and then cut the gasoline tax accordingly.

Veronique de Rugy is a research scholar at the American Enterprise Institute. Kathryn Newmark is a research assistant at the American Enterprise Institute.

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