Cut Back the Department of Transportation

By Chris Edwards – Re-Blogged From

The Department of Transportation subsidizes and regulates highways, airports, air traffic control, urban transit, passenger rail, and other activities. However, taxpayers and consumers would be better off if many activities were privatized, which has been a worldwide trend. Opening up the financing and operation of transportation infrastructure to the private sector would save money, spur innovation, and reduce congestion.

The department will spend about $80 billion in 2015, or about $650 for every U.S. household. It employs 56,000 workers.

  • Federal Highway Funding. Highway aid gets misallocated and related regulations stifle local innovation. Highway aid and federal fuel taxes should be ended, and the states should pursue toll highway projects with the private sector.
  • Urban Transit. The federal government spends billions of dollars a year on urban rail systems even though buses are often more efficient. Without federal subsidies, cities would make better choices for their local transit needs.
  • Airports and Air Traffic Control. Airport subsidies should be ended and U.S. airports privatized, as has occurred in many major cities abroad. Air traffic control should be commercialized, with Canada providing a good reform model.
  • Privatizing Amtrak. Government-run railroads don’t work due to political meddling, high labor costs, and a lack of management flexibility. Amtrak should be privatized to provide efficient service on those routes that make economic sense.
  • High-Speed Rail. Policymakers are dumping billions of dollars into high-speed rail, even though foreign systems are money losers and carry only a small share of intercity passengers.
“Having considered the bill this day presented to me entitled ‘An act to set apart and pledge certain funds for internal improvements,’ and which sets apart and pledges funds ‘for constructing roads and canals, and improving the navigation of water courses’ . . . I am constrained by the insuperable difficulty I feel in reconciling the bill with the Constitution of the United States to return it with that objection to the House of Representatives. The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers.”  

James Madison, March 3, 1817. Veto of federal transportation spending.

Most Department of Transportation activities are properly the responsibility of state and local governments and the private sector. There are few advantages in funding infrastructure such as highways and airports from Washington, but there are many disadvantages. Federal involvement results in political misallocation of resources, bureaucratic mismanagement, and costly one-size-fits-all regulations imposed on the states.

The Federal Highway Administration should be eliminated. Taxpayers and highway users would be better off if federal highway spending and gasoline taxes were ended. State governments could more efficiently plan their highway systems without federal intervention. The states should look to the private sector for help in funding and operating highways, and they ought to move forward with innovations such as expressways with electronic tolling.

The Federal Transit Administration should be eliminated. Federal transit subsidies have caused local governments to make inefficient transportation choices. Federal aid favors rail systems, which are more expensive and less flexible than bus systems. The removal of federal subsidies and related regulations would spur local governments to discover more cost-effective transportation solutions, such as opening transit markets to private operators.

Air traffic control should be removed from the federal budget, and the ATC system should be set up as a stand-alone and self-funded agency or private company. Many nations have moved towards such a commercialized ATC structure, and the results have been very positive with regard to efficiency and safety. Canada’s reform in the 1990s to create a private nonprofit ATC corporation is a good model for the United States to follow. U.S. ATC is currently overseen by the Federal Aviation Administration, which has serious funding problems and a poor record on implementing new technologies. Moving to a Canadian-style ATC system would help solve these problems and allow our aviation infrastructure to meet rising aviation demand.

Amtrak has provided second-rate rail service for decades, while consuming almost $40 billion in federal subsidies. It has a poor on-time record, and its infrastructure is in bad shape. As a government agency, it is hamstrung in its decisionmaking regarding routes, workforce polices, capital investment, and other aspects of business. Amtrak should be privatized to give it the management flexibility it needs to operate in a more efficient and competitive manner.

The table shows that federal taxpayers would save about $85 billion annually by closing down the agencies and programs listed. The department would retain its current activities regarding highway safety, aviation safety, and some other regulatory functions. Those functions could be reformed as well, but the most important thing is to end federal subsidies for transportation activities that would be better handled by the states and private sector. America should take heed of the market-based reforms being implemented abroad, and pursue similar solutions to its transportation challenges.



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