First let me say that I'm an admirer of Mary Peters. She has a lot of good ideas, including a broad focus on policy that would affect demand for, and not just supply of, transportation services. This translates to a relentless focus on efficiency of the system, something that's desperately needed. To her credit, she also has a clear vision for the system's future, and has consistently driven towards fulfillment of the vision.

However, for reasons stated by others on this blog (such as Parris Glendening), while there are useful components to her vision that should be incorporated into a new federal policy architecture I think overall it's a poor fit for a fiercely competitive, global 21st-century economy.

The federal role needs to be expanded. We need our government to build the infrastructure that will boost workforce and company productivity in our metropolitan regions, which compete not just with each other but with regions around the world. This can't simply be cobbled together at the local or even state levels, there needs to be a national strategy, well structured and capitalized. This does not necessarily mean matching other countries vis-a-vis percentage of GDP spent on infrastructure. That's a coarse metric for gauging effectiveness of a program. But the program does need to be scaled up.

Most important, however, is the fact that performance matters, or as Steve Heminger implies in his post and particularly his last observation about the price tag, the federal role needs to be much more effective and clear. It is indeed premature to debate the price tag without some measurable support for a new policy which offers clear benefits (and a path for getting there) in terms of performance metrics that are important to the nation -- increased productivity and jobs, decreased congestion, reduced dependence on oil, reduced heat-trapping pollution, and improved quality of life, for example.

Last but not least, the other challenge we face is communication, an area where I think the transportation industry is woefully deficient. For example, people don't want to hear about "infrastructure" or other vague terms that make one think of a bureaucracy awaiting more hard-won taxpayer money. We want to know that investments will pay off in ways that benefit the nation, and us. Those of us who work on transportation may not be able to produce a tool as compelling as a map that galvanizes the will to pay for a new program, as in the case of the Interstate system (although the Administration's map of high-speed rail corridors takes a stab), but I think we can paint a picture that is compelling enough if we set our minds to it.

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First, let me agree with Steve Heminger--we can't let an arbitrary sum of dollars drive our thinking about the scope of a federal transportation program--whether that sum is what we now have available, or what we think might be raised in the future.

And then, I want to take a comment from Ken Orski, who picked up on the point made at the Miller Center conference about "federal role" vs "federal interest," but take that idea in a different direction.

One thing we have learned over the years is how much transportation affects a number of issues we care about.  Defining the "federal interest," for me, means identifying areas where there is consensus about desired outcomes--outcomes broader than just transportation measures--and determining how transportation policy and programs can help acheive those outcomes.  The outcomes can cover a wide scope--reduction in greenhouse gases, improvement in economic performance, reduction of health care costs by improving transportation safety, development of livable communities, improvement in social equity or whatever else the public has identified as national goals.

The task for those charged with transportation policy and program development is to determine whether, and how, transportation can make a difference, and whether transportation investments (dollars or policy intitiatives) can do as well or better than other interventions.  Then, with a clear idea of what we want to achieve, we can size investments accordingly. or establish policies that draw on the relationships created through our investment programs.

The alternative approach, linking only to physical systems, and defining the federal role as providing certain systems but not others has real drawbacks.  It's the kind of approach that led us to build Interstate highways without looking at what they meant to cities and towns or improving airports without concern for how people get there..  Transportation decisions don't neatly sort out that way.  The transportation system is more than a collection of its individual parts,and the quality of federal actions will be improved if those actions aren't constrained to particular components.  This is not to say that the federal government does, or pays for, everything.  There need to be strong efforts by states, localities and the private sector.  But sometimes it will make sense to guide or invest in those efforts as they affect "national interests."

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There was a time in the nation’s history when the federal government led the way in building some of our greatest infrastructure systems, but since then federal leadership has decreased and the condition of the nation's infrastructure suffered. Correcting those decades of underinvestment and lack of maintenance is going to require a strong, national vision, which is why ASCE included increased federal leadership as the first of our five key solutions in 2009 Report Card for America’s Infrastructure.

While the actual amount spent on public infrastructure continues to increase, this investment as a share of GDP is in decline—from a peak of 3 percent in the late 1950s and early 1960s to range of 2.3 to 2.5 percent since the mid-1980s. This level of investment demonstrates an opportunity for the federal government to adopt more of a leadership role, not only by funding infrastructure improvements, but, just as importantly, by providing goals and principles to all levels of government for investment. By aligning its infrastructure policies to support increased investment in infrastructure, environmentally sustainable development, efficient and reliable transportation systems and sustained, robust economic growth, the federal government can provide the vision and leadership we need to be successful.

Despite the need for a stronger federal role, we can’t just continue business as usual. As has been discussed many times on this blog, the federal surface transportation program has to be focused on expanding the system, implementing performance-based measurements, improving the environment and addressing intermodal solutions to increase freight and passenger mobility. Attaining such high-level goals is going to require making serious changes to our current programs; changes that cannot be done in a piecemeal or decentralized manner.

That’s not to say that states, regions and local communities won’t play an important role in the future of our transportation system. They will have to work closely with the federal government to determine how to meet the needs of the system’s users and best use the funds, and they will also have to be responsible for raising some of the needed revenues. Where feasible, this can be done through working with private interests to develop and enhance projects through public private partnerships.

If we are serious about improving the nation’s surface transportation system so that it can meet our current and future needs and continue to support our economy, the federal role has to expand not shrink. The system’s users do business on a global scale. If we’re not at least thinking on a national scale, how can we ever hope to successfully achieve our goals?

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It’s paramount that the next surface transportation authorization bill maintains a strong federal role and provide for the creation of a national freight program. The success of our nation’s economy relies largely on the transportation of freight, and ATA predicts that total U.S. freight tonnage will increase by 26 percent by 2020. Trucks deliver nearly 100 percent of consumer goods and about 70 percent of overall freight tonnage in the United States. Economists predict this trend will continue, so we must expand and repair the aging National Highway System to meet these demands. ATA supports funding this expansion by increasing the federal fuel tax, but only if all proceeds go into the Highway Trust Fund, are correctly targeted at the most needed projects, and are not diverted to the general fund.

Also, federal government should tie infrastructure investment to system performance by requiring recipients of federal funds to meet performance standards related to safety, infrastructure condition, congestion reduction and emissions. Moreover, infrastructure projects must recognize the critical role of freight transportation in meeting the nation's economic needs. Specific proposals that establish a new core Freight Improvement Program will dedicate money to the National Highway System -- which carries 75 percent of truck traffic -- and other highways designated by states as important to meet freight mobility needs.

And what is the appropriate role for the private sector? Without complete transparency, taxpayers do not know what to expect from Public-Private Partnerships. The United States cannot maintain a national highway network if key segments are leased to the highest bidder. Leasing existing roadways allows states to only postpone, not solve, their budget problems. The Indiana toll road’s 75-year lease finances the state’s transportation plans for only the first 10 years. After that the state will have to deal with the same budget problems, but without revenue from the toll road.

Private financing and private operational control of transportation infrastructure do not guarantee greater efficiencies or cost-effectiveness. In fact, private financing of infrastructure is normally more expensive than public financing.

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How right Ken Orski is to distinguish between a federal “interest” and a federal “role”. There is a federal “interest” in food being good for us, but it does not follow that there should be a federal “role” in the actual provision of food. Food stamps can be provided to those unable to afford food, but it does not follow that governments should finance, establish or operate food stores.

Since the completion of the Interstate Highway System, the federal financing role in surface transport has been conspicuous by its irrelevance to “core national priorities”. What has the Obama administration done to justify further federal involvement? Where is the analysis justifying investment in “High-Speed” rail?

As federal money is free to states receiving it, they have incentives to claim as much as possible, so there is no way of knowing whether $500 billion would be too much or to little to meet the needs of transport users. In the absence of convincing investment criteria (which Congress does not provide), common sense would suggest that investment for each transport project should depend on users or beneficiaries being prepared to pay for it.

If transport users’ “willingness to pay” were to be adopted as the basis for transport investment, then the required facilities could be financed by the states, or even privately and, as Mary Peters indicated, the federal contribution could thus be reduced. 

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This, of course, is a fundamental question and one that deserves more discussion than it usually gets. As Steve Heminger notes, the public is likely to have little appetite for spending a half-billion dollars absent a clear picture of what they will get for it. Without trying to give a complete answer in a quick post, here are a few thoughts:

Nearly everyone seems to agree that the existing federal program, begun under President Eisenhower in 1956, has run its course. The Eisenhower program’s urgent goal was to induce states to build a national highway network to connect our major population centers and get this nation on a secure footing both economically and militarily. That goal has long been met, yet we continue to funnel money to state departments of transportation with the mandate merely to keep spending, with little accountability for the consequences.

Today the federal role should be to ensure that our world-class highway system, an astounding share of which is entering the late phase of its original design life, is preserved and that it operates as efficiently as possible.

In addition to preserving our assets, we need to address the thoroughly dysfunctional urban and suburban transportation systems we have, and for which there is no meaningful national policy. The vast majority of Americans, more than 80 percent, live in metropolitan areas that are all but crippled by convoluted and unaccountable planning and project delivery processes, even as they suffer through overworked highway networks, incomplete and disconnected transit systems, and streets that are unsafe for pedestrians and bicyclists alike. Ensuring that people and goods can flow and reach their destinations in our metro areas – without worsening our oil dependency and climate or harming our existing communities and quality of life – is central to our economy and is clearly a cause for national concern.

U.S. DOT Secretary Ray LaHood had the right idea in his recent remarks:

“The fact is, metro areas hold over 80 percent of the U.S. population. They’re major centers of economic activity. And they account for most of the congestion and greenhouse-gas emissions.  Empowering metro regions to tackle their transportation and energy problems will move us closer to enjoying cities and suburbs that are cleaner, less congested, and less polluted than many are today.”

The other urgent need is to develop a meaningful policy for the rural areas and small cities and towns that have been pushed to the economic margins. For two generations the only answer federal policy has offered for the rural economy is to get to in line for a bypass. In our outreach to rural communities across the country, we have found that a much more diverse and responsive set of solutions is needed.

All in all, the federal role, in terms of being an active and attentive participant, does not need to be diminished so much as it needs to change. As a nation, we must not shrink from spending what we need to spend to remain prosperous, healthy and forward-looking. However, we certainly cannot afford to raise and spend tax dollars – from the gas tax or any other source – simply to continue a federal program that is not accountable for making progress on important national goals. Our large and broad coalition, representing millions of Americans from all walks of life who depend on our transportation system, will work hard to support the former, and will fight just has hard to prevent the latter from continuing.

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It is ironic to me that at a time when both Republicans and Democrats appear ready to pass a highway bill, the Administration wants to put it off and we are debating the relative merits of private investment vs. federal funding when we know that both are required in ever-greater magnitudes.  The fact is that highway bills are among the few bills that both parties in Congress have long believed merit strong federal funding. And at a time when the economy suffers an employment downtown, both parties believe that highway bills offer real stimulus for job-creation. No one would argue against more private investment, but let’s take full advantage of the unique attributes of a federal program that can achieve bi-partisan support. 

The United States spends a small fraction of what would be considered an average competitive investment in transportation infrastructure. We are far behind other players in the global economy, such as China and Canada, on this issue. To continue to be competitive in a global economy the United States must invest in our transportation infrastructure. A program with a budget that falls under $300 billion will not be enough to maintain the existing infrastructure, let alone pursue new projects.

We must reauthorize at least $500 billion over the next six years if we are to fix existing roads, bridges and transit. To maintain the current structure, however, is not enough. We need a major expansion of mass transit if we are to strengthen national security by reducing the need for oil, reduce carbon emissions and remain economically competitive.

Recognizing that near future gas prices will cause great harm to family, local and national economies, national governments around the world are investing dramatically in transit. Witness China – one of our major competitors – as a striking example.

Transportation is a core function of the national government. Consider the national support for canals at the beginning of the Republic, of the railroads as we expanded west and more recently of the interstate highway system. Now, ideological opponents want to place transportation further down on the priority list at a crucial time. Transit is our future.

Our most important transit systems are regional, such as the North East corridor systems serving more than 110 million people and the center of our financial and governmental systems. To suggest that we step back and rely only on state and local revenue is just a back-door effort to block the growing support for mass transit.

The local, state and federal government must take an active role in prioritizing transportation infrastructure. National security, competition in the marketplace, controlling fuel costs and emissions reduction in the wake of climate change are all are all at stake.

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Much as I admire and respect Secretary Peters, I cannot wholly agree with her position. First, while tolls and private financing are valuable, their use is  limited to high density corridors, The unavoidable truth is that we need significant increase in user fees- gas tax at present and VM fees in the future.These fees were not controversial in the past but have become politicized now. If we create a compelling vision and tie spending to perfomance, we will regain credibility.With the united front of AASHTO, contrractor and designer groups and users and business, the time to press forward is now.The issue is national in scope and the federal government must take the lead.  

To her credit, former Secretary Mary Peters offers an intellectually honest view, yet I believe ultimately a flawed one, for how our nation should deal with the financial and policy crises we have across our transportation system. The “federal interest requirements” she discussed during the Bush Administration (and reiterated during the interview) leave little room for the public parts of our system where privatization, long-term leases and concession income are insufficient to pay the capital and operating parts of our system. After all, if they could, the private sector would already be operating them profitably and we would not have public transportation in many of the areas we do (e.g., Amtrak, transit, rural aviation, highways). 

In an increasingly interconnected world with a globalized trading system, a demographic time-bomb looming on the horizon, greenhouse gas emissions, and energy security issues, federal leadership and funding of rural, metropolitan, intercity and international infrastructure projects are vital. Hamilton foresaw it, the Whigs fought for it, Roosevelt codified it and, if we needed a further reminder or an update, the Commissions hit us on the head with it. Defining the interstate commerce clause as applying to only commerce or travel that crosses state lines in a world with a global supply chain and networked passenger transportation is inaccurate, quaint and outdated legally by at least 70 years.

The past Administration’s embrace of federal retrenchment is regrettable as some of the ideas Secretary Peters discussed during her tenure were certainly sound: the need to access new sources of capital by increasing the use of public private partnerships (PPPs) is one; and the need to better tap the benefits of aligning the costs of using infrastructure with the prices passengers and shippers pay is another (e.g., the Bush Administration’s FAA reauthorization proposal). The difference is that we need PPPs and market-based pricing alongside an increase in the fuels tax and an eventual shift to user fees that include market externalities, not as substitutes for them. As John Horsley enumerates, our needs are many.

Unfortunately, by linking a federal retrenchment with the problems of trust fund imbalances and a shift to market-based pricing, Secretary Peters and her supporters created the mistaken impression that in order for our transportation programs to use more private capital and better inculcate market incentives we have to reduce the federal role. Not only is this a false choice, it needlessly set advocates of an increased and redefined federal role against those that believe that a variety of PPPs can be quite valuable for meeting a portion of our nation’s needs. We in fact should be, and many of us are, allies.

In order to address outstanding transportation needs and achieve outcomes such as converting our industry to use cleaner sources of energy, we need access to existing and new sources of public and private capital and we need to improve the ways we price transportation, whether the passenger or good is moving through the air, ground or water. Fortunately groups as diverse as the American Trucking Association, the Chamber of Commerce, environmentalists and labor agree. 

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The question of whether the federal government should largely abandon its responsibility for a national transportation system has already been answered by two bipartisan national commissions – one of which Sec. Peters chaired and provided a minority report reflecting the position she advocated in her recent interview – and by the interstate commerce clause of the U.S. Constitution. 

Both commissions found that the nation’s aging infrastructure is in crisis and that the future economic health of our country depends on sustained and pro-active investment in our transportation systems. In fact, chronic underfunding of our current transportation system has led us to the point where one-quarter of the nation’s major urban roads are in poor condition, one out of four bridges either needs significant repair or is too narrow to handle today’s traffic, and half of the nation’s transit buses and rail cars have exceeded their service life or will do so within the next six years. Not to mention the billions of dollars lost in time and energy costs because of crippling congestion for both commuters and freight.

The National Surface Transportation Policy and Revenue Study Commission found that the country is investing less than 40 percent of what is needed to meet current needs. Looking to the future, the panel – chartered by Congress – found that at least $225 billion a year would be necessary to meet our national needs, and that all levels of government must continue to fund their historic shares – in the case of the federal government approximately 45 percent of the total for capital improvements to our highways and transits. As the Commission stated, “The problem is simply too big for states and local governments to handle by themselves, even with the help of the private sector. We believe that the federal government must continue to be a major part of the solution.”

State transportation officials agree that the national program should be focused on national priorities, and that the existing cumbersome structure can be streamlined for efficiency. We also support the use of public-private partnerships to help meet the investment needs with all states being given the flexibility they need to determine what works best in their states. 

But let’s keep it real. Just last month, states submitted 1,400 projects totaling $56 billion for consideration in the TIGER grant program – which is capped at $1.5 billion. Twenty-four states are seeking $50 billion for high-speed rail projects, more than six times the money designated in the economic stimulus plan. 

Transportation dollars create physical assets that will last 50 to 100 years, building a foundation for a modern, globally competitive America, one that will enable current and future generations to sustain their families and enjoy an unprecedented quality of life. Surely that is a goal our federal government should pursue.

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Reducing Scope Could Restore Confidence in Federal Program

It’s not only Mary Peters who has concluded that the federal surface transportation program has lost its way, increasingly evolving into a politicized public-works program. That was the conclusion of a March 2008 GAO report (GAO-08-400) as well as the Policy and Revenue Commission. But while the latter claimed to be streamlining and simplifying the program, it actually called for significantly expanding its scope to encompass inter-city rail, environment, and energy programs, in addition to expanding federal transit assistance to cities and towns of all sizes. That’s also what Chairman Oberstar has proposed in the House reauthorization proposal.

Far wiser, in my view, is the kind of rethinking called for last year by Secretary Peters in the DOT’s report “Refocus, Reform, Renew.” As Peters said in her recent interview, the key to restoring public confidence and support is to refocus the federal program on truly national functions, while giving states and urban areas the freedom to address local and regional problems. To me, the most critically important federal government responsibility is interstate (and international) trade and travel, defined as a federal function by the Interstate Commerce clause of the Constitution.  Most certainly not a federal function is urban land-use planning, promoting scenic trails and bike paths, and any number of similar special-interest programs that have been grafted onto a program originally created to build the Interstate system.

A related issue is how to pay for the federal transportation function. If we pared back the truly federal role to enhancing, rebuilding, and maintaining the Interstate system and adding various intermodal trade connectors, the sums raised by the current federal fuel taxes could well be sufficient for the next reauthorization period. That’s especially true if Congress continues the trend of the past two decades of reducing restrictions on states’ use of tolling and public-private partnerships rather than, as the House bill proposes, significantly increasing such restrictions.

In the October issue of the Reason Foundation’s “Surface Transportation Innovations” newsletter, I further suggest that in the context of this kind of rethinking of the federal role, we should shift funding for urban transit from highway user taxes to the general fund. (And likewise, any continued funding for inter-city passenger rail should continue to come from the general fund, not from highway users.) This would return the federal fuel tax to its original purpose of ensuring proper funding for the truly national highway system, putting trust back in the Highway Trust Fund. And it would reinforce the very sound principle of user-pay/user-benefit.

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This is the toughest question in the whole debate about the future direction of the federal surface transportation program: what are the "core national priorities" that the program ought to pursue?   During the Interstate era, the purpose of the federal program was quite clear:  connect the population and manufacturing centers of the nation with a network of grade-separated highways.  In the post-Interstate era (which we entered some 20 years ago), the mission of the federal program is muddled at best.

The National Surface Transportation Policy and Revenue Study Commission on which I served struggled with this question throughout our early debates, but eventually a strong majority of its members coalesced around a vision of the federal role that would be re-focused on a limited set of priorities for a national multi-modal transportation network, including: a state of good infrastucture repair, efficient goods movement, metropolitan mobility, connectivity between regions, passenger safety, and environmental enhancement.  We further agreed that the nation should set ambitious goals to improve performance in each of these focus areas, and that those performance objectives should drive the investment levels that the federal government undertakes with other public and private sector partners.

Now, reasonable people certainly can (and do) reach different conclusions about whether these are the right objectives for the federal government to pursue.  But if we can reach consensus on new national goals for our transportation program, we must follow through with the investment program and system management strategies to meet those goals.  As Ken Orski notes, that will mean both supply- and demand-side approaches to problems like persistent urban traffic congestion.

An authorization process that begins and ends in quarrels about whether we should spend $300 billion or $500 billion or $700 billion will just frustrate the Congress and the general public.  We need to figure out first what the federal program should do.  If we don't know what we're buying, how can we haggle over the price?

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In considering the future of the surface transportation program most of the attention has focused on the “supply” or revenue side: how to pay for the program. In her interview with National Journal’s Lisa Caruso (“Bush DOT Chief Discusses Reauthorization,” Insider Interview, October 8) former Transportation Secretary Mary Peters has reminded us that we also must look more closely at the “demand” side. She suggested that the time may have come when we should limit the scope and size of the federal-aid program to activities and investments “that are truly in the federal interest.”

Over the years the federal surface transportation program has grown to include a variety of programs and activities that, at best, have a loose connection to the primary or core mission of the program: that of preserving and enhancing the nation’s surface transportation system. Useful as they may be in their own right, these “non-essential” programs and activities place a heavy burden on the already strained resources of the Highway Trust Fund. Eliminating them from the transportation budget would not necessarily eliminate the need for additional funding but it could significantly reduce that need.

Secretary Peters is only the latest voice to call for a refocusing of the federal program on investments of genuine national interest. The National Surface Transportation Policy and Revenue Commission made a similar recommendation in its December 2007 report, “Transportation for Tomorrow.” More recently, this issue figured prominently in the discussions at the National Transportation Policy Conference held at the Miller Center of Public Affairs at the University of Virginia.

In discussing this subject, conference participants drew a distinction between “the federal role” and “the federal (or national ) interest”. There are many transportation activities in which Congress and the federal government may have a legitimate “interest” but not necessarily a financial “role.” Perhaps fiscal circumstances will oblige us to adopt a less expansive definition of the federal role and cause us to limit the scope and size of the future federal transportation program to investments that truly advance critical national transportation goals. Which programs to eliminate and which ones to retain could become a key challenge in drafting the next program authorization.

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