With all the furor and protests accompanying the launch of the Donald Trump administration, you might assume there’s little room for bipartisan cooperation in Washington.
That assumption is mistaken. The new president says he’d like to enact a 10-year, half-trillion-dollar program of infrastructure investment. Congressional Democrats and traditionally Democratic interest groups such as trade unions love this idea. Many Congressional Republicans and traditionally Republican interest groups love the idea, too. So do some North Carolina politicians who hope the package will pay for long-needed improvements to our stretch of Interstate 95.
I don’t love the idea. I worry that whatever emerges from Capitol Hill will be covered in regulatory strings and stuffed with pork-barrel projects. More fundamentally, I want to see the federal government’s role in infrastructure reduced, not strengthened.
This is an old story in American politics. Throughout the 19th and early 20th centuries, special-interest groups that couldn’t get their favorite projects funded at the state and local levels went to Washington. At first, they were often rebuffed by federal lawmakers and presidents who recognized that “internal improvements” were mainly a state and local responsibility under our constitution, not a federal one.
Eventually, the spending lobbies wore down the opposition. One of the arguments they made was a constitutional one, that the federal government had a responsibility to finance infrastructure if it was necessary for national defense. The initial trunks of the interstate-highway system fit that parameter, because of the need to move troops and weapons rapidly and efficiently.
But as the system proliferated and commercial uses completely overwhelmed the potential military ones, its planning and financing should have reverted to the states. Other infrastructure projects such as airports, seaports, and railroads should never have had significant federal involvement in the first place.
One reason is that those transportation options could always be financed by charging users directly. Automotive transportation couldn’t, because of the difficulty of excluding nonpayers from the roads. Automotive transportation remained mostly a private enterprise, mind you — household and business expenditures to purchase, operate, maintain, insure, and fuel cars and trucks represent about 80 percent of the system’s cost. But the remaining portion, the underlying roads, were financed by a combination of direct user charges (tolls and fees) and indirect user charges (gas taxes levied by the gallon).
State politicians wanted to get roads built without facing the potential political consequences of raising user charges or taxes. Securing “federal money” from Washington was a welcome expedient, although of course all the money originated in the states, flowed through the nation’s capital, and then came back (minus shipping and handling charges).
What should we do now? The worst idea was former President Barack Obama’s plan to “reform” the corporate income tax — increase its burden, that is — and then use the proceeds to finance new projects. Infrastructure does confer net economic benefits, on average, but they aren’t large enough to offset the economic damage inflicted by higher corporate or personal income taxes, as a new Tax Foundation study illustrates.
Raising gas taxes or other user fees is a better idea, although still unpopular and prone to be a net waste of money in many instances. In any event, Washington shouldn’t do it. If more revenue is truly needed, states and localities should raise it. That will make it less likely the money will be spent on low-priority projects.
The best idea of all, however, is to pay for new road investment by reducing government expenditures on other things. For the most part, that’s what North Carolina has been doing over the past decade, by ending about $400 million a year in transfers into the General Fund out of the Highway Fund and Highway Trust Fund. These gas and car taxes would have been spent on something else, but are now being spent on road construction and maintenance. Good.
If the Trump administration and Congress really want to improve infrastructure policy in America, they’ll devolve it to the states as much and as soon as possible.
John Hood is chairman of the John Locke Foundation and appears on the talk show “NC SPIN.” You can follow him @JohnHoodNC.