FREIGHT Act of 2010

The topic for this week’s National Journal blog was whether the Focusing Resources, Economic Investment, and Guidance to Help Transportation (FREIGHT) Act of 2010 will enhance the nation’s freight system.

Emil Frankel, Director of Policy for the NTPP, argues in his latest entry that the problems facing freight transportation are dealt with most efficiently when a broad, programmatic approach to transportation investment is employed. Through this lens, the NTPP views the issues plaguing freight transportation (i.e. increasing congestion, unreliable delivery times) as problems that reach beyond the freight mode and need to instead be dealt with across modal and agency lines.

Mr. Frankel argues that the FREIGHT Act could be strengthened by including, along with goals for economic growth, NTPP’s goals of accountability toward increasing national connectivity and metropolitan accessibility of investments. These goals would make any freight investment benefit the national transportation system as a whole rather than a particular region or state. Furthermore, the FREIGHT Act should include a mode-neutral freight fee in order to further tie funding to investments, enabling performance benchmarks to be met.

Read Emil’s blog post here.

Emil Frankel in the Financial Times

Emil Frankel, Director of Transportation Policy for the National Transportation Policy Project, was recently quoted in a Financial Times article “US deals with the politics of recovery”. In the article, Mr. Frankel argues that a greater emphasis should be placed on how federal funds “perform” as evidenced by how well the funds generate economic activity.

This emphasis on performance is at the core of NTPP’s vision for federal transportation policy reform. Implementing federal transportation policy that aims to foster economic growth, among other national goals, will ensure wasteful or unnecessary projects are replaced with investments that encourage long-term, sustainable economic growth across the nation.

Earmarks in Transportation Legislation

Several troubling reports about draft transportation legislation have emerged in recent days. One, as reported in Congressional Quarterly, seems ripped from the headlines of the Onion (a satirical paper), "Earmark Computer Crashes, Delaying Transportation Bill." A second, reported by Roll Call, reads "Oberstar Less Stringent on Earmarks." Despite the unwanted notoriety Congress gained in the wake of the Bridge to Nowhere, earmarks still persist, and they remain a highly visible benchmark by which the public follows and judges transportation legislation.

The general concept behind earmarks is not misunderstood: people know that legislators want to "bring home the bacon" to their constituents. What is less clear are the negative secondary effects of this pork. Earmarks remain a relatively small part of the overall transportation budget, but like a canary dying in a coal mine they are indicative of more serious and deeper problems. The most pressing concern is that many earmarks are not directed to projects of national, or even regional, significance. Even if some of them are, they were not necessarily submitted or judged with that criteria in mind. Earmarks targeted for specific districts without any evaluation of their national merits are fundamentally at odds with the proposition that federal funds should be spent for national purposes, what we might call a "national compromise."

If earmarks play even half as prominent role as they did in the last authorization, the whole piece of legislation will most likely be tainted, regardless of its other merits. For better or worse, the public has never been able to engage in transportation debate at the national level like it can on many other issues. Transportation legislation is simply too opaque, too non-partisan, and the outcomes too detached, to draw anything but cursory attention from the general media, never inciting the sort of mass emails and faxes that topics like healthcare and gas prices engender. Without a clear sense of how to judge transportation legislation, the media and the public have latched onto earmarks as a leading metric of success. Deep down, people know that earmarks are not a positive example of what economists call the "invisible hand." What is good for them and their representative is not necessarily good for the nation as a whole. The sum of all earmarks is less than the parts.

If it is to be bold and effective, the next transportation authorization needs a broader base of public support than SAFETEA-LU. That will mean more transparency, more clarity about goals, more accountability, and more public support for the overall strategy - because the public needs to buy into however this new program will be funded. These concepts are also at the heart of a legitimate "national compromise." Regardless of their merits, earmarks simply must be contained and limited or else they will threaten every other aspect of reform.

-Daniel Lewis

Is Failed Midway Airport Deal a Blow to Infrastructure Privatization?

Earlier this week the planned sale of Midway airport to private investors by the city of Chicago fell through. Observers such as the Wall Street Journal are calling it a blow to the privatization of infrastructure more broadly. Whether that is true or premature, it highlights an important issue for transportation policy: The private appetite for infrastructure will inevitably ebb and flow with market conditions, experiencing booms and busts over time like other areas. Public policy must take this into account when considering the role that private capital can and should play in infrastructure investment.

In recent years the ability of private capital to invest billions of dollars in infrastructure has been highly touted – leaving the impression that private money can fill a substantial portion of the current investment shortfall. When interest rates are low and credit markets are loose the potential of public-private-partnerships (PPPs) looks much rosier. It becomes easy to imagine that the flow of private money will persist indefinitely, that somehow infrastructure investment is an investment class immune to traditional booms and busts, that it can always and forever provide investment. Under this view, it becomes possible to imagine that the public is best served by abdicating its traditional role as provisor of infrastructure.

Although we have just built up a bit of a strawman to knock down, the outgoing administration had an explicit policy against raising federal fuel taxes and in favor of leveraging private capital as a substitute. It is good public policy to harness private capital when available and appropriate, but similarly it is poor public policy to rely on that private capital for essential infrastructure investments. Public money will always have an important role in infrastructure investment – especially as a consistent provider when the market is not responding. There is also a specific federal role to be played in addressing critical investments of national importance. There is, without a doubt, a beneficial role to be played by PPPs, but the limitations of that approach have become apparent in the current economic crisis. Public policy must take all this into consideration in the upcoming authorization bill when weighing how public and private money can be used to achieve the greatest good.

-Daniel and Joshua

Congressman LaHood and the Department of Transportation

During his career in the U.S. House of Representatives Congressman LaHood had a reputation for approaching public problems with an open and pragmatic mind.  I am confident that this attitude will translate into a willingness to consider significant reform in the transportation sector during his leadership of U.S. Department of Transportation.  Many necessary changes can only come through legislative action, but DOT can undertake administrative and regulatory changes to promote greater linkages between transportation policy, economic growth and competitiveness, energy security, and climate change. Addressing these issues, which are deeply interwoven with transportation policy areas, is essential in developing a forward-looking federal vision – and DOT can play an important role in this task.

There are a number of steps DOT can begin today to reform the system. Perhaps the most dramatic might be a reorganization of DOT’s structure along functional, rather than modal, lines. The leading example of such a departmental restructuring comes from the United Kingdom. The goal is to better align priorities, objectives, and process while reducing inefficiency and providing incentives for success. A restructuring would help clarify and consolidate the grant-making agencies within the DOT (like merging the highway and transit agencies into one) and the more regulatory-oriented agencies that deal with goals like safety. Within the limits of existing statute, the new Secretary might consider a reorganization of DOT around national goals and purposes, such as transportation in metropolitan regions, major trade and goods movement corridors, and intercity passenger connectivity.  In addition, the new Secretary might undertake – again, within existing law – a consolidation of the Department’s regulatory activities that deal with goals like safety.

DOT can lead in other areas as well. In focusing on energy security and environmental goals, Cong. LaHood, as Secretary, should begin the process of further increases in CAFE standards for all classes of vehicles and should direct DOT’s operating agencies to develop guidance to state, local, and metropolitan agencies that will encourage genuine strategic transportation planning and linkages between transportation, economic growth, energy, and climate change at those levels. To improve operations DOT can take action to enhance the role and capacity of the Bureau of Transportation Statistics to collect data critical to insuring performance and accountability; without better data it is hard to develop accountability much less set goals. DOT can also move to put a greater emphasis on operating improvements and restoration of existing assets and, to the extent possible under existing law, using DOT programs and authority to allow state and local governments to utilize pricing in the management of systems. 

Even if all of these goals cannot be fully accomplished in the next few years, a DOT focused on opportunistically moving the ball forward when possible will help to ensure that critical long-term concerns are advanced.

Transportation "Theater"

A recent article in The Atlantic about airport security argued that most of the measures put in place after September 11 to prevent more attacks are almost entirely for show, what the author dubs “security theater.” Not only is it still possible to sneak dangerous items through security, or components of dangerous items, it is easy to produce fake boarding documents and avoid the government's “no fly” list in the purchasing of tickets and screening of passengers. The most important safety improvements have been the strengthening of cockpit doors and the new awareness of passengers that they should take action if hijacked. The huge resources being poured into airport security and screening are thus doing little to actually further security and stop clever terrorists. Obviously this is troubling by itself, but it also holds lessons throughout the transportation industry in terms of theatrical solutions trumping real fixes.

As we have argued repeatedly on this blog, putting more resources into transportation infrastructure may be important, but it is not sufficient to ensure the system actually improves. There are important difference between band-aid solutions and fundamental restructurings. For example, fighting traffic congestion by adding more lanes attacks the symptom but not the problem. Congestion results from too many people wanting to use too little capacity at the same time. The optimal solution involves not only expanding capacity and alternative travel methods/routes, but pricing the existing capacity properly to ensure that people use it efficiently. This is really a fix it first philosophy – maximize what you currently have before building new stuff.

The ribbon cutting “theater” currently so popular in transportation ignores this strategy – and wastes valuable resources in the process. Similar to how current airport screening may be costing more than it’s worth, many transportation policies and programs give the impression of helping when they are really not long term solutions.

To fix transportation you must be able to assess the effectiveness of solutions. If we as a country keep spending more and more money on transportation but traffic congestion gets worse, emissions keep increasing, and the cost of business logistics rise, then clearly our policies are failing. The costs, priorities, and incentives built into current transportation policies are outdated. If the current way of doing things is allowed to persist for much longer, if theater trumps practicality, then transportation problems will only worsen. The time for transportation theater is over – there is not enough money to keep putting on a grandiose show. 

-Daniel Lewis

What Are The Candidates Saying About Transportation?

Not much, is the correct answer. (You can bet that they're not whispering about transportation in that photo). At the Democratic convention last week, and at the Republican convention this week, the topic of transportation policy and infrastructure has been absent. Now, maybe some have been talking about it, perhaps minor speakers at non prime-time hours, but of the major voices? Very few. There has been a great amount of focus on clean, renewable energy, and that ties in with transportation in a serious way – but it is separate from the policy and infrastructure issue of roads, rails, and transit.

For example, at the Democratic convention, both Bill and Hillary Clinton mentioned energy, but not transportation. Same story with Joe Biden and John Kerry. Michelle Obama spoke of neither. Transportation made one brief appearance in Barack Obama’s speech when he called for government to “invest in new schools and new roads.”

From major Republicans in Minneapolis there has also been no talk of transportation. President Bush, Rudy Giuliani and Sarah Palin all mentioned energy but not transportation, and Fred Thompson and Joe Lieberman mentioned neither. Perhaps John McCain will throw in a one-line reference like Obama.

Two of the only events we know about that focused on transportation were roundtable discussions held by the Rockefeller foundation at each convention. In fact, National Transportation Policy Project Members participated in Denver and Minneapolis, Jane Garvey and Senator Slade Gorton respectively. Other big names attended, like Pennsylvania Governor Ed Rendell, but so far as we know the forums were not televised.

It is tempting to write that transportation has been conspicuously absent from these conventions, but that’s not exactly fair to the phrase. Transportation would had to have been a common topic beforehand for it to go conspicuously absent; but no politician, going back as far as the early presidential primaries, has made it a key campaign focus.

In many ways this is shocking. For most Americans, transportation - alongside public schools and taxes -is their most frequent interaction with government. Driving their car, taking a bus, these activities are on infrastructure paid for by government. And everyone knows how poor that infrastructure is these days. Congested commutes, potholed roads, infrequent trains, these are problems that when fixed earn deep gratitude from the public. This is not to mention high gas prices, the Minnesota bridge collapse, and recently renewed discussion about the Bridge to Nowhere earmark. Why aren’t politicians talking transportation?

Perhaps most people don’t consider the situation as troubling as I do. That goes against my personal experience, and the experience of almost everyone I’ve talked to regarding the subject, but it’s possible. The more likely cause might be that people have become accustomed to mediocre infrastructure, and just enough is being done to stifle complete road rage. Politicians can get by spreading out projects here and there rather than tackling the larger and tougher choices about how to fund, prioritize and invest in transportation. Given all the talk about leadership at the conventions you would think there is plenty to go around, but transportation is one area that is still crying out for it.

-Daniel Lewis