One of the more fiscally irresponsible components of President Obama’s budget proposal for fiscal year 2012 is the plan to increase surface “transportation” spending by more than 84 percent — from $58 billion to $107 billion — over FY 2010 spending levels.
To put this in context: Overall spending totals for the same period would rise by 7.9 percent, so transportation spending would rise more than 10 times faster than all programs combined. One reason for the explosion in proposed transportation spending is the president’s commitment to create two new programs — Amtrak/high-speed rail and livability — that have strong appeal to unions and environmentalists.
As is apparent from the president’s first two years in office, he and his team believe in a primitive form of Keynesian economics, one of the tenets of which is that government can spend its way to economic prosperity. Despite the revolving collection of euphemisms to define these varied schemes — “stimulus,” “jobs” and now “investments” — this proposal would fare no better than the first several efforts.
Added to this is the political allure of federal transportation spending that disproportionately benefits members of labor unions and their leaders. All workers on federally supported construction projects must be paid “prevailing” wages in accordance with the Davis-Bacon Act, and these wages are higher than those in the competitive market. Such wages are common to union contracts. A recent Heritage Foundation study found that the Davis-Bacon Act increases the cost of federal construction projects by 9.9 percent and that its repeal would create 155,000 more construction jobs at the same cost to taxpayers.
Davis-Bacon is not the only cost problem. All federally funded transit systems are operated by unionized workers who are paid wages and benefits, and provided costly job protections under Section 13(c) of the Federal Transit Act and other federal statutes, well above those of comparable workers in the private sector, whether unionized or not.
While the president promises high-speed rail service (top speeds of at least 150 mph), most of his projects involve signal and track improvements on privately owned freight-rail systems that would provide marginal improvements in the Amtrak service sharing those tracks.
Despite his State of the Union proclamation to spend $56 billion on the high-speed rail during a five-year period, the president’s transportation budget offers no such plan. Of the $8 billion of rail money for FY 2012, “$4 billion ($15 billion over six years) fully funds Amtrak’s national network operating, capital and debt-service requirements,” while the other $4 billion ($38 billion over six years) “funds competitive grants for development of core express, regional and feeder corridors, to advance the president’s goal to provide Americans with convenient access to a passenger rail system featuring high-speed rail service.”
The key word here is featuring. What does “convenient access” to something featuring HSR mean? As written, this program could subsidize Washington, D.C.’s deficit-ridden Metro system because it provides “convenient access” to Union Station, where Amtrak’s HSR Acela trains run. If so, spending on real HSR will account for a relatively minor amount of the $38 billion that the president proposes.
Transportation Secretary Ray LaHood has been pressing for an expansive and costly “livability” effort and formally defines livability as “being able to take your kids to school, go to work, see a doctor, drop by the grocery or post office, go out to dinner and a movie and play with your kids in a park, all without having to get in your car.” In order to achieve the LaHood vision for America, government must nudge/force/coerce people into buses or trolleys and create tighter living arrangements.
With federal transportation programs becoming little more than political slush funds, perhaps it’s time to turn the program back to the states.
This commentary is excerpted from a WebMemo by Utt, Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation and published with permission by the Georgia Public Policy Foundation.