Friday, February 25, 2011

What to do instead of building HSR

We don't need to borrow money for a Ferrari if our roof is leaking and the plumbing is broken. We need to fix the house first in order to live in it.

David Leonhardt, one of the economics journalists with the New York Times, writes in the NYT blog, Economix, the following.

In brief, the point is: fix it first, then build new.  In this case he's talking about highways, roads and bridges.  He makes no mention of rail, much less high-speed rail.  But the central argument is valid nonetheless. 

There is an effort on the part of HSR promoters to leapfrog all the currently deteriorating transit modalities so that all resources can be poured into an entirely new rail network.  Wait, that's not entirely true.  Much of the HSR funding has actually been directed at rail upgrades in many of the states that have Amtrak services (it's just not high-speed rail), and that certainly parallels what Leonhardt is talking about.

There is a sharp difference within the federal high-speed rail program based on the speed of the trains.  True high-speed rail, such as proposed for Florida and California, is a totally different kettle of fish than all the upgrade Amtrak projects around the country that will increase passenger rail and service, but are in no way high-speed rail.

But the basic premise in this article is absolutely commendable; fix it first.  If the President wants to "invest" in infrastructure, he should begin with a national repair-maintain-and-improve agenda.  That goes for all our failing infrastructure, not only Transportation.  It should include power grids and plants, and water distribution.  

It should include dams, many of which are on the edge of collapse. And yes, it should include rail; but primarily the rail that is most heavily used and least supported; that is, urban and regional rail as well as the other public mass transit systems in all modalities.  That's where the greatest problems lie and that's where there should be the greatest expenditure of maintenance and upgrade funding.

The basic principle being promoted in this blog is: Put transit where the people are; don't make people go to where the transit is.  Well, people are within the urban/regional population centers and they really need public mass transit to get around. Fix that first.  One example? Los Angeles to San Diego.  Another example? Boston to New York to Philadelphia to Washington, D.C.

New, glamorous, luxury trains that provide whizzy eye candy across the countryside is the wrongest place to spend resources which we don't have.

February 24, 2011, 3:50 PM
Fix It and They Will Come

On Friday morning, the Hamilton Project will release a few new proposals for helping fiscally struggling state and local governments keep their roads, bridges and other infrastructure in decent shape. One of the proposals fits a theme I’ve been writing about recently: making government programs less wasteful.

This proposal comes from Matthew Kahn of the University of California, Los Angeles, and David Levinson of the University of Minnesota. The title summarizes it: “Fix It First, Expand It Second, Reward It Third.”

Mr. Kahn and Mr. Levinson call on the federal government to devote its current funding for highways to repair, rather than to the construction of new highways. As they note, the reverse happens all too often:

The way the federal government allocates money for transportation infrastructure investments is one reason why the United States is experiencing a maintenance shortfall and falling returns on new investment. Federal highway infrastructure spending is allocated based on a series of subjective criteria that typically do not require any stringent analysis of expected benefits versus costs. Because there is often public pressure to build new projects using scarce funds, adding capacity often comes at the expense of supporting and enhancing existing infrastructure.

We build roads we don’t need instead of fixing aging roads that we do need. The Kahn-Levinson solution would force state and local governments to spend their federal dollars on repair.

If state and local governments wanted to build new roads, they would have two options. They could pay for the roads out of their own revenue. Or they could use a newly created Federal Highway Bank that would serve as an intermediary between private investors and the state and local governments. 

Of course, the investors would support the roads only if the roads could pay for themselves — “through direct user charges.” as the professors write, “and by capturing some of the increase in land values near transportation improvements.”

Finally, roads that exceeded expectations — were completed ahead of schedule, for instance, or reduced traffic more than expected — would be eligible for a federal interest-rate subsidy, through the highway bank.

The idea strikes me as promising. The big question, it seems, is how Congress can be persuaded to get out of the business of shiny new roads and concentrate instead on the unglamorous repair work.

The Hamilton Project — which is a branch of the Brookings Institution and tends to be filled with once and future Democratic policy makers — will host an event on Friday to discuss its new proposals.
Update: I changed some language to make clear that states would still be able to pay for new roads out of their own funds, even if the roads could not cover their own costs.