June 13, 2008

Transportation Funding : You're doing it wrong!

First off, the good news. Congress is looking at a 5 year, $1.5 trn transportation funding package. That should just about be enough to make the improvements we've needed for a long time. How much of that will come to Texas? That will depend on whether or not there is a change in our Congressional delegation. Specifically, the number of Republicans in it. More and we get less money. Fewer and we have Democrats there who, unlike the Republicans, will actually fight to bring more money back home. And then TXDOT will stop poor mouthing.

However, that may not be enough as it appears that Rep. Johnson has caught a bad case of the stupid.

Toll roads and privatization are at least part of the answer, said Johnson, who's been working with a handful of members of Congress from Texas since last year to come up with a bipartisan list of recommendations.

"We cannot see how it can be done with just tax dollars," she said.

Don't do that, EBJ. Don't think for a minute that this is a good idea. It's ALWAYS the most expensive and least financially efficient way to go (see here, here, here and here). Either way, we're going to be paying a higher cost per mile. ALL roads are going to have tolls if the privatizers have their way. And that will dramatically increase the costs to all of us, from less than 1 cent per mile to more than 15 cents per mile.

I had this conversation with Rain Minns, the very sharp woman running against Sen. Carona. Her problem was that she thought increasing the gas tax would disproportionately hurt the poor. What Rain didn't realize is that, on average, the poor drive more fuel efficient cars (or don't drive at all). Well, that and the simple fact that TOLLS ARE GOING TO EVERYWHERE AND WILL BE MOSTLY UNAVOIDABLE. In other words, poor and rich will get hit with them.

We've had this ongoing conversation with Mike Dahmus here in Austin. He's ALWAYS wrong, but it doesn't stop him from carrying on about how tolls are great because they make rich suburbanites pay for their transportation directly. Aside from the obvious seflishness, the reality is that rich people don't live out in the burbs. Sure, there are some nice homes out there but there is a reason the vast majority of the people in the burbs are there... it's all they could afford.

You could also forget the fact that expansions to existing roads are going to be tolled. We told you they would a long time ago. Now, they're actually building it. This would be a lot easier if y'all would just LISTEN to me... when I tell you this will effect everyone, I'm not making it up. Since that's the case, wouldn't be better off with a solution that increases costs less than 2 cents per mile than one that costs, on average about 44 cents per mile? And where does that extra money go? To a private company. Not to improve your roads.

Yes, TXDOT lied.

As for how to pay for this, it's simple. We've been running deficits annually of $300 bn or more. While our financing costs have recently increased (you may have noticed that interest rates are up) and we've been able to sell the paper despite the fact that this is all related to structural issues and a lack of desire on the part of Republicans to actually pay their own way. The first solution is to stop that by increasing taxes. You don't even have to do it to 2000 levels, just take up cap gains and the taxes on the top tax rate from 35-40%. You're still on the good side of the Laffer Curve and the government will finally have enough money to operate. Cut Iraq funding dramatically and all the sudden you're in surplus.

Then, you sell off transportation infrastructure bonds (call them Series Methuselah... sorry, inside finance nerd joke) with maturities of 50 years. If we're running surpluses, they'll sell out quickly. Then you use THAT money to finance infrastructure improvements and construction, including roads and mass transit. That does create a long term liability for the Federal Government, on which interest must be paid (usually every sixth months to the holders). Depending on how large the surpluses are, and they will grow, we can cover that cost easily just with the surpluses.

However, we won't need to. Why? Oh, read this. When the state governments pay for infrastructure, that money goes to materials and labor. Sales of materials generate a profit which means it will be taxed. Labor will be paid a wage, which like all wages, will be taxed. Therefore a large percentage of that money is going to find it's way back to the Federal Government, possibley enough to offset our liability on the bonds effectively making this is a self financing project. Of course, we'll have to pay to maintain all this (and the underlying debt) and that's where a gas tax, indexed to inflation, helps put us on the right track now and into the future. So we don't keep having to deal with this every 30 years.

The best part? We get the roads and transit facilities we need. Which decreases waste in our economy (gas and personal time) and increases productivity which acts as a drag on inflation. It'll also drive up employment, making the jobs market tighter and driving wages up for the average worker at the bottom of the totem pole.

If you couple this with an investment in true alternative energy, we get rid of the almost $1 trn we are sending out of the country every year for oil and natgas. That money stays in OUR economy which will, again, boost productivity, create employment, etc. And it's also pretty cheap... $100 bn annually vs almost a TRILLION. Get it? Here's one way to do it. Not the best, but it'll work.

Here's the bad thing... in my district, I've got (at the Federal level) Michael McCaul who is basically a pawn of big oil and the road privatization interests. He has never met a publicly financed transportation bill he likes. But he has met a lot of privatization and toll bills that send him into the kind of orgasmic bliss usually enjoyed by porn stars. And old men on Viagra.

Needless to say, job number one is getting rid of his stupid ass and putting Larry Joe Doherty in Congress. To do that, you need to give him some money. NOW.

The other obstacle is, much like McCaul, really in love with privatization at the expense of the taxpayer. It's Jr. John Cornyn, our favorite Senator who loves him some hunting with a ladies shotgun. However, we can easily replace him with Lt. Col. Noriega. All he needs is some of your hard earned money to beat that fossil and replace him in Washington.

This, my friends, is coming one way or another. Many of you reading this are fairly affluent so you will probably be able to afford the new roads. Some of you will not. At the end of the day, regardless of your financial situation, these roads are a good deal for NO ONE other than the companies who stand to gain from squeezing us for the next 50 years. That, truly, is why I am so adamantly opposed to privatization and tolls. It's not conservative and it's certainly not progressive. It's wasteful and is a diversion of public resources to private greed.

You have a chance to stop it, but you have to act.

Posted by mcblogger at June 13, 2008 12:58 PM

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Comments

Some rants ought to be required reading for policy makers. This is one of them. Right ON!

Posted by: BigUncle [TypeKey Profile Page] at June 13, 2008 01:12 PM

Send it to them... that's what I'm doing.

Posted by: mcblogger [TypeKey Profile Page] at June 13, 2008 01:21 PM

The folks in Round Rock are a lot richer than the people in East Austin, and even if they weren't, driving creates negative externalities and should NOT be subsidized by those who do the right thing and drive less (which is what business-as-usual actually did - requiring heavy injections of property and sales taxes, penalizing central Austinites twice).

We should be subsidizing things that have positive externalities (libraries, parks) and not things that hurt us (driving, drilling).

Posted by: mdahmus [TypeKey Profile Page] at June 13, 2008 06:44 PM

Considering there are more people in RR than in East Austin, and considering that gentrification has definitely skewed the demographic you're all the time quoting, your statement has comparatively little worth.

As if that wasn't enough, how many of those poor people will be able to drive on the new tollways?

I love how your advocacy for the poor always ends up costing them more money.

Posted by: mcblogger [TypeKey Profile Page] at June 16, 2008 12:50 PM

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