US transportation budget with mega-deficits (EDITORIAL)

February 17, 2011
By Peter Samuel

It's 'innovative finance' writ large. The US President's budget for transportation provides for $556b surface transportation spending over six years, a 60% increase over the inflation-adjusted spending of the last six years, they say. And for 2012 the administration proposes $112b in spending (styled 'investment'), almost double 2011's outlays.

The White House budget chapter on transportation has a summary box called "Funding Highlights" but there's not a single mention of funding under that heading. It's a list of bullet points about proposed spending, called investments.

Indeed the only mention of funding is this: "The President is committed to working with the Congress to ensure that funding increases for surface transportation do not increase the deficit."

This after several years of burgeoning reliance of US transportation spending on general fund and debt financing and a serious collapse of the role of 'user fees' such as gasoline tax revenues.

Massive increases in government spending are proposed in the new budget so-called without any notion of how anything will be funded. Search for words like gasoline tax, tolls, user fees and each time you'll get "No matches were found."

Here's a revolutionary approach to budgeting by the administration - you plan your spending called 'investments' first and that's your budget. Whether or how it can be paid for will be left to the worthies of the US Congress.

Last time the US Congress had a shot at 'reauthorization' of the six year transportation budget in 2009 it was led by the  Minnesotan congressman James Oberstar, then chair of the House transportation committee. Oberstar came up with a grand 6-year spending plan also. The small detail of how to finance the hundreds of billions, he also left out as too difficult.

This revenue-free approach should perhaps be called the Oberstar Innovatory Financing method to memorialize the pass-the-megabuck game that he codified and which has recently been embraced by Ray LaHood and the Obama administration.

Their Oberstar Method budget draws paeans of praise from the American Road and Transportation Builders Association (ARTBA), the lobby group that purports to represent building companies in the US capital. ARTBA recently led off their comment on the LeHood revenue-free budget: "In one of the boldest budgets in memory, the Obama Administration has proposed investing a total of $128 billion in transportation in FY2012, a $53 billion increase..."

You have to suspect that if an ARTBA member company's executives did 'innovative' budgeting like the US Government they'd rapidly be joining Bernie Madoff and Kenneth Lay in a penitentiary. And if it was a South American or African country's government was budgeting this way they'd be cut off at the knees by the World Bank or the IMF.

As the state governors wise up to the disaster that is US Government transportation funding they're starting to reject these US monies outright - New Jersey Gov Chris Christie over the ARC rail tunnel under the Hudson River, and Ohio Gov John Kasich, Wisconsin Gov Scott Walker and now Florida Gov Rick Scott have all rejected federal offers of billions for so-called highspeed rail.

Actually the total farce that the US government is making of transportation financing is a very positive development for the country. The financial irresponsibility and intellectual bankruptcy of the US Government's throw-billions approach is becoming widely understood.

It is dangerous buffoonery, but it leaves the field open for new practical, prudent approaches being detailed in important new books recently out of the Brookings Institution (Last Exit by Clifford Winston) and the American Enterprise Institute (The Road to Renewal by Richard Geddes).

Both suggest a greatly enhanced role for tolls and pricing of roads and for restoring links between transportation customers and service providers raising money in capital markets and making their living by their service - bypassing all the wasteful, disastrous DC nonsense.

States and counties are likely to take an increased interest in the Winston/Geddes themes.

We'll be writing these books up shortly - editor.

US administration 'budget' for transportation:

http://www.tollroadsnews.com/sites/default/files/$USbudgetTransp.pdf

TOLLROADSnews 2011-02-16

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