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The Trump Infrastructure Plan

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The Trump Infrastructure Plan

January 24, 2018
Infrastructure and energy

John Tierney joins Seth Barron to discuss the Trump administration’s plans to reform how infrastructure projects are managed and funded.

Civil engineers and other experts (including here at City Journal) have warned for years that the country’s roads, bridges, tunnels, airports, and rail lines are in serious need of repair. Thanks in part to Donald Trump’s presidential campaign, infrastructure is now at the top of the national agenda.

But does the Trump administration actually have a workable strategy for infrastructure? John Tierney discusses the promise of the administration’s fresh approach, which breaks from past efforts in reducing Washington’s role. He wrote about the plan in his City Journal article, “Trump’s Infrastructure Opportunity.”

Tierney is a contributing editor of City Journal  and a contributing science columnist for the New York Times.

Audio Transcript

Seth Barron: Hello.  Welcome to 10 Blocks, the podcast of City Journal.  I am your host, Seth Barron.  Joining me today is John Tierney, contributing editor for City Journal and a contributing science columnist for The New York Times.  John, thanks for joining us.

John Tierney: Thanks, Seth.

Seth Barron: You recently wrote an article for City Journal called Trump’s Infrastructure Opportunity, in which you say that the government can make infrastructure great again by getting out of the way.  But isn’t it the government who builds roads and bridges?  I mean, isn’t that their responsibility?

John Tierney: Well, people tend to think that.  And, of course, it is the government at some level authorizes these roads, but we’ve had this myth, really, since the Great Depression that the federal government should be doing the lion’s share of this, or that infrastructure is a federal responsibility.  And each President promises that he is going to make it great again, meanwhile the infrastructure, the bridges, you know, are not doing great, the highways have been deteriorating.  In fact, infrastructure really ought to be a local responsibility.  And the great thing about the Trump plan, we haven’t seen the whole plan yet, but we have seen their principles and we just had today some leaked documents, you know, from what appears to be the plan.  They are the first administration that has really, you know, put some good people in there who recognize the principle that it should be local governments and the private sector that ought to be building these projects, it is not something that Washington needs to mastermind.

Seth Barron: Okay, but back up a moment.  You know, I have always heard that the, you know, the greatest infrastructure project in American history was under Dwight Eisenhower, the interstate highway system.  I mean, wasn’t that a modern engineering marvel?

John Tierney: It was.  I mean, people like to call that the greatest public works history and project anywhere.  And it was in some ways an engineering marvel.  But, the problem with it was is that it worked at first, but you know, but now the interstates are terribly congested, many of the highways have really reached the end of their useful life, and we don’t really even have enough money to maintain the existing highways, let alone, you know, make the kind of improvements – adding more lanes for super trucks, adding more lanes, adding things that would ease this congestion.  We don’t have the money anymore.  And that’s because it was done by the federal government instead of by the states, instead of letting private companies and the states do these projects.

Seth Barron: I see.  So, I was just down in Miami, Florida, and they have got some, you know, pretty nice highways there.  And, apparently, they are run and maintained by private companies who collect the tolls.  I don’t know a lot about the details, but can you describe how these things work and how we would convert to a public-private type of infrastructure system?

John Tierney: Yes.  These kinds of highways are pretty common around the world, and they have not been that common in the United States because of this mistake that was made with the interstate system, because when they started that, until then states like Pennsylvania had been building turnpikes and they supported them with toll revenues, and the revenues generated enough money to take care of the roads and to build new ones, but the interstates setup this gas tax system.  And, so, everything was funded by this federal gas tax, and they banned tolls on new, federally funded highways.  So, the United States has really lagged behind the rest of the world on this.  And, for decades now, you know, transportation experts have been saying we have got to have more of these private toll roads, these privately run roads that support themselves, and are good highways, and that use tolls to ease congestion, to maintain the roads, and they are run very efficiently by these private companies that support them with that.  There have been a lot of obstacles because of this ban on tolls, but there have been, as in Florida, as in Virginia, as in Colorado, the feds have grudgingly allowed some experimental projects and they have allowed a few of these projects to go forward.  And, for the most part, they work very well.  You have to be careful how you set them up, but, in general, you know, I was on a highway in – 91 outside Los Angeles, where at the peak of rush hour they guarantee you a speedy commute.  You are not going to get caught in bumper-to-bumper traffic.  And there are roads outside San Diego where they adjust the tolls at peak times, so you are guaranteed of getting a smooth ride to work.  And these highways pay for themselves, so they don’t depend on Congress to collect gas taxes and then give money back to the states to do it.  What has happened with the interstates is that Congress has not raised the gas taxes enough to keep up with inflation.  They have also raided this so-called Highway Trust Fund to pay for transit systems, to pay for snowmobile tracks, to pay for bike paths, and so the roads therefore don’t work well.  But those roads in Florida and other places, a private company finances them, builds them and runs them, and it uses toll revenue from the roads to pay back its own debt and to finance the project.

Seth Barron: But what you described about guaranteeing you an easy ride in the roads in Los Angeles, I mean, aren’t roads a public good and should be owned by the people?  This sounds like you could wind up excluding some people from driving.

John Tierney: Well, these roads are typically still owned by the people.  You know, they are public roads that you lease out, the way you lease out a concession in a national park.  You let a private company run the lodge.  And you can structure these deals in different ways.  I mean, and, you know, the company might get a 30-year lease on it, but the people still own it and they still have some say about what the tolls will be.  Saying, you know, people have complained, it is very difficult once a highway is free, once people are used to a free highway, it is politically so difficult to impose a toll.  People don’t like to, you know, that highway should be free.  And in places where they have done this, they sometimes use the HOV lanes, which nobody was using, and they have turned that into what is called an HOT lane, which is high-occupancy toll, and they will let you use it if you have two or three passengers in your car or if you pay a toll.  And people would complain, as you say, about – they call them Lexus lanes, that only rich people can use them.  Well, in fact, people of all income levels do use them, and paying a $5 toll to save yourself an hour in traffic, I mean most people make a lot more than $5 an hour.  So, it’s not, I mean, people – the value of time that people waste sitting in traffic jams is so much greater than what they would pay in a toll, and in fact, once you build these new lanes especially, even people who aren’t using those lanes benefit.  For instance, around the beltway in Washington where they have added some, you know, some lanes there, by building the new lanes you take some traffic off the old free lanes.  So, even those drivers benefit.  In effect, the so-called Lexus lanes are basically helping to pay, are subsidizing those free lanes and freeing them up for space.  They also sometimes, you know, set it up so that these toll lanes, the buses can use them free.  So, the poorest people of all who are riding buses, they are basically getting these driver’s tolls, or subsidizing their bus service.

Seth Barron: Okay.  President Trump ran on the promise that he was going to put a trillion dollars into rebuilding America’s infrastructure.  I don’t know exactly how much is going to wind up going in, or – and coming from what sources, but where do you think that trillion dollars should be spent?

John Tierney: Well, the great thing about trusting these things to states is that someone in Washington doesn’t have to sit there and divvy up a trillion dollars and decide where it goes, because nobody in Washington knows where that money should go.  The nice thing about the Trump plan from what we have seen in the leaked documents and from their principles is, you know, they have said that basically most of the money is going to come from localities.  You know, the figure of, you know, that $800 billion of that would probably come from either the private companies who put up the financing that are building them, or the states and localities would do it.  And the feds would be using their money to encourage innovative projects in various ways.  So, I mean, the good thing is that Washington, they would, to some extent, be picking which projects they are putting money into, but it is really up to the localities to come up and to put up their own money, because that is ultimately the best way to decide whether a project is worthwhile or not.  You know, are you going to get enough user fees?  Will the highway collect enough tolls to actually pay for itself?  Will there – is the city or state convinced that that project, whatever it is, whether it is a new water system, or any other – or a new bridge, anything – is that project worth it to them to spend their own money on it?  Because what we have had is we have had this bridge to nowhere in Alaska, we have the bullet train to nowhere in California.  Once the federal government comes in and starts dangling dollars, the locals will say well, it’s stupid not to use this money, and they build these projects that they would never do.  I mean, one of the examples that I talk about in the City Journal piece is that when they did the interstate system, because it was a centrally planned system, they had to get politicians all over the country to buy into it in Congress, and to basically buy the votes of the urban politicians, they promise them we are going to put these interstates in cities too.  And, so, they subsidize these roads through these dense urban neighborhoods that the cities themselves would never have torn down whole neighborhoods.  It is incredibly expensive aside from being disruptive.  But, if they had to spend their own money they would not have done it, but when the feds come in and say we will offer you a ton of money to run a highway through this neighborhood, then you say well, we better take the money, and, of course, the local construction companies and unions want that money, and often the people in these poor neighborhoods don’t have the political clout to stop it.  So, you actually had this real destructive impact of federal financing.

Seth Barron: I see.  And, from what we have read of the leaked infrastructure plan, it seems that what the federal government will be doing is easing restrictions on, say, bond issuance, and concession giving, and things like that to make it easier.

John Tierney: Exactly.  And some of the environmental things – I mean, right now the feds, you know, one of the chief things they are doing is slowing up projects, because they have to, you know, I mean it’s not only enough for the cities and states to do their own environmental review, the feds have to do a review.  And it’s just so many extra layers that it just slows everything down.  I mean Obama, during his stimulus, you know, they had this fantasy we have all these shovel-ready projects.  And they quickly discovered no, actually nothing is shovel ready, because it takes so long.  So, one of the good things in this plan and what we have seen of the leak so far, is that they are easing, they are streamlining this process, they have been talking about we are going to set a tight deadline on how long the feds can take to approve it, we are going to waive the federal review for some kinds of projects, the small ones, and they are also going to – there are moves to eliminate one of the biggest drawbacks to these public-private partnerships, the ones that exist in so many other countries where you have private toll roads run by companies, is that, you know, right now we have tax-exempt bonds that cities and states can issue that makes it cheaper for them to finance these projects, and it has not been so easy for private companies to use that same tax exemption, therefore, you know, there is a big skewing of incentives for the government, for the local government to do it.  And what we need are changing those incentives so that it doesn’t favor one or the other.

Seth Barron: You wouldn’t take the bait when I asked you which projects really deserve the most attention nationally, but how about locally?  In New York, New Jersey, this area.  President Trump and his administration nixed the gateway tunnel plan, or at least are, you know, bluffing that they are nixing it…

John Tierney: Right.

Seth Barron: …but that seems very important to the region’s economy.  Where do you think infrastructure in the New York City region is headed in the next few years?

John Tierney: Well, it is a very depressing thing in New York because our costs are so astronomical and there is a real question why should the rest of the country finance these outrageously inflated costs here.  You know, The New York Times did a great series about the unbelievable costs of building the Second Avenue Subway, and, you know, the amount of featherbedding, and the ridiculous, you know, salaries that are being paid and the delays, and that’s, of course, a problem.  It would be nice to have a new railroad tunnel underneath the Hudson.  You know, that was supposed to be the first project of The Port Authority and they never got around to it.  I mean, we need an awful lot of things.  I have seen people argue that a truck tunnel underneath the Hudson would actually be more useful.  We certainly need these things.  It is really difficult to build them, though, given these incredible costs, you know, all the sweetheart deals with the unions, the work rules, so – and the subways are – it is so expensive to do anything to them.  So, I mean I would say that the subways need to be upgraded, we need more tunnels underneath the Hudson.  How to pay for them, though, it’s, I mean it’s very hard to imagine how to do that.  I mean, the one – I like to be an optimist – the one thing that, you know, I try to take some optimism is that these cities like New York and all these other cities simply don’t have any more money for these projects.  You know, so much of their budget now goes for paying pensions that they are going to be forced to turn to public-private partnerships to bring in private companies to do them that can do them so much more efficiently and, I mean, what I would love to see happen to the Northeast Corridor, for instance, I mean, it is the one rail corridor in the U.S. that makes sense, it badly needs to be upgraded.  What they should really do is sell it.  I mean, I have talked to Richard Branson and he said he would love to, you know, run a train on the Northeast Corridor.  And Britain did that with its trains.  They privatized the system and they got a big increase in ridership, you know, much better trains, and I cling to this fantasy that when things get bad enough and the cities and states simply don’t have any more money, they are going to have to turn to these public-private partnerships to do it.  And, I mean, it would be great, you know, to sell one of the subway lines to – or at least one of the subway lines to a private company and let them run it.  I talked to Dan Biederman at the Bryant Park partnership and he said he would love to try to run the subway system.  And we have so many riders on that, it is so crowded, I mean, how could you not make money on that?  I mean, anybody, you know, a decent, private operator could upgrade that system and make a profit on it.  And, I mean, it seems a hopeless fantasy to imagine our politicians would ever allow that to happen, but I would like to think at some point for new projects they are going to have no choice but to do these.

Seth Barron: Yeah, it seems really perverse that countries like Sweden, or France, or Germany, that we think of as practically being socialist, manage to pay their workers much less, you know, per mile of building tunnels, have much stricter rules on how many people are working on a project, and we, you know, supposedly this capitalist, you know…

John Tierney: Right, exactly.

Seth Barron: …utopia, we have tons of excess workers and we are paying them well above market.

John Tierney: Right.  I mean, our subway cost so much more than Paris’s new subway, the Second Avenue Subway, and it really is scandalous.  I mean, it is partly, you know, it is partly these bureaucratic and political things we have here, where no one is really responsible for the subways because the governor is, you know, I mean, the MTA runs it, but that’s – and The Port Authority.  There is all this diffuse authority where politicians can pass the buck and if there was just some way to put somebody in charge of that system and have them responsible for revenues and costs, you know, that would be – and I think these other countries are better at that and that they have a clearer line of authority and they have more reasonable unions and more competent politicians running them.  So, I’d like to hope that, you know, that these financial problems will eventually force us to learn from these countries instead of being the, you know, the great example of how not to do things.

Seth Barron: That sounds like a real race to the bottom you are describing.  Well, thanks for joining us for this episode of 10 Blocks.  If you enjoyed listening, why not give us a five-star review on iTunes and tell your friends to listen in?  You can follow us on Twitter, @CityJournal.  Thanks for listening and thanks, John, for joining us.

John Tierney: Thank you, Seth.

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