Obama’s New Transportation Chief Wants Streetcars for Everyone

By
Randal O'Toole

America’s transportation system will continue to grind to a halt under President Obama’s pick for transportation secretary, Anthony Foxx. Currently mayor of Charlotte, N.C., Foxx strongly supports streetcars and other obsolete forms of transit.

It is a measure of the glacial pace of America’s political system that Obama had nearly 16 months’ notice that current Secretary Ray LaHood planned to step down at the end of Obama’s first term, yet the president required another three months before finding a replacement. If the administration has anything to say about it, American travelers will move at the same glacial pace: the streetcars that Obama, LaHood, and Foxx want to fund are slower than most people can walk.

Transit advocates often point to Charlotte as an example of a successful lightrail line (more accurately described as a “low-capacity-rail line”). With success like this, I’d hate to see failure: the line cost more than twice the original projection; generates just $3 million in annual fares against more than $20 million in annual operations and maintenance costs; and collects of an average of just 77 cents per ride compared with nearly a dollar for other light-rail lines. Now Charlotte wants to extend the line even though a traffic analysis report predicts that the extension will dramatically increase traffic congestion in the corridor (see pp. 54-56).

Foxx believes rail transit “drives economic development,” says George Washington University Professor Christopher Leinberger approvingly. “The goal of any transportation system, especially rail transit, is not to move people,” Leinberger argues. “The goal is economic development at the stations.”

Anthony Foxx certainly believes that. “If we didn’t do streetcar,” he asked the Charlotte city council during a debate, “does anybody have an idea how we’re going to revitalize” downtown Charlotte?

Rail advocates claim that Charlotte’s low-capacity-rail line helped revitalize neighborhoods along the line. However, a study by transportation expert David Hartgen concluded that most of the billions of dollars of development that was planned along the line was never built. Of the developments that were built, most would have taken place without the line, Hartgen found, though not necessarily in exactly the same locations.

I’ve said this before and I’ll say it again: transportation spending generates true economic growth only if it results in lower-cost, faster, and/or more convenient movement of people and goods. Streetcars and low-capacity rail are more expensive, slower, and for all but a tiny number of people less convenient than the alternatives, whether buses or cars. Even if you reduce transit rider costs by subsidizing them to the hilt, someone has to pay the subsidies and that slows economic growth.

Foxx is blissfully unaware of this and we can expect him to continue LaHood’s policy of giving away as much money as possible for transit projects that are as expensive as possible and move few people while creating more congestion for everyone else.

Topics: 
Energy and Environment

More Questions for Secretary Sebelius

By
Michael F. Cannon

Given the growing concern even among Democrats that ObamaCare will result in a “huge train wreck” later this year, I have a few questions for Health and Human Services Secretary Kathleen Sebelius to add to my previous list:

  1. What happens if a federal court (say, the Eastern District of Oklahoma) issues an injunction barring HHS from making “advance payments of tax credits” in the 33 states with federal Exchanges?
  2. Has HHS done any planning for that contingency? If so, what are those contingency plans?
  3. If HHS has not, why not? Given that the Congressional Research Service and Harvard Law Review both say there’s a credible case that the PPACA forbids tax credits in the 33 states with federal Exchanges, how could HHS not have a contingency plan ready?

For more on how HHS is violating federal law by planning to issue advance payments of tax credits through federal Exchanges, read my Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” and my Health Matrix article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

Topics: 
Cato Publications, General, Government and Politics, Health Care

The American Roots of Tax Aversion

By
David Boaz

In last Sunday’s Washington Post, Jennifer Rubin wrote that Republicans must move beyond their adoration of Ronald Reagan and recognize, among other modernizations, that

America will not return to the pre-New Deal era. Limited government, not small government, must be the aim. That requires low taxes, not taxes that never increase.

She wants Republicans to give up “the pledge” and be willing to raise taxes if that’s the prudent thing in any circumstance.

Republicans and conservatives and libertarians who don’t want to follow her advice could find some historical support just a few inches away on the same page of the “Outlook” section. Reviewer Walter Isaacson quotes this line from a new book on the origins of the Boston Tea Party and the American Revolution, Bunker Hill by Nathaniel Philbrick:

Rather than propose a means of raising revenue that they deemed fair, the colonials were more than happy to direct their considerable energies toward opposing whatever plan the British ministry put forward.

That is, the American revolutionaries didn’t feel obligated to help the British government raise all the money it wanted. They were satisfied to oppose what they regarded as unwarranted taxation.

Tax resistance: an American tradition since 1773. Or 1767. Or 1687.

Topics: 
Government and Politics, Tax and Budget Policy

What to Do about OPEC?

By
Jerry Taylor

Cato hosted a policy forum last week (which you can watch in its entirety if you missed it the first time around) to discuss a new paper released by Security America’s Energy Future (SAFE).  The paper – written by long-time friends Andy Morriss and Roger Meiners – argues that there is a consensus among academics who have studied OPEC.  The consensus?  The cartel is responsible for less crude oil on the market than would otherwise be the case (which means higher prices than would otherwise be the case) and for the bulk of the price volatility we find in crude oil and, thus, gasoline markets.  “The international market for oil is not a free market” they conclude.  “The global oil market deviates in important ways from the competitive model and that these market anomalies have significant economic impacts and so are relevant for policy makers.”

While Morriss and Meiners would thus seem to invite politicians to act, they offered no agenda of their own.  That’s where SAFE comes in.  FedEx’s Fred Smith, who co-chairs SAFE’s Energy Security Leadership Council, argued at the forum that the federal government needs to respond to OPEC’s machinations by (1) achieving energy independence for North America (a goal I’ve been quite skeptical about in the past), (2) establishing tough energy efficiency standards for a whole host of goods, but most particularly, for U.S. automobiles via CAFÉ standards (an agenda that most economists would reject in favor of accurate price signals), and (3) subsidizing R&D in order to find alternatives to oil in transportation markets.  SAFE discusses this agenda more robustly in their “National Energy Strategy for Energy Security, 2013”.

SMU’s James Smith – one of the most prominent energy economists who works in this field – was on-hand to offer what I think was a compelling rebuttal to the central arguments forwarded by the Morriss and Meiners study.

Read the rest of this post »

Topics: 
Energy and Environment, International Economics and Development, Trade and Immigration

Trade Pessimism Reigns Supreme

By
Simon Lester

The Economist magazine has an article worrying that the proposed US-EU trade talks – discussed in this Cato paper and at this recent event – are floundering.  They say, “[r]ight now, the pact is in trouble, beset by small-mindedness and mutual suspicion.”  All is not lost, though: “Time, then, for a big push on both sides; this pact can still be saved.”

Now, I can see why people get concerned about trade negotiations.  Many of them drag on for years, and the prospects for completing large-scale negotiations look dim these day.  But there’s something that should be kept in mind about the US-EU talks:  They haven’t even started yet!  The negotiations won’t start until July, and it’s still only April.  So everyone needs to relax a bit.

Having said that, I can see why people would express concern.  The pre-negotiation jockeying suggests there will be serious difficulties.  For example, France wants “cultural sectors,” like TV, radio and film, exempted.  On this point, the Economist notes:

European governments recently sent trade officials to Brussels to a first meeting on their offer to America. Led by the French, envoys from southern and eastern Europe called for a long list of red lines. These covered the usual stuff: agriculture, public services and “audio-visual” content (eg, bungs for French cinéastes, airtime quotas to keep Flemish hip-hop on the radio). That appals Team Obama, though not because Americans are blameless. From financial services to air passenger services, America maintains lots of barriers to trade. The real fear is that if Europe starts setting out red lines, trade sceptics in America will draw their own.

There is no doubt that this kind of economic nationalist thinking gets in the way of trade liberalization.  Instead of recognizing the benefits of opening the domestic market to imports, too many countries try to “protect” their economy from foreign competition.  The reality is that the economy benefits from this foreign competition, and governments should be fighting to see who can liberalize the most.

Unfortunately, based on what they see as rational domestic political calculations, governments do not think or act this way.  They try to use trade negotiations to open up export markets, while maintaining import protection.  Not surprisingly, this undermines the potential benefits of the negotiations, and makes it very hard to get deals done.

In order for the proposed US-EU pact to avoid stalling out, as some other trade negotiations have, some realism could be helpful.  We shouldn’t expect a trade deal to lead to complete and total free trade.  At best, it will simply make some progress towards more liberalization.  And if it can do that, that’s a good thing.

To make real progress, though, trade negotiators need to change their mindset.  Protection from foreign competition is not something to be maintained through special exceptions in trade deals; rather, protection is bad for the economy as a whole (despite any benefits to particular interest groups), making us all worse off.  If some day trade officials can recognize this basic economic truth, trade negotiations will become much easier!

Topics: 
International Economics and Development, Trade and Immigration

Tax Revenues from Legal Marijuana Overstated

By
Caleb O. Brown

There are plenty of reasons to legalize marijuana. But one that has received perhaps too much attention is tax revenue. In this Cato Daily Podcast (Subscribe! via iTunes), senior fellow Jeff Miron argues that tax revenue estimates are simply too rosy.

Miron’s 2010 report, The Budgetary Impact of Ending Drug Prohibition, estimates that the overall fiscal impact (including tax revenue) of legalizing marijuana nationwide could be tens of billions of dollars, the revenue boost that legalization supporters trumpet is overstated.

Topics: 
Government and Politics, Tax and Budget Policy

Doing Business Under Attack

By
Dalibor Rohac

The Doing Business project is among the World Bank’s most useful activities – both for scholars and, more importantly, for policymakers who are interested in pursuing pro-market reforms. It is disheartening to see that the review of the project, initiated last year by the Bank’s President Jim Yong Kim, has been hijacked by groups like Oxfam, Christian Aid or CAFOD, which are trying to erode the project’s analytical sharpness and destroy its role as a focal point for economic reformers in low- and mid-income countries. Perhaps they would like to see it scrapped altogether.

Marian Tupy and I are discussing the controversy, and offering arguments in favor of the Doing Business project in our article at Foreign Policy. Bottom line:

It is true that Doing Business is not an ideal metric of business environment: Nothing is. Yet over the past decade the survey has proven an extremely useful tool both for scholars and businesspeople who want to compare the ease of actually conducting business in different countries, and for policymakers trying to foster the development of the private sector. Unless someone comes up with a better alternative, discarding or watering down this metric is likely to lead to less well-informed choices about policy.

We may disagree about the relative importance of a good business environment for poor countries. Yet few would suggest that it should be simply ignored. It’s difficult to avoid the impression that Doing Business is currently coming under attack by groups with ulterior motives, groups who are inimical to a pro-market and pro-growth policy agenda. Given the extraordinary economic and human progress achieved in the last few decades through deliberate improvements to business environment, one hopes that the Doing Business project remains central to the World Bank’s portfolio of activities.

Topics: 
International Economics and Development

Pages