Will Congress Reform Air Traffic Control?

Five years ago, Bob Poole and I argued that the nation’s air traffic control (ATC) system should be transformed into a private, nonprofit organization supported by customer charges, not taxpayer subsidies. I have argued that Canada’s privatized system is a good model for U.S. reforms.

Well, how about that: the Wall Street Journal reports that Congress and various aviation interest groups are coming around to the Cato way of thinking on the matter: 

A push to radically reshape the outmoded U.S. air-traffic control system is gaining support, as airlines and some labor unions join to back change and a top lawmaker drafts legislation that could effectively privatize services.

Rep. Bill Shuster, a Pennsylvania Republican and the chairman of the House Transportation and Infrastructure Committee, and his staff are drafting legislation to strip the nation’s 15,000 civilian controllers and more than 230 air-traffic facilities from the Federal Aviation Administration, possibly putting them under the control of a nonprofit corporation, people familiar with the plan say.

… Rep. Shuster’s spokesman said this month that the goal is “serious reform” and the committee “has looked extensively at other air-traffic models around the world.”

… A number of influential organizations are joining the chorus for change. Paul Rinaldi, president of the controllers union, hasn’t signed onto the idea of privatization but has become less resistant to the general concept. He has complained about the unpredictability of congressional appropriations by saying “we are going to lose our competitive edge if we don’t knock it off.”

NYT Infrastructure Story Crumbles

In the New York Times on Wednesday, David Leonhardt presented a chart under the headline “Amtrak Crash and America’s Declining Construction Spending.”

The chart shows federal, state, and local government construction spending as a share of GDP. Leonhardt discusses America’s “crumbling infrastructure,” particularly rails, bridges, highways, and airports. He highlights the spending decline as a share of gross domestic product over the past five years.

Leonhardt also cites Joe Weisenthal of Business Insider, who presented a similar chart after the collapse of a bridge near Seattle two years ago. Weisenthal’s brief piece was called “The Collapse Of Public Infrastructure Spending In One Chart.”

There is a big problem here: the falling spending that Leonhardt and Weisenthal point to has very little to do with transportation. The data come from the Census, which the two writers extracted from this Fed database. The data can be broken out into a dozen subcomponents for the period 2002–2015. If the writers had done that, they would have come to different conclusions.

The three largest subcomponents of government construction are highways and streets, education, and (non-road) transportation, which includes airports, seaports, and transit. Using the Fed database, I charted the three components in millions of dollars; that chart is below the jump. (I’ll look at spending as a percentage of GDP in a moment.)

Time for Hillary to Speak Up on Trade

The Washington Post ran an editorial on Wednesday indicting Hillary Clinton for her silence on the trade agenda. Yesterday morning, the Post published an op-ed by Robert Kagan of Brookings titled “Clinton’s Cowardice on Trade.” Both pieces offer some valid observations, but the matter deserves more scrutiny still.

Is it just me or do others see it as presumptuous, disrespectful, and even contemptuous that the person who expects to head the Democratic Party ticket next year feels entitled to her silence on the single most divisive issue confronting that party? Trade policy is causing a schism between Democrats, and Clinton chooses to showcase her leadership bona fides by … refraining from taking a position? And what does that say about the judgment of her steadfast supporters, whose return silence countenances an evasion akin to deceit? On the other hand, Clinton’s supporters are accustomed to accommodating a more expansive definition of honesty, so perhaps they’re oblivious.

If I were an engaged Democrat, I’d demand to know, now, where Hillary Clinton stands on trade. And if I were a presidential candidate with a reputation for favoring expedience over principle and whose most compelling claim to the White House is that I really, really want to be president, I would want to demonstrate my worthiness by taking a firm position, explaining to my party why I believe that position is the right one, pointing out (as President Obama has) that many of the Left’s objections to trade are based on fallacies, and sticking to it, even if it alienates some factions. Making some people unhappy is a necessity of leadership.

Like President Obama, Hillary Clinton has a history of flip-flopping on trade, so people are understandably confused. As First Lady, she advocated on behalf of her husband’s efforts to forge NAFTA. As a U.S. senator, she was a solid protectionist, voting against trade barriers only 31 percent of the time and against trade-distorting subsidies only 13 percent of the time. As a candidate for president, she expressed skepticism and, at times, indignation about trade agreements and joined with the political left in vilifying NAFTA. As secretary of state, she not only embraced the Trans-Pacific Partnership (TPP), but was instrumental in making it the centerpiece of the administration’s “pivot to Asia.” Today, in the midst of a debate that will make or break the TPP and shape next year’s Democratic Party platform and more, Clinton is mum.

The Trade Promotion Authority legislation struggling to gain support from congressional Democrats would extend the terms of TPA through the entirety of the next president’s first term and into the second (it would expire in July 2021). It is a tool that would be welcomed by any president who sees trade agreements as channels for economic growth and diplomacy. Clinton’s silence implies indifference to the outcome of the TPA debate in Congress and, thus, indifference to trade liberalization as a policy tool. Clinton is well aware that the most important aspect of U.S. foreign policy to most countries is our trade and commercial policy.

So, unless the former top U.S. diplomat, as president, would turn her back on the TPP she once embraced, and pull the rug out from under the Transatlantic Trade and Investment Partnership—outcomes that would deprive the economy of valuable growth opportunities, offend 39 foreign governments, and reinforce perceptions of U.S. decline—she should affirmatively endorse TPA now.

Clinton’s endorsement would signal leadership and provide cover for scores of Democrats in Congress who are wary of the party’s dash to the far left. It would provide refuge for members who want to be on the economically responsible side of the schism. It would create an environment where it is safe to say the anti-trade, progressive emperor is stark naked. 

Do Racial Disparities Explain Flat Student Performance?

The latest results of the Nation’s Report Card for history, geography, and civics are out, and as usual they are depressing. The exam, formally known as the National Assessment of Educational Progress, is administered to a representative sample of U.S. students to give a snapshot of student performance in a variety of subjects nationwide. Education Week reports:

The nation’s eighth graders have made no academic progress in U.S. history, geography or civics since 2010, according to the latest test results from the National Assessment of Educational Progress (NAEP).

Fewer than one-third of students scored proficient or better on any of the tests and only 3 percent or fewer scored at the advanced level in any of the three subjects.

No significant changes since 2010

However, Chad Aldeman of Bellwether Education Partners argues that saying students “have made no academic progress” is “the wrong way to look at it” because of something called Simpson’s Paradox (which has nothing to do with the voice of Principal Skinner and Mr. Burns turing down a $14 million contract):

This Is Why Amtrak Should Get More of Your Money?

An Amtrak locomotive caught fire yesterday on its way from Chicago to Milwaukee. Fortunately, all 51 passengers were safely evacuated from the six-car train.

At about the time the locomotive was burning, a reporter was telling me that “everyone” in Washington was saying that the Philadelphia accident proves that Amtrak needs more money. No doubt the Wisconsin incident will add to those calls for more funding.

But go back and read the first paragraph: There were only 51 passengers on that train. All of them could have fit on one motorcoach, many of which have 52 or more seats. The Horizon coaches used on this train typically have 60 seats, which means the train was less than one-sixth full. According to Amtrak’s performance report for fiscal year 2014, the Chicago-Milwaukee Hiawatha trains filled an average of 36 percent of their seats in 2014, or about two-and-one-half buses worth.

Amtrak fares for its seven daily trains each way between Chicago and Milwaukee start at $24. According to Busbud, Greyhound and Megabus together offer 13 trips per day each way between Chicago and Milwaukee, and their fares are often as low as $7 and never higher than $10.

While intercity bus operators pay a discounted fuel tax, the buses otherwise operate without subsidy. Amtrak’s Hiawatha trains produced $16.8 million in ticket revenues in 2014 against $24.5 million in operating costs, for a net loss of $5.7 million (not counting amortized capital costs). The trains carried slightly less than 800,000 riders, for an average subsidy of slightly more than $7 per trip.

In other words, the subsidy alone would have been enough to give every single Hiawatha rider a free trip on Greyhound or Megabus (at the low cost of $7 per trip).

The IRS Folds, Returns 100% of Lyndon McLellan’s Money

Defying a demand from the federal government to stop publicizing his case, today Lyndon McLellan was told the IRS is abandoning its efforts to keep more than $107,000 it took from his bank account without ever charging him with a crime.

The case received national attention and outrage, including from a member of Congress, which led to this threatening message from an Assistant U.S. Attorney to McLellan’s lawyers:

Whoever made [the case file] public may serve their own interest but will not help this particular case. Your client needs to resolve this or litigate it. But publicity about it doesn’t help. It just ratchets up feelings in the agency. My offer is to return 50% of the money. 

So much for that; Mr. McLellan will be receiving 100% of his money back.  

Maryland Passes Tesla Bill

This week, people in Maryland got the news of Gov. Larry Hogan’s signature of HB 235, the so-called “Tesla Bill.” The law allows, for the first time, makers of electric cars to sell directly to consumers, bypassing traditional auto dealerships.

During the last few years, a number of states have prevented Tesla Motors from selling cars directly to consumers.  They have enforced laws that require the use of independent dealers to complete sales.

In the Summer 2014 issue of Regulation professor Daniel Crane explained that these laws are a legacy of past battles between dealers and legacy automakers like GM and Ford over the distribution of wealth losses during recessions and the number of dealerships whose fixed costs must be supported relative to Toyota and Honda.

This history has little to do with niche manufacturers like Tesla that do not want to use dealers.  But dealers do not want the possibility of non-dealer sales to spread to traditional manufacturers.     HB 235 codifies this sentiment. It allows Tesla and other electric car makers to sell directly to consumers.  But it preserves the status quo for all other traditional cars and trucks, whose dealers understood that not allowing a Tesla exception would focus undue attention on their regulatory protection and perhaps cause voters to demand more fundamental reform.