Tag: transit

Trump and Democrats Issue Competing Infrastructure Plans

Senate Democrats have proposed an infrastructure plan that calls for $1 trillion in federal deficit spending. In detail, the plan calls for:

  • $100 billion for reconstructing roads and bridges;
  • $100 billion to “revitalize Main Street,” that is, subsidies to New Urbanism and affordable housing;
  • $10 billion for TIGER stimulus projects;
  • $110 billion for reconstructing water and sewer;
  • $50 billion for modernizing rail (Amtrak and freight railroad) infrastructure;
  • $130 billion to repair and expand transit;
  • $75 billion for rebuilding public schools;
  • $30 billion to improve airports;
  • $10 billion for ports and waterways;
  • $25 billion to improve communities’ resistance to natural disasters;
  • $100 billion for a next-generation electrical grid;
  • $20 billion for broadband;
  • $20 billion for public lands and tribal infrastructure;
  • $10 billion for VA hospitals;
  • $10 billion for an infrastructure bank;
  • $200 billion for “vital projects” that “think big,” such as building “the world’s fastest trains.”

In response, someone has leaked what is supposedly the Trump administration’s own list of 50 infrastructure priority projects. It includes such boondoggles as a Dallas-Houston passenger rail line, the congestion-inducing Maryland Purple Line, the $14 billion Hudson River tunnels, and completion of the $2.2-billion-per-mile Second Avenue Subway. Except for the Dallas-Houston line, most of the passenger rail projects were already pretty well decided, but they are still foolish investments that will cost a lot and return little to the economy. There are supposedly more than 250 other projects on a priority list, but it isn’t absolutely certain that this list was endorsed by Trump or merely proposed to him.

Update: While I am now certain that the supposed Trump priority list was really “fake”—that is, not really from the administration—it appears that the reason why the Dallas-Houston line was on the list is that it is supposed to be entirely privately financed. While I am skeptical that private funders could profitably build and operate such a line, if they could, it would be appropriate (though unnecessary) to have it on such a priority list.

What most people have been calling Trump’s infrastructure plan calls for giving tax credits to private investors who spend money on these kind of infrastructure projects. This has some virtues over the Democratic proposal of direct federal spending:

  1. While the Democrats take a top-down approach dictating where the money will go, Trump leaves the setting of priorities to state and local governments, which have already approved most of the projects on his top-50 list;
  2. Where Democrats would commit the federal government to spend an arbitrary amount of money whether it needs to be spent or not, Trump lets state and local governments decide how much to spend and how they will pay for it;
  3. Where Democrats would add $1 trillion to the deficit, Trump relies on a tax credit program that will cost the feds no more than $167 billion per trillion in spending (less, obviously, if less than $1 trillion is spent);
  4. Where a lot of the Democrats’ money would go down a rat hole, at least some of federal tax credits that Trump’s plan would issue will be offset by the reduced use of tax-free municipal bonds and taxes paid by companies and workers earning the money.

Typical of central planners, the dollar figures in the Democrats’ plan are completely arbitrary.

  • Why should trains and transit, which carry 1 percent as many passenger miles as roads, get roughly as much money as roads and bridges (and probably more considering much of the $200 billion “vital infrastructure” fund would go for high-speed rail)?
  • Why spend $40 billion expanding transit and no money expanding highways when highway use is growing faster than transit in most places and most years?
  • Why no money for upgrading the air traffic control system (which is on Trump’s top-50 list)? I don’t support the use of tax dollars for such things, but it is a huge oversight from a plan predicated on the idea that federal central planners know the best places to spend your money.
  • Why $110 billion on water and sewer, and not $100 billion or $120 billion? It seems the point of these numbers is to add up to a nice round $1 trillion while divvying up the money to special-interest groups.
  • For that matter, why any at all on water, sewer, and the electrical grid when these should already be adequately funded through user fees?
  • Why is education even on the list when the federal government has never spent more than token amounts of money for school infrastructure?

My complaints about the Trump plan have been:

  1. It’s not really a plan—it’s just one funding tool;
  2. It doesn’t prevent state and local governments from spending the money on completely looney projects such as the aforementioned Dallas–Houston high-speed rail; and
  3. The private-partnership aspect has confused many people into believing that it will only fund projects that can be paid for out of user fees when in fact most projects would require state and local taxpayers to ultimately repay the private contractors out of tax dollars.

While these are valid complaints, the Trump plan is more bottom-up than top-down, as most if not all of the projects on the possibly fake priority list are supported by state and local officials. And while Trump brought a new idea to the table, the Democrats’ plan is the same old borrow-and-spend formula that they have used in the past. This is actually worse than tax-and-spend because taxing and spending doesn’t leave huge debt problems and interest payments for the future.

While we can hope that Trump’s projects will rely more on user fees more than taxes, at the moment the score has to be Trump 1/2, Democrats minus 1.

Privatize Washington’s Metro System

Some members of Congress are considering restructuring DC Metro’s management and oversight. Big reforms are needed given the disastrous service, safety, and financial performance of the system in recent years.

Why not privatize Metro? Countries around the world have been privatizing their transportation infrastructure in order to improve management and efficiency. Privatizing Metro buses would be straightforward, but even privatizing the subway system would not be an unheard of reform.

Hong Kong privatized its subway system in 2000. In a recent study on infrastructure, McKinsey reported:

Hong Kong’s MTR Corporation has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighborhoods, opportunities for real-estate developers and small businesses, and the conservation of open space. The whole system operates on a self-sustaining basis, without the need for direct taxpayer subsidies.

MTR’s railway system covers 221 kilometers and is used by more than five million people each weekday. It not only performs well—trains run on schedule 99.9 percent of the time—but actually makes a profit: $1.5 billion in 2014. MTR fares are also relatively low compared with those of metro systems in other developed cities. The average fare for an MTR trip in 2014 was less than $1.00, well under base fares in Tokyo (about $1.50), New York ($2.75), and Stockholm (about $4.00).

That sounds pretty darn good. The average fare on the DC Metro is about $3. The on-time record of Metro is unclear, but in technical terms I think “crappy” best describes it. Note that Hong Kong’s 99.9 percent on-time record means that “of the average 5.2 million passenger trips made on the MTR heavy rail and light rail networks on each normal weekday, 5.195 million passengers safely reach their destinations within 5 minutes of their scheduled arrival times.” In 2014, “the system ran for 120 consecutive days without a single delay over eight minutes.” Wow.

That stellar performance induces strong demand for the Hong Kong system, which in turn generates high fare revenues. The ratio of passenger fares to operating costs is a high 185 percent, which means that fares fully cover operating costs and part of capital costs. MTR raises other funds for capital from real estate deals under which it gains from land value increases near stations. The Hong Kong system is profitable and unsubsidized. By contrast, the average ratio of fares to operating costs for U.S. subway systems is just 46 percent, and the systems are heavily subsidized.

The MTR is probably the best-run subway system in the world. The system is an “immaculately clean, well-signposted, cheap, regular, convenient system.” And there’s free Wi-Fi in most stations.

The system is so admired that MTR has been contracted to run systems in other cities. CNN says: “MTR Corporation now operates the London Overground, and two lines of the Beijing Metro, as well as parts of the Shenzhen and Hangzhou Metro systems in China, the Melbourne Metro in Australia and the Stockholm Metro in Sweden … London Overground enhanced its punctuality from 88.4% in 2007 to 96.7% in 2013 after MTR took over its operation for a year.”

Can we get MTR Corporation to expand into Washington? Metro Board Chairman Jack Evans wants a federal takeover of Metro, but how about a private takeover?

Trump’s Trillion-Dollar Infrastructure Plan

On the campaign trail, Donald Trump promised to spend twice as much on infrastructure as whatever Hillary Clinton was proposing, which at the time was $275 billion. Doubling down again in a speech after winning the election, Trump now proposes to spend a trillion dollars on infrastructure over the next ten years.

President Obama had proposed to fix infrastructure with an infrastructure bank, though just where the bank would get its money was never clear (actually, it was perfectly clear: the taxpayers). Trump’s alternative plan is for the private sector, not taxpayers, to spend the money, and to encourage them he proposes to offer tax credits for infrastructure projects. He says this would be “revenue neutral” because the taxes paid by people working on the infrastructure would offset the tax breaks. In short, Trump is proposing tax credits in lieu of an infrastructure bank as a form of economic stimulus.

America’s infrastructure needs are not nearly as serious as Trump thinks. Throwing a trillion dollars at infrastructure, no matter how it is funded, guarantees that a lot will be spent on unnecessary things. As Harvard economist Edward Glaeser recently pointed out in an article that should be required reading for Trump’s transition team, just calling something “infrastructure” doesn’t mean it is worth doing or that it will stimulate economic growth.

Infrastructure more or less falls into three categories, and Trump’s one-size-fits-all plan doesn’t work very well for any of them. First is infrastructure that pays for itself, such as the electrical grid. Private companies and public agencies are already taking care of this kind, so if Trump’s plan applied to them, they would get tax credits for spending money they would have spent anyway. That’s not revenue neutral.

Is Mobility a Right or a Privilege?

Michael Lind, a co-founder of left-leaning New America, is urging the federal government to create universal mobility accounts that would give everyone an income tax credit, or, if they owe no taxes, a direct subsidy to cover the costs of driving. He argues that social mobility depends on personal mobility, and personal mobility depends on access to a car, so therefore everyone should have one.

This is an interesting departure from the usual progressive argument that cars are evil and we should help the poor by spending more on transit. Lind responds to this view saying that transit and transit-oriented developments “can help only at the margins.” He applauds programs that help low-income people acquire inexpensive, used automobiles, but–again–thinks they are not enough.

Lind is virtually arguing that automobile ownership is a human right that should be denied to no one because of poverty. While I agree that auto ownership can do a lot more to help people out of poverty than more transit subsidies, claiming that cars are a human right goes a little to far.

America’s Socialized Transit

On the heels of a National Transportation Safety Board (NTSB) report that found that Washington Metro “has failed to learn safety lessons” from previous accidents, Metro general manager Paul Wiedefeld will announce a plan today that promises to disrupt service for months in an effort to get the lines safely running again. While ordinary maintenance can take place during the few hours the system isn’t running every night, Wiedefeld says past officials have let the system decline so much that individual rail lines will have to be taken off line for days or weeks at a time to get them back into shape.

The Washington Post blames the problems on “generations of executives and government-appointed Metro board members, along with Washington-area politicians who ultimately dictated Metro’s spending.” That’s partially true, but there are really two problems with Metro, and different parties are to blame for each.

First is the problem with deferred maintenance. The Metro board recognized that maintenance costs would have to increase as long ago as 2002, when they developed a plan to spend $10 billion to $12 billion rehabilitating the system. This plan was ignored by the “Washington-area politicians who ultimately dictated Metro’s spending” and who decided to fund the Silver and Purple lines instead of repairing what they already had.

Second is the problem with the agency’s safety culture, or lack of one. According to the NTSB report, in violation of its own procedures, Metro used loaded passenger trains to search for the sources of smoke in the tunnels. Metro at first denied doing so, then said it wouldn’t do it any more. But Metro’s past actions sent a signal to employees that passenger safety isn’t important.

Transit in Turmoil

Last week’s resignation of Michael Melaniphy as CEO of the American Public Transportation Association (APTA) is a sign that more people are seeing that America’s transit-industrial complex has no clothes. Melaniphy’s departure comes on the heels of the withdrawal of the New York Metropolitan Transportation Authority (MTA) from APTA membership.

MTA’s complaint is that APTA has failed to help the seven “legacy” transit systems, that is, rail systems that are more than 40 years old, that are suffering from severe maintenance backlogs. These transit systems, which are in New York, Chicago, Philadelphia, San Francisco, Boston, Pittsburgh, and Cleveland, carry nearly two-third of the nation’s transit riders yet–thanks in part to APTA lobbying–a disproportionate share of federal transit dollars go to smaller cities that are building new rail systems that they won’t be able to afford to maintain.

In 2010, the Federal Transit Administration estimated that the legacy rail systems (plus Washington and Atlanta) needed nearly $60 billion to restore them to a state of good repair. Yet little was done, and the latest estimate is that the maintenance backlog has grown to more than $93 billion. Meanwhile, with APTA’s encouragement, Congress has spent something like $15 billion supporting the construction of new rail systems in places like Los Angeles, Seattle, and Portland.

Even the transit systems that suffer from maintenance backlogs are spending precious resources building new rail lines because that is what Congress will fund, not maintenance. Thus, the Massachusetts Bay Transportation Authority is spending $3 billion on a light-rail line to Medford even as it let its maintenance backlog grow to $7.3 billion. The Chicago Transit Authority is spending $2.3 billion extending its Red Line even as its maintenance backlog exceeds $22 billion. The San Francisco BART system is suffering frequent breakdowns and has a $9.7 billion maintenance backlog, yet is spending $6.3 billion on a line to San Jose that partly duplicates existing commuter rail service.

Meanwhile, other cities seem to be racing to see who can spend the most on their own rail transit expansions. Having just finished spending $1.5 billion on a seven-mile light-rail line, Portland wants to spend $2 billion on a new 12-mile line. Seattle just spend $1.9 billion on a three-mile light-rail line and is now spending $3.7 billion on a fourteen-mile line to Bellevue. The Los Angeles Metropolitan Transportation Authority wants to spend $120 billion on new transit lines, including the construction of a nine-mile light-rail tunnel to the San Fernando Valley that will cost nearly $1 billion per mile. 

Despite their expense, none of these light-rail lines are anything like the Washington or other subway systems. The “light” in light rail refers to capacity, not weight: light rail is, by definition, low-capacity transit, capable of carrying only about a quarter as many people per hour as a subway or elevated line. In 1981, San Diego opened the nation’s first modern light-rail line at a cost of $5.6 million per mile (about $12.5 million in today’s money); the cost of the average line being built today is $163 million per mile, yet those new lines won’t be able to carry any more people than the San Diego line.

These new rail lines do little good for transit riders, mainly because their high cost eventually forces most transit agencies that build them to cannibalize their bus systems. For example, construction of new light-rail lines forced San Jose’s Valley Transportation Authority to reduce bus service by 22 percent since 2001, leading to a 32 percent decline in ridership

It’s no surprise that APTA sheepishly reported last month that the nation’s overall transit ridership declined in 2015. While APTA blamed the decline on low gas prices, the truth is (as noted here last year), if you don’t count the New York subway system (whose ridership has been growing in response to rising Manhattan employment), nationwide ridership has declined for the past several years. 

Why are we spending so much money building new rail lines when it doesn’t help, and often hurts, transit riders? Part of the answer is Congress likes shiny new projects more than maintenance. But part of the answer is that APTA’s membership is stacked with manufacturers and suppliersconsultantscontractors, and land developers who build subsidized projects next to rail stations. Although New York’s MTA carries nearly 37 percent of all transit riders in the country, its membership dues covered less than 2 percent of APTA’s budget because APTA gets most of its money from non-transit agencies. Thus, like Congress, APTA is biased towards new construction.

For example, APTA claims to be an educational organization, yet it hasn’t done much to educate Congress or the public about the long-term costs of rail transit and the need to almost completely and expensively rebuild those rail lines every 30 years or so. After all, this message could undermine support for building new rail transit lines in cities that don’t need them.

People who support the needs of actual transit riders, rather than rail snobs (people who say they’ll ride a train but not a bus) or contractors, should use these facts to persuade Congress to stop funding obsolete rail transit systems when cities desperately need things that will truly relieve traffic congestion and cost-effectively improve everyone’s mobility.

NY MTA to APTA: Quit Wasting Our Money

The New York Metropolitan Transportation Authority (MTA) has formally quit its membership in the American Public Transportation Association (APTA), the nation’s principle transit lobby. In a harshly worded seven-page letter, MTA accused APTA of poor governance, an undue focus on small transit agencies, and having an embarrassingly large compensation package to APTA’s president.

The MTA and its affiliates, Metro North, the Long Island Railroad, and New York City Transit, together carry 35 percent of all transit riders in America. Since MTA’s ridership has been growing while transit elsewhere has declined, this percentage is increasing.

Yet APTA’s focus has been on lobbying for increased funding for smaller agencies, including building new rail transit lines in cities that haven’t had rail transit and extending transit service in smaller cities and rural areas that have had little transit at all. As a result, says the letter, MTA has been short-changed by roughly a billion dollars a year in federal funding that it would have received if funds were distributed according to the number of transit riders carried.

This accords with the finding of a Cato policy analysis that found that New York has been shorted half a billion dollars a year in discretionary transit funds. Since discretionary funds make up less than half of all federal transit funds, it is easy to imagine that the nation’s largest urban area is losing a billion dollars a year to smaller cities that are not making effective use of those funds.

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