Washington Can’t Ease Our Traffic Jams

By John Hood

RALEIGH — The federal government projects trillion-dollar deficits as far as the eye can see. Perhaps that’s the problem: Washington’s fiscal irresponsibility has become so reckless, its costs so gargantuan, that the issue is hard for the average voter to grasp and, thus, prioritize.

So, I will try to make concrete what may seem abstract, and local what may seem far away. Let’s talk about traffic jams in Raleigh, Charlotte, and other North Carolina communities.

As frustrating as traffic jams are, and as wasteful of time and resources, the alternative is worse: little traffic at all. That broad swaths of North Carolina continue to add people, companies, and job opportunities is an affirmation that our state remains an attractive mix of natural and human resources — and that our leaders have, for the most part, governed more wisely than their counterparts in other parts of the country.

Still, policymakers need to upgrade and expand the transportation infrastructure needed to accommodate such growth and lay the foundation for future investment, in-migration, and family formation. For airports, seaports, and rail lines, the mechanisms for financing such capital projects are straightforward. These enterprises, be they public or private, can easily charge their users for their services. These funds, in turn, pay for infrastructure projects or are used to cover principal and interest for the loans or bond issuances required to finance them.

With roads and bridges, the story is more complicated. Users still bear the vast majority of the cost of the infrastructure itself, albeit indirectly through fuel taxes and vehicle registrations rather than direct charges (i.e. tolls). More importantly, most of the value of vehicular transportation can be found not in asphalt, concrete, signage, or safety protection but in the vehicles themselves, nearly all of which are privately owned, operated, and insured.

Over time, however, the rough approximation of a user fee represented by per-gallon fuel taxes and per-vehicle registration fees became less of a meaningful approximation. Vehicles traveled more miles per gallon. Electric and hybrid vehicles also altered the math. North Carolina and other states responded by raising tax rates, hiking registration fees, redirecting tax revenue from the sale of auto parts and services to highway purposes, and reducing the extent to which any highway-related revenues are diverted to non-highway purposes.

Faced with the same mismatch between highway demand and highway-related revenue, federal policymakers made less-defensible choices. Congress has routinely subsidized the federal Highway Trust Fund with general revenues, sometimes paying for nearly a third of annual expenditures that way — even as Washington ran massive annual deficits.

Before 2008, explains the nonpartisan Tax Policy Center, highway tax revenue dedicated to the federal trust fund was “sufficient to pay for outlays from the fund.” Since then, Congress has transferred hundreds of billions of dollars from general revenues to the federal highway program, including $118 billion in 2021 alone. According to a recent Congressional Budget Office projection, the federal program will require another $150 billion infusion from outside the system to keep the Highway Trust Fund solvent through the end of the 2031 fiscal year. Beyond that year, the projections are likely to get gloomier, not sunnier.

See where this is going? Whatever you think of using federal income taxes to pay for local road projects, this practice is going to end sooner rather than later. Federal debt now exceeds America’s annual economic output. The Social Security and Medicare “trust” funds will be exhausted in about seven years. Even if the current military operations against Iran end sometime soon, it would be unreasonable to expect a sudden outbreak of stability around the world’s key economic chokepoints (the straits of Hormuz, Bab El-Mandab, Taiwan, and Malacca, for example). Because massive federal deficits will keep interest rates painfully elevated, I believe future presidents and lawmakers will be forced into serious actions. One of them will be to curtail if not end federal subsidies for highways.

Just something else to think about while stuck in traffic. You’re welcome.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).