News Story

The President's $50 Billion Planes, Trains and Automobiles Plan: Is It Good Public Policy

President Barack Obama recently announced plans to spend $50 billion for transportation infrastructure. The plan would rebuild 150,000 miles or roads, construct and maintain 4,000 miles of rail and rehabilitate or reconstruct 150 miles of runway.

Here are the thoughts of two policy experts:


Tad DeHaven, budget analyst, Cato Institute

In a blog post, DeHaven argued that the private sector should be given a chance to satisfy the country's transportation needs. A sample of that:

In a speech to union supporters in Wisconsin, President Obama announced his intention to take the country $50 billion deeper into debt in order to finance more public infrastructure projects. The president defended his abysmal economic record by claiming that he has had to take on "powerful interests who had been dominating the agenda in Washington for too long.

Instead of depriving the private sector of another $50 billion plus interest, why not allow it to play a greater role in funding and operating the country's transportation infrastructure?

For example, most policymakers act as if there is no alternative to government-financed highways. However, as a Cato essay on federal highway funding explains, the U.S. has a rich history when it comes to privately financed and operated roads. More importantly, new technologies not only make private roads more plausible, but ideal: 

Looking ahead, there are no technical or economic reasons why the highways of the 21st century should not be private toll roads once again. Modern GPS-based technology enables mileage-based tolls to be debited to road users, and the revenues credited to road providers, without vehicles having to stop, and without invading the privacy of road users... 

While payment for road use by fuel taxes involves paying into opaque government-controlled funds with no knowledge about how the revenues are spent, mileage-based fees can provide precise and transparent information on the payments being made for each road segment, and thus illuminate the costs and efficiencies of different road providers. Such information, which could be made available without revealing the identities of the road users, would be sure to be publicized, and thus help move the control and financing of roads from nonresponsive government funds to competitive suppliers operating in open markets.


Adrian Moore, vice president, research, Reason Foundation

Moore said that Obama's plan is a bit premature to analyze because it lacks so many details.

"It was all rhetoric without any substance," Moore said.

Moore wrote a blog of his own on the subject. Here are two of the points that he made:

We are still left wondering about a lot of details, and hoping the White House gets more specific soon.  For example, where is the $50 billion coming from? The plan does not address that. Is this a proposal to spend current federal fuel taxes in a new way? Or to spend new money? If the latter, then are we talking about more deficit spending? Which raises the question of where Congress is on this proposal. They have been pretty uninterested in working on a transportation bill, on more stimulus, or more deficit spending, so it is hard to see them being receptive to Pres. Obama's plan.


So what is going to determine where this $50 billion goes?  Oh, yeah, Pres. Obama is quite clear this is all about jobs.  So the money will go where politicians say it will create jobs, not where the transportation needs are greatest, or where the projects with the highest value to mobility and economy are. 


Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.