Monday, May 12, 2008

Returning to the Path of Fiscal Responsibility

What do John McCain, PATH (Port Authority Trans-Hudson), and the national debt have in common, besides all being very old? More than you might think!

America’s national debt is almost $9.4 trillion, a stack of $100 bills almost 6,300 miles high. That’s over $30,000 per legal resident, an already ominous figure growing rapidly with no end in sight. While most of the mass media lavishes attention on the rants of Jeremiah Wright (no relation), the federal government’s fiscal situation worsens, the dollar weakens, and the nation’s aging infrastructure further deteriorates. In March, an elevated section of I-95 in Philadelphia almost collapsed but nobody but truckers and Philly commuters paid much attention. On Wednesday, April 30, a fire near the PATH’s Christopher Street station shut down the 33rd Street-Journal Square and 33rd Street-Hoboken lines, forcing tens of thousands of people to find alternate ways of returning to their homes or cars in New Jersey.

PATH responded reasonably well to the fiasco -- nobody was hurt and service was restored the next morning. But as I waited for the E train to take me to the World Trade Center so I could transfer to PATH’s still functioning WTC-Hoboken line, and as I crammed into the car gizzard to gizzard with other disgruntled commuters, I wondered if there might be a better way. And there it was, behind the rotund woman with the oversized purse! PATH is celebrating its centennial by reminding commuters that it began life as a private company, the Hudson and Manhattan Railroad. That company eventually went bankrupt, the story goes, and the beneficent government, in the form of the Port Authority, stepped in to provide cheap, reliable transportation under the mighty Hudson.

The real story is more complex. Myriad government regulations pushed the H&M, and many other fine American railroads, into bankruptcy. Even with the fare increase, the PATH system is indeed cheap. Anyone who has used it, however, knows that the stations are oppressively hot and dank and the rides slow, herky jerky, and crowded. The system is in the middle of getting a long overdue facelift but the improvements made thus far have been marginal at best. And much of the money for those improvements, and indeed the system’s day-to-day operations, originate in cross subsidies from the Port Authority’s more lucrative assets, like its bridges. Were the Port Authority a for-profit company, it would have long since sold PATH to an entity better able to run it. If New Jersey’s recent abortive attempt to sell its turnpike is any indication, however, a proposal to privatize PATH would be a non-starter even though its sale to a competent private owner would likely lead to better service for commuters and a reduced strain on taxpayers.

It’s ironic that the victors in the Cold War still cling tenaciously to remnants of communism like state ownership of mass transportation infrastructure. Even more ironic are voters who complain about big government, high taxes, and fare increases but who refuse to take obvious steps toward reducing them. I’ve little doubt that John McCain (well, his staff) can find many hundreds of billions to try to trim from the bloated federal budget. I’m less confident, however, that Americans are prepared to allow the government to return important services to the private sector. Until voters are ready to let the market work, the national debt clock is going to continue to spin wildly upward as our dreams for future generations grow ever more pessimistic.

Tuesday, May 06, 2008

What We Really Need Is A Bigger Gasoline Tax

Our presidential candidates have hit new lows calling for a federal gas tax holiday. What a real leader, a good old-fashioned statesman (statesperson today I guess) would call for would be increases in the gasoline tax. Here's why:

1. The federal budget deficit (and subsequent national debt) is rapidly getting out of control. Check out the counters on this page for details. We certainly do not need further tax cuts at this juncture.

2. The current fossil fuel based system may be destroying the environment and is certainly a strategic risk to U.S. security. We therefore need to cut down on fossil fuel use, not encourage it.

3. Investment in alternative fuels is relatively low (and hence slow) because of the uncertainty of future oil/gas prices.

The government could solve, or at least mitigate, all three problems by imposing an escalating gasoline tax and committing to it. A quarter a quarter would probably be sufficient to spur investors to back hydrogen and battery service stations, breaking the chicken-egg problem. (I want a car that runs on X but there are no places to buy X because nobody owns cars than run on X.) And a buck a year would probably not shock the economy too much. Reasonable people would realize that in a decade gasoline would be well north of $10/gallon and make their next vehicle purchase accordingly.

In the meantime, the feds would collect large sums that they could use to pay down
the national debt. We paid off our first national debt thanks to a similar combination of statesmanship and a powerful source of revenue (customs). But let's not learn from the past, let's just talk about people's pastors and flag pins.