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Interstate 2.0

Why fiscal conservatives should support rebuilding America’s federal highway system

Mar 7, 2011, Vol. 16, No. 24 • By ROBERT W. POOLE JR.
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Second, the map of what became the Interstate system was drawn up in the 1940s, for a country whose economy was predominantly industrial rather than services-based, and whose population was far more concentrated in the Northeast and Midwest than today’s. There is no Interstate route, for instance, between Las Vegas and Phoenix, two major and (for the past 40 years) rapidly growing metro areas. Patterns of shipping and travel have changed enormously over the decades, and accordingly there are many missing links in the Interstate system. Many of those links could be created by upgrading existing highways to Interstate standards. But the idea that “the Interstate system” is complete is fallacious.

Third, many of our Interstates​—​both urban and rural​—​are seriously congested and need more capacity. In some cases, this means widening them in the near term, well before age requires complete reconstruction. In other cases, adding lanes is appropriate when the facility is rebuilt, as when the old Woodrow Wilson Bridge was replaced several years ago on the Capital Beltway between Maryland and Virginia and when the obsolete Marquette Interchange was rebuilt in Milwaukee.

What would it cost to reconstruct, expand, and modernize the Interstate system? One estimate comes from the Federal Highway Administration. Every two years FHWA is required to report to Congress on the condition and performance of the U.S. highway system. It estimates the amount of annual capital spending (major maintenance, reconstruction, and new capacity) required (1) to maintain current conditions (e.g., pavement quality) and performance (e.g., congestion) and (2) to improve conditions and performance (e.g., replace deficient bridges, significantly reduce congestion). Based on a requirement that such projects have a ratio of benefits to costs of at least 1.5, the average annual investment in the Interstate system to improve conditions was between $24 billion and $39 billion. Current annual capital investment in the Interstates (federal plus state) averages $16.5 billion. Thus, the annual shortfall is between $7.5 billion and $22.5 billion. To invest less than that means, at best, to preserve today’s conditions, including today’s level of congestion.

The FHWA numbers emerge from a macro model of the entire U.S. highway system. Other studies take a bottom-up approach. A 2005 study for the Institute for Defense Analysis estimated the capital cost of adding a network of express toll lanes to the freeway systems of the 19 most congested metro areas. That estimated cost was $98 billion, in 2002 dollars (more like $139 billion in today’s dollars). A 2004 study of the 233 most congested interchanges in the country (nearly all of them involving Interstates) identified huge benefits (time savings and improved safety) from rebuilding them. At an estimated cost of $128 billion, the 20-year benefits would be about $1.4 trillion, for a benefit/cost ratio of 10.9.

No generally accepted estimate of the cost of reconstructing, expanding, and modernizing America’s Interstates exists, but it’s pretty clear that the cost would be in the hundreds of billions of dollars over several decades. If, somehow, all the current federal surface transportation money could be devoted to this single endeavor​—​which I have called Interstate 2.0​—​it’s not clear whether the current gas tax, which yields an annual revenue of $33.9 billion, would be sufficient. 

Why (Only) the Interstates Should Remain Federal

What role (if any) the federal government should play in highways has been an issue ever since the Constitution was ratified. The initial justification, in the 19th century, was that Article 1, Section 8 gives Congress authority to “establish Post Offices and Post Roads.” For a long time, the prevailing view was that since no other types of infrastructure (canals, other highways, railroads) were mentioned in the Constitution, the power to establish or assist them was reserved to the states via the 10th Amendment. Most of what we think of as highways in the 19th century were privately financed turnpikes​—​toll roads.

Once the automobile came into existence, the “Good Roads” movement lobbied both state and federal governments to pave the highways. That led to the widespread enactment of state motor fuel taxes, with the proceeds dedicated to highways. It also led to the Federal-Aid Road Act of 1916 to assist states in building paved post roads. Subsequent lobbying led to the Federal Highway Act of 1921, with the justification for federal involvement expanded to encompass the Constitution’s interstate commerce clause. A one cent per gallon federal motor fuel tax was enacted in 1932, but there was no direct connection between the revenue raised and the amount spent, since the revenues went into the federal government’s general fund.

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