The Ever-Rising Cost of America's Highways

By Richard Florida


Do gas taxes, tolls, and auto registration fees ensure that America's highways "pay for themselves?" Not at all.

A new report by U.S. PIRG, the federation of state Public Interest Research Groups, shows the cumulative net subsidy that U.S. taxpayers have paid for the interstate highway system since its inception--a sum that is fast-approaching $700 billion.

The report cites research by the Pew Charitable Trusts' Subsidyscope Project, which found that "user fees paid for only 51 percent of highway costs, down 10 percent over the course of a single decade." Even if state, local, and federal governments spent every penny of these fees and taxes on highways, they would still only pay for less than two-thirds of their cost. But they don't: A significant portion of these revenues aren't even spent on highways but used for other purposes.

The upshot is a federal policy that not only subsidizes roads and drivers, but distorts the transportation system and the broader pattern of urban development that flows from it. Add in government incentives for home-ownership and what you have is a massive subsidy for suburban sprawl, which imposes costs of its own.

That may have made some economic sense for the old Fordist model of economic growth, where suburbanization fueled demand for the products coming off Rustbelt assembly lines. But it makes much less sense now, when so many of these products come from China, and when economic growth in the U.S. and other advanced nations comes from knowledge and innovation.

It's time to put in place a new and more rational transportation policy which is in sync with new economic realities and budget priorities. Tantamount to this is making drivers and those who use our roads pay their full costs.

This article available online at:

http://www.theatlantic.com/business/archive/2011/01/the-ever-rising-cost-of-americas-highways/68949/