Transcripts For CSPAN3 Cato Institute Hosts Discussion On Infrastructure Spending 20170307

Time its turn at the podium. Im chris edwards. Editor of cato. Thanks for all you folks coming today. Infrastructure is certainly a priority issue for the new administration. President trump has repeatedly called for a trillion dollars infrastructure plan. We dont know exactly what that means. Does he mean a trillion dollars in new federal Government Spending or does he mean the plan put together by his advisors wilbur ross that called for a tax credit for new investment in infrastructure . Im not a fan of either of those approaches, so im hoping that the white house is open to different ideas on infrastructure reform such as the ideas that are panelists are going to be talking about today. Everyone agrees that America Needs to improve the efficiency of its infrastructure investment, trump has talked about deregulation as one way to reduce the cost of infrastructure. Hes talked about for example, reducing the cost of highway building so we would get more and better highways and so i think thats very positive. The main reform that other nations have pursued to upgrade their infrastructure in recent years is prioritization and Public Private partnerships. For example, its been three decades now since Margaret Thatcher privatized Heathrow Airport in britain which launched a global sort of revolution in reforming airport management. Half of your europes airports are now private. Donald trump has called u. S. Airports which are owned by the government in all of the 50 states, hes called them third world. So whats donald trump going to do about that . We will see, but i hope he looks at some of these International Reform trends and adopts some of these thatcher style reforms here in the United States for our infrastructure. Our panel today will discuss what trump may do and should do on infrastructure reforms. We have experts here on highways, on Public Transit and on aviation. In my own writing on infrastructure, i borrowed heavily from all of these speakers today. I would encourage you to go to the websites of the institutions represented today to learn more about infrastructure. So ill introduce our four speakers and then we will get going. Our first speaker is ron ott who is a Research Fellow at the American Public policy institute. Ron was at Heritage Foundation and he was the go to guy for promarket reforms on infrastructure. When i write about transportation issues i always go back and look and see what ron has said over the years to make sure im sort of on the right track. Back in the reagan administration, ron was the associate director for privatization from 1987 to 1989. Ron has a ph. D. From indiana university. Our next speaker will be mark scribner. Hes a senior fellow at the competitive enterprise institute. He writes about infrastructure development, transportation safety, privatization and innovations such as Automated Vehicles and unmanned air crafts. Marks writings on air Traffic Control are crucial to the current debate about air Traffic Control reform which i think will be a big topic of discussion this year. Mark received an undergrad degree from gwu. Our third speaker will be baruk figureen baum. Previously he was on capitol hill. He handled transportation issues. He earned a masters degree in city and Regional Planning not Georgia Institute of technology. In our cleanup speaker will be cattos randall otoole. Hes written tons and tons of books and studies on those topics over the years. Randalls explored how federal distort local transportation choices and his writings on urban transit really have been crucial to debunking a lot of the fairy tales you will see on light rail systems in city after city across the United States. Randalls been crucial in that debate. So i think each speaker is going to talk for ten minutes so we can hopefully have some time for q a. Thanks for coming. Thank you, chris for that kind introduction and also thank you for inviting me to be here today. This is an interesting time to talk about infrastructure. It was partway through the Electoral Campaign where Hillary Clinton announced that she was in favor of a half a trillion dollars Infrastructure Spending proposal that she believed would create great jobs and get the American Economy on the move again. A week later, candidate trump who thinks larger, bigger announced that hes in favor of a trillion dollars infrastructure plan. Since that date there hasnt been much detail provided on that and so were still kind of guessing but this also gives us a chance to maybe do some recommending because when you announce that you have a trillion dollars infrastructure plan, what you do, what you set off in america and globally for that matter is a huge money scramble and the money scramble has already started. The National Governors association has provided the white house with over 400 Shovel Ready Projects that are ready to go totaling about 120 million. Senator schumer has come out with the oppositions plan also for a trillion dollars, which as you would suspect is largely oriented toward his particular constituency and of course then theres Donald Trumps more and more of these things are coming through as everybody believes that theres going to be a huge amount of money on the table and they want to get it. But one of the important things that trump has let us know in the few details he has is that it will be incentivized by 137 billion of tax credits to encourage the private sector to get more involved in infrastructure, provide the financing, the management and presumably the operation of these things and this raises an important issue in infrastructure in america, because we really have two kinds of infrastructure. We have private infrastructure, when i say infrastructure, were simply typically talking about physical, long lived assets that provide society and people with the flow of useful services. We have housing, retail establishment, shopping centers, hotels, farms, not for profit hospitals, food service, commercial airlines, power generation, so on and so on. In Public Infrastructure we have generally roads, transit, airports, air Traffic Control, Passenger Rail, water supply, waste Water Treatment and so on. Now theres a difference between the first and second and its not just the ownership. Items listed in the first are not cited as a problem. In fact, if anything, you tend to overproduce that kind of infrastructure and many policies for example, agriculture policies are designed to curb food production. Its very difficult to build a new hospital without getting approval because there would otherwise be a glut of hospitals and if anything problem Housing Production is we tend to overproduce creating nasty cycles. In Public Infrastructure, however, these are where we have all the deficiencies where we have shortages and terrible conditions, pothole and bridges, Water Systems that dont work and the and this is where a lot of people talk about the infrastructure crisis. But the question is, really an infrastructure crisis or is it a crisis of socialism since all the things that are problematic that dont lend themselves to easy solutions are, in fact, publicly owned. And all the things in the private sector are not perceived as a problem. So its sort of like capitalism versus socialism in this and we need to make that distinction very clear as we look for the different sort of policies. Now the real question is since theres going to be this huge money scramble how are we going to make decisions about all these projects and, by the way, we have the other threat is that the republicans in the house are threatening and may very well likely in the middle of this year end their ban on earmarks. They came very close to doing it at the beginning of this session and they werent defeated. They simply put the issue off until later this year. With a thousand dollars on the table, i think theres going to be a free for all because Congress Wants to be part of the action as well. And so this is suggests that there is the real risk to waste this money. So my suggestion is you start to look at mechanisms that have already been created and implemented to rationalize the selection of infrastructure policies. An example of that is one that was just implemented in virginia in 2016 and is now been operating for two years to create a Performance Based system for selecting Infrastructure Projects. These are only in transportation and includes transit both transit and roads but Something Like this could easily be done for waste Water Treatments, airports and so on. Its the idea of coming up with an objective cost benefit standards to rank projects by their particular value. Now in 2014, virginia enacted whats called house bill 2, which is then actually implemented in 2016 for the first time. It covers the entire state, congestion is one of congestion mitigation is one of six factors thats considered in any project. All the measures or qualitative and it must predominate in major urbanized areas and the factors are waited by region. Now the program is now called smart scale and the six measures are safety, congestion mitigation, accessibility, environmental quality, Economic Development and land use coordination. And since all parts of the state are different in their problems, it is been the state has been divided up into four different regions where the waits are different. Now in category a which includes only three metropolitan areas in the state, hampton roads, washington, d. C. , virginia suburbs and fredricksburg which is part of Northern Virginia at this point and congestion mitigation counts for 45 of the score for different particular projects. So congestion must predominate and the other factors are relatively minor in comparison. Once you get into the smaller cities where there isnt much congestion, the other factors take over and when you get to category c and d which are largely rural, congestion counts for virtually nothing because they dont have a congestion problem. So the reason for this is to hold all regions harmless in terms of the money they get from the state because what happens is when you Start Talking about congestion mitigation to rural legislatures and officials, they say, oh, youre going to ship all the money to Northern Virginia. This allows everybody to tailer their state money to the particular needs in their community. Now, in each of the factors we have several subfacters. For example, in access bilts its access to jobs, which is the most critical part, access for the disadvantaged and modal choices which is a zap to the transit industry. Economic Development Section we have support for Economic Development, interer modal access which also relates to congestion mitigation. Now how the process works is that all the projects that are put forth are new projects or substantial revitalize projects that will cover the next six years and it includes transit. Metropolitan and local governments submit their particular projects to the v dot, v dot scores and measures the dollars the benefits per dollar according to the scale that applies to each region over the six different factors and then v dot selects the projects that are in the top in all these different regions and then they submit them to the commonwealth transportation board and then they, which is essentially a political board then goes through these recommendations and either accepts them or makes changes as appropriate. So weve done this now in virginia for 2016 and 2017 and of the 8. 5 billion worth of projects that were submitted to be scored, only 2. 7 billion were actually approved for 2016 and 2017. And theyve been announced so far and obviously those who were the losers, say, well this smart scale process really isnt any good. Its a flawed position. I think generally everybodys happy. The elected officials who voted for it are pleased and it seems to be working and most of the things that i could see make great deal of sense in terms of either keeping or getting rid of. Now whats important in closing is that these qualitative measures are only as valuable as what goes into them. In the case of virginia, it was congestion mitigation was the most important part because congestion is a very serious problem in two two major metropolitan areas of the country. But maryland, for example, which also has congestion but has a different political philosophy than we have just came up with their set of proposals and, in fact, not only are they proposals for guide lines but they are enacted into legislation. Its the legislation that says which means that the government cant change anything because if he does he violates the law. But these law. As you can imagine, with a liberal legislature in maryland, that the scale factors are largely proenvironment, protransit, probicycle, prowalking. As the governor pointed it, it is hard to approve high way projects. Its a problem because its enacted into law and he threatened to veto it. He sent it back and it came back with a veto safe majority. So, it is now the law. So, this is the case where setting up performance goals, if you are not careful could backfire on you. With that, let me conclude and look forward to questions later on. Thanks. Hi, everybody. Thank you, ron and thank you, chris, for moderating. We had this issue of trying to find 1 trillion worth of Infrastructure Projects over the next ten years. This is coming from both parties. What i want to talk about today is getting the most bang for the buck and shifting the costs and project risks away from the taxpayer. You have heard speaker ryan and leader mcconnell both say that trillion dollars will not be a trillion dollars of more spending. Getting the most bang for your buck are financing reform and Regulatory Reform. With respect to financing, this is important. Financing is where these entities, the Government Entities with a private sector partner enter the credit markets and use Debt Financing to construct the Infrastructure Projects. Contrast funding is coming out of the treasury. So, infrastructure financing and private public partnerships. Now, one problem for increasing private sector involvement in this sector is on the public side, they are able to access tax free Municipal Bonds. The private sector generally does not enjoy such a tax advantage. The ideal solution here would be to Level Financing and eliminate the Municipal Bond tax exemption, but that is politically unrealistic, at least at this point. So, the second best solution here is to expand tax free Debt Financing for Public Private partnerships and we already have private activity bonds that were in the 2005 highway reauthorization. What they do is allow the private sector to borrow in a way that is similar to the public sector. However, we have a lifetime cap of National Lifetime cap of 15 billion and as of january 23rd this year, according to the federal highway administration, 10. 86 billion has been allocated. For the administration and congress to greatly increase private sector financing, that cap is going to need to be raised, substantially. Theres a solution, lifting the cap, also potentially expanding asset Class Eligibility and the types of projects eligible. Right now, its limited to surface transportation projects. So, we already have an example. The Current Administration could look at the past administration, which had a proposal in 2018 to create qualified Public Infrastructure bonds or qpibs and it would be for airports, ports, water Waste Systems and eliminate the Expiration Date for the bonds. If the goal is increasing private sector involvement in the near term, a new qpib style bond framework should be created to level the financing between the private and public sectors. Another area, this would be Public Financing reform, but we have a forthcoming faa reauthorization bill and one thing we would like to see is modernizing whats known as the passenger facility charge, a local airport user charge and it helps to reduce the federal tax. Right now, we have the pfc butitis capped and unchanged since 2000 and inflation is half the buying power of the pfc. Many airports are approaching debt limits. If we modernize the pfc to eliminate the cap and allow the airports to raise the passenger facility charge, the pfc is used to back bonds, allowing the airports to reaccess the credit markets that they are soon to be shut out of, if they havent already been. Large hubs said for years they are willing to give up their Improvement Program grant in exchange for uncapped pfc and fortunately, last week we saw legislation introduced from an unlikely duo of Ranking Member of the house Peter Defazio and thomas, a republican member of the committee. Their bill would uncap the pfc and also reduce aip funding. Now, moving on to Regulatory Reform at usdot, i think theres im going to go broad on what we should do to move in a general positive direction. Then im going to get specifics at the end. So, many of you know that executive order 12866 back in 1993 signed by president clinton ordered regulatory agencies to, when ever possible, specify performance objectives rather than the behavior or compliance they must adopt. The Performance Base regulation has been encouraged for many years now. But, despite attempts to move away from the more honorous safety regulations at d. O. T. , the agencies at d. O. T. Have a best uneven in moving toward this approach. I can give a few examples. The national highway transportation, their federal moe toll vehicle standards are generally Performance Based. For instance, for the air bags, they are not telling you how to design your air bags. They set a force threshold, then the auto makers can decide how to meet that standard with whatever technology they want. In contrast, at the faa, there have been efforts to move away from the more prescriptive safety certification rule that is have been on the books many years. We did see in recent months small aircraft certification reform that moved in this Performance Base direction. Unfortunately, when we are seeing things like emerging technology, especially Unmanned Aircraft systems, you are seeing the faa continue to turn out very honorous, prescriptive rules that restrict all sorts of operations. The way around them is to request and receive a waiver. That is a very difficult process. Now, the federal Railroad Administration has some Performance Based rules, bridge inspection management plans are Performance Based. For instance, proposed in late 2006, alternative Passenger Rail car crash standards that would have adopted a Performance Base approach and allow the introduction of new technologies that improve the design of american Passenger Rail cars. While they were developing that proposal in 2016, they proposed a rule that would require a minimum twoperson crew. That cuts against an ongoing effort and mandate from the fra that railroads install positive train control technology, which is communications and Automation Technologies that one of the business benefits the fra cited in the past is reducing crew sizes. In the same way we are moving toward selfdriving cars. In the future, theres no reason we shouldnt be able to move toward selfdriving trains. But, this was clearly political done for railroad unions. Thats the sort of thing, the prescriptive rules that dont allow new technology update. These are the things we can see, driving up cost and disadvantaging consumers. So, broad reform, i think congress should require in legislation a comprehensive regulatory review of the d. O. T. s and their agencies safety regulations and develop Performance Based alternatives to the remaining prescriptive rules then to also require all new rules be outcome based, Performance Based. Like i was talking about, special care needs to be paid to emerging technologies that may not be subject to regulation. Selfdriving cars, for instance, are not. But, they soon will be. Theres a real risk of adopting nontechnology neutral prescriptive standards that could really cause us to forego the many benefits these technologies brought us for the future. I could name specific rules that should be withdrawn, the national highway traffic administrations vehicletovehicle communications proposed rule that would specify a specific technology aimed at warning drivers of hazards. Now, the problem with this rule is it does not allow alternative compliance with alternative technologies and also basically ignores the rise in automation that can actually have a computer directly avoid these collisions rather than providing a hazard warning, whether its a chime or tactile feedback in the Steering Wheel or something to the driver. The fra twoperson crew rule makes no sense and should be withdrawn. A final example would be the Surface Transportation Boards proposed resip cal change. What they did, basically, you have Freight Railroad that is were largely deregulated in the early 1980s. For many, for about 30 years, you had a standard that required a showing of conduct on the railroads for the Surface Transportation Board to force railroads to interchange each others traffic. Now, over 30 years, there have been no there have been no theres been no evidence of any anticompetitive conduct on the part of the railroads. The solution to this is e limit nate the conduct requirement and allow it to impose these switching arrangements. Really, they are back to price controls and these are, this is another example of agencies going in the wrong direction while also simultaneously ordered to go in a more sensible, economically Performance Based direction. Finally, president trump, in his joint session to congress address, said, you know, he did kout private financing. There werent any specifics, but at least he was talking about it. One thing that did trouble me is one of the two principles he said would guide his infrastructure plan are buy america provisions. This is a mistake. All this will do is drive up the cost of Infrastructure Projects. We have seen this play out before with the stimulus under president obama. You saw between 2009 and 2011 due to the buy america steel and iron provisions, you saw costs increase by 5. 7 billion, i believe. Thats pure waste. Thats money that could have been spent elsewhere. It could have been used for other projects. These are this is exactly the opposite direction you want to be going because under Credit Assistance, federal Credit Assistance such as private activity bonds, the private public bond is the buy american provisions, unless they receive a waiver. So, the buy america or the call to strengthen that cuts against the president s call for more private Sector Investments. I think this approach needs to be rethought at the administration and in congress. If we do want to see a private Sector Investment take off. With that, i will conclude and i look forward to any questions. Hello and thanks for attending. My name is baruch feigenbaum. I want to thank chris and randal for inviting me to speak on this. The first two presentations by ron and marc focused on ideas we should be doing and things that would be good to move forward. This is actually a proposal that is going to be introduced in congress. It was introduced last year, passed the House Transportation Committee and is probably our best chance to do Something Big over the next four years, in my opinion. Its a little bit complicated, air Traffic Control is different than surface transportation. Im going to go over it and hopefully, if there are any questions, we can answer them at the end. So, whats wrong with the current air Traffic Control system . We have some folk that is are neutral or say the air Traffic Control is wonderful, we dont need to do anything to it. Thats not true. What corporation would solve, then some examples of problems we have now and how atc would actually solve those problems. So, when i say a chance for meaningful reform, theres a lot of great things we can do in infrastructure, some the Trump Administration proposed and some i wish they would propose. Unlocking federal barriers to private surface transportation. Improvements in investments. There are quite a few barriers. There are a lot of solutions we could have if we make it easier for the private sector. I see a slide and people are like, the problem is, we dont have enough opportunities. No, the problem is, we have law that is are preventing those opportunities from being taken advantage of. Private financing to rebuild airports is different. It goes to trumps comment about the airports and how some are decrepe id and why they are better. Encouraging p3s for waterway reconstruction, another issue i think is interesting. Building the interstate systems prove controversial then air Traffic Control reform. What im saying is i think it is the most significant of these challenges and these changes at this time. The timing is right. So, when i say that, im saying we have support from political leaders, both the president and the house, theres support in the senate, they are not on the record as of yet. My sense is theres support from talking to people there. Think tanks on the right in terms of cato, heritage and in the middle and some cases on the left. Support from trade groups, airlines for america, obvious think airlines have a big very important when we talk air Traffic Control. Having them on board is important. Then, when i say unexpected places, i thought if we had support from these groups, it would be a slam dunk. Politically, its more challenging. The air Traffic Controllers union and the Airline Pilots association. The reason those groups are by and large especially the air Traffic Controller is the Current Situation basically leaves them open to government shutdowns, which means they dont get paid and theres uncertainty. Even though they are a part of the union and typically unions are not fans of privatization or corporatization, the uncertainty has gotten so bad for them with the Current System, they are like please get me Something Else, even if they have to give up some of their union protections. So, whats the problem . Okay, theres really three main problems here. One is the faa is the Government Agency designed around the precautionary principle. I know thats shocking, a Government Agency designed to be precautionary. Changes for the 21st century. The air Traffic Management should be using richer information. It uses right now what we call a single locust of control and because of the various technology and upgrades in Computer Software over the last 50 years, it could get to a more robust system. Example, gps and the automation of air Traffic Control meaning planes could fly closer together. More capacity of runways, which means not building another runway. Landing protocols, including the number of planes you can land. This is a big one, serving rural airports at a lower cost. Some are concerns because they are losing service now with aviation in general because they are expensive to maintain. There are actually solutions to that that we can implement but the faa is not proving open to those solutions at this time. Its more for political reasons. Then ability to provide Better Weather information to pilots. The second problem is the faa has trouble attracting top talent. Government salaries are typically lower than they would be in the private sector in a technologically complicated environment such as this so theres a notable brain drain over the past 15 years in particular. The other problem i should have put on this slide is working for the government does not give you a chance to be creative or innovate. You basically have to do the same thing and stick in your box for your career and thats not real attractive to most of the more educated, more sophisticated folks that are coming into the market right now. The third problem is the micromanagement of faa by politicians. So, basically, most politicians, unless they are on the Transportation Committee dont really have a great grasp of aviation because its pretty complicated. Even if they do, they are not looking out for the taxpayers best interest, they are looking for their best interest, Something Else that will not shock you. There is oversight and interference from at least eight different sources right now. Both Transportation Committees, both funding committees, dao, got, the inspector general, omb and the d. O. T. Executive. Maybe i could have put cbo on there as well. So, its really hard to operate a professional system when all of those folks are weighing in. Some weighed in to say how bad the Current System is, which is understandable. If you always go from negative report to negative report, its hard to make positive changes. As a result, the faa focuses on pleasing the political folks, not aviation customers, the passengers and thats who they should be focusing on. How do they solve this problem . It separates the air Traffic Organization from the res of the agency. We are just spinning off that small part of the faa. It actually brings faa into guidance with recommendations worldwide aviation group. Every developed or first world country in the world has some form of separating ato from a safety regulator except the u. S. Let me say that again. Every first world developed country, be it here, in europe, in canada, wherever, has separated these agencies because they recognize it doesnt belong. We are the only one that has not done this. Some separated them in different ways. Sometimes they are a different type of nonprofit, but they are all separated. The majority have a privatized system and the best example is now canada, not to say we are going to copy them because we have a few more people than they do. If you look at the overall system and how it lowered costs, it looks like a good system for the u. S. There are some similarities there. How would it solve the problem in terms of funding . I think this is a big question and because there previously wasnt a revenue title, something that couldnt be identified and is a sticking point. What it would do is shift from funding air Traffic Control to user taxes to charges paid by aviation customers. What happens right now is the user taxes go into an Aviation Trust Fund and must be appropriated. The problem with this, we see it in inland water ways as well. That doesnt mean the ou prop yea tors, omb or whoever necessarily wants to provide the full funding. Sometimes they hold back the funding because they decide they know best, which is interesting. If theres a government shut down, theres no funding. Remember there was a whole thing of governors getting home from their districts and they did things for aviation. In theory, theres not fundsing. It could be diverted. The charge is paid by aviation customers. Its more of a user pay, user benefit system. Cato strongly supports that. The utility customers pay for what they use. Theres a direct link for how much an airline or general aviation or business jet or whatever, how much that particular operator is paying and how much they are getting in return, which is not something we see right now. Governance, another issue that is important. What the corporation does is provides a governance board that represents key aviation stake holders. Theres a lot of controversy and people think this board is made up only of the airlines. That could not be further from the truth. The board is made up of airports, atc employees, of the flying public. There may be some changes. We are seeing if airports have a technical slot or not in the bill but its not only airlines, its all members of the traveling public. This board sets policies for corporations. So, the board is the one actually setting the policies of knowledgeable aviation folks. Its not some politician. Its not some special interest group. Its not whoever happens to, you know, draw the long straw or some sort of arbitrary process. So, i want to briefly summarize, again, how atc corp. Ization solves the problems identified before. Again, faa is a Government Agency run. The solution is to have air Traffic Control which requires technology, innovation and new thinking to be moved outside into a separate entity. The faa has trouble attracting top talent. Atc corporation can have a different pay instructionture, less restrictions, a creative culture, something that is going to be very important as theres a lot of demand for top talent around the world now. Then the problem, politicians run the faa. I like to be blunt with that. Thats how it works. The atc corporation will have a board of users, folks that understand aviation, understand the problems and are knowledgeable to fix them. So, support is growing, but not everybody is on board, yet. I do want to mention some of the opponents and why i think they are opposed. The National Business Aviation Association is strongly opposed and so its actually interesting their users are classified as commercial and noncommercial. In this instance, the commercial users pay more although the noncommercial wouldnt. The reason theres that classification is stupid, but it would take ten minutes to go into it. 12 overall of the aviation, but 20 of the users in new york city during peak periods, which is obvious lay major market and one thats heavily congested right now. So, our opinion, approach, is that users should pay regardless of the type of aircraft. Some of the business jet people say we are not flying commercial, we should be exempt. We say everybody should pay. Users pay and benefit. Delta airlines, i have a flight on tomorrow. They were previously strongly opposed. Now, in the recent statements they are becoming more neutral. Very interesting. They quit the airlines for America Group over this issue and it looks like they might now be trying to make peace with the group. They were previously opposed because they were concerned that they would be losing out. They have a Good Government Affairs Group and they can easily influence politicians and they like that idea. So, under the new ceo, things are different. Well see where that goes. Current democratic leadership, theres some opposition. They have been labeling it. Its important to get it right. We think there are union issues even though the main unions support it. We think the other unions are jealous of this union. I dont want to think about union politics. There seems to be a rift between the house and modern democrats. Folks from the Clinton Administration support this. They supported something similar as did the folks in the reagan administration. We can go back and back. Generally, neutral folks, well, well see. They dont like losing money. Theres been some behind the scenes discussions. I think things are getting bertd now. The public statements havent been great. General aviation, theres a lot of misinformation. They are not affected. It would be ideal if they are but politically, this would be more challenging. Itis not worth it at this point in time. Business aviation is incorrect, though some folks try to do that. Finally, one additional challenge is the scoring of the proposal. Cbo scores the bill as new spending. We dont think it would be. Obviously, if you are a republican in a district, you are not going to vote for something that looks like its increasing spending. We are looking to omb, seeing what we can do on that. Thank you very much. I was supposed to talk about transit, but im going to start with one of my favorite subjects, autonomous or selfdriving cars. When i started talking about it eight years ago, a lot of people thought it was science fiction. Then google was nice enough to send one of their cars to cato headquarters to take people on rides. En more affirmingly, last august, the ceo of ford we are announcing the intent to have a high volume sae level 4 fully Autonomous Vehicle in full operation in 2021 in a ride hailing or ride sharing service. Ford is going to be mass producing vehicles with full autonomy in five years. That means theres going to be no Steering Wheel. Theres not going to be a gas pedal. Theres not going to be a brake pedal. Of course, a driver is not going to be required. Imagine that thats going to totally revolutionize everything about transportation and its going to make a big difference for transit. Its going to make a big difference for what we do about roads. What kind of special infrastructure will Autonomous Vehicles need . Whether they are partially autonomous meaning you can take over sometimes or fully autonomous with no controls. What kind of infrastructure will they need . None at all. They need the existing infrastructure kept in good condition. The idea of smart highways, which is Obama Administration wanted to fund is already obsolete. All the smarts, all the intelligence will be in the cars themselves. They wont need any electronic infrastructure to help guide them around. Now, i have a projection of oops, what happened here how long it is going to be before we start seeing these cars and i might be optimistic, but based on what marc fields said, well be able to buy a car that drives itself under most circumstances in three or four years. Soon after that, you will be able to buy a kit to take a late model car and convert it into a selfdriving car. Mark fields said 2021 for a fulltime selfdriving car. He didnt say you could buy it, it would be available for car sharing. In 2025, i think youll be able to buy cars like that. In 2030, half the cars on the road will be selfdriving. 2040, well close highways to human driven cars because human drivers are so dangerous. What kind of infrastructure do we need . We need to maintain the infrastructure we have. We need to fill the potholes. We might need consistent signage for road detours. Im not sure they would understand an upsidedown road detour sign. Those are minor things. Really, for selfdriving cars, they are going to use existing infrastructure. What about transit . They are going to have a huge impact on the transit. Maryland wants to spend 3 billion building the purple line. My argument is that is going to be totally obsolete before that line is worn out. Lets look at the cost of driving. Right now, americans spend about 1 trillion a year on their automobiles. We drive about 2. 7 trillion miles a year, which works out to 40 cents a mile. Since we have an average of 1 2 3 per person a car, its 25 cents a passenger mile. Look at transit. Transit fares are hovering around 25 cents a passenger mile. Thats because they are trying to compete with the automobile. If you dont have a car and ford out there or uber or General Motors and lyft have selfdriving cars out there and you can call them up on your smartphone, they may charge you 40 or 50 cents a vehicle mile to use their share selfdriving car, look out the window and its snowing or raining or its 90 degrees and 90 humidity, do you really want to walk to a transit station when you can push a button on your phone and have a car come to your door, pick you up and take you where you want to go. If theres two of you, its cheaper than transit. If theres one of you, maybe a little more. You can imagine, with those alternatives available, light rail trains and buses will be running empier than they are today. When we add in subsidies, the picture changes more. Last year, we spent about 2015, 73 billion subsidizing highways. Its more than usual. Usually, its 40 billion a year. 73 billion, its only 2. 6 cents per passenger mile. Thats for cars. When you add in trucks and buses and things like that, the cost is even lower. By comparison, subsidies to transit, just operations and maintenance subsidies, not counting the capital cost are 41 cents to 1. 06 per passenger mile. Decision makers are looking at declining transit ridership, saying why are we spending all this money subsidizing transit when we can put people in selfdriving cars, get people vouchers who dont have high incomes. Low income vouchers to use for selfdriving cars. What do the implications have for driving selfdriving cars . If you have a busy area, you may need new infrastructure. Selfdriving cars reduce the need. They reduce congestion. The cars can operate closer together. Most congestion is caused by slow human reflections. Computers have faster reflexes, you can fit more cars on the road. Where you do need to build new infrastructure, i think you ought to build it out of user fees, not rely on general funds at all. That might mean a Public Private partnership. Theres a certain type that is used for roads called a demand risk partnership. Thats where the private partner puts up the money, pays back the cost of building the infrastructure out of the user fees. The public takes no risk at all. All the risk is taken by the private partner. Guess what . Infrastructure, as already mentioned, thats operated privately tends to be better maintained than infrastructure that is operated publicly. Its operated out of user fees is better maintained than that operated publicly out of general tax dollars. For example, our state highways are operated out of user fees, tolls and gas taxes and the local roads tend to be operated out of general funds. So, the percentage, you all heard about brinls falling down and things like that, the number of bridge that is are actually whats called structurally deficient declined by 50 in the last 25 years. From almost 140,000 to 55,000 a day. Almost all of that decline has been state bridges and most of the bridges are disproportionate share of bridges remaining are local bridges. So, if we can get the local roads on a user fee basis, they will be better managed. Similarly, with rail transit, we have huge infrastructure problems, huge infrastructure backlog. Now, agencies are starting to turn to Public Private partnerships to build rail transit such as this one in denver that opened last year. Thats a different kind of private public par nership than a demand risk used for roads. This is availability partnership. The private partner borrows the money, spends it and the public partner pays the private partner back. It doesnt matter whether anybody rides the train or not or fares are collected. The public partner is obligated, in this case, to pay 5 million dlarls a month to keep that train running to the pry videotape partner. Really, its as if the public partner borrowed the money, but didnt want to exceed the debt limit and let them borrow the money. It doesnt show up on the agencies books. Theres two problems with this kind of system. First of all, if you are not worrying about paying for it out of user fees, the costs go way up because you dont care, somebody else is paying for it. The first modern light rail line was built in 1980 and in todays dollars, after adjusting for inflation, it cost 15 million a mile. Today, the average cost of light rail is 163 million and there are some that are spectacularly more expensive. Seattle just completed one that cost 626 million a mile. Los angeles is just decided to build one that is going to cost 980 million a mile. Its not going to be able to carry anymore people than the line built in 1980 that only cost 15 million a mile. So, because we are not worrying about earning a profit, we are spending wildly and building all kind of infrastructure we wont be able to maintain. Thats the other problem. If you cant build it out of user fees, you cant maintain it. The metro system is falling apart. Its not just washington metro. Its chicago transit authority. Its mbta in boston. It its septa in philadelphia. They are all having serious infrastructure problems because they are relying on tax dollars. The government helped to pay to build the lines. In some cases, they were privately built when they were profitable. Local governments paid to operate them. Nobody paid to maintain them so they are falling apart. Instead of paying to maintain, putting up tax dollars to maintain rail system that is are losing tremendous amounts of money, its time to think about replacing them with buses. This is a busway in istanbul. It moves 250 buses an hour. Each of those buses, this is a larger bus than we use in the United States. It can hold 200 passengers. Using a bus that would be found in the United States, this busway can move more People Per Hour than the washington subway system. So, we can use buses anywhere there are rails in the United States with the exception of new york city. Buses can substitute for rails they can move people faster, safer and less expensively. Denver opened two rail lines and a bus line. The bus line goes the fastest, 41 miles an hour and the rail goes 20 to 30. The bus line cost the least and its the only one that didnt have a huge cost overlay. It goes on the same lanes that individual cars go on. They toll them to make sure they are never congested so the bus is always on time. It doesnt get caught in congestion and the lanes are, if because of selfdriving cars, buses get rendered obsolete, the lanes can be used for selfdriving cars. You dont need to spend a lot of money on these. These are high occupancy toll lanes built in salt lake city. The only difference is theres a white stripe painted between them. So, they dont spend a lot of money building it, they paint the white stripe and say they are for toll paying vehicles only. So, infrastructure can be cheap. Infrastructure can be effective and flexible. If we rely on buses, if we rely on things like selfdriving cars rather than spending a lot of rails and obsolete technologies. Thank you very much. Thanks, a lot. Listen, it makes me think it is extraordinary. What makes me think is what ties them together. The federal government has a huge power over all these different technologies in transportation modes. Even though some of these things like urban transit are purely city operations, owned locally by cities and states. Because the federal government hands out aid to state and local governments for all these modes of transportation and aviation, bus, light rail and highways, the federal government aid has a lot of power determining what local governments do and all the regulations that come with the aid related to safety and economic returns and that sort of thing are very powerful. Im going to open up with one question to the panel. Im going to open it up to you folks to raise questions on any of these topics. Given all the power the federal government has is centered on one person now in the new administration, thats the new secretary of transportation, elaine cho. She oversees the highway and Transit Program and the aviation program. What do we know about her priorities and, you know, how much power is she going to have to push reform in this administration and which direction do you think shes going to go. If the panelists want to address that. [ inaudible question ] 600 million grant. Remains to see if it gets rejected. I think shes off to a great start there. Yeah. I think its too early to say. We dont have key personnel in place, nor do we have any ironclad policies put out there. But, i have been encouraged by her stated openness to increase in private sector involvement in the provision of infrastructure and looking at the bloated regulatory state of transportation. So, right now, im cautiously optimistic but we have to wait to see. She was actually deputy secretary of transportation in the first george bush administration. If you look at her priorities then, they were free market friendly. Shes a supporter of private publ private public partnerships. Shes going to take a trip to canada to see how their system works. Her father owned a shipping business. Shes been in the transportation area from a business perspective and understands some of the problems inherent in all of this government control. Early folks she named have been pretty good. Shes gotten folks involved in the p3 world and investing world that shes named or donald trump named. Its early, but so far, so good. Great. We can go to the audience for questions if you want to wait until the microphone gets to you because we are video taping this, so we can get you on tape. Maybe down front here. In the red jacket. Hi, im from the new york times. Can you please explain the possibility of expanding the tolling system to finance highway projects. Highway tolling, do you want to are you talking about the legal possibility or the technical possibility . The technical possibilities are infinite. Im from oregon. Oregon is the first state to have a gas tax and dedicate that money to highways. Now oregon is the first state to be extensively testing a mileage rate user system. I was in the first testing system. They sent me a gps thing to plug into the car. It transmits to the private company how much i drive and they tell the state how much i owe them. Thats all. I dont feel like my privacy is being invaded. That system can be used to have variable tolling on congested roads. It will relieve congestion. The system can be used to make sure local governments use their share of the money. When i drive on a local road, my money goes to the owner of that road, rather than the state. I see this as very positive and im looking forward to seeing it adopted nationwide. I think it will probably end up being transitioned in where the state might say all new cars have to use this system and old cars can still use the existing gas tax system for so many years. Yeah, to speak to some of the specific legal barriers, you know, we have a prohibition on states tolling their own interstate with a limited exemption for a tiny pilot program. So, i think as randal said, these barriers set by congress would need to be eliminated before we see expansion of tolling and in particular, if you want to see more private investment in Public Private toll roads, absolutely financing reform would be key as well. Its up to congress. Maybe down in front here. Im a total novice about this. I kept thinking about how you could tell the story so that the general public could understand it. Its unbelievably complicated, but i think we have to start educating our public so they get behind these ideas and dont just assume if its coming from cato its right wing and we dont like it. I have heard a lot of good ideas here, but most people dont understand it. I beg you to put it into visual charts to sort of show what the changes would be and the compared to what charts. Its just a suggestion. I think thats a very good suggestion. Maybe in the second row down in front here. Ann stone. I have a question about any advice you all have to get the Transportation Industry to accept new technologies. For example, you talk about redoing bridges and roads. There are materials that are better than concrete and asphalt out there now and we are not using it. In fact, theres one person i know that invented something that is used to fill potholes in minnesota and i think kentucky. The filler is so effective, the road crumbles around it and the pothole still remains. Why dont they do the entire road out of it. Also, bridges, we know a problem with using concrete, they catch on fire. They burn, they melt, they collapse. There are materials they can be built that are fireproof. How do we get the government to look at those new technologies so that if we are going to rebuild infrastructure, we do it smart, and dont do it stupid . I think starting, we need to start with procurement reform and procurement and competitive bidding. A lot of the problems, there are many at the federal and state level with the procurement rules go to the local level where you have municipal engineers doing the same thing for 20 years, have relationships with specific suppliers and you see it across the entire not just for transportation but notorious in the water and waste water sector. So, i think, procurement competitive bidding, start there and see what happens. I think more private ownership would be helpful. The problem you have in procurement process is the low bidder wins. That doesnt mean they are cheating anybody, but theres incentive to use cheaper materials. The ones you are talking about are more expensive, but last longer. You, the contractor are expected to finish to a certain standard. Doesnt matter if it lasts ten years or 30 years. If you are a private owner, you have a great deal of incentive using materials that last 30 years if theres sufficient payback and its justified. You have a system now that has no internal incentives to adopt technology. Invariably they are more expensive. In the public sector, theres no way to capture that gain. This is a widely discussed advantage of the Partnership Like the company that built and is now operating and managing the capital beltway toll lane expansion. They design, built and will operate for the long term. They have an incentive to use materials and procedures and structure that is minimize their longterm costs. Maybe back down over here. Hi, im art with the American Public transportation association. Thanks for the invitation to be here. Comments on private sector participation. That is, indeed, a good thing. Inferences were made about places in transit, particular where there is a private sector, the denver project, on the cusp of the purple line here, florida, texas, Passenger Rail projects. Even beyond that. My question is, really a straight question for an answer. Is there appreciation that not all projects might be private sector, many will be, but some are not going to work under that model . That has been discussed in some congressional hearings. Its not for everything, i accept that point of view, i wonder if the panel views it that way or not . Ill give my view. Im for diversity and federalism. Because so much federal money and Regulatory Authority is involved here, we are not giving the states enough chance to go their own diverse ways. I dont know what the best solutions for all the different cities you mentioned are. I would like state and local governments to be making decisions without the distortions that i think federal aid and regulatory mandates create. You know im a rail nut. I love trains, i ride amtrak a lot. The next time i come to washington, d. C. , im taking amtrak from oregon. It will be a fourday trip. I once was open to that idea. The more i look at urban transit, the more i realize once you open the door to saying, okay, we are not going to worry about making a profit, we are not going to worry about covering costs, the washington metro system, they said fares are going to cover 100 of operating cost and 80 of capitol. Then 50 of the capital, and 50 of the operating cost. So, once you open the door, it gets more and more expensive, more and more bloated. You build things you shouldnt have built in the first place, shouldnt have considered in the first place because they are too expensive. There has to be a line. The line is, it has to be able to cover its own cost. Whether its public or private, i care less about that than whether its going to cover its own cost out of the fees paid by the people who are using it. Maybe we ought to have another session you and i can debate that. Art, i would say, we have this discussion internally and to be perhaps a tad controversial, if there are truly areas people need that cant be served in the private market, maybe we would be open to looking at that and how it could, you know, some sort of public funding. The challenge is, right now, it seems like a lot of rail projects, particularly rail projects are being built for choice riders, not transit dependent riders. In my personal view, the folk that is do not have a car, dont have transportation any other way, if we are providing some sort of government funding, you know, especially federal, but local and state, that should be our priority. I dont think it is right now. So, i guess, in theory, you raise a good point, at least in my mind. I think we need reforms as to how we are doing it correctly. Maybe down in front here. Michael i live in china part of the year. I have taken the chinese highspeed trains. I have been in france and taken the highspeed train and in japan. This country seems to be a natural for highspeed trains, its huge. The distances are huge. Why arent we emphasize thag . What is 2 problem of not making new york an hour from here or going from miami to washington like shanghai to beijing in five hours. It would be a tremendous load off the highways. It is a political problem or money problem . What is the problem there . Thank you. We have this New Invention called airplanes. They go faster than highspeed trains, they are cheeper than highspeed trains, they dont require a heck of a lot of extremely precisely maintained infrastructure. They are cheaper to maintain than highspeed trains. California, in 1995, an economist estimated it would cost 10 billion to build a highspeed train from los angeles to San Francisco. At that cost, he said highspeed trains would cost more to move a passenger from los angeles to San Francisco by train than by car or by plane. It would be far cheaper by plane and a little cheaper by car. Today, the projected cost is 100 billion. Theres no way thats going to be competitive with flying. Flying, los angeles has five airports, San Francisco has four. You can fly from an airport to near where you live to where you want to go. The highspeed train is going to go from downtown to downtown. Thats fine if you are downtown. Only 8 of americans live or work downtown anymore. Thats not going to be convenient for 92 of americans. Highspeed americans. High speed trains are a natural solution for tokyo to osaka. The rest of the world france, spain, other countries have gone hundreds of billions of dollars or tens of billions of dollars in debt because of them and theyre thot providing satisfactory transportation in those areas. Two quick points. Theres been numerous stories about what boondoggles a lot f the chinese infrastructure including high speed trains. Randal has an excellent website on those issues you raised. Down the middle here. This was extremely interesting, but because this is not my topic of digital technology, there was a lot of data to process and i michiga d missed it, but the cost ive seen that our environmental cost include ng the calculations, its a very honest and logic question. Do we have numbers fr for examp massive inkrecrease in autonomo cars will be less costly in the longterm, using trains or planes or any other transportation. The environmental impact. We have a lot of numbers on that and what we know is that with 85 of all our travel is by car. Trz maybe 1 is by rail. Counting urban and inner city. If we could double that rail uses maybe 20 less energy than cars, maybe emits 20 less pollution. A lot of rail systems do worse. Say it emitted 20 less. Say wed be reducing pollution emissions by you know, a fraction of a p percent. The its much more effective to go for that 85 and try to get more people to drive priuses or electric cars, you only have to get a small percentage of people to change there and you get lar large changes. We know that works because in 1970, you couldnt see across town because air pollution was so thick in the United States. Maybe not quite as bad as beijing is today, but in some cities, it was as bad. And we tried a two pronged approach to fix it. We made cars cleaner and we tried to get people out of their cars on a trnz it. 1970, the average american rode transit 50 times a year. Weve spent a half a trillion dollars improving it since then and today, the average American Rides it 40 times a year. That didnt work. On the other hand, making cars cleaner worked. Today, we only have less than 10 as much pollution as being emitted by all cars. As was being emitted in 1970. That means each car is is em emitting that much less pollution. Maybe two more questions. Down in front maybe. Thank you very much. Its always good to see you. Mr. Otoole. Especially as you have such great visuals to support some of your ideas and initiatives and that makes it interesting and i love your ties by the way, ive said that many times. What is your observation of d. C. . You spend a lot of time in oregon, portland. What is your observation of what could be done better in this showcase, the nations capitol, which recently hosted the inauguration. Theres some problems right in front of Union Station for instance, cosmetic, as you cross over the crosswalks of massachusetts avenue x urk see theres an agree jous negligence in the restlation. Some of the federal areas could use some work. So what is your thoughts about how u we can better showcase the nations capitol and where would we, is this familiar issue or more of a local city issue. I think its definitely a federal issue. They have distorted the system too much to make them behave rational. The the streetcar, 200 million. Its providing zero function. And its such a failure they want to expand it. They want to build more. Right . Portland has built more miles and they want to build 140 miles. Over a half are in Poor Condition and the cost of 140 miles of streetcars would be more than paving every single one of those 5,000 miles of streets. Now, i havent done the numbers for washington, d. C. , but i wouldnt be surprised if the streetcar plans theyve written up are more than the cost of paving every single street in washington, d. C. The metro system is an embarrassment. When i first came to washington a couple of years after the it was built, it was like entering into 2001 a space odyssey, when you go into a station and today, its like entering into blade runner. Its because they settled on a technology that was too expensive. A a technology that we cant afford the to maintain. We need ewing different technologies that we can afford rather than what we thought were 2001, but 1901 technologies. Last question down front here. There hasnt been much mentioned here of the nonmotorized modes. Does anybody have nigh thoughts about those and infrastructure . I bicycle i drive and i think bicycles can be compatible with cars, but its clear that a lot of people dont feel comfortable cycling, so they need to have a little bit of separation. I think there are cheap ways of doing that, like take a major arterial and find a street thats parallel to it and turn it into whats called a bicycle boulevard. That means minimize the number of stop signs and stoplights that bicycle streets, bicyclists have to deal with and put a few little barriers in to keep cars from using as through street, but still allow cars as local traffic. Thats a very cheap solution for bicycles. Its been tried in berkeley and works very well. You dont have to spend millions of dollars for special bike lanes. For what you have to spend money on bicycles, i think a tax on bicycle tires would be a good thing. They wear out fairly fast. And they wear out according to how much you bicycle and so if you tax the tire, you can raise some money. The more people bicycle, the more tax they pay, the more money you raise and then at least bicyclists would be able to say theyre paying at least a share of the cost of the roads theyre using. Im skeptable, but if we have a role, i think the products that are funded or finances ought to be significant. I dont think theres a way to make the argument. I think those are local issues. But i have no problem with cities deciding to put in infrastructure. I dont think theres a federal role there. Thanks for coming. The lunch will bed upstairs, up the door and down and up the spiral staircase. Thank you. Washington journal, live every day and coming up wednesday morning, Iowa Republican congressman steve king on the revised travel ban and Republicans Health cairo plan, then Washington State democratic congresswoman on Trump Administration immigration policy and border security. And Kaiser Health news, chief washington correspondent will also review the Republican Health care proposal. Watch cspans washington journal live at 7 00 eastern wednesday morning. Join the discussion. House republicans released their Health Care Plan yesterday that repeals parts of the afford bable care act. Scaling back the role in health care. And tomorrow, well will live at the house ways and Means Committee as they make changes to the bill. Both the ways and Means Committee and the energy and Commerce Committee share jurisdiction. Watch live coverage at 10 30 a. M. Eastern here on cspan 3. And you can read the bill at our website, go cspan. Org. This weekend, cspan 32s book tv is is live from the tucson festival of books with two days of Panel Discussions and author interviews. Saturday, our coverage begins at noon ooempb and authors include Richard Reeves and his book, inpha my, the shocking story of the internment in world war ii. Lillian faderman, the story of the struggle about lbgqt rights. And stamped from the gipg, the definitive history of racist ideas in america. On sunday starting at 1 00 p. M. Eastern, politics and immigration with nation Magazine National affairs correspondent, john nichols and his book, people get ready, the fight against a jobless economy and a citizen less democracy. Marine downward. The year of voting dangerously and former Goldman Sachs Vice President and her book, my underground american dream. My true story as an undocumented grant who became a wall street executive. Book tv is live from the tucson festival of books, saturday at noon and sunday at 1 00 p. M. Eastern on cspan 2. They have tons of money, but the suhher ups that make it to the top, they want to have standing and status and they want to be respected and want to have power. Sunday night on q and a, beyond Global Founder sandra naviti discuss her book, how the financial elite and their net woks rule our worlds. I think many of the super hubs see whats wrong with the system, but its also one of the key questions i ask in the book is do they hold the system presenter or are they presenters of the system. The is it their fault or is it the systems fault . Its in the end, afteranalysis, i come to the conclusion its the interaction of play. Sunday night at 8 00 p. M. Eastern