6/3/2015

Chinese Drivers Pay for Roads. Why Can't Americans? - Bloomberg View

TR A N S P OR TA TIO N

ChineseDriversPayforRoads.
WhyCan'tAmericans?

MAY21,201510:00AMEDT

ByPeterR.Orszag

aA

CongressispoisedtoextendtheHighwayTrustFundfortwomoremonths.ThisBandAidis
neededbecausethefundsauthorizationexpiresattheendofMay,andlawmakershaven'tbeen
abletoagreetoamoredurablestrategytopayforAmerica'sroads.
InChina,whereIamatthemoment,thingsaredifferent.Despitethiscountry'smuchlowerper
capitaincome,ChinesedriverspaynoticeablymoreinfeespermilethanAmericandriversdo.The
higherfeesencouragepeopletousehighspeedrailandotheralternativesforgettingaround.And
themoneyfinancesnewandmoreefficientinvestmentsinhighways.
Itisabsolutelycorrect,asmyformercolleagueLarrySummersandothershaveargued,that
todayslowinterestratesandsluggisheconomicactivityprovideanidealenvironmentformaking
neededimprovementstoinfrastructure.Anditwouldeasilybepossibletoborrowthemoneyfor
suchprojects,wereitnotforthepoliticalunwillingnesstocommittosomewayofpayingitback.
Analternativetofullpublicfinancingisthemuchhypedpublicprivatepartnershipmodelfor
infrastructurespending.Thatmodel,though,requirestollsorotherformsofrevenueprivate
investorsdemandareturn,andthatreturnnecessitatesanidentifiablerevenuesource.
IntheU.S.,weareunwillingtolevyeitherdedicatedtaxes(thefederalgastaxhasn'tbeenraisedin
morethan20years)orchargetollsandotheruserfees.
ThereisoneexceptioninAmericaninfrastructure,andthatisthefreightrailroadsystem.Inher
book"Move:PuttingAmericasInfrastructureBackintheLead,"RosabethMossKanterexplains
that,althoughpassengerraillagsbehind,U.S.freightrailisagloballeader,thankstothesystem's
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6/3/2015

Chinese Drivers Pay for Roads. Why Can't Americans? - Bloomberg View

financialprofitabilityandreinvestmentofprofitsintheimprovementofinfrastructure.
Freightrailisnotwithoutitschallenges,includingsomeareasofcongestion(especiallyaround
Chicago),questionsaboutwhethertheindustryisadequatelypreparedfortheincreaseincargo
thatwillcomewiththeexpansionofthePanamaCanal,andthecontroversiessurroundingthe
safetyofcarryingoilfromshaleformations.Butbecausethefreightrailroadcompanieshave
payingclients,theyhavetheincentiveandtheresourcestoinnovateandimprove.
AnewpaperfromtheHamiltonProjectlaysoutseveralwaysinwhichwecouldfacilitateuser
feesintheU.S.Thefederalgovernmentcould,forexample,establishasinglenationalstandardfor
electronictollcollection,perhapsthroughasmartphoneapplicationthatwouldfunctionmuch
likeanEZPass.Theauthorsalsosuggestasetofnationalguidelinesforcongestionpricing,
withvariableuserfeesthatdependontrafficflowsandsoreducedemandoninfrastructureatpeak
times.
Tobesure,notallinfrastructurecanorshouldbefinancedbyusers,whichiswhypublicprivate
partnershipsarenottheuniversalresponsetoinfrastructureneeds.Furthermore,manyotherkinds
ofchangesareneededbeforetheU.S.canmoveforwardwithanambitiousinfrastructureprogram.
Overlappingfederal,stateandlocalregulationsneedtobesortedout,forexample.
ButCongressiskiddingitselfifitbelievesthatit'spossibletosubstantiallyexpandinvestmentsfor
thefuturewithoutaskinguserstopaymore.
Tocontacttheauthoronthisstory:
PeterOrszagatporszag3@bloomberg.net
Tocontacttheeditoronthisstory:
MaryDuenwaldatmduenwald@bloomberg.net

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