Tag Archives: federal government

The important step taken toward American interstates on May 7, 1930

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I am a few days behind in celebrating anniversaries in American transportation history but this post from The Infrastructurist highlights an important highway commission that was founded on May 7, 1930:

This past Saturday marked a little-known anniversary in the long-running contest between American highway and train establishments. On May 7, 1930, the U.S. Senate passed legislation to form the United States Motorways Commission, a twelve-person group — two Senators, two Congressmen, and eight presidential appointees — whose job was to consider a proposal for a national road network strikingly similar to the Interstate Highway System that emerged decades later.

The concept of a truly national road system was, at this point in American history, truly novel. The particular idea to be considered by the motorways commission sprang from the mercurial mind of an engineer named Lester Barlow. The Union Highway, as Barlow first called his system, would be a four-track expressway stretching from Boston to San Francisco. It would have fast lanes and slow lanes, access ramps to eliminate grade crossings, a partition between traffic flows to prevent U-turns, special sections devoted to gas stations and food stands — in short, all the definitive markers of expressways as we know them…

All seemed to be going well after the Senate voted to create the motorways commission on May 7, 1930. Then suddenly the legislation ran into problems. The House of Representatives trapped its version of the bill in a committee, and New York lawmakers did the same. Attempts to revive the plan in subsequent sessions, both federal and local, failed again and again, until the idea faded away.

Tilson later revealed to Barlow the real reason for legislative inaction on the proposal for a national highway system: it had been blocked by the mighty railroad lobby, which feared the loss of passengers and freight to road travel. This reason was confirmed to Barlow at a gathering of New Haven Railroad officials in the fall of 1930. As Barlow later recalled, John J. Pelley, then president of the New Haven, told those in attendance that a poor highway system was in the railroad’s best interest, and that it should do whatever it “practically” could to prevent the development of expressways in America.

This is an important story as it sounds like this commission laid the framework for the Federal Interstate system that began in the mid 1950s. As sociologists, historians, and others would tell you, this Federal shift toward highway construction had a profound impact on suburban development after World War II.

It would be interesting to hear more about the gap between this commission and the Federal Interstate Act of 1956. Of course, there was a Depression and a massive war. But during this time period, a number of government agencies started planning and building roads. The Pennsylvania Turnpike was built in this gap and the states of Ohio and Indiana started constructing connections to this Turnpike. In the Chicago region, a number of highways were under construction by the mid 1950s as the State of Illinois and the City of Chicago recognized the need for such roads. Beyond historical circumstances, was it primarily the railroad lobby that held up Federal support of interstate construction prior to 1956? If so, what was the state of the railroad industry in 1956 and was the Federal government actually behind the times in funding the Interstate system?

Proposal for government to study driving tax by mile

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I’ve occasionally written about the gas tax (see here and here for recent examples) as well alternative forms of deriving tax revenue from driving (see here). There is a report that the Obama administration has proposed a new federal study that would look at taxing drivers per mile driven:

The Obama administration has floated a transportation authorization bill that would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive…

Among other things, CBO suggested that a vehicle miles traveled (VMT) tax could be tracked by installing electronic equipment on each car to determine how many miles were driven; payment could take place electronically at filling stations.

The CBO report was requested by Senate Budget Committee Chairman Kent Conrad (D-ND), who has proposed taxing cars by the mile as a way to increase federal highway revenues…

The administration seems to be aware of the need to prepare the public for what would likely be a controversial change to the way highway funds are collected. For example, the office is called on to serve a public relations function, as the draft says it should “increase public awareness regarding the need for an alternative funding source for surface transportation programs and provide information on possible approaches.”

I have several quick thoughts about this:

1. Doesn’t the government have to go to some method like this in the future with the advent of electric cars? If people are buying less gasoline (which is generally thought of as a good thing), then gas tax revenue will decrease.

2. If a tax like this were implemented, does this deincentivize purchasing electric cars or more fuel-efficient vehicles? Although you might pay less at the pump for gas, you would then pay more for driving longer distances.

3. How much of this is going to turn into a public relations battle? It is interesting that the proposed study would look into this. I’m sure a few things would worry some people:

a. How is the government going to use this tracking information since they will already be tracking the miles driven? Of course, this is potentially already an issue in states with toll transponders like Illinois and the IPass system

b. Is this a tax on mobility or on the American way of life (i.e. sprawl)? It would be interesting to see how this new tax might compare to existing costs for driving. Overall, this article reminds me that driving is not cheap – it may feel like freedom but it is expensive freedom.

4. Is a tax for miles-driven too broad? Different vehicle sizes put different stress on road surfaces. Should a tax also take this into account? Or is the difference between a Honda Insight and a Honda Pilot not significant?

5. There could be some interesting consequences of this. Would there be fewer road trips and driving vacations? Would the airline industry (and the rail/high speed rail industry) benefit? Would putting the costs into miles driven rather than tacked onto a gallon of gasoline make people think twice about purchasing a home further from their work?

More appealing measurements of the American economy

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The Economist looks at several ways in which the US federal government calculates certain economic statistics that might make our economic situation look most appealing. Here is their conclusion:

Conspiracy theorists might conclude that the American government is trying to nip and tuck its way to attractiveness. The persistent downward revisions to GDP growth do look suspicious. But in other areas American number-crunchers seem to believe that their measures are better; indeed, history shows that European statistical agencies have often later adopted their methods. The world’s biggest economy is also much less bothered about the international comparability of its numbers than smaller European countries. True, when the statisticians at the IMF or the OECD produce comparative data, they do so on the basis of standardised definitions. The snag comes if investors fail to grasp that official national figures can show the American economy in an overly flattering light.

Complex numbers, such as these, can be difficult to operationalize or calculate but they also need to be interpreted. Economic experts may know about these methodological differences and can account for these but I’m guessing that the average citizen of the US or European countries has less of an idea about what is going on.

Another US figure that has recently attracted methodological attention is unemployment. While the US unemployment rate has undoubtedly risen in the economic crisis of recent years, it has its own quirks. One part that has been discussed in that people have to be actively looking for work in the last 4 weeks and once people move beyond that cut-off point, they are no longer counted as being unemployed. Another area involves those who work less than full-time but want full-time work and could be classified as “underemployed.” (You can see how the Bureau of Labor Statistics calculates unemployment here.)

(It is also interesting in this story that they compare the calculation of these statistics to cosmetic surgery, apparently an important marker of American culture.)

The large percentage of Americans who use software or pay someone to do their taxes

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Here is a statistic that gives us some idea about how difficult the American public thinks filling out their yearly taxes is:

More than 80% of individuals hire someone or buy software to help file their taxes, though only 64% of filers owe them, according to the Tax Foundation. So millions of filers pay for help to learn that their tax liability is zero.

I recently finished doing these by hand and while it wasn’t terrible, it was time consuming. While the article suggests both individuals and companies spend a lot of time and pay a lot in order to have their taxes done, it sounds like the tax preparers and software companies have plenty of business…

Might the 30-year mortgage disappear?

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An article suggests that the 30 year mortgage might “fade away.” As both Republicans and Democrats think about eliminating Fannie Mae and Freddie Mac, it is unclear whether a purely private mortgage industry would retain features like a 30-year payment period:

Life without Fannie and Freddie is the rare goal shared by the Obama administration and House Republicans, although it will not happen soon. Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide.The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup.

The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans…

Hanging in the balance are the basic features of a mortgage loan: the interest rate and repayment period.

Fannie and Freddie allow people to borrow at lower rates because investors are so eager to pump money into the two companies that they accept relatively modest returns. The key to that success is the guarantee that investors will be repaid even if borrowers default — a promise ultimately backed by taxpayers.

A long line of studies has found that the benefit to borrowers is relatively modest, less than one percentage point. But that was before the flood. Fannie, Freddie and other federal programs now support roughly 90 percent of new mortgage loans because lenders cannot raise money for mortgages that do not carry government guarantees.

The issue of a 30-year mortgage would be up for debate within a broader restructuring of an important industry. Both organizations, Fannie Mae founded in 1938 and Freddie Mac created in 1970,  were intended to help Americans become homeowners. Fannie Mae, along with several other government programs, particularly helped to boost homeownership rates after World War II. During this postwar housing boom, government programs helped lower down payments and lengthened the years in a mortgage. If I remember correctly, mortgages prior to this postwar period were 15 or 20 years at most, required much larger down payments, and were available from mortgage lenders or savings and loans associations.

Where this article needs to go next is to ask whether this means fewer Americans will have access to mortgages and homeownership. If the industry is indeed restructured in the coming years, will the homeownership rate continue to drop? If politicians from both sides of the aisle are interested eliminating Fannie Mae and Freddie Mac, does this mean the federal government is pulling away from more explicit endorsements of homeownership? It is intriguing to note that all of this might take place because of a large economic crisis (though both of these programs have had their critics for decades) while Fannie Mae was instituted in response to an earlier crisis.

Telling graphs about American infrastructure spending

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A number of commentators in recent years have pointed out the relatively small amount of spending on infrastructure by the American government. Here is another take on this, complete with some handy graphs. Additionally, here is some interpretation about government spending on education and technology:

Productivity-enhancing spending, according to Meeker, comes from three main sources: infrastructure, education and research and development investment. We’ve seen infrastructure spending collapse as a share of the budget since the 1960s. What about education and R&D?

In 1970, the U.S. (at the federal, state and local level) spent twice as much on education as health care. Twenty years later, health care closed the gap, and today, total government spending on health care is about 33 percent higher than education spending, which is more or less even with its 1970s levels.

Second, look at technology. R&D spending exploded in the late 1950s and 1960s on the back of government investments in aeronautics and science. Fifty years later, federal R&D has fallen below 1950s levels as a share of GDP, while the private sector has picked up the slack.

So after looking at figures like this, I want to ask what kind of strategies could be utilized to tackle the issue of infrastructure spending, particularly with budget issues looming all over the country?

What to do when development projects, such as HSR, encounter opposition from residents

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This is a common story: a developer, community, or a set of politicians put forth plans for a new development. Some residents or citizens complain that the project will negatively affect them. What is to be done to balance out their concerns versus the plans that have been made? How do we balance the rights of the individual versus the needs of the community?

This is taking place currently in California as state officials continue to move forward with plans for high-speed rail (HSR). According to The Infrastructurist, there are several fronts for complaints: one community suggests the high-speed rail will alter the character of their community and farmers are unhappy that some of their land will split by the tracks.

Within this debate, several themes emerge:

1. A longer and/or bigger view helps provide perspective. In the California case, the start of HSR in the Central Valley looks like a boondoggle because it doesn’t yet connect the largest cities in the state. But it is the start of a network that will expand and eventually provide 2.5 hour travel from San Francisco to LA.

1a. This might help: show that the funding for the later stages in the project, where the Central Valley start is connected at both ends to larger cities, is guaranteed. Otherwise, there might be some worry that this first part will get built and the later funding will dry up or disappear.

2. The time for debate about whether HSR rail is good or appropriate for California is over – it is going forward, particularly since there are Federal dollars committed to this. Yes, these farmers and communities may be affected but they are not going to be able to stop the whole project (unless, perhaps, they get a whole lot more people on their side).

3. The key for those promoting HSR is that they need to continue to focus on the benefits that will come. Some of this is through city revitalization as the HSR serves as a new economic engine. More broadly, it will benefit the state in terms of reducing traffic, provide a quicker form of transportation that flying, and be greener. Yes, people will complain that these are just guesses but then the promoters need to follow through and ensure that HSR actually does benefit the state.

4. Change is not easy. Even if all Californians agreed that HSR was good and it should be pursued, there are always issues regarding making it happen. This is a long-term project that will affect a number of people. The hope is that in the end, it will lead to more good than harm.

Mortgage interest tax deduction being discussed

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With the federal government looking for more money, a budget deficit commission has been discussing possible changes to the tax code to bring in more revenue. One option among a number of options: limiting or revoking the mortgage interest deduction.

Whatever this commission recommends, I can imagine the political fights that may ensue.

Different definitions for welfare

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Apparently the gubernatorial race in Maine has included discussions about how welfare provided by the government might be defined differently:

“Essentially, we all get welfare in some fundamental form or another,” said Luisa Deprez, a sociology professor at the University of Maine.

Unemployment, Social Security, school lunches, subsidized college loans and even federal tax refunds can be considered forms of public assistance, according to those who favor a broader definition.

In the context of the gubernatorial campaign, however, welfare has been discussed in its more common, narrow definition: public anti-poverty programs that help provide basic needs, such as food and shelter.

I’ve other studies that suggest the public favors government intervention more when it is called something like “government assistance” as opposed to “welfare.”

This is a reminder that there are very few people who really want no government involvement in the lives of individuals. In reality, people who are supposedly at different ends of the political spectrum are debating how much government should be involved. How many people, of any political persuasion, are willing to completely give up unemployment benefits, Social Security, or Medicare?

A conundrum: Americans see entititlement programs as growing problem but don’t support available solutions

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Gallup reports that a majority of Americans see entitlement programs, such as Social Security and Medicare, creating large financial problems for the country in 25 years. Yet, a poll from several months ago showed that Americans did not support some of the main options for helping the finances of Social Security developed by the Congressional Budget Office.

I always find this to be an interesting situation: people agree something should be done but the available options do not appeal to a majority. Looking for and then applying patterns from situations where  solutions are developed would seem to be worthwhile. Are there sociological studies that address this?

Whoever can find a way through this will be deserving of lots of credit. Complicating the issue is the generation gap: issues like Social Security and Medicare tend to fire up older voters, who vote in larger proportions already.