Americans Flock to Public Transit

This phenomenon is mostly the result of rising gas prices, which places an increasing burden on car owners.  Though some of you may not agree that paying more at the pump is great for the U.S., it should be universally acknowledged that increased public transportation use is a good thing; it lowers transportation costs for individuals and reduces fossil fuel usage which is good for the environment.  Perhaps most importantly, this recent trend flies in the face of public transit naysayers and indicates a new direction in American thinking. Opposition to new projects often rests on the assumption that people love their cars and don’t want to ride trains or buses to work, making new public transit projects useless and wasteful.  With people flocking to public transit and gas prices continuing to climb, the statistics seem to say otherwise—Americans are finally trying to jump on the public transit bandwagon.

Unfortunately, there may not be enough bandwagons for everyone. Our public transit systems, across the board, are vastly underfunded and in need of maintenance. Not only that, the current explosion of usage will only continue, taxing systems that are already reaching or have passed intended capacity.  Additionally, high fuel costs are causing a funding crisis.  Despite rising numbers of passengers and rising fares, some metro areas won’t be able to expand service and may even be forced to cut back.  This represents a giant step backward on the road to improved infrastructure and public transit.  It is simply further evidence of our historical disregard for the importance of infrastructure and investment in public goods.

In the last 25 years, infrastructure has taken the back seat to other aspects of the national economy. From 1950 through 1970s, the United States invested roughly 3% of GDP in infrastructure and capital projects. Investment in infrastructure was reflected by the era’s solid economic growth. Today we spend less than 2 percent of GDP on infrastructure.  This percentage decline has taken place despite the fact that the number of cars on the road, number of miles traveled per person and number of flights per year have all increased sharply since the 1980s. As more and more people use roads, airports and railways, beyond original capacity, the logical solution is to improve and expand those systems to better accommodate the increasing number of users.   Today, countries like Singapore, Ireland, South Korea and China are pumping 5% of GDP or more into maintaining and rapidly expanding their infrastructure. These countries are poised to take the lead in global growth and innovation, in part because of this investment. On the other hand, the United States, from bridges to runways, is crumbling around us.

Many studies, like those by Urban Land Institute and the New America Foundation, point to political discomfort with high costs as a leading factor in the decline of U.S. infrastructure. Building a high-speed train between major cities, for instance, costs a lot of money.  It’s not always clear that the project itself will be profitable enough to justify the big bill. What some politicians, and many voters, don’t see is the positive economic impact that a high-speed train or commuter rail might have on the surrounding area.  As the housing bubble has burst during the last year, some areas have remained relatively unharmed.  In Washington DC homes in the city itself or close-in suburbs have retained their values, in large parts because they are located near to public transit and the stores, restaurants and business that crop up nearby. The homes that have lost value are those located in the outer suburbs, beyond the reach of the Metro.

With a million homes in foreclosure, public transit’s effect on the housing market should be enough to recommend such projects.  But on top of its seeming correlation with a stable housing market, restaurants and shops have a tendency to crop up around public transportation bringing new jobs with them. The same thing happens when a new port opens or a new freight rail line is built. Businesses that require quick, reliable shipping are able to move into the area.  We can’t just examine the cost of a new project and then try and assess how much in fares or fees will be gained.  Public Transit should be at the heart of creating vibrant communities and so its cost must be considered in relation to the economy it produces.  For a period in U.S. history, this relationship was understood and embraced.  Our economy would be vastly different without such giant public projects as the Eisenhower Interstate Highway system. These sorts of projects (not just highways, but also research centers, airports and telecommunications equipment) helped usher the U.S. into its era of global economic dominance.

But by spending the last 25 years overlooking the positive effects of continued public goods investment, we no longer experience those benefits to their fullest. According to the Urban Land Institute, The United States’ infrastructure situation is “scarily behind where an industrialized nation should be and [as a result the country] loses further ground to competitors.” For instance, vehicle miles traveled in the U.S. have increased 95% since 1980, but road capacity has increased only 4% in the same time period.  ULI estimates that the resulting congestion costs motorists $78 billion a year in wasted fuel and lost time. Or take Atlanta and Chicago O’Hare airports: passengers collectively lose the equivalent of 3,500 and 5,000 days per year. Flight delays cost $15 billion every year in lost productivity, a problem that could be eliminated by building as few as 25 extra runways at already existing airports.  The Department of Transportation estimates that freight bottlenecks on highways and railways cost the U.S. economy around $200 billion per year. The list of problems goes on and on, including inadequate freight rail capacity and lack of political support for expensive, if necessary, passenger train systems. That doesn’t include the cost of missed opportunities for investment and growth due to our sub-par infrastructure—businesses can’t crop up somewhere if there is nowhere for them to sprout.

Of course, large projects do come hand in hand with large upfront costs. How do we pay for it today, having not yet seen the gains of tomorrow?  Here are two suggestions, and rough though they may be, these ideas at least help us think about capital expenses in a different way.  Sherle Schwenniger at the New America Foundation discusses the immediate need for federal budget reform, dividing the budget into current and capital expenditures.  Most states and municipalities in the U.S. already utilize this type of accounting.  Capital expenditures are long term investments and should be accounted for as such.  There is a major difference between paying current expenses and investing money in a long-term project that will reap long-term benefits.  Our current federal system makes no distinction between the two.  Making that distinction allows policy makers to impose more fiscal discipline on current expenses while maintaining the ability to complete and flexibility to fund infrastructure and other public goods. This division of the budget could be expanded even further, creating a U.S. Development Bank whose sole purpose is investing in infrastructure, public transit, and other public goods like national technology research programs.

Another idea, which seems to be en vogue with the rail freight industry, is the creation of public-private partnerships.  The railway industry has been successful at joining with local governments to build new lines and expand freight capacity.  This concept could be applied in a wide variety of ways.  Why not build passenger rails or high speed trains like this?  Or expand port and waterway infrastructure?  The two sides split costs, making it cheaper for the business to build and also producing more business in the long term for the community itself.  Public and private alike have vested interests in making shipping and travel quicker and more available to more people and businesses.

The overarching lesson is a simple one: If we build it, they will come. People want to use public transportation, particularly when gas prices are high. Where it is available it’s being utilized, sometimes beyond the system’s full capacity. People also want to invest in the United States, which has been the largest and most competitive economy for much of the last few decades. But we’ve utilized all that the U.S. infrastructure system can offer and we’re at a breaking point.  It will be costly, but making that crucial investment can place us back at the forefront of technology and productivity.