Do We Need a Department of Transportation?

Following yet another failure of government control of transportation -- the FAA system debacle --  Pete Buttigieg has been soundly thrashed again for his incompetence. The FAA failure is only one of many fiascos over the past year laid at the feet of the erstwhile secretary of Transportation. Recall when he and his “husband” were on paternity leave for nearly two months while the maritime shipping supply chain crisis was going on last fall. Next, he was AWOL during the railroad strike negotiations and really played no role in brokering a deal. As a matter of fact, he was on vacation in Portugal at the time. However, he did have time to point out that a railroad strike would force Americans to boil water. We could have hardly survived without him. Next up, the holiday air travel crisis, during which massive cancellations occurred under his watch. Further, Southwest Airlines basically shut down for a week. Buttigieg criticized the airline for the failure, but not much else. He did nothing to prevent the problem, even as he was aware of the possibility of a meltdown. Even prominent Democrats complained of his handling of the fiasco.

Should we call for the firing of Mayor Pete? On the contrary, the secretary of Transportation in reality has little sway over transportation system performance. Government regulators have no real track record at improving anything, let alone system performance. Regulators typically make things worse.

Let’s take a look at the Department of Transportation (DoT). It’s stated mission is ”To deliver the world’s leading transportation system, serving the American people and economy through the safe, efficient, sustainable, and equitable movement of people and goods.” The DoT was established in 1966 and combines thirteen agencies that cover all aspects of transportation from air, road, and rail travel to the administration of the Great Lakes St. Lawrence Seaway Development Corporation. It’s FY23 budget is $105 Billion, up from the FY21 budget of $87.6 Billion and it employs over 58,000 personnel.

What has the DoT done for us?

In addition to the failures listed above, there is plenty more where those came from. First off, the Federal Aviation Administration, one of the DoT agencies, failed miserably in certifying the 737 Max jet, causing two major crashes and the loss of many lives. While spending over $16.9 billion (FY23) on mass transit the U.S. has failed to modernize its system. The Motor Carrier Act of 1980 removed much of the price controls and red tape in the railroad industry, resulting in a 159% increase in productivity and a real price decline of 44%. Now, the Surface Transportation Board is starting to regulate reciprocal switching agreements. The net effect will be to bog down the rail industry and increase prices.

With the ongoing failures of the Department of Transportation, is it fair to place the blame on one person? No. This is a system problem that needs to be dealt with in a different way. What needs to be done is to start to dismantle the DoT, agency by agency.

Let’s start with the FAA. There have been calls for years to modernize the air traffic control system. The only way to improve the system is to privatize it and put it in the ownership of the airlines, who have the incentives to make the best system work reliably.

In regards to airline accountability, neither the DoT nor Mayor Pete can impact this successfully. The market has great incentives for airlines to perform. The customers will hold Southwest and all other airlines accountable. Southwest Airlines has it in its own best interest to solve these problems, given that the holiday debacle cost them $825 million. If that is not a big incentive to improve, it is hard to imagine something better.

The Highway Trust Fund (HTF) was established in 1956 to fund the interstate highway system. This system has been completed. It now funds approximately one quarter of all highway projects in the U.S. In 2015, it diverted 28% of the $55 billion budget to non-highway programs. It is now a slush fund for all sorts of projects. The Biden infrastructure bill only makes it worse. The HTF tax on gas of 18.4 cents (24.4 cents on diesel) should be repealed and the states should make up the difference if they so choose. The Federal Highway Administration can then be dismantled, saving around $50 billion a year. When this is accomplished, the states will have more control over their own highways and will increase efficiency through local control

These are just some of the few ideas to improve all things transportation. Mayor Pete is not going to fix it. Dismantling the DoT will.

Image: DoT

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