Politics, bridges, and one possible solution.

Certainly the bridge collapse in Minneapolis is a sad occasion. And almost immediately the vultures swept in.

Vulture in Chief, King George, took a 10-minute helicopter fly over -- just long enough so he could hold a press conference and show his compassion. He promised “prayers to those who wonder about whether they’ll ever see a loved one again.” I assume he meant prayers for them, not to them. And he immediately promised to have the bridge rebuilt.

Here is a question? What makes this a federal project? Is there any function which Mr. Bush still thinks belongs to the states or has everything been effectively nationalized under his regime? Education used to be state controlled but not under his “No Child Left Behind” program. Marriage used to be but he’s tried to nationalize that with a Constitutional Amendment, but failed. It appears everything is a federal project for his majesty.

Ah, say the advocates of nationalization, the state can’t afford major projects like this so it behooves the federal government to step in. Of course the federal government is deeply in debt so what the term “afford” means is difficult to pin down in this case. Either way the federal government appears set to provide around $250 million for a new bridge.

As for Minnesota not being able to afford the new bridge? Apparently they could afford to spend a lot more than that for a massive welfare check to a wealthy businessman. The government handed over $387 million in funding to Carl Pohlad, the owner of the Minnesota Twins baseball franchise so that he could build himself a new ballpark. For good measure the legislature also stipulated, in the law, that the measure is exempt from any public referendum. Basically Pohlad blackmailed the government telling them that unless they rob taxpayers for his personal benefit he will take his baseball team somewhere else. But even that threat turned out empty when voters in North Carolina rejected an attempt to fund a baseball park for Pohlad there so he decided to stay in Minneapolis and the legislature gave him a big welfare check to celebrate.

So the funds were given to one of the richest men in the state, if not the richest. Pohlad, in addition to the baseball franchise, owns Marquette Financial Companies and United Properties. Next to PepsiCo Inc., his family is the largest shareholder in PepsiAmericas. Pohlad is a billionaire -- several times over. Yet the state of Minnesota, which apparently is too poor to maintain their bridges properly, was willing to hand over a few hundred million in corporate welfare to a billionaire.

The bridge didn’t collapse because Minnesota couldn’t afford to maintain it. The state had other priorities totally unrelated to the proper functions of government. And very, very few people, outside political circles, think that handing over corporate welfare to billionaires is a proper function of government.

Remember the feds are promising around $250 million for a completely new bridge. That is around $137 million LESS than the welfare check Pohlad received. But the state didn’t need to spend $250 million to maintain the bridge before its collapse. Maintenance costs a lot less than new construction. And I haven’t even mentioned the $200 million the state is spending on a new football stadium for the University of Minnesota. They sure have their priorities straight.

But let us even assume that maintaining local bridges is a federal project. Even if that is the case the politicians get involved and divert funding from urgent projects to less urgent projects. This editorial in the Wall Street Journal explains the process.

Basically the Santa Clauses in Congress dole out cash for road and bridge maintenance. Then individual congressman interfer with the spending by pushing through earmarks. And this is true with highway spending. In 1981 there were 10 earmarks in the spending legislation. By 1991 there were 1,850 and by 2005 there were 6,371. Using the earmark process is what got the infamous “Bridge to Nowhere” stuck into the budget. And the WSJ notes:

The $250 million in emergency appropriations now flying through Congress for Minnesota is slightly more than half the amount appropriated to Alaska for the "Bridge to Nowhere" and "Don Young's Way," two of the more infamous earmarks from the 2005 bill.

And here’s the kicker:

A main problem with these earmarks is that they often supersede the more urgent repair and replacement needs identified by state and local officials. Earmarked funds in past highway bills would go unspent because the vanity projects were unwanted and typically require some state matching funds. A full five years after the 1987 transportation bill, for example, no less than 64% of its earmarked money was still unspent because states had more urgent priorities for their share of the spending. By 1997, 55% of the $6.2 billion in earmarks from the 1991 highway bill had gone unspent. We can't report the same numbers for the 1998 and 2005 highway bills because the federal Transportation Department stopped disclosing the figures, lest it embarrass Members of Congress.

So earmarks can divert spending from projects that are more necessary to projects that are less necessary. Funding that might be available for something like bridge maintenance gets diverted to another project instead.

This goes back to the controversy regarding Ron Paul’s generous use of earmarks to bring home pork for his district. When that was posted here the Paulists argued that the earmarks didn’t create new spending but merely diverted spending from one project to another. Gee, isn’t that the point the Journal was making? Politicians push through their earmarks to divert funding from one project to one that will benefit their district and thus themselves. This can pervert the allocation of resources by diverting them away from more critical projects to more politically advantageous projects. Why is this a good thing?

The second justification that Paulists gave was that most of Paul’s earmarks were in the realm of highways and bridges which they say can fall under federal jurisdiction. Precisely. Again, that is what the Journal is saying helps pervert spending on highways and bridges. It means money can be diverted for political reasons unrelated to actual requirements for maintaining the roads.

If the federal government is going to dole out billions on highways and bridges shouldn’t those funds go to projects that are in more dire need and not to projects that win votes for the local congressman? Even if earmarks don’t add a single cent to federal spending they pervert how the funding is spent, and often divert funds away from needed projects to vanity projects that are merely vote-winning gimmicks for the benefit of politicians. In that regard Ron Paul seems no different than the rest of them. When the Paulists argue that his use of earmarks is relatively benign they ignore this problem -- but they ignore lots of problems.

Over at the Competitive Enterprise Institute Hans Bader notes that in Europe some commentators have been posting messages at Dutch and German newspaper websites blaming the collapse on low taxes. That ignores the fact that Minnesota is one of the highest taxed states in the country. If this is correct Minnesota taxes at a higher rate than 43 other states.

The two other highway collapses with which I am personally familiar, as I lived in the areas in both cases, was the 1983 collapse of the Mianus Bridge, which killed three, and the 1989 collapse of the Cypress Street Viaduct in Oakland which killed 40. The first was in Connecticut, the state with the second highest tax levels in the nation. The second was in California which ranks at #12 in taxes collected. Both were maintenance related even if an earthquack triggered the Oakland collapse -- retrofitting that needed to be done had been neglected in favor of other projects.

If you compare the percentage of bridge deficiencies with taxes raised you find that some of the highest tax states have the worst bridge maintenance rates. Rhode Island is in the top ten when it comes to taxes collected and has a higher percentage of deficient bridges than any other state. Pennsylvania has taxes higher than 31 other states and a bridge deficiency rate that is the second worst in the country. New York is number ten in taxes collected and one of the worst when it comes maintenance. Half of the top ten states, when it comes to levels of taxation, are in the bottom ten when to comes to maintenance deficiencies.

This illustrates the problem of political allocation of resources. The funding certainly exists to maintain roads and bridges. It always has existed. But politicians pander to special interest groups and reallocate funding to placate them, and win votes and campaign contributions for themselves. Money that could be spent on bridge maintenance ends up in football stadiums. Or congressmen earmark funds reducing the amount available in some areas, which may be more urgent, to projects that benefit their political careers.

According to a Tax Foundation report resident in Minnesota receive .69¢ in federal spending for every $1 they send to Washington. Alabama receives back $1.71 for every dollar paid in. Arkansas receives $1.47, Kentucky $1.45, Louisiana $1.45, Mississippi $1.77, Missouri $1.29.

Politicians raise sufficient revenue to fund critical projects which most people, rightly or wrongly, want government to fund. But then they allocate those resources according to the own best interests and not according to prioritized needs. Often the critical projects that most people want funded are the very ones neglected in order to fund vanity projects.
Politicians intentionally under spend on the projects which have public approval. This allows them to raise taxes later.

Here is how that game works. A city, for instance, may need to spend $100 million on policing and fire protection. That is popular with voters. But the politicians, in addition to that spending, want to fund $20 million on some vanity projects, or to placate a small special interest group. That has little public support. They may allocate $20 million to the vanity projects and $80 million to fire and police. Then they go to the public asking for an additional $20 million in new taxes in order to “adequately fund” fire and police services. By diverting funds from popular programs to unpopular programs they are able to push through tax increases which otherwise would met stiff opposition from the public. Rarely do they actually raise taxes for the express purpose of unpopular projects. It is always the projects the public prefers used to justify new taxes.

Certainly, in Minnesota, money that should have been spent to maintain this bridge wasn’t spent. At the same time hundreds of millions were spent on stadiums that had little public support. That is the political process at work.

What is the alternative? One possible solution is to turn each state road system into a non-profit corporation funded entirely from tolls not taxes. The stockholders in the corporation would be the road users. They elect a board to run the roads and determine road spending and tolls. Funds can not be diverted to other vanity projects since all funding belongs only to the road corporation. And the only source for funding would be the tolls not taxes subject to political control.

If tolls are too high, and surpluses are routinely generated, then the tolls are reduced. Any profit is returned to the stockholders, who are the road users themselves, in direct proportion to what they paid in, a refund on their contribution toward the expenses. People who don’t use the roads pay nothing directly and pay indirectly relative to the benefits they receive. Trucking services, whose use of the roads are subsidized by taxpayers, would pay more. No one is overcharged since all surpluses are returned to the consumers.

With the electronic road pricing systems that exist there is absolutely no need for toll booths except for out-of-state travelers who normally get a free ride, but under this system would actually pay for the harm they inflict on the state’s roads. Get rid of the taxes that fund such projects entirely.

Each consumer would know what the cost of his road services are. The funds couldn’t be diverted to unnecessary projects or diverted to vanity projects or other states.

This form of privatization puts to rest the old canard that the only way to privatize is to turn over such things to for profit private monopolies. A monopoly service is supposedly something that has to be under political control because it is able to inflict higher prices due to their sole-provider status. Of course, as we have seen, political control does exactly the same thing. It imposes higher prices on road users and then diverts the funding to other projects when done on the state level, or to other states, when done federally.

Instead have a privately owned entity whose stockholders are the people who actually pay for the services. They pay in the revenue and receive back any surpluses. They are free to hire management companies to run the roads in a competitive manner and can fire any company that botches up the system. There would be no chance that the maintenance funds will get diverted to billionaires and no chance it will be sent off to another state instead.

Photos: First photo is of the bridge in Minneapolis, second is of the Cypress Viaduct in Oakland, and the third is the Mianus Bridge in Connecticut.