Building Transportation Infrastructure in a Broken Political System

Posted on 09 May 2013

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By Robert Cruickshank

Over at his blog, Alon Levy has an interesting post calling for more democracy in the planning and authorization of transportation infrastructure. Levy points to Switzerland as an example of a political system where transportation projects are routinely put to a referendum and the results are generally positive. He contrasts that with the California high speed rail project, which he argues was the product of a flawed political process:

I've begun to believe that California's original sin with its HSR project is that it refused to do the same. Prop 1A was a referendum for what was billed as one third of the cost, $10 billion. In reality it was $9 billion and $1 billion in extra funds for connecting local transit; in year of expenditure dollars the estimated budget then was $43 billion, so barely a fifth of the project's cost was voted on. The HSR Authority planned on getting the rest of the money from federal funding and private-sector funding. Prop 1A even required a 1:1 match from an external source, so confident the Authority was that it would get extra money.

In reality, at the time the proposition was approved to go to ballot, the financial crisis hadn't happened yet, and there was no talk of a large fiscal stimulus. Although the stimulus bill gave California $3 billion, in 2008 the HSR Authority couldn't know this source of money would be available, and yet it assumed it would get $17-19 billion in federal funding. Likewise, no private investor was identified back then, and promises of foreign funding have been inconclusive so far and again only come years after the referendum. Put another way, Californians voted without any information about where 79% of the budget for HSR would come from. The state is now scrambling for extra funding sources, such as cap-and-trade revenues. Since there is no real dividing line between on-budget and off-budget when 79% of the budget is undetermined, costs could rise without controls. An agency that had lined $43 billion in prior funding via referendum would be too embarrassed by any cost increase requiring it to ask for more money from any source; a large cost increase could make the difference between project and no project.

I would agree that it would have been best if Prop 1A authorized $40 billion in bonds rather than just $10 billion. Hell, it should have authorized $100 billion, with half going to the high speed rail project and the other half going to trains and buses in cities and regions across the state.

But it's not enough to say that's how it should have been, that if voters had been given the full picture they would have come to a reasoned conclusion based on the evidence. Switzerland has a functioning political system. The United States does not, and before we can figure out how to fix it, we need to understand the causes of the problem.

First, I think we need to deconstruct the idea that simply having more democracy in these decisions is a panacea. Here's what Levy writes:

When there is democracy - by which I mean not just periodic elections offering two parties to choose from, but a referendum process, transparency, and community consultations - people have an incentive to be informed. It's possible to sway many people in one's community and have a positive effect on local state services. Local politicians who are informed on the subject will be able to lead spending and planning efforts and can count on the support of informed voters. In contrast, when there is democratic deficit, being informed is far less useful, because decisions are made independently of what people think unless they are power brokers, or perhaps wealthy, power-brokering communities.

I want to believe. Everything in my left-wing ultra-democratic body says "hell yes!" to what Levy writes. And yet the evidence doesn't support the argument. I have seen other well-crafted transportation infrastructure proposals go to a referendum and be shot down, both in California and in Washington State. I have seen extremely badly crafted transportation infrastructure proposals go to a referendum in both states and be approved.

Facts are not usually the basis on which voters make their decisions. They vote instead based on their values. That doesn't mean facts are irrelevant, but they can be and often are trumped by appeals to values. Political campaigns recognize this and typically appeal to the values that voters have. When it's two candidates running for office that's not so bad. But when it's a referendum on a transportation proposal, well, facts are usually the first casualty.

Image credit: California High Speed Rail AuthorityWe saw in California between 2008 and 2012 a relentless campaign against the high speed rail project that flew in the face of the facts. Didn't matter what the evidence from around the globe showed regarding profits and ridership, critics and their media allies appealed to values to undermine the project. Truthiness ruled the day. If a claim felt true to people, then they acted as if it were true, since it matched their values. Enough Californians bought into the belief that trains were inherently flawed, that nobody would ever ride them, that they would always struggle to generate riders that all critics had to do was play to that belief and they would get traction.

Even if the state legislature had been willing to put a $43 billion bond on the 2008 ballot (more on that in a moment) we would not have seen an informed debate about the project and its potential costs and benefits. Instead we'd have seen more of what we actually did see - a spate of zombie lies thrown around by the No campaign and their allies in the media. The higher price tag would have meant higher stakes and likely higher campaign budgets, which would have meant more money to get those zombie lies in front of more voters. It's doubtful that the HSR project would have been decided on the basis of its merits. It would have come down to values. And while I believe we still would have won, we'd have won on the basis of our own values.

Second, we have to examine the reasons why we have the flawed and broken system we currently possess. It wasn't always this bad. You can go back to 1959 and look at how the state legislature debated and approved the plan to build the State Water Project, centered on the California Aqueduct. Or you can go three years earlier to see how Congress approved the Interstate Highway Act. Both were classic examples of sensible, informed, honest decision-making in a functioning if imperfect democracy. The Legislature and Congress came up with a sensible plan to build massive pieces of infrastructure, some of the biggest in human history, and adopted a method to fully fund them both at the time of their passage.

If we still had the same politics today, Sacramento would have not even had to go to the ballot. The Legislature could have crafted a high speed rail project, agreed on a mechanism to fund it, and passed it. If voters hated it they could throw the bums out at the next election.

But we don't have those politics today. Our system is broken. Levy acknowledges this but I don't think he really gets at the root causes. In the 50 years between 1960 and 2010 we saw a successful effort launched by the nation's wealthy elite to blow up the democracy we had and replace it with a system that has the outward trappings of democracy but in fact operates as a plutocracy. The way they did that matters too - they figured out how to mobilize populism to turn against government rather than against the wealthy elite, primarily through the anti-tax movement. They convinced enough voters that government was bad and that it should essentially be defunded. They blew up campaign finance restrictions so they could dominate campaigns with their dollars. Californians know this history better than anyone, since it started in the Golden State.

Government in the '60s and '70s certainly gave people reasons to be distrustful. But those instances, from Vietnam to Watergate and more, were used as justification by the elite for a right-wing program to make government inoperable. Anti-tax sentiment was real, and it helped destroy the political system that gave us the Interstates and the aqueducts.

Anti-tax sentiment was also driven by a growing political unwillingness to maintain the essentials of a functioning civilization, and began refusing to innovate new solutions to solve new problems out of a desire to maintain the fantasies of the middle 20th century. Voters began turning down projects that would have addressed those crises. California's first high speed rail project might have sailed right through just 10 or 15 years earlier. But in 1983 it was killed by a state legislature determined to wage war on anything other than automobile transportation. The new two-thirds rules for taxes gave conservatives a veto over state fiscal policy. And conservatives rejected the pro-infrastructure consensus of the '50s and '60s and were not shy about using their veto to block more of it.

By the 2000s the costs of this approach had become clear. But California was still in its throes. Arnold Schwarzenegger had become governor in 2003 in part by riding the fading but still potent anti-tax movement. The two-thirds rule was still in effect for both taxes and budgets. Conservatives were still deeply hostile to most new transportation infrastructure.

So when the high speed rail bond initiative was first approved for the 2004 ballot, it's hard to see how the legislature could have come to the conclusion that they should have asked for $30 or $40 billion. They were scared of the anti-tax movement, so asking for more - which would have required a tax increase - was more than they were willing to risk. And because a two-thirds vote was required to put an initiative on the ballot, conservatives could veto the whole thing anyway unless it was a smaller proposal that didn't require a tax increase.

I don't list these things as excuses. They're obstacles to overcome before we can get to a point where we either have a representative government or a direct democracy process that functions properly and can be hospitable to transportation infrastructure referendums.

California is further along than most other states in untangling that Gordian knot. The anti-tax movement has been defeated, though it still retains some power, particularly at the local level. The two-thirds rule was eliminated for the budget but remains in place for taxes. Democrats have a two-thirds supermajority but not enough confidence yet to use it to raise taxes or place big projects on the ballot (or enact it themselves). And it did approve a high speed rail project, even if it wasn't with as much funding as it needed.

Restoring trust in government requires further steps to keep conservatives from power (their goal is to break government so nobody trusts it) and to get money out of the political process so that facts become more important than appeals to values in a campaign, though we should never expect referendums to be decided on the facts alone. And it requires organizing people to support these reforms as well as to support funding new transportation infrastructure.

So while I generally agree with Levy that it'd be nice if we had a functioning political system to allow for more democracy in transportation planning, I don't believe we're going to get there without removing all the trees and landslides blocking the tracks.

Robert Cruickshank writes on California politics at Calitics and California High Speed Rail Blog. This article was originally published at California High Speed Rail Blog.

The reason why there is anti-tax sentiment today is because of two things. First, the tax rate on Californians is incredibly high. Even middle income people have a 9.3% state income marginal tax rate and 7.5% sales tax. This didn't exist in the 50s.

So, the average joe has a California marginal income tax rate of 9.3%, Fica of 7.65%, and a FED rate of about 31%. Add this up, the average joe is paying almost 50% marginal income tax rate. Add to this things like sales and property taxes and it is not too surprizing that the average joe is struggling to stay out of debt. So, along comes the government saying, "hey, joe, we need more money." Is it surprizing that Joe says, "What, me? I've already given my pound of flesh."

In the 50s, the marginal tax rates were nowhere that high for the averag joe. So, he was more receptive. Sorry, Mr. Crooshank, we've already given.

The other thing that makes one completely distrustful of the government is the rampant fraud. For example, I already reported that the federal government is now "cracking" down on social secuirty recipients who are dead and collecting benefits. They found 1395 recipients between the age of 111 to 129 who were collecting benefits and were, shockingly, dead.

The earned income tax credit is, admitted by the government, over paying $11.6 billion per year (as of 2010). Over payment is the government's way of admitting that fraud artists are scamming the government (i.e. the taxpayer). And, if the government admits it is $11.6 billion you can bet it is way higher than that.

Back to social security, the government estimate is that there are 7% over payment. That is about $25 billion/year they admit.

Medicare/medicaid has been estimated to be between 12% to 30% fraud. We are talking another $60 to $100 billion per year in fraud.

I could, of course, go on and on. But, with this type of fiscal incompetence, why would anyone want to give them more money?