Why Not Privatize Highways?

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Congress has apparently reached a bipartisan agreement on a transportation bill that includes $109 billion to support the nation’s roads, bridges, and railways. 1.9 million jobs hung in the balance, and the political bickering delayed the bill’s passage several months, but the real question is…why subsidize highways at all? If we were to sell off our Federal Highway system, we could potentially pull in a few hundred billion dollars to balance our budget and pay off loans, and stop the bleeding at the Federal level. In 2010, $52 billion was spent on highway funding. Imagine what we could do with that money–build a nationwide smart grid, subsidize renewables, invest in an electric vehicle infrastructure, or simply pay off our growing debts.

The money comes from the Federal Highway Administration, a division of the Department of Transportation, and is supported by taxes on gasoline. Imagine a greenie like me suggesting we eliminate taxes on gasoline, but it is possible, and I’d advocate that it makes solid fiscal sense. Or perhaps we could phase them out, with the ongoing revenues from gasoline taxes being used to pay down our extensive deficit, finance social security or medicare or any number of other government agencies that are laying off workers during a recession because of budget constrictions.

It’s not a new concept. According to the book America’s Toll Roads Heritage, in the 1800’s, there were at least 2500 companies that operated private roads by collecting tolls for passage. Breaking up America’s 47,000+ miles of Interstate Highways that currently are entirely subsidized, selling them, and allowing private companies to charge tolls to cover maintenance and operations would generate a pile of dough up front. The Dulles Greenway, a 14 mile road in Northern Virginia that is privately owned, cost investors $350M, but is still in business 15 years later, even though it competes with free highways. Granted this is a high traffic road on high value real estate, but even conservatively estimating that we could sell the rest of the Interstate System at 1/4 that price, we could sell the entire system for $6.25 million per mile, or $295,312,500,000. Add an extra $50-60 billion per year that we wouldn’t have to pay to subsidize the highways, and pretty soon you’re talking real money.

In addition to all this, you’ve now created a lot of private sector jobs that pay taxes, and you’ve also implemented a pay-as-you-go system, so that if you’re not using the highways, you’re not paying for the highways.

Ahh, but what of interstate commerce? Wouldn’t this drive up the cost of things shipped across the country? There is little doubt that it would. Upward inflationary pressure on goods is generally considered a bad thing for the economy, but that’s short term thinking. In the long term, with consistent levies against goods that are shipped thousands of miles, a real economic advantage would start to emerge for localizing manufacturing, repurposing, and agriculture.

What do you think? Good idea? Bad idea? What are the short and long term repurcussions?

For more hair brained, “that just might work” ideas, follow Scott Cooney on Twitter.

Toll road photo courtesy of Shutterstock

1 thought on “Why Not Privatize Highways?”

  1. I forgot to mention that goods shipped from China to California, then sent across the country to Arkansas would all of a sudden not seem like such a bargain compared to something manufactured in the U.S.

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