Despite widespread support to create a nongovernmental user-funded entity for air traffic control, including most recently by the Wall Street Journal editorial board, narrow interests in Washington continue to inhibit this much needed "public-private partnership." The rationale for supporting public largesse rather than private-sector ingenuity varies, but underlying most obstruction is the dumbfounding belief that government works best.
This belief is especially evident when it comes to infrastructure, even though President Trump, who has consistently reaffirmed his commitment to such investments, supports expansion of PPPs. The establishment thinking goes that because infrastructure is a federal priority, it must only be handled by government bureaucrats. Never mind the fact that, in the case of ATC reform, dozens of countries deploy a PPP-style approach where daily air traffic control is handled by non-government entities supported by user charges while the government focuses chiefly on safety. Free-market groups such as my organization, the National Taxpayers Union, have backed this approach as well.
To the boosters of continued, wasteful government spending on infrastructure, consider the fully-private freight rail sector. While not a one-to-one comparison, the industry proves that private actors are deeply valuable to U.S. transportation networks. Its future existence is, ironically, deeply tied to public policy and actions by the Washington decisionmakers now debating ATC reform.
Indeed, freight railroads offer an important illustration of how free-market solutions can restore a vital part of our transportation network – and, a cautionary tale against complacency. According to statistics compiled by the industry, major freight rail operators such as BNSF, CSX, Norfolk Southern, and Union Pacific have spent $26 billion annually in recent years. This investment, which allows the industry to serve nearly every sector of the economy, which in turn supports 1.5 million jobs nationally and generates nearly $100 billion in taxes for public projects, including infrastructure. The federal government’s analysis also affirms that freight rail invests “one of the highest percentages of revenues to maintain and add capacity to their system.”
The industry rightly credits this success to the Staggers Act of 1980, which among other deregulatory actions provided greater latitude for railroads and their customers to negotiate freight-hauling rates. The National Taxpayers Union recently joined 24 other groups in arguing for the need to maintain this legal framework and reject several regulations proposed by the Surface Transportation Board that could reverse the progress of the past four decades.
Chief among these is a measure to require, under certain circumstances (and at the government’s behest), an incumbent railroad to serve a rival’s customers on its own facilities with the non-incumbent railroad paying compensation. This would represent a major expansion of reciprocal switching, a practice that generally occurs through private market negotiations (what should be the first preference for any economic sector). As the Phoenix Center for Advanced Legal and Economic Public Policy Studies aptly states, “growing the regulatory state in the rail industry — which was almost destroyed by regulation prior to the Staggers Act — is exactly what the STB now seeks to do.”
Nonetheless, despite shifting market conditions, particularly a major reduction in coal shipments in the past five years, the industry continues to serve its customers well. It has experienced year over year growth in shipments, particularly for consumer goods carried by a combination of trucks and rail.
All of which is proof, that when equipped with sensible public policies, transportation and infrastructure systems in the country can not only exist but thrive, and do so without massive taxpayer commitments.
The PPP envisioned by House Transportation & Infrastructure Committee Chairman Bill Shuster, R-Pa., and a large contingent of House Republicans reaffirms a critical principle once championed by former President Ronald Reagan: Ideally, infrastructure is paid for by those who use it. Whether trading ill-fitting taxes for better-defined fees, leaning on a private freight rail sector to maintain its own network, or asking stakeholders to more directly fund a modern, accountable air traffic control system, the principle remains the same.
Rather than inhibit much-needed innovation, elected leaders should hash out a deal to reform our air traffic control system before the Federal Aviation Administration’s current authorization expires in April. They can look to our freight rail infrastructure for inspiration.
Pete Sepp is a contributor to the Washington Examiner's Beltway Confidential blog. He is president of the National Taxpayers Union.
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