Derailing Economic Growth

The decision by the U.S. Transportation Department not to fund the extension of the Metrorail through Tysons Corner and out to Dulles Airport is an economic body blow not just to Northern Virginia but to the entire Washington region.

It jeopardizes an initiative that would not only improve the quality of life in a region beset by traffic congestion, but also would make it possible for the region to move toward smart growth.

This is what happens when a society becomes so obsessed with cutting taxes and rhetorically running down government that it massively under-invests in infrastructure. Right now, government isn't spending enough to maintain the nation's public transit system, let alone expand it to reflect the increased urbanization or the environmental and land-use benefits of getting people out of their cars. To do that, we'd have to double the $13 billion annual public investment in transit infrastructure, which in the current anti-tax environment isn't bloody likely.

I have a lot of sympathy with Transportation Secretary Mary Peters's view that we need to make better use of market mechanisms such as congestion pricing to help relieve peak-time bottlenecks on highways and at ports and airports. She has been courageous in challenging the highway lobby, the airline lobby, the public transit lobby and the shippers lobby whose answer to every problem is for the taxpayers to subsidize the growth in their traffic and their profits.

What's unfortunate is that Peters has drunk the conservative Kool-Aid when it comes to using taxes and government to provide public goods and broad social benefits that markets cannot and will not provide. She kids herself in believing that this ideological prejudice has nothing to do with her decision to pull the plug on rail service to Dulles.

Here's the back story, as best as I can piece it together:

By federal standards, the Dulles rail project was expensive back in the late '90s when the cost estimates for the initial phase were less than $2 billion. But as the planning dragged on, the price tag has soared, largely because of the rising cost of steel and construction labor in the Washington area.

Unfortunately, the high costs of the project were not matched by high benefits -- at least by the formula used by the Federal Transit Administration to evaluate competing proposals. For while those of us in Washington may think of the Dulles corridor as heavily populated, it is still a suburban area that doesn't have the urban density to deliver large numbers of new riders.

That said, even the feds concede that the method they use to evaluate funding proposals focuses almost entirely on a single benefit -- savings in time traveled -- while giving little consideration to how the economy might grow and more businesses and households might move closer to the new subway.

Federal officials acknowledge that these dynamic effects can be significant -- certainly they are a big part of why the Dulles rail project has such strong regional support. But since these benefits cannot be quantified with any confidence, they are largely ignored in the federal evaluation process.

For these reasons, the project probably would have never made it to the planning stages if the career staff at the FTA had its way. But for years Dulles rail survived on political life support, thanks in large part to the intervention of region's congressional delegation, led by Virginia Republicans John Warner and Tom Davis. More recently, Warner and Davis found a sympathetic ear in Peters, who hoped that the project might be structured as a public-private partnership -- a particular interest of hers -- that could serve as a model for other transit projects around the country.

During the past year, however, that political dynamic has changed. Democrats took control of Congress and Warner and Davis announced their retirements. When Tim Kaine, the newly elected Virginia governor, announced last year that he was shifting control of the Dulles project to the regional airport authority, he ended any discussion of private investment in the project.