A History Lesson Preceding the RTP

As part of the introduction to last week’s workshop scoping out the process or updating the Regional Transportation Plan, Metro President David Bragdon gave a history lesson, recounting how the way in which the nation has paid for its transportation infrastructure has varied greatly over history, going through phases roughly every fifty years. The suggestion of course is that they era of the federal gas tax and highway trust fund, started in the 50’s by Eisenhower to build the Interstate Highway System is getting long in the tooth.

While Bragdon did not have a formal printed verison of his remarks, he was kind enough to share his speaking notes, reproduced here:

David Bragdon
Opening Remarks
Regional Transportation Workshop
April 20, 2006

This is an historic morning – and to prove the validity of that cliché in this instance, let’s start with a little history.

Government investment in transportation has been shaping our economy and our communities for centuries, but the form, paradigms and assumptions of that investment changes every 50 years or so.

It is rare that one paradigm of investment lasts longer than 50 years, and there’s lots of evidence that we are at the end of such a cycle right now.

Some generations have risen to these transitions and some have not. Some places have adapted to these transitions and thrived and some places have not. This morning is the beginning of the test of whether we recognize change and adapt to it or not.

Start with the post-revolutionary period: Alexander Hamilton (look at the $10 bill): “internal improvements” like canals and national roads and harbors, to be funded by the tariff. Or the Gallatin Plan of 1808 to open the Midwest, and make the U.S. an international economy. These were visionary plans, and were partly implemented. But time passed and that funding source, the tariff, ran its course. By the 1820s there was a void left by federal inaction, only partly filled by some selective state action like Dewitt Clinton’s Erie Canal. There was also significant technological change in the wings in the form of the railway.

After decades of slumber, federal financing took another quantum leap in the mid 19th Century — again after a major political realignment (the Civil War) — with the introduction of land grants to subsidize railway expansion. Again, a new idea and a new technology – one with profound consequences for our economy; things that had not been thought of before.

But that paradigm (land grants), after shaping our nation, also ran its course and died.

Move to 20th Century, especially with the political realignments under Theodore Roosevelt and Franklin Roosevelt: more totally new paradigms of public finance and new technology, unlike what went before, both caused by, and causing major changes in our society. This led to a quantum leap, especially after World War II: creation of the interstate system and the federal gas tax highway trust fund, somewhere around 1956 (hmm, exactly fifty years ago . . .are we sensing a pattern….?).

Here’s the point for us this morning: that paradigm shift in the 1950s created the world we live in today, particularly the dispersal of suburbanization. I cannot stress this point too much: what we are living in today is the product of those investment tools, and assumptions and objectives of that last major shift – one that occurred when Dwight Eisenhower was President.

Let me be more direct: until this morning, every Regional Transportation Plan has been implicitly conditioned by the fundamental assumptions of 50 years ago.

What were some of those assumptions and conditions?

  • Oil at that time was around $13 per barrel. (Did anyone happen to hear on the radio what it is this morning? $72);
  • Most of our oil came from places like Oklahoma and Texas – only perhaps a quarter of our supply came from overseas, from docile sources largely under American and western European control;
  • The United States had a growing heavy manufacturing base, pent up demand and expanding industry in the post-depression, post-war period. We needed new stuff;
  • The federal government had just appropriated $25 billion (in 1956 dollars) to build 40,000 miles of new roads;
  • Most importantly to shaping metropolitan transportation planning, the new paradigm offered states 90 cents of federal money for every 10 cents a state spent on interstate highways. Actually, for Oregon, for various reasons related to timber lands, it was 8 state cents for 92 federal cents.

Look at it this way: for eight cents on the dollar, Oregon could buy Interstate 5 from the California border to the Columbia River and Interstate 84 from Portland to Idaho! Who could resist at prices like that? Roads for less than one-tenth their construction cost, and oil at $13 a barrel!

And until this morning, that’s still an ingrained assumption that has underlain much of our transportation decision-making in this country.

In our region, somewhat ironically, our decision-making today is further distorted by the habits created by what was actually a great decision in 1974 — the cancellation of the so-called “Mt. Hood Freeway,” which freed up $550 million (in 1974 dollars) for other projects. The misconception is that the money that would have built the Mt Hood Freeway (which, actually, was just a link between the Marquam Bridge and Lents), instead was used to build light rail to Gresham. I say this is a misconception because in fact, less than half of the money was used on light rail. There was enough left over to completely rebuild the Banfield Highway and 220 other road projects regionwide (the Highway 26 and 217 Interchanges done in the 1980s, for example, were done with Mt. Hood Freeway money, as were overpasses as far away as eastern and southern Oregon).

The cancellation of those monstrous urban freeways created a huge pot of federal “trade-in” money – remember, it was $550 million in 1974 dollars! – that the region lived off of for nearly two decades. The City of Portland, controlling most of those funds, bought peace around the JPACT table for years by passing out more funds (largely to the suburbs) than could have been used within the city limits of Portland.

That was a wise choice: cancel two huge, disastrous projects and instead do hundreds of better, smaller (and not so small) ones that made more sense for our region. Unfortunately, that pot also conditioned us to a revenue stream that was thought to be typical when in fact it was an aberration. All our engineering, planning, decision-making, and expectations were built on an expectation that this aberration was actually normal.

It would be as if for 30 years I continued to calculate my annual, regular household budget – my food budget, my clothing budget, my rent or mortgage – based on the income from one big inheritance I had received from my uncle back in 1974 – an inheritance that he had accumulated as a result of an investment he had made in Washington, DC in 1956. The problem is we have now spent that inheritance and they are not making any new deals in Washington.

It has now been 50 years since 1956. More than 30 since 1974. Yet we are still doing regional transportation plans with essentially the expectations we used back then.

Until this morning.

Signs would say we are on the verge of another shift, judging by all the usual indicators that marked prior shifts:

  • As with the tariff and the land grants in their day, there is evidence that our major national tool has run its course: financial prospects for the Federal Trust Fund are dire. When JPACT members met with Senator Gordon Smith in February, he predicted the Federal Highway Trust Fund will be broke by 2010 – though in fact the non-partisan Congressional Budget Office says it may be 2009.
  • As happened in the late 19th Century and again in the mid-20th Century, our society and economy are changing — post-industrialization, etc. The United States is now a mature economy, with existing assets to maintain, not a 1950s economy trying to catch up with pent-up demand from the war years. Rather than tens of thousands of miles of highways that need to be built, we have hundreds of thousands of miles that need to be maintained – and aren’t being.
  • As happened in the late 19th Century and again in the mid-20th Century, the world is changing around us.
  • As happened between Hamilton and Lincoln, and as happened between the two Roosevelts, we have a brain-dead federal government, disengaged from any investment strategy at all.

History shows us that every 50 years or so, when all those factors converge, we have:

  • Exhaustion of existing funding paradigms;
  • Rapid technological change;
  • Economic upheaval based on global factors;
  • Social transformation domestically;
  • Federal detachment.

And when all those factors converge, then an entirely new way of thinking about (and investing in) transportation emerges. Some generations rise to the occasion and are part of that emergence, but some do not. Alexander Hamilton did; Franklin Pierce did not. Abraham Lincoln did; Herbert Hoover did not.

Often the response has to occur not in Washington, DC, but at the local or state or regional level – New York State stepped up and built the Erie Canal in the 1820s when the federal government would not. And partly as a result, New York State outperformed most of the rest of the nation for the ensuing decades; California stepped up and built highways in the 1950s, ahead of the federal curve, and it outperformed the rest of the nation for the following decades. That is not to say we should build canals today the way New Yorkers did in the 1820s, or highways today the way Californians did in the 1950s – rather, it is to say that those places had a vision and invested and thrived; while other states which did not invest during those eras lagged.

That is what today is about: whether or not our region is going to be in the forefront of recognizing new realities and investing accordingly, or whether we are going to live in the past and be left behind.

If we adapt to new fiscal and social and economic realities – and develop a new approach to transportation that is consistent with the tools and aspirations of the 21st Century – then our region is positioned to prosper.

To get us started with that challenge and explain what we are going to do this morning, we have an excellent chair of JPACT — I am proud to introduce my colleague Councilor Rex Burkholder.


5 responses to “A History Lesson Preceding the RTP”

  1. There may be a shift to a new paradigm soon. I am alarmed that the new paradigm will be an America that no longer is competitive in a globalized economy. The previous fifty years have seen the pinnacle of the American dream of individual liberty and prosperity, based upon the fact that US items were in unrivaled demand throughout the world. And the Interstate Hwy. system reflected this. But what if we can’t keep ahead of foreign competition?

    Our leaders say we will still provide the intellectual leadership and that our economy will sustain an expanding service sector. Who is to say that the Chinese and Indians and others will not provide their own ‘creative’ leadership. They are pretty smart people. So far we have been able to keep ahead with the exporting of capital goods, but I don’t know how much longer we can be competitive.

    Our expanding service economy still relies on importation of cheap labor (which has threatened my occupation) and it has failed to salvage a lot of intermediate service jobs, such as IT. The American Dream of upward mobility (yes, liberals, too) has always relied on a cheap underclass that does the hard work.

    There may remain pockets of the US where the rising, professional class can sustain its lifestyle—particularly in seaport cities. The American heartland and small towns may have a much different story. Relating this to transportation I would be concerned that mass transit may not prove to be feasible in crumbling ‘red’ America regions. The ones that could depend upon rising commodity prices might recover, but small maufacturing centers might not survive the foreign competition. People will have to make crucial decisions to keep above insolvency, and that may not include the relative slowness of mass transit.

    “As happened between Hamilton and Lincoln, and as happened between the two Roosevelts, we have a brain-dead federal government, disengaged from any investment strategy at all.” While I would agree with this, I have also come to believe in the critique leveled at liberalism: “Tax and Spend”. There is resentment in many rural areas of the US that the cities get vastly favorable treatment, especially in transporation investment. I know this doesn’t bear up by a simple statistical calculation, but we must understand that rural transportation needs are on a different scale. We’re all Americans and in this together. In the cities we need to be very careful that projects are intelligently planned to bring the greatest return on investment, to solve more than one problem at a time, and to avoid dead end ideas that need further correction, later on.

  2. The shift I believe David was trying to reinforce with his examples and the Piggy Bank that was the Mt. Hood Freeway Transfer Fund was this basic fact and was acknowledged by the party currently controlling the federal budget: They are broke in four more years on transportation funding. This doesn’t help us with our biggest issue. Moving goods and people smoothly and freely through our central city over the Columbia River to population centers North will become a local issue. Currently, the ratio is 50/50 for federal funds (please correct me if I’m wrong) to local funds. This could change to 40/60 with the locals having to choose more wisely where that 60 percent will be spent.

    This means tolling. This means more bond measures like the one that was passed back in the 1980s for Washington County. This means possible fees on development for specific transportation improvements. This lack of support from Washington DC could also mean the end to Oregon not having a Sales Tax.

    I believe we need to look North and South for our support because looking East isn’t worth the effect. Washington and California will not be paying for our transportation projects but they should be working with us on corridor planning for high speed rail, people freeways, and alternative fuel programs.

    We better get our act together in the next 18 months on the Columbia River Crossing and get our choice into the Federal government for 2008 (election year) because 2009 and beyond isn’t looking very good for funding. And since Portland hasn’t done anything about I5 and High Speed Rail through the city we can expect to have to shoulder the cost on our own after 2010.

    Ray Whitford

  3. Moving goods and people smoothly and freely through our central city over the Columbia River to population centers North will become a local issue.

    No matter how often this is repeated, it isn’t true. Portland’s economy does not depend much at all on how fast or smoothly goods or people move over the Columbia River. It depends far more on early childhood education, livable neighborhoods, urban greenspaces, local schools and access to higher education, the things that make it an attractive place to live and operate a business.

    On the other hand, Clark County’s economy does depend on the movement of people across the Columbia to jobs in Portland. The I5 bridge is entirely an issue of serving those commuters. There is more than enough capacity to serve people, they just can’t all be in their own vehicle. Tolling the current facilities would eliminate the need for the a new bridge.

  4. All of this, whether opportunities thru education (questionable) or opportunities thru transportation (also questionable), unfortunately is almost impossible to do from public funding. The Government is pretty much at it’s peak of funding. There is basically no more money the Feds/States/Cities can use to invest in this. They cannot raise taxes as it won’t create REAL value they can use to spend. If taxes increase the dollar will collapse faster.

    50 years ago, much less of our GDP went to taxes, 50 years before that even less (practically nothing in real terms). In both of the last 2-3 paradigm shifts it wasn’t so much the Government that made progress, it was people and businesses/trusts/corporations.

    …and people need to quit saying that the damn land grants where “subsidization”. That is a gross over generalization. The railroads where proud, and the people that run them. They still are and that is one of the reason they “pay back” these “LOANS” and don’t want subsidy. That’s why they wanted to stop running passenger trains. The government gets over involved and likes to think itself useful in these industries. It’s not, it’s far more harmful than useful. Who rebuilt the lines after Katrina? The Railraods. Who has recently turned down subsidies multiple times. The railraods. Who is funding 8 billion of their own money into infrastructure for transportation. The railroads.

    The price tag on these supposed subsidies are another thorn, the land grants and other direct loans given amounted to about 120 billion in today’s dollars compared to the 12 trillion spent over a 20-30 year period building the transcontinental railroads. In the case of the Great Northern it was even more skewed. So if you use Government math and terms, they where subsidized about 1.2%.

    So seriously, to say these “land grants” and other items where a subsidy is a JOKE of the worse kind. It gives the incorrect idea that subsidies are required and needed to enable transportation. If something is needed by society, IT WILL BE paid for. These subsidies today are merely pet projects of powerful political people.

    If people really want REAL transportation choices we’re going to have to work companies/trusts/corporations back into the picture and government back OUT of the picture. Otherwise everything will 100% stay road/car based no matter what draconian laws and taxes are put in place to “fund” these transportation choices that are politically decided.

  5. Why is Portland here? What reasons were there for chopping down the Douglas Fir forests? I have been told it was because of two rivers that created great transportation corridors.

    Why is there a choice to make? Why can we not support transportation projects and feed and teach our children? I don’t see the reason to stop supporting one or the other.

    Corporations pay less taxes in Oregon then anywhere else in the US. Why have the two political parties created this un-just ratio (10 percent of all Oregon tax revenue comes from corporations)?

    Transportation and schools could sure use that revenue that has been deleted with all the tax loopholes in the 40S Form.

    Tell me again why we can’t have jobs and education?


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