[Dialogue] Highway Robbery

[Harry Wainwright]

Highway Robbery

January 4, 2007 
By Bennett Gordon,
Utne.com 


Taxpayers get run over as public highways go private

Fixing potholes is often cited as the quintessential job of government. But
many US politicians are looking to private investors to do their jobs for
them, and the American people are picking up the tab. The Federal Highway
Administration estimates that current highway funding will need an infusion
of $800 billion over the next 16 years, just to rehab existing bridges and
roads. Privatization is being billed as a win-win solution, one in which the
roads get fixed and citizens don't have to pay higher taxes. But Daniel
Schulman and James Ridgeway, writing for Mother Jones
<http://www.motherjones.com/news/feature/2007/01/highwaymen.html> , warn
that such deals may be "a major turn toward handing the nation's common
property over to private firms, and at fire-sale prices to boot."

Lawmakers tend to see privatization as a way to fix highways without taking
the politically unpopular step of raising taxes. "Privatization promises a
quick fix," say Schulman and Ridgeway, "and a way to outsource difficult
decisions, like raising tolls, to entities that don't have to worry about
getting reelected."

The problem is that voters and taxpayers get left out of the equation -- and
ultimately end up paying the price. Eileen Welsome of the Texas
<http://texasobserver.org/article.php?aid=2365>
<http://texasobserver.org/article.php?aid=2365>  Observer reports that that
privatization may lead to "double taxation," whereby motorists are charged
both through expensive highway tolls and traditional taxes. To make things
worse, writes Welsome, "the large, multinational companies and global
investment firms are often using taxpayer-supported bonds, loans, and grants
from sources such as Texas' State Infrastructure Bank, the Federal Highway
Administration, and the Federal Department of Transportation."

What's more, the profits turned from that private capital isn't going back
into communities or even staying in the country. Foreign companies such as
Cintra and the Macquarie Infrastructure Group have been major investors in
highway privatization projects, meaning that the profits from those projects
will be exported to Spain and Australia, respectively. It's a scenario that
particularly rankles conservatives, already piqued by double taxation.
Mother Jones quotes conservative activist Phyllis Schlafly asking, "Why the
rush to sell our transportation systems to foreigners?" But even the lefty
consumer rights pioneer Ralph Nader has compared the situation to the
Louisiana Purchase, where a huge revenue source is given away for "a
miniscule up-front payment."

In spite of such attacks, privatization efforts are moving ahead at full
speed. Cintra and the Macquarie Infrastructure Group recently purchased a
157-mile Indiana toll road for $3.8 billion, and other private
infrastructure deals are being planned from Alabama to Alaska. "Don't be
fooled," Dollie Cole tells the Texas Observer. "You are paying for a road
twice and will continue to pay throughout your life and throughout your
children's driving life."

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