The Strong Towns Podcast
Chuck Marohn and Tony Dutzik unpack the messy history of the gas tax, cross‑subsidies between states, and the moral story drivers were told about “user fees.” They revisit highway revolts, the rise of federal transit funding, and the long slide into Highway Trust Fund bailouts. Their conversation lays out stark choices for the next chapter of national transportation policy.
Transcript (Lightly edited for readability)
Hey everybody, this is Chuck Marohn. Welcome back to the Strong Towns Podcast. A month ago — I can't believe it's been a while now — we released this report called "Mission Accomplished" that looks at the Federal Highway Trust Fund, the way we fund transportation, the way we build highways and infrastructure for transportation at the federal level, and said we need to do this differently.
A bit of the behind-the-scenes of making that report was me throwing ideas out to a whole bunch of different people that I have a lot of respect for and admiration for — people who are certainly more in the weeds than I am and more attuned to this. Tony Dutzik is Associate Director of Senior Policy Analysis at the Frontier Group. I was actually thinking, Tony, I think you've been on the podcast as a guest more than anybody else.
Are you kidding me? Really?
This is your fourth or fifth time. I think you're like the Steve Martin of the podcast.
Yeah, man.
Let me set this up. I did not get affirming feedback from everybody at every point along the way. I got people challenging me — saying, "I'm not sure I agree with you here" or "you're thinking about this in a different way." You, who I have an immense amount of respect for, and I feel like we both, at the end of the day, want generally the same thing — you've been one of the people who has challenged me and said, "I think about this differently than you do."
I thought it would be fun and interesting to have some of those conversations — not in writing, which you're a great writer and I know we both like to write and go back and forth — but as discussions here. Because I've set out in the report a clear set of insights and policy recommendations, but I'm also willing to step back and admit this is really complex. There are a lot of things going on here. You can write a 40-page report and it glosses over decades of history. I feel like you had a lot of good insight and nuance that we should wrestle with.
Welcome back to the Strong Towns Podcast. It's nice to have you here. What's the Frontier Group? What do you do? I think it's maybe a good refresher for people, because it may have been a year or two since you've been on. Let people know where you're coming from, and then we can dive in.
Sure. We are a nonprofit research and policy organization. Our mission is to provide information and ideas to build a healthier, more sustainable America. I have been here for 25 years at this point, which is crazy to say. We work on a variety of issues — environmental protection, consumer protection. I've done a lot of work on transportation issues over the years. What we try to do is provide information to help citizens and decision makers make sense of their world, make sense of the choices that we have, and to do that in an accessible and digestible way.
On transportation, we've spent a lot of time on what is probably the thing we've been on here to talk about most over the years — boondoggles — in our series of highway boondoggles reports, where we expose wasteful and unnecessary highway expansion projects across the country. We've done eight of those reports over the years, but we've also done some work on transportation finance and on the interactions between transportation policy and climate policy.
Can we start the conversation by talking about the origins and founding of the Interstate Highway System? I feel like there was a point in time when you had a lot of messy state policy. You had the FDR administration kind of create this map, and then you have Eisenhower, and we nostalgize this as a country — "Eisenhower created the interstate system." He codified a map that had been put together and then created this funding mechanism: the gas tax and the Highway Trust Fund, which was supposed to fund this in perpetuity. My argument in the report was that it was a fund to build the system. Where is there nuance in that origin story that might be important to where we're at today?
I don't know that there's a lot of nuance to that particular part of the story, but a couple of things I would add. One is a recognition that, as tends to happen with these things, pretty much the first thing folks figured out after they established this funding mechanism was that it wasn't going to generate enough money. Within five years after the establishment of the initial gas tax, Congress had to raise it dramatically because they low-balled the cost of building this incredibly huge and complex 40,000-plus-mile system of interstate highways across the country. The cost of that system was just more than what was anticipated.
The other thing that's contextually important to recognize is that, while it was clearly a national priority to link much of the United States together through high-quality highways, that's not the entirety of our transportation system. At the time, we were in the middle of this transition of urban transit agencies from private companies to government-sponsored authorities. We had a freight rail system and a national passenger rail system that was still private in operation. The airline system is a whole other story, but this was the area in which the federal government decided to create this flywheel of funding going into infrastructure expansion, to the exclusion of some of those other options — which, at the time, weren't even necessarily perceived to be within the federal government's purview.
One of the things I think about when we talk about the interstate network as being a success is that it was many things. It was that interstate network. It was a network to facilitate suburban expansion. It was a network to facilitate all sorts of changes to the urban fabric that, pretty soon thereafter, we began as a country to really regret. The nuance of the story is that, within the context of the time, this was the thing that — possibly with the exception of the air transportation network — the federal government decided to say, "This is the thing that we need to facilitate." That, in some ways, led to the development of a system that is effective in a whole set of ways, but also
was distortionary in a whole set of other ways. I set out to have a story that pivoted at a certain spot — trying to build a consensus around the idea that we set out to do something, we accomplished it, and then we can rethink. Part of that is a glossing over of some of the journey. We're in agreement. I think I'm just going to state this, and then you can agree or disagree: whatever good there was in connecting cities, the stuff that we did inside cities was a net negative. And I kind of acknowledge that I gloss over that — I don't even wrestle with that issue.
If you try to wrestle with everything in a short paper, it's hard to get all the nuance on paper.
What I have seen is that other people who have tried to have similar conversations about the future of our interstates and highways tend to get hung up on — let me give it a term that might be a bit inflammatory — the restorative justice of how do we fix what we did to cities, neighborhoods, and people. Not that I think that is unimportant, but I'm not sure it aligns with something the federal government is capable of doing at a national scale. I feel there's a local nuance to it that is hard to do from Washington, D.C. Does that make sense?
The challenge is, as you lay out pretty effectively in the paper, that many of the programs we've supported to do good things or to fix problems have been created within our current system and with the current priorities. Transportation agencies, mostly up and down the line with a few exceptions, still make it pretty easy to tweak and twist those into not actually solving the problem. That's a nice way of saying "individualizing" the problem.
I think you and I probably agree on a large chunk of the problems or challenges with how the federal government works now. In theory, would it be a valid thing for the federal government to fix some of these historical problems? Yeah, I think in theory that's right. But then in actuality, given the system that we have now, would
it ever happen? Is that the mechanism?
It's hard, and it might in certain cases, but that's not necessarily to say that those programs are necessarily all really focused on fixing the things that we've
done. So I laid out an argument about focus that I think pivots in the '70s in my narrative. There was a bipartisan consensus that cities needed money for transit — urban issues needed some attention — and there was a dilution or shift in the way that gas tax dollars were allocated, where some were now going to transit systems in a way that hadn't occurred up to that point.
My argument in the report was that there was a certain covenant with drivers: you would pay the gas tax, and it would pay for the system, in a perpetuating cycle. This broke that covenant or changed that arrangement. I think you were maybe a little less pollyannish than I was about the moral covenant the federal government set up. I want to give you a chance to voice that, because I think part of the narrative today that's keeping us stuck from fixing this is the idea that the gas tax would work but for the federal government robbing it for this, that, and the other. That's a silly thing — and that's where that part of the narrative starts. I want to give you a chance to elaborate on a different way of thinking about that than what I presented.
I think I have two reactions to that. One is that the gas tax is often described as a "user fee" — and it's not, really. If I drive —
Let me ask you this as nuance, though: it's obviously not today, but could you have made the case in, say, 1972 that it was?
The federal gas tax? Not really, or not entirely. If I'm the kind of person who lives in a rural area far from any interstate and drives a lot and pays federal gas tax on every gallon of gas I burn — and that's going to pay for the interstate highway — am I getting out what I put in? In some respects, yes, because we all benefit from it. But in the quid pro quo sort of way we envision when we talk about a user fee — "if I use this thing, I pay for it" — no.
Can I say this a different way? Up until about the early 2000s, you can make a strong case that New York gas taxpayers were paying for highways in Idaho. And so it wasn't a direct user-pay system, because Idaho would have a higher gas-tax draw than New York. It was a national collect — it was a socialist program, is what it was.
Right, pretty much, yeah. If you go back to the early planning documents from the FDR administration thinking about what this notional set of lines on a map was going to look like and who was going to pay for it, one of the options initially considered was tolling, and it was pretty quickly rejected because so many of those links — in Idaho or Interstate 80 up in upstate New York, which when we drove back and forth to my wife's parents in Binghamton, New York, there was never anybody on that road — wouldn't generate enough revenue.
So there were cross-subsidizations happening all over the place even with the creation of the federal gas tax. It is a tax, and gas taxes have been used for a variety of different purposes over time. The federal gas tax was initiated in the '30s to pay down the deficit. Other states have used them for other purposes, and there's nothing inherently wrong or immoral about doing so. In the same way that if I pay tax buying a toaster at Walmart, it's not like that money should necessarily go to making
toaster productions, right. Exactly.
The gas tax tends to get wrapped up in this moral language of "because I pay this thing, I have to get back what I paid into it." In reality, the way I interpret it was that there was a specific plan that Congress signed off on — a map — to do a very specific thing: to build this network. There was a financing mechanism that was fair in that the people who would tend to benefit from it were paying into it. But I tend to wrap it up less in moral and ethical language, because honestly, if you and I were paying for the real costs we were imposing by driving every day, we'd be paying way more than we currently do.
And they would have in the '70s too.
Totally, they would have in the '70s. Yeah.
Let me ask you to elaborate a little more on transit — the shift that happened when we incorporated transit into the funding. I don't want to put words in my mouth, because I don't think I said it's morally disruptive or anything like that. I acknowledged the issue and the problem, but it was kind of a pragmatic solution: we've got a bunch of money, here's how we can spend it, and this kind of solves something. I felt like you were bringing more nuance to it than I glossed over, so I wanted to give you a chance to talk directly about that.
The nuance I bring is being a resident of Boston, where this all started. In the 1960s, there were proposals to build an inner-ring highway system through Boston and to extend Interstate 95 basically directly into the city. If you spend any time in Boston, imagining this is a very hard thing to do, because these highways would have — and in fact, for some of them, there was land clearance and right-of-way acquisition — gone through some of the most densely populated neighborhoods in America, many of them really vibrant places.
So we had one of many highway revolts that took place across the country, but one of the earlier successful ones. Eventually we got Governor Sargent to cancel plans for those highways. When you look at it from the perspective of someone in an urban area in the early 1970s, you could be getting 90 cents on the dollar to build an interstate highway through the densest, most vibrant and economically productive areas of your city. Or, if you chose instead to build a transit line — reroute the Orange Line, or build the Red Line — you were essentially on your own. There was some transit funding that started at the federal level in the mid-'60s, but essentially nothing. So you're looking at a situation where the federal government is going to pay your way to destroy your city, but if you want to do something that's actually beneficial for your city, you're on your own.
That situation is pretty distortionary. In the early 1970s, urban leaders — Ted Kennedy and others, I believe, though don't quote me on that — advocated for a change to basically say, "Allow metropolitan areas that are choosing not to pursue this destructive route of interstate highway construction to use that money for something else" — that something else being transit. Here in Boston, we got the rerouted Orange Line out of the deal, and a set of other things. My sense of all of this is that establishing, at least initially — and we'll get to ISTEA and all that later —
Yeah, that'll be next.
Later in the '90s — there was a real sense of imbalance there, and what was being called for, in terms of the federal transportation program and the ways the federal government intervened in transportation, was for a series of interventions that actually made sense for urban areas as well.
Can I give you a federalist counter-argument? I feel like we're close on this, because I don't think we disagree. If the federal government's role is interstate commerce, building the interstates inarguably affects interstate commerce — good or bad, it allows the flow of goods back and forth across states, and it's the federal government's role to coordinate and facilitate that.
If we had not built highways through the middle of urban neighborhoods — if we had not made part of the interstate construction about building suburbia and commuting and accommodating essentially a different version of the American city — the argument to do the transit part of this would have been less coherent. The reason it became a coherent argument is because the interstate aspect of the interstate system became incoherent. Is that a fair counter view?
Yes, I think that's pretty fair. We might disagree slightly in theory, but in practice, had not the interstate program turned into what it turned into in cities, the rationale for federal involvement in transit would have been significantly less. Presumably transit agencies would also have not faced the dire straits — or at least not to the extremes that they did in the '50s, '60s, and '70s — had that infrastructure not essentially been abandoned, or significantly downgraded, in order to live into this vision of an automotive city. It's easy to blame that all on the federal government, but it was an idea that was believed pretty much all the way down for a period of time.
You'd have to convince the Rotary Club president that this was
a good idea. Exactly, yeah. The Rotary Club president was right there with you.
I do think there is a certain reflexively defensive interpretation of the federal role here — like, "don't blame the federal government for this." I've tended to look at it like the One Ring from Lord of the Rings: we use this to do good, and then it ends up doing evil through us. With the federal role, you can do good things — there's no doubt. But you also have the side effect that it becomes easy to co-opt: well, we've built this interstate system, but it's really easy to make it work so that we can help land speculators on the edge of the city, who are connected to the local politicians, who are connected to the people writing the local plan, who are applying for the grant — and all of a sudden it's not an interstate highway system anymore. It's a local land development approach that the Rotary Club president and the bank president and all the connected people really buy into.
I think maybe the next stop is the early '80s, where we did the gas tax increase and reformed the system and basically made it solvent. For me, the emphasis at that point is this: if you step back and look at the map we drew in the 1930s and the map we signed off on in the 1950s, by the time you're really debating policy in the early 1980s, it's pretty hard to argue that we were not done. You could argue there were little stretches not yet built, but it feels like at that point there could have been a recognition that basically we're done — we did what we set out to do, and now we're going to set up something else. I don't feel like that's what happened. I wonder if you have some insight into what you think happened — or didn't happen — at that point that got us to the '90s, where I think we started to go crazy. Can we talk about what we did in the '80s?
I feel like that portion of the history is a place where I feel a little hazier than on what came before and what came after — I'll just acknowledge that. But there was a failure. I think you and I agree there was a failure to put a stake in that moment and say, "The thing we set out to do is mostly done; we need to transition."
The reason I feel a little hazy about talking about the history is because I'm not sure that in some way we didn't actually do that — that what instead we decided to do was to say, "Okay, we did that, and now we're going to have a much more expansive federal involvement in transportation," in a way that gradually expands the amount of things the federal government is choosing to fund, and that creates this sort of permanent role for funding — whether or not anybody declared that consciously, whether or not anybody went out on an aircraft carrier with a "Mission Accomplished" banner or not. There was a pivot there. You recognize it in the paper, defining that pivot as moving from something that was believed to be a fairly constrained federal role limited to a certain set of things — and maybe a set of exceptions to those things — versus a permanently funded but rather incoherently designed formula-funding system.
I was born in '73, so I was about nine. I don't have a live memory of this debate. The histories of the interstate highway system, the discussion and the politics, are also kind of fuzzy about this, and there hasn't been a lot of depth added to this idea.
It feels like they got to the early 1980s — I'm imagining a bunch of politicians who fought in World War Two, grew up in this boom time, had been through a couple of inflationary cycles — and sat down and said, "This system needs more money." In the '80s, the thing people were sensitive about was the budget deficit, so we're not going to borrow a bunch of money and add to the deficit. We're going to do the prudent thing: if we want transportation, we're going to raise taxes to do it, and here's how we're going to spend it.
I really don't know if it was any more complicated than that — if anybody wrestled with deeper issues than that. Maybe that's why we don't get a more exciting, sexy policy history: it was just prudent people, the mentality of my grandfather's generation, who would have said, "I'm going to spend a dollar, that means I need to save $1.20 — I've got a dollar to spend and twenty cents in the bank." That seemed like that generation's mentality at the beginning of the '80s — except when it came to defense and other
things — we just put all that on
the credit card, right.
Yeah. The other contextual things that are important at that time — and this is true going back to the late '60s, early '70s — is that many of the highways we built... you and I have talked a lot over the years about the failure of traffic projections and the continued assumptions that traffic is going to continue to grow ad infinitum. It hasn't lately. But back then, many of the forecasting errors that were made were on the low side.
That's very true, yeah.
The sense that this was a system — and this would not have been my view then, it's not my view now, but it wouldn't have been my view in 1982 either — but the idea that this system we built is one that we feel the need not just to maintain in the form it was built, but actually to continue to expand over time in terms of number of lanes if not miles. Even if you're reading the case for the interstate system being made through the late 2000s and early 2010s, that idea of "we're going to have twice the amount of traffic in 25 years, so we'd better widen highways" — the idea that we'd need to continue investing money into building out that core system, let alone everything else, would have been on people's minds at the time. Actually stepping away and saying, "Okay, we're done" might have been a challenge.
I graduated from college in '95 and got a job as a civil engineer. The senior engineers at the firms I worked for — and I did two internships at the DOT while I was in college — those people had grown up in the profession in the '70s and '80s. You just jogged my memory. I can name a number of instances where they said to me, "We underestimated traffic demand. We did what we thought was an aggressive projection in the '70s and '80s, and look around — we were way off, by factors of three, four, five, on the low side." I was kind of taught by them to always overestimate: "It will seem crazy when you do it, but you will need that capacity, because it's going to grow faster than you think." That was their lived experience. I'm glad you reminded me of that, because it had gone fuzzy in my head.
A lot of that is still baked in, in a very real way — especially in places that are growing. I was invited to speak on a panel before the Oregon Committee on Transportation Oversight, which is dealing with these tremendous mega-projects that are just spiraling totally out of control. The case I made to them was: it used to be that the risk of under-building felt greater than the risk of overbuilding, but in our current moment, the risk of overbuilding is greater than the risk of under-building — for all sorts of reasons. But going back in time to the 1980s, that would not have been on anybody's mind then.
This leads into where we were in the 1990s very nicely. I started practicing in '95, which was after the first ISTEA — the first kind of reimagining. I'm going to give voice to something and I want you to push back on it.
I feel like there was a cultural pivot point at the end of the Cold War: the peace dividend, the first Gulf War, our triumph in 100 hours — there was a sense of "we kick ass and can do anything." When you bring that over into the transportation realm, there was a lot of money, a lot of growth, an idea that investing in transportation reinforced growth. So why don't we just broaden this, take this pie and cut it into more pieces, maybe broaden it a little, and share it? Let's be more flexible. Let's not just fund highways, let's continue to do that. Let's not just fund transit, let's continue to do that. There are all kinds of other cool things we can do that are transportation-adjacent — let's find a way to give those money too.
I make the case in the report that this was the end of any focus we had at all. Whatever covenant there was is gone, and this just becomes a spending program. I feel like you have a slightly different take. How would you describe this period up until 2008, which I think is the next break point?
My take on it is a little different. I graduated from college in '91, had done my time as an aspiring civil engineer briefly for a couple of years, and then went my own way. One of the things very much on people's minds at that time is: if you are someone who believes, for the good of the country and the public interest, that we need to continue to expand highways — or if you are in a connected special interest group that's where you make your money — the question is, where are you going to get the political juice to sustain the political support needed for this program going forward?
Because we had finished building the interstates.
Right. The consensus we might have had as a country around the idea that the federal government should be focusing exclusively on building highways had broken down pretty significantly by the early 1990s. Those of us working in environmental consciousness through the '80s and '90s thought, "That seems like a really bad thing to be prioritizing above everything else" — because you can't breathe the air in LA 200 days out of the year, there was a growing sense of climate change, and Congress for New Urbanism started in what, '93?
Around that time, sure.
So you have the anti-sprawl movement, New Urbanism, environmental consciousness — all of these things really challenging the centrality of the vision that this is the thing we ought to be doing. From the perspective of advocates who had seen this imbalance in federal spending, the idea that we could redirect a portion of the gas tax to fund things we think are really important was a logical and desirable thing to do. On the other hand, it then tied those things to continuing this overall program that I think many of the critics in the early '90s would have had an issue with.
Can I say it in a less generous way? I've felt for a long time that what we do is pay off the advocates by throwing them some table scraps, so they in turn support or acquiesce to massive expansions in highways and interchanges and frontage roads that would otherwise not be built. That's not a nice way to say it, but I feel like that's been the net result, if not the intention.
I don't think that's totally wrong, nor necessarily ungenerous. From the perspective of the advocates — if you're somebody who cares a lot about biking and walking infrastructure, or about there being adequate bus service for a wide variety of people — you're going to care about those things. I think the issue is more that advocates sometimes have not wrapped in — and I think this is actually changing, and it has been changing over the last 10 or 15 years — that unless you can change the ways that money is flowing toward highway expansion projects, you're never going to achieve systemic change at the level and in the form that you want to see.
In the early '90s, would you have said that strategy was worth a shot? I think I'm pretty generous to the people who thought that. But 25 years later, it pretty obviously hasn't led us to the promised land. Maybe we need to think about things a little differently.
When we got to 2008, we were in the Great Financial Crisis, and I remember this being framed in real time as: "We're in a financial problem. We need shovel-ready projects. We need funding. We need jobs. The best way to do that is to build infrastructure." That was really the first of a number of bailouts of the Highway Trust Fund. In my framing, I called it just that — the first bailout of the fund — and we've kind of committed to bailing this thing out ever since. Where is that framing maybe wrong or not complete enough?
I don't think it's necessarily wrong. The perspective you just laid out — that we saw this stuff as economic stimulus —
Stimulus — that was actually the word we used.
Totally. We used it again in 2020 after COVID, and we're probably going to use it again in another year or two. The idea that the reason to do these things was not necessarily because they were the best things to do at the time, but rather the things that were available to us — that we could put people to work. The consideration about whether this self-funding system should remain self-funding — we sort of took a vacation from that. But it's like we took a vacation from it and then never came home, because one of the things you might take from that experience is, well, it's just a heck of a lot more politically easy to put all this stuff on the credit card, as opposed to either holding ourselves fiscally accountable for the money we spend or going back to the people who primarily benefit from these investments and saying, "You've got to pay more in federal gas tax."
It's almost quaint now — that we used to talk about the gas tax as something that needed to go up to pay for infrastructure.
Because it's not even on the table. Unless you're an electric vehicle driver, in which case there are all sorts of inequities and cross-subsidizations. But the idea that none of us are paying our way, no matter what you drive, is not something that's central to the discussion right now.
We crossed over — I don't know the exact year, but sometime post-2008 — from where we talked earlier about New York subsidizing Idaho, in a kind of socialist way, to a point where all states became net receivers. Every state is being subsidized now by federal deficit spending on transportation. To me, that makes the idea of reform so much more difficult — perilous, really — because no state now has an incentive to want this system to change, since they'll almost certainly get less money if it does. Is that a fair analysis of the cul-de-sac we're in?
Yeah, I think that's totally fair. The other perverse result, to my eye, is that we've been bailing out the trust fund with now, I think, more than a quarter-trillion dollars since 2008. That's real money — a quarter-trillion dollars is nothing to sneeze at. But we still treat that pot of money the way we treated it when the gas tax was a nickel — as if
it has to go to highways, because
exactly, as though it has to go to highways. We put out a paper, I think four years ago, called "Shifting Gears" that basically argued one of the first steps to solving this problem is to just recognize, first of all, that the trust fund is not a trust fund in the sense that a trust fund is money you put into something that then has a specific and discrete purpose. If you're bailing
out the trust, there's a feedback loop with the trust fund that does not exist
with general funds. So if you're going to be spending general funds on highways, let's treat it like general funds. Instead of having this apparatus that sends money out to the states according to formulas to build highways, have it be a budgetary line item like anything else. Let's weigh whether it's an important enough thing to do versus spending it on health care, spending it on education, returning it to people in a tax break, reducing the deficit, or whatever else you think we should be doing with the money. The idea that we should be prioritizing this kind of opaque and goal-free highway spending mechanism — at this moment in history, with an infinite flow of general funds — just doesn't make any objective sense, at least not to me.
The deeper corruption that the trust fund creates today is that state DOTs feel a certain certainty about what they're going to get, and it has actually had this feedback loop of allowing them to not really wrestle with constraints. If you're the Texas DOT, you can not only count on what you've always gotten, but you can count on the fact that if you just keep adding to the list of needs you have, that number can be sent to Washington, D.C., and it becomes the baseline of the budget for the next renewal cycle.
We had the baseline budgeting discussion in the '80s and '90s — do we start with last year's budget and then add 3%, and if we take from that it's a cut? In the engineering and DOT professions, it's even worse. You start with last year and then pour onto that every project you've imagined, and that's the number. If you don't fund that number, it's actually treated as a cut to your budget. I don't know any other kind of government endeavor that is funded in that way. Maybe defense is funded that way, I don't know. But Social Security, Medicare — nothing else, no other entitlement, is funded in that way.
You're funding these things, in some cases, from anticipated gas tax revenues of taxes that haven't even been levied, because the level of certainty among everybody in the whole system is: "Of course we're going to bail out transportation the next time. Of course we're going to make sure the money exists." And I agree — it leads to a whole set of perverse decision-making that, as you point out, makes reform really hard to envision.
So we're at this point. What I have proposed — what Strong Towns has put forth as an idea — is that the federal government does have a role in sustaining the interstates that have been built. If you look at the way it works now, that role is fulfilled through state DOTs. The federal government does not have its own highway construction company doing contracts; they give the money to states to maintain the interstates.
My proposal, simplified, is to say: let's no longer have the federal transportation apparatus. Let's have the money that comes in from the gas tax go right back to the states. Let's not have them apply for funding against certain criteria. Let's just give them the money, require them to maintain the interstates to an acceptable level, and then the rest of it becomes discretionary funds that they can use.
The main pushback I've gotten — and you can expand on any pushback — I think I can summarize as: "The Texas DOT is horrible, and they will go build highways." My counter-argument has been: sure, but the Massachusetts DOT is not, and they will build things that are really good. I'm willing to let that conversation evolve, because I think it gets us to a better place more quickly than trying to do this from Washington, D.C. Give me the counter-argument, because I feel like there's a strong one that is worthy of being on the table and discussed.
Chuck, you think way too highly of the Massachusetts DOT. I know people who work there — love them to bits — but nobody is doing this entirely right. Let me take apart a couple of things when I look at that proposal.
One is that it could very well be that what you're proposing is the best way to go forward — that the infrastructure we've built to allocate the money has become such a Rube Goldberg machine
— you mean the infrastructure we built to allocate the money? Correct —
that it's become such a Rube Goldberg machine set loose upon the land that arguably we may be better without it than with it. I'm willing to entertain the argument that, given the choice between continuing to pour money into what we have — or something that I would imagine might be adopted in the current Congress, which would be a step back from some of the reforms we've made over the years — it may be that what you're proposing is the better way to go.
The two places where I get a little hung up are one practical matter and one philosophical thing. As a practical matter, the one thing that worries me greatly is within the transit portion of the Highway Trust Fund: we fund a lot of stuff that is pretty critical basic transportation in places that are not like my city of Boston. Boston benefits from federal money — it helps us a lot. Could we go it on our own? Do we have enough political support for transit in Massachusetts? We probably could figure that out. The New York metro area probably could too. But a smaller city in a state that provides no state funding for transit whatsoever — are those agencies going to survive? I'm guessing a lot of them won't. My concern is that even if I would acknowledge that maybe we need to do something big, I want to hold that there are some really worthy and important things that are going to be endangered along the way. That's
something Jarrett Walker said to me, actually. I think I'm going to have him on and he can speak for himself, so I won't say the positive things he said, but on the negative side of the ledger, he said there are people who depend on transit today for their existence, and that funding will be immediately eliminated if the federal government is not funding it. That's a real thing that we should give voice to.
Yeah, that's the first thing that viscerally gives me pause. Philosophically, my vision of a federal role is probably a little more expansive than yours, because yes, interstate commerce is a core function of the federal government, but interstate commerce also involves the rail system. If we had a functioning passenger rail system in the United States, things would, to my mind, be a lot better than they are — or even a functioning intercity bus system. So even when thinking about interstate commerce, there is theoretically a federal role that extends beyond highways.
I come out of the environmental, climate, and energy world. Is there a national interest in reducing our dependence on oil at this very moment?
I don't know why there would be. Actually, I think that's what we're doing — trying to destroy the world's dependence on oil.
Yeah. All of this plays into it, and one of the things I reacted to when I read the draft was that there's a distinction between a national goal and a national project or objective. The interstate highway system, when we developed it, was an objective. People thought it fit all sorts of different goals — national defense, interstate commerce, redeveloping urban areas, whatever the case may be.
I do think that there are — maybe more than you would acknowledge, maybe less than some other advocates would acknowledge — things that play so powerfully into so many other issues of our national life that transcend localities and borders, that I'm philosophically more open to the idea of a bigger federal role. That said, I look at the situation you lay out in the white paper, and I look at the current system, and I go: is continuing down the same path going to get us anywhere near where we need to go on any of those other things?
One of the things I'm grateful to you and Strong Towns for is laying out that case — imagining, in a time when our policy imagination is so limited, what if we didn't have this to begin with? If we imagine not having it, you might be able to start to imagine
a better way to do it. Let me ask you this as a last question. We know the players: the trust fund expires in September, and there will literally need to be some legislation. I'm not asking you to predict, because we've seen we have unpredictable policymakers and random policy being made. But I do feel like there's a growing coalition of — if we just call them Team Red — skepticism of government spending. And to a degree, there's still a remnant of it, though it's obviously in decline. There's also a Team Blue skepticism of the Highway Trust Fund in general and the highway funding arrangement — that trade-off we talked about earlier. What do you think happens at the end of September? What are we looking at on October 1?
This is how I preserve my sanity these days, Chuck — by paying as little attention to
it as possible. That's okay — I think you're spitballing as much as anybody.
If I had to bet — and I don't know anything about anything, full disclaimer, I am the least informed person on the planet when it comes to this — I'm guessing we'll extend in some way.
That's my guess too. But extend with more money, or extend at current gas tax levels? Because current gas tax levels would be a massive cut from
where we are exactly. And how long to extend — I also don't know. If anyone listening to this podcast is on Polymarket or Kalshi or whatever, please do not use anything I have to say to guide your position on current events.
I do think this is a fascinating time because of that conundrum. We live in interesting times. You have this weird policy mix, and if you just extend — which seems like the easiest consensus thing to do — you have Option A: extend at current gas tax levels, which is a massive cut for states. Or Option B: extend at the expanded levels, which means hundreds of billions in deficit spending that we really don't like. What is that?
The thing that also plays into this is that we are getting less bang for the transportation buck than we have in a very long time. Yonah Freemark, a transportation policy analyst at the Urban Institute, came out with papers — and I'll probably totally butcher the conclusions — but he basically concluded that all of the increases in spending that went in through the IIJA have basically just gone out the window in inflation. So we're not
— I've got the paper right here. The economic multiplier that was used in the 1950s and '60s to justify this, and that we haven't really revisited since — those are insane now.
Right. The question of, even if you maintain spending, are you going to get the kind of results people imagined when the IIJA was passed? No. And if we restrain spending further than that, it's going to be hard times. You're starting to see this in places around the country — certainly in the debate in Oregon and Washington around the Interstate Bridge Replacement, where they've dramatically downscaled that project. Hopefully, you're going to start to see some of these projects that were dramatically over-designed and overbuilt, when we thought there was all the money in the world, actually get rethought. Because even if you do continue the program at current spending levels, whether you'd actually be getting as much out of that as you previously imagined is starting to feel very much in doubt.
For the audience, I want to wrap this up by saying: you've just listened to an hour of a Minnesotan and a Massachusetts resident argue over policy. This is what it sounds like when — thank you so much. That was refreshing, therapeutic, illuminating, and I'm really grateful that you took the time to do this. Tony, thanks so much.
So grateful for the invitation, Chuck. Always happy to be here. Thanks to you and Strong Towns for putting these ideas on the table.
If people want to contact you and follow your work: FrontierGroup.org?
FrontierGroup.org — all one word — and that's where you can find us online.
Tony Dutzik, thanks for being here, everybody. Thanks for listening. Keep doing what you can to build a strong town. Take care.
This episode was produced by Strong Towns, a nonprofit movement for building financially resilient communities. If what you heard today matters to you, deepen your connection by becoming a Strong Towns member at StrongTowns.org/membership.