Posted on 07/03/2006 5:37:03 AM PDT by A. Pole
50 years ago President Dwight D. Eisenhower signed into law the 1956 National Federal-Aid Highway Act and since 1990 referred to as the Dwight D. Eisenhower System of Interstate and Defense Highways. He authorized the connectivity of 41, 000 miles of high quality highways across the United States. It would be financed by a combination of the Highway Trust Fund, federally imposed user fees on motor fuels and state user fees.
Eisenhower was prompted to persuade the nation’s people to build the interstate highway system, as a matter of national security. Although not at war at the time, he believed it was imperative the interstate be designed for mass evacuation of cities in the event of a nuclear attack, in the era of the Cold War. The Act dictated that one out of every five miles must be straight, in order to use as airstrips in times of war or other catastrophic emergencies. And to that end, the success of national defense was dependent upon the navigability of large numbers of military personnel and their equipment during such a crisis. And even today, 75% of the interstate highway system represents the Strategic Highway Corridor Network (STAHNET) utilized by the U.S. military.
And while in 1956 there was the fear of nuclear threat from the then Soviet Union, today’s national security, often referred to as homeland security, remains similarly threatened in an era where the threat of terrorism looms. Yet, at such time that it would appear imperative that U.S. strategic infrastructure such as the interstate highway system remain under American control, it is but one more public asset available for sale under the guise of Public-Private Partnerships. Unlike domestic privatization, however, states throughout the country are negotiating contracts solely with foreign corporations and conglomerates, primarily in Europe, Australia and Asia, in order to finance the maintenance, modernizing and extension of U.S. interstates.
As funding from federal gas taxes and state user fees have fallen behind the inflated costs associated with road construction and maintenance, more and more state governors and lawmakers no longer see the operation of roads solely as a public responsibility. However, the reason states initially took over handling roads at the beginning of the 19th century was because many roads, bridges and canals had previously fallen to bankruptcy in the hands of private owners.
According to the Secretary of the Department of Transportation, Norman Mineta, “We are like a poker game. We are inviting people to the table and saying, ‘Bring money when you come.’” And Mineta believes, “A big part of the answer is to involve the private sector more fully – not just as a contractor or vendor, not merely as a financier, but as a partner in the funding, management and expansion of our transportation infrastructure.” Yet when those partners are exclusively foreign entities, a whole new dimension is added to the management of the U.S. interstate highway system. It is unprecedented.
The deal which started a flurry of more than 18 proposed foreign financed interstate highway projects across the nation over the past year in amounts of over $25 billion was in Chicago, IL in December 2004. Chicago Mayor Richard Daley proposed an agreement to lease the Chicago Skyway for $1.83 billion dollars to Cintra-Macquarie Consortium, a Spanish-Australian conglomerate, doing business as State Mobility Partners in the U.S. The deal, finalized in January 2005, gave Cintra-Maquarie a 99-year lease for which it is responsible for the maintenance and structural quality of the 8-mile elevated structure.
In exchange for its upfront payment, Cintra-Macquarie will collect and keep all money from tolls from the Skyway and will be able to raise tolls as incorporated under the terms of the agreement. The company is modernizing toll collection with an electronic transponder system. Until the technology is fully operable, toll collectors have been newly but temporarily recruited. But instead of earning an average hourly wage of $20.00 as their predecessors did, they are paid a $10.00 to $12.00 hourly wage. And as contracted, the Skyway offers the buyer an asset without having to deal with improvements or debt.
Following the situation in Chicago, Indiana Governor and former Office of Management and Budget Director for President Bush in his first term, Mitch Daniels, explored a similar arrangement for Indiana’s $2.8 billion shortfall in its transportation budget over the next ten years. Daniels was able to get his highly contested proposal through the state legislature as well as the courts where it was challenged by a citizen advocacy organization.
A bid was accepted by the state of Indiana in the amount of $3.8 billion and an agreement was arrived at with Cintra-Macquarie, the same operator of the Chicago Skyway. The lease agreement will provide for the operation and maintenance of the 157-mile Indiana Toll Road, a part of the interstate highway system, for a period of 75 years. The deal is expected to close on June 30, 2006. The Indiana Toll Road will also have an upgraded electronic toll system installed, eventually ending the need for toll workers.
Here are just a few of the many other projects either approved or proposed across the country. In Virginia, the rights to manage, operate and maintain the Pocahontas Parkway, an 8.8-mile toll road outside of Richmond, were bought for $611 million by the Transburban Group, also an Australian entity in its first foray into U.S. road management. A lawmaker in New Jersey has proposed selling a 49% interest in the New Jersey Turnpike and Garden State Parkway to a private investor.
In August 2005, the same Macquarie Infrastructure Group took over operations of the Dulles Greenway Toll Road which operates between suburban Virginia and Washington, D.C., for the amount of $533 million. And the anticipated widening and extension of the Trans-Texas Corridor which runs 316 miles and parallel to I-35 in Texas, is slated to be built by Cintra, the Spanish company, and Zachry Construction, out of San Antonio, TX, who plan to invest $7.2 billion.
But windfall upfront payments while attractive to states to reinvest in other transportation projects, have their limitations and pitfalls too. States will need to learn how to enforce and write explicit contracts. And the proceeds from the sale or lease of roads should be earmarked for specific projects. Non-compete clauses are often inserted in such contracts such as inducing lower speed limits on parallel free roads to drive traffic to the toll road. Others fear that operators will only maintain those parts of the route which remain profitable.
Other issues which are arising more often after the fact is the increasing worry that the public will have less and less input over the use of its public assets. Such is the case in Colorado and California where the enforcement of maintenance matters have already become problematic. Immediate increases in tolls and applied on a perennial basis, with higher tolls applied at rush hours have not sat well with commuters.
However, questions will continue to arise in a process still in its in infancy. Yet states must have the ability to learn from mistakes made in doing business in this brand new way. Will a private firm maintain the roadways as well as the U.S. government? Will a foreign corporation care about the needs of the American people? And will selling off public assets to pay debts now be regrettable down the road? One would think that Eisenhower would have thought so.
Copyright 2006 Diane M. Grassi
contact: dgrassi@cox.net
This is not true. I see plenty of space in public libraries and many books never read. Also I do not see huge crowds on free sidewalks. Air is still plentiful.
Thank you, p. There are a few on this thread who just don't get it.
You're welcome.
Oh, they get it alright. The problem is, they AGREE with it.
I think it has more to do with Michigan's weight limits. Michigan allows heavier trucks than any of the other 49 states. The Teamsters union keeps saying that has nothing to do with the condition of our roads - they claim it is the winter weather that is so rough on the roads.
Funny thing is - I've driven in Ontario, Minnesota and Wisconsin. Their winter's are just as bad as ours, or even worse, yet they don't have the crumbling road problem that Michigan does. They also have lower weight limits. Coincidence? I think not.
The streets near my house that have very heavy truck traffic to and from the auto factories fall apart months after they have been repaved. Roads that have no heavy truck traffic seem to last for decades without repair. Coincidence? I think not.
The Teamsters union gives tons of money to politicians who make sure the weight limits aren't lowered. Coincidence? I think not.
Free market bump.
Red Meat Headline Alert.
Scary, aren't they? When America is gone, they'll wish they could get it back. Or maybe they won't.
BTW, you have a great FR HomePage!
You'd think the Teamsters would want lighter weight limits. This would mean more trucks and more potential Teamsters. The real winners in Michigan are the owners of those 48 wheelers.
I would say that anyone in the public sector is overpaid if they would make less in a free-market environment.
I'm always amazed at the power of threads like this to bring the Buchananites and the socialists out of the woodwork.
They most certainly are scary.
What's really shameful is they talk the crap they do, and tomorrow is our Independence Day.
Thank you about HP, still working on it. I'll have pictures on it soon.
Or so it seems.
Libraries are a poor analogy, and you know it. Americans, sadly, are much less interested in books that other entertainment mediums these days.
Also I do not see huge crowds on free sidewalks.
In the urban centers I visit, the sidewalks always seem very crowded to me.
On the subject of wages; I see no problem with toll collectors getting $20/hr if they can get it. Wages are in essence an agreement between the buyer (employer) and seller (employee) of a service for an agreed-upon price. If the seller can get more for their skill, more power to them. If the buyer can get the same service cheaper elsewhere, bully on them as well. It's where wages are dictated by external influences that I have a problem: The minimum wage, for one, keeps wages artificially high. On the other hand, the influx if illegal foreign labor keeps wages artificially low. This leads to what we see now: A continually shrinking middle class.
Of interest in follow-up to bsb's link:
The list of usual suspects:
http://www.capitalresearch.org/search/orgdisplay.asp?Org=CFR100
Of particular interest:
http://www.capitalresearch.org/search/gmdisplay.asp?Org=136066955
Conducting war on the wage earners of this country, are we now?
The automated toll collections methods such as EZ Pass are replacing actual toll collectors.
Now tell me the/your merits of featherbedding.
That is very true.
I asked a worker at Wal Marts where they had moved their children's books too and she said they hadn't been moved. I had her follow me over to the isle and pointed to the display. All there was there, was those books where you push different a buttons on the cover, and coloring books.
I asked her why was there was no selection in children's books, you know what she said? Kids don't read anymore like they used too.
I guess they thought it was a waste of space and took more than 2/3 of them out.
It was not analogy. It was direct test of your "rule that when a resource is given away for free, demand will swell to consume all available supply"
You're making way too much money, according to Alberta's child.
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