The Road Ahead: Transportation

Previous posts in the “Road Ahead” series:

1. Global Warming

The 2016 election has come and gone. President-elect Trump, members of Congress, governors and state legislators are now waking up to the fact that they are running the country and are planning their transition to power.

There is no better time to take a step back and take stock of where we are as a country on the issues that will shape our future. Over the coming weeks, Frontier Group analysts will be providing their take on the lay of the land on the issues on which they work.

America has seemingly gone “back to the future” when it comes to transportation.

For a decade, the United States seemed to be creeping away from our extreme dependence on fossil fuel-burning cars and trucks. Between 2004 and 2014, the number of miles driven by the average American fell by about 7%. Vehicle fuel economy increased and transportation carbon pollution declined. Traffic deaths fell. Congestion stagnated. Cycling and transit use surged. Meanwhile, new technologies and services emerged that promised a potential break from the nation’s dominant model of mobility based on personal car ownership.

Then, everything changed. Gasoline prices collapsed to the lowest level since 2003. Vehicle travel and the congestion that comes with it increased. Traffic deaths rose alarmingly for reasons ranging from rising travel to distracted driving to a surge in the number of bad drivers on the roads. Americans launched into a debt-fueled SUV-buying bonanza that has stalled improvements in fuel economy. Congress put $300 billion more behind the failed transportation infrastructure investment policies of the past via the FAST Act in late 2015. And the future of new models of mobility such as carsharing, Lyft and Uber remained in question.

And then came November 8. Voters gave virtually unchecked federal power to a Republican party that has frequently proven hostile to transit while embracing an “asphalt socialist” approach to highway construction. The transportation priorities of our incoming president are as yet unclear, but the tentative steps toward a cleaner and more efficient transportation system that the Obama administration took over the last eight years would seem to be in jeopardy.

Is the situation hopeless? Not at all. Achieving the systemic, root-and-branch reform of transportation policy that America so desperately needs was always going to be a long game. The election of Donald Trump, along with other developments in the country and in the world of mobility, opens up new and sometimes unexpected avenues to advance the ball.

The Auto Bubble Fizzles

Analysts have tended to focus on falling gas prices and a growing economy as the triggers of the recent rise in driving, and both are major contributors. But recent years have also seen Wall Street unleash a torrent of easy credit into the auto lending space, making it absurdly cheap (at least in terms of monthly payments) to buy an expensive car.

Consumers have responded. Over the past six years, the total amount of auto debt outstanding in the United States surged by 57 percent. Vehicle registrations have risen to a new all-time high.

As we’ve written previously, however, the foundations of this boom in auto ownership are shaky. The expanded subprime lending and loose loan terms that auto lenders employed from 2013 to 2015 aren’t looking so good in the rearview mirror. The ultra-low interest rates that once kept monthly payments down for car buyers are now on the rise. Used car values are falling – making it harder for those purchasing or leasing a car to make the numbers work in their favor. Automakers are currently piling on the incentives to keep people coming into the showrooms. And this, mind you, is during an economic expansion.

The bottom line is that many Americans currently own cars they cannot afford. Nearly one-third of all new car buyers and a quarter of used car buyers are rolling the negative equity from their previous vehicles into new loans when they trade-in, building a snowball of debt that will, at some point, become unmovable. With interest rates rising, Wall Street starting to curb the craziest lending practices of the recent boom, and used car values falling, the next wave of vehicle purchases will get much harder to finance.

What does all this mean for transportation policy? For one thing, it means that one of the likely catalysts for the recent surge in driving no longer exists. Keep this in mind as politicians and others talk about the “need” for major highway expansions in the infrastructure debates ahead.

More intriguingly, the potential peak in car sales marks a new phase in the battle over which model of mobility – the traditional model of personal car ownership or a multimodal model reliant on shared mobility services – will come to dominate the 21st century. 

The economic and societal case for multimodalism and shared mobility has been made before, including by us (e.g., here and here). But, the fading of the auto boom creates new incentives for both individuals (who may be unable to afford a new vehicle or looking to earn extra money to pay off an existing vehicle) and automakers (looking to sustain new vehicle sales or for opportunities to sop up the upcoming glut of used cars that threatens to erode trade-in values) to increase their involvement in shared mobility. Already, General Motors’ Maven carsharing service is refurbishing off-lease vehicles for use by ridesourcing drivers – a way to both prop up the residual value of used vehicles and tap into a growing market.

For policymakers looking to employ shared mobility to support environmental, transportation or equity goals, the shift in the automobile market creates new needs, challenges and opportunities, and makes clear the case for giving more Americans the option to live without a car of their own. Smart and creative public policy at all levels of government can make the most of this opportunity to encourage a lasting shift in how Americans get around.

Boondoggle-palooza?

At the federal level, of course, all eyes are on President-elect Trump’s infrastructure plan, which, as of this writing, has not been laid out to the public. The incoming administration has floated some ideas on how the nation might pay for infrastructure and who would get paid, but we have heard nothing about what we’d be paying for, which is the question that should be answered first.   

In our recent report 50 Steps toward Carbon-Free Transportation, we suggested that the first step in fixing federal transportation policy was to “stop doing harm” by no longer building expensive highway expansions that don’t solve congestion, don’t deliver a strong return on investment (PDF), and exacerbate climate change.

Given Steve Bannon’s “throw it up against the wall and see if it sticks” approach to infrastructure spending, however, it is safe to assume that the boondoggle threat level is high. The dirty little secret of the current political moment, however, is that the infrastructure plan proposed by Hillary Clinton during the 2016 campaign was no great shakes either in terms of charting a 21st century course for the nation’s transportation system. And so, while the substance of the infrastructure debate is not much different with Trump as president, the politics shake out in some new and novel ways.

Over the last few years, we at Frontier Group have documented roughly two dozen proposed boondoggle highway projects – unjustified wastes of public money that could be better spent on high-value investments in road and transit maintenance, transit operations, demand management, and facilities for walking and biking, among other things. Our work has often been embraced by local activists fighting those projects and by some fiscal conservatives. But, at least until recently, many progressives have simply failed to grapple with the notion that, when it comes to infrastructure spending, less is sometimes better than more. The election of Donald Trump to the presidency could spur more progressives and environmentalists to lend a long-overdue critical eye to new highway projects, and facilitate the creation of new coalitions to challenge them.

Local Innovation Continues

Even as Trump was prevailing on the November ballot, voters across the country – in Red, Blue and Purple states – were saying “yes” to public transit, with ambitious plans for transit expansion or improvement passing in Los Angeles, Indianapolis, Seattle, Atlanta and Raleigh. The success of those measures – and the continued energy leading cities are putting into improving conditions for bicyclists and pedestrians, expanding access to shared mobility, and preparing for autonomous vehicles – suggests that cities will continue to position themselves in the vanguard of developing the mobility solutions of the 21st century.

At the same time, leading states can be expected to continue to develop innovative policy approaches to transportation. States like California will continue to show the way in excising longstanding transportation policies that preference or subsidize driving, while other states (such as those in the Northeast) will continue to push forward with efforts to promote electric vehicles and reduce transportation carbon pollution. In the absence of a comprehensive, coherent transportation plan from Washington, D.C., these states will, if anything, find themselves with strengthened resolve to forge a new transportation future.  

But if transportation reform is limited to a few leading cities or states, it will be a failure. The most consequential and interesting battles on issues related to transportation and urbanism, we’ve argued, are taking place in places like Tampa, Dallas, Indianapolis and Denver – places far away from the coastal outposts that attract the attention of many urbanists. At the same time, the mobility challenges faced by suburban America – especially those related to the aging of the Baby Boom generation and rising suburban poverty – are growing more acute with each passing year. Lastly, as we argued in A New Way Forward, any realistic strategy to address climate change will require actions to reduce transportation carbon pollution that work in a variety of cities and suburbs all across the country. Limiting focus to only a few breakout cities or states is a luxury none of us can afford.

So, the need for creative thinking and problem-solving in transportation – in all kinds of communities, all across the country – will become more urgent in the years to come, while the deficiencies of our current transportation model will become more obvious. The Trump administration’s approach to infrastructure investment and transportation policy – whatever it turns out to be – won’t change that underlying reality.

Even as transportation advocates buckle down to stop bad policies at the federal level and cultivate new mobility solutions at the local level, it will be important to keep the big picture front and center. America’s transportation policies make millions of us poorer, sicker, less happy and more vulnerable than we should be. There are better ways forward. The next two years provide a golden opportunity to articulate a 21st century vision for transportation in America and lay the groundwork for making it a reality.