Cato Institute Proposes 94 Percent Budget Cut for Department of Transportation

By Nick Dean | June 22, 2010 | 6:41 PM EDT

( -- While the federal budget deficit for 2010 ticked past $1 trillion last week and President Barack Obama is pressing Congress for another $50 billion in economic stimulus money, the free market Cato Institute is pushing proposals to dramatically cut federal spending, including a nearly $85 billion reduction at the Department of Transportation (DOT).  
Cato released its list of proposed federal cuts last Thursday, posted on its sister Web site  In addition to the DOT plan,  Cato has released similar spending-reduction plans for the Departments of Commerce, Agriculture and Education.

The DOT "will spend $91 billion in 2010, or about $770 for every U.S. household," reported Cato. "It employs 58,000 workers and operates 85 different subsidy programs."
For the DOT, Cato advocates eliminating both the Federal Highway Authority and the Federal Transit Administration, and also suggests that lawmakers cut several aspects of the current Federal Aviation Administration.
Cato’s proposal would reduce the DOT’s  $91-billion budget for fiscal year 2010 to a mere $6 billion -- a 94.4 percent decrease.
On the Web site, Cato argues that the operations cut from the DOT could be managed more efficiently at the state level and in the private sector.
Cato’s federal and state budget expert Chris Edwards, author of the book Downsizing Federal Government, said the Department of Transportation maintains and funds many aspects of transit that “are properly the responsibility of state and local governments” and the “private sector.”
“There are few advantages in funding infrastructure such as highways and airports from Washington, but there are many disadvantages,” Edwards said at the Web site “Federal involvement results in political misallocation of resources, bureaucratic mismanagement, and costly one-size-fits-all regulations imposed on the states.”

Transportation Secretary Ray LaHood testifies on Capitol Hill in Washington, Wednesday, Oct. 28, 2009, before a Senate Commerce, Science and Transportation hearing on combating distracted driving. (AP Photo/Haraz N. Ghanbari)

Edwards proposed that states be forced to find cost-effective mass transit opportunities and said the quality of a state’s infrastructure would increase if the transportation was deregulated and if the Federal Highway Administration was eliminated.
Edwards told, “Taxpayers and highway users would be better off if federal highway spending and gasoline taxes were ended. State governments could more efficiently plan their highway systems without federal intervention.”
If the agency was eliminated, states could move toward innovative transportation models such as expressways and electronic tolling, Edwards said.
In terms of innovation, the fiscal year 2011 budget shows a 30 percent increase (a little over $1 billion) in the Federal Aviation Administration’s (FAA) budget to implement new technology called NextGen. Edwards said that the push for such technology would come naturally through a privatized air traffic control system.
“The FAA has had terrible problems for decades in trying to implement new technology for air traffic control,” said Edwards. “Our air traffic control has got to get a lot more sophisticated. I don’t trust the FAA with doing that soon.”
According to Edwards, Canada switched to privatized air traffic control in 1996 and has thrived under a non-profit company that he said has been “extremely successful.”
Canada is the first in a line of countries that have shown the benefits of privatization, said Edwards, adding that the shift toward privatization of transportation is not a party-line battle.
“This shouldn’t be an ideological, conservative or liberal, thing,” he said. “Other advanced nations have privatized their transportation and infrastructure services under both liberal and conservative governments. It has to be done.”
“This would be a way to take all the stuff out of the federal budget and save taxpayer money and operate more efficiently,” he said. “I see it as a win-win all the way around.”
The $6 billion left over after the $85 billion in cuts at the DOT, under the proposal, would be used for highway and aviation safety regulation agencies and other “regulatory functions,” Edwards said.
Even with the $85 billion in proposed cuts, Edwards said taxpayers would not see a drop in taxes because of the size of the federal deficit.
“We have a trillion dollar deficit,” he said. “The tax issue is a different issue. If we don’t cut spending, taxes will for sure be higher in the future. The massive deficit is exploding and this is a way of cutting spending and working on that deficit.”
The Cato Institute, a non-profit libertarian think tank, is preparing nine more proposals to downsize government, including analyses of budget cuts for Departments of Justice, Treasury and Defense.