Matthew Kahn and David Levinson are proposing a change in the way the federal government finances our highway infrastructure.
They think that our current highway infrastructure is so bad that all the money in the Highway Trust Fund should go to maintaining what we have today. Currently, about 30% of the Highway Trust Fund (money from gas tax and tolls) goes to new construction. Not only should all the money go to existing infrastructure but 1% of the fund should go to improving the capabilities and performance of state highway departments.
New projects would be funded by a Federal Highway Bank, which, they hope, would be self-financing after being initially funded by the government. Also, they feel that this bank would have more rigorous standards in allocating funds. And to put money on the table the Bank would reward especially good projects with subsidized loans and bonuses for projects which exceed performance standards.
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