Quite a bit, actually.
I have seen this question posed by people on both sides of the aisle since the Governor’s transportation plan was released and began its way through the General Assembly. The question is usually a rhetorical one – the kind Democrats ask with a wry tone of voice that is, in effect, a thinly veiled charge of hypocrisy. And when Republicans ask, it tends to be in an exasperated tone of voice slightly tinged with the flavor of betrayal. I can understand why the Democrats ask the question; these Democrats are the same folks who try and dumb down the Republican message of fiscal discipline into “no taxes ever” and who think our concern with deficits and public debt means we are psychological incapable of embracing any policy that involves borrowing. It’s harder for me to explain why Republicans ask it, but I try to give them the benefit of the doubt that it’s a sincere concern and not simply politics.
But regardless of the motivation for asking the question, the answer is simple: the Governor’s plan is fiscally conservative for a number of reasons, including the fact that this the good kind of public debt, we can service the debt with existing revenues, and we’re doing it without a tax increase. Taken as a whole, those reasons make it fiscally conservative. And what makes the plan the right thing to do is simple – we are finally moving the ball forward on rebuilding our transportation infrastructure.
I was critical of the Northern Virginia delegates who voted against the Governor’s plan in the House last week. I have listened closely to their rationales and their reasonings, and I am still critical of them. Some gave rational, reasoned responses. I can respect those responses even if I disagree. Others gave what sounded to me like thinly veiled excuses and inverse-John-Kerry-style “I voted against it before I’m going to vote for it” answers. Those I can’t respect, because they smack of politics. And transportation is too important an issue for Northern Virginians for our elected officials to use it to play the same old political games.
I expect that kind of behavior from our opponents on the left. But what frustrates me the most is when I see Republicans – including some who call themselves fiscal conservatives – criticizing the Governor’s plan simply because it requires us to borrow money. A fellow blogger wrote today on Facebook “So taking out a loan to pay down future debts is “conservarive”?? What family takes out a loan to pay off their credit cards? That’s personal budgeting 101. Taking out loans to pay off credit debt is a really bad idea and kills your bond ratings.”
That’s just a bad argument and it dumbs down the policy here to an absurd level.
There is a huge difference between taking out a loan to pay off credit card debt – a situation much akin to robbing Peter to pay Paul – and financing major investment in improving our transportation infrastructure. The two scenarios are completely different and should be treated that way. It’s one thing to borrow money to pay off an existing debt – there you are simply moving numbers around on a page. Borrowing money to build things represents an investment for the future. These bonds will be used to create permanent structures that have value and the potential to pay for themselves in the long run. Building a new road or widening an existing road has an economic impact that is exponentially larger than the cost to build the road in the first place. And the economic impact of a road project cascades out from the actual project itself – for every construction worker on the road, you’ve got someone who made the concrete he’s pouring, someone who drove it to the site, someone who made the truck that drove it to the site, and so on. It’s hard to pin a number on the impact these projects have, but the end result is clear – we will get far more than $4 billion worth of economic activity and economic benefit for spending this money. That’s a far different situation than when a family spends $30 on the credit card for Ledo Pizza. That pizza isn’t going to pay for itself in the long run, unless the family is in the sewage treatment business.
Even using these bonds for maintenance – what my friend characterized as borrowing money to change the light bulb – is still a good investment. Roads need to be repaired, just like buildings, cars, and anything else out there. A car that is in good condition runs better and is worth more – the same is true of roads. The better maintained, the more efficient and the more reliable the road is – and greater efficiency and reliability equals a more solid investment and a greater return on that investment. Nobody buys a house and then fails to maintain it – at least nobody I would call responsible. We can’t build roads and bridges and fail to maintain them, even if it means we borrow the money to do it. The enhanced value of the asset in good working condition makes up for that cost. It just doesn’t make a lot of sense to separate out maintenance from new construction.
Fundamentally, we all have to recognize that there is good debt and there is bad debt. Being fiscally conservative doesn’t mean never borrowing. It means you want good debt over bad debt. A good fiscal conservative recognizes that it’s better to buy a house than to rent one. Yes, you’ll take on a lot of debt to pay for the house, but that’s good debt – it’s a physical investment and it’s likely to increase in value as time goes on. And the amount of money you actually pay will be reduced by inflation over time, meaning the real cost of the debt is far less than it could have been had you waited and saved to pay cash. We have the benefit of some of the lowest interest rates on bonds in a long, long time meaning that the amount we have to borrow and repay right now is significantly less than the cost in real dollars if we were to wait just a few years and pay in cash up front. Borrowing $4 billion now could be get you the same benefit as spending $6 or 8 billion out of pocket in a few years. And you don’t get the added benefits of the improvements for far longer.
Think about it this way – is it better to buy a house and incur the debt it takes to finance it now, or save your money and in twenty years buy the house free and clear? I don’t think anybody is going to suggest that the latter option is better than the former. And I don’t think it’s the fiscally conservative thing to do either.
Throw in the fact that the Governor’s plan allows us to spend more on transportation than we have in years without raising taxes right now, in the middle of a slowly recovering economy, and you’ve got a solid, fiscally conservative proposal to fix some of our transportation problems.
Does the Governor’s plan fix them all? No. Does it solve the problem of a long term dedicated funding source for transportation that the Democrats love to complain about? No. Does it have to? No. First things first – address the critical problem while we work to solve the longer-term one.
The Governor’s plan – whether it’s the House version or the Senate version – is a necessary first step in getting us to where we need to be when it comes to transportation and that’s why many of us were upset to see so many Northern Virginia elected officials vote against it. I respect those who have defended their votes in a rational way, but it is clear to me that voters in Northern Virginia can tell the difference between political maneuvering and a legitimate, principled stand. And even those who took a principled stand need to recognize that there are a lot of voters out there who will have a hard time accepting that their elected officials voted against transportation, regardless of the reason. That’s why the robocalls RPV sent into a variety of districts, including my own, have been so effective.
Governor McDonnell’s plan is a good one. It isn’t the best, but when it comes to legislation, we should never let perfect become the enemy of good enough. This bill is good enough for me, it’s fiscally conservative, and it finally moves the ball forward. I hope the General Assembly recognizes that and we can get the bill through by the end of session.
