The Department of Transportation (DOT) is a sprawling cabinet agency of $106 billion, a dozen departments, and 55,0000 employees. It should be a prime target for review by Elon Musk and Vivek Ramaswamy in their DOGE (Department of Government Efficiency) effort to deregulate the federal government, cut staff, and cut costs. In naming Sean Duffy to head the department, President-elect Trump said his nominee would help “fulfill our Mission of ushering in The Golden Age of Travel, focusing on Safety, Efficiency, and Innovation. Importantly, he will greatly elevate the Travel Experience for all Americans!” This is likely to include a pivot to automation, rescinding the two-man crew rule for freight rail (as done in the first Trump presidency), and renewing attention on privatizing or partially privatizing some of America’s transportation systems, already implemented in most developed nations.
Overview of DOT Departments: Highways, Airways, and the Secretary
The Federal Highway Administration (FHWA), with a budget of $52 billion, accounts for half of DOT’s budget and is charged with funding the nation’s highway system (construction, maintenance, repair) and to lesser degree safety programs and innovation technologies. Privatization of the nation’s road system is a no-brainer. A key benefit is better roads built by private companies rather than the federal government. Such roads are likely to have innovations like smart traffic management, dynamic pricing automated tolling, and user fees.Private roads are likely to have greater investment of private capital with a long-term view to maximize the infrastructure over decades with greater quality, maintenance, and upgrade. Private roads are also associated with a reduced tax burden and lower traffic congestion. This means that Americans can use the roads to get to their destination more safely and quickly.
Why have America’s highways not performed better? One explanation is uniform distribution of federal highway resources across states, leading to inefficiency. The FHWA and its regulated industries are interdependent and need each other to survive, a form of regulatory capture which includes road funding, regulatory fees, labor regulation, and so on. Privatization of the highway system would force providers to serve their customers, not the government.
The most important reason to privatize roads, however, is to reduce death and injury, a leading cause of death in the US and one that is largely preventable. The National Highway Traffic Safety Administration (NHTSA) noted 46,000 vehicle deaths on US roads in 2022 and 2.4 million crash injuries, an increase from recent years, even with holding constant the increase in vehicles and distance travelled. Related issues are speeding, driving while drunk and/or high, distracted driving, failure to use seat belts, and poor road conditions. Notably improving roads and driving conditions (improved safety instrumentation between the vehicle and infrastructure, and road analytics), reducing congestion, and meaningful enforcement of speed and driving requirements can alleviate this worrying trend. The NHTSA gets $1 billion to oversees efforts to improve road safety and reduce traffic fatalities, but clearly something is wrong when road death and injury are on the rise.
The next largest bucket at $18 billion and 17% of budget is the Federal Aviation Administration.A series of near collisions with take-offs and landings is a wake-up call. The first Trump administration made some progress on privatizing air traffic control, and Duffy should pick this up.Related priorities include mitigating the growing problems with aircraft manufacturer Boeing and improving market entry for drones, air taxis, and other innovations. The FAA itself must also be reformed to improve governance and accountability; FAA incompetence prevented the deployment of 5G around US airports, something unheard of in the rest of the world.
The various problem children of DOT include the Federal Transit Administration (FTA), at $16 billion, or 15 percent of the department’s budget. It oversees public transit, an entire concept which must be rebooted in the age of working from home. With $8 billion, the Transportation Security Administration (TSA), charged with airport security screening, is another agency which should be considered for partial privatization, as is done in other developed nations. The Office of the Secretary of Transportation (OST) spends $1 billion annually on overseeing the bureaucracy. Duffy can send a strong signal by slashing the budget of his own office. Importantly, the money to fund DOT comes largely from fuel and vehicle taxes as well as deficit spending.
Shifting to a privatized transportation model will reduce the burden and bureaucracy on Americans, improve safety, and incentivize innovation and investment.
The Bright Spot in American Transportation: Freight Rail
The one bright spot in America’s transportation picture is freight rail, an infrastructure which is privately funded and which declined federal Covid funds. Unsurprisingly, the US freight rail system is considered a world leader for the amount of goods transported the most distance with the best fuel efficiency. Freight rail is the only top-rated of America’s infrastructure by the American Association of Civil Engineers, which recognizes the networks for accomplishments in investment, innovation, and safety.
However, this competitive infrastructure system is regulated by the Federal Railroad Administration (FRA) to the tune of $3 billion annually, much of which goes to support Amtrak, which almost broke even in the first Trump administration but has since been perpetually $1 billion in arrears. The FRA is locus of the controversy of the two-person crew rule, which requires freight rail trains, which can otherwise be driven safely and autonomously, to include two human operators.
Another area of controversy is the 2023 East Palestine, OH, train derailment. Fortunately, no death resulted from the event, but the mishap speaks to the perversion of common carriage in the freight rail industry, forcing railroads to carry hazardous materials at below-market costs, in service to shippers, which have used regulatory agencies to gain advantages which would otherwise not be possible in the marketplace. Ending the common carriage rules for freight rail would put the proper price on shipping to protect community health and safety.
Relatedly, the freight industry has sued FRA to do its job, namely to approve requests to make safety improvements. The FRA is two years behind on multiple requests for permission to install safety inspection systems.
DOGE, Duffy, and the Trump administration can take inspiration with the following guidelines for DOT:
1. Real-world safety with a focus on results as measured by reduced death and injury.
2. Rational, transparent, and evidence-based regulation.
3. Modernized policy framework with incentives for market entry, private investment, and technological innovation.
