1. The climate crisis and the American road

At the center of the massive Infrastructure Investment and Jobs Act of November 2021 (IIJA) was the reauthorization of programs established 30 years before in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA).Footnote ¹ Widely regarded as an island of bi-partisan accord in a roiling partisan sea, these programs, which encompass the nation’s highways and transit systems, also survived the faltering of their longstanding revenue base in the federal excise tax on gasoline. Though shortfalls first emerged in the early 2000s, Congress has continued to fill the gap with general funds. The IIJA actually pre-paid the deficit, estimated at some twenty percent of total outlays.Footnote ² There are clear signs, however, that bipartisan accord on the issue is wearing thin. Progressives held the 2021 bill hostage for months in an effort to pass a companion bill, deliberately appropriating the label “infrastructure” for programs that had suffered decades of spending cuts, including childcare, affordable housing, and public health. They relented only after a weak showing by Democrats in the off-year elections of November 2021. Republicans, who secured a narrow majority in the elections 2022 and 2024, are already gearing up for a re-debate when current authorizations run out in 2026, with many expected to reprise a dominant theme of the 1970s: that spending on anything other than highways constitutes a “raid” on the Highway Trust Fund.Footnote ³

As this paper will argue, the primary reason for the unusual success of this policy realm over the past 30 years is the collective authority of the agencies that built the American highway system: a vast network of almost four million miles of roads, all retrofitted for motor vehicles. These agencies, the state-level departments of transportation, have distinguished themselves for the past 100 years by their capacity to resolve their own often significant conflicts first; a capacity that has enabled them to advance their collective policy recommendations in Congress as both the advice of experts and the will of the states.Footnote ⁴ This extra-constitutional capacity helps explain not just remarkable achievements of American highway policy—two continent spanning highway systems—but their equally remarkable social and economic costs, including the razing of large swaths of America’s cities and rising dependence on foreign oil. As the paper will also explain, the intersection of the looming fiscal crisis with the climate crisis creates an opportunity for these agencies to collectively reshape American transportation policy once again, with impacts well beyond this policy realm.

In order to make this case, however, I must first confirm that this extra-constitutional capacity exists. Though state highway departments are often cited in historical accounts of American transportation policy, their role is generally missed in favor of other factors, including the technological and cultural force of the automobile, the lobbying power of the industry that produces them, the vote-getting strategies of politicians, and the many outsized personalities drawn to the issue over the past century.Footnote ⁵ It has also been missed by scholars of American political development due to its resemblance to two other types of institutions that draw authority from the capacity to organize across a divided political order: inter-governmental associations and policy subsystems, or the powerful “iron triangles” of federal agencies, congressional committees, and industry lobbyists that have emerged in other policy realms such as agriculture and national defense.Footnote ⁶ Highlighting this other layer of policy formation is doubly important, as I also explain, because most prognoses for federal transportation policy based on these other theories are fairly bleak.Footnote ⁷

The article begins, accordingly, with a brief review of American highway history from this perspective, showing where and how the extra-constitutional authority of state highway departments emerged, expanded, faltered, and recovered over the past century. The first two sections focus on their remarkable achievements and costs during the first half of the twentieth century.Footnote ⁸ The next two sections focus on the policy upheavals that followed the Oil Embargo of October 1973, including the rise of a powerful transit lobby and the logroll of 1982, which spared the program from the Reagan axe. This is followed by a closer look at the landmark reauthorization of 1991 that institutionalized that truce in a new national purpose of connecting that massive highway system to other transportation modes.

2. An extra-constitutional institution

The most common explanation for the massive extent of the American highway system is the remarkable utility of motorized vehicles. Able to cover as much as five times the distance of draft animals in a day, the automobile fueled the popular demand that fueled the rise of a massive industry that set off a massive building boom on the urban fringe, all of which amplified political pressure on politicians at all levels of the federal system to build more roads.Footnote ⁹ Largely missing from this account, however, is the role of the agencies that built the roads: the state highway departments. First established across the Northeast in the 1890s, these agencies not only preceded the automobile but created the highway systems that determined where they could go.

In 1914, a handful of state highway officials gathered in Washington, D.C. to intervene in a protracted debate between advocates of interstate roads, championed by the new motor vehicle industry, and advocates of rural “post roads,” championed by congressmen from the South and Midwest. The state highway departments resolved the debate in favor of the latter with an ingenious formula for allocating federal aid among the states: though heavily weighted toward rural and land grant states, it retained the traditional apportionment factor of population, effectively providing an apportionment cushion for state highway departments in more urbanized states based on a population they did not have to serve (the other condition was a provision that limited federal aid to rural roads).The final bill, approved in June 1916, also conditioned the new federal grants on the creation of a state agency with the requisite technical expertise to take on the job, effectively putting themselves in charge.Footnote ¹⁰ Three additional conditions, however, shifted that project into high gear. The first was a new federal mandate approved in 1921 to hook up their emerging state highways systems at the state line. That purpose persuaded Congress not just to expand federal aid but bypass their own budget rules: highway authorizations were designated as a formal “contract” with the states in 1922, bypassing the appropriations process. The response was the nation’s first highway system: a massive 200,000-mile map, formally approved in 1923, connecting all 3,000+ county capitals.Footnote ¹¹ The second condition was the advent of state excise taxes on gasoline. First introduced by Western states in order to match the step-up in federal aid, the gas tax was a revenue source that effectively grew with each new mile built.Footnote ¹² It is no surprise in this regard that the state highway departments were able to grade and gravel all 200,000 miles of the new system by 1929, just before the stock market crash shifted the larger economic forces they had harnessed into reverse. The third condition was the economic collapse. It is no surprise that both Presidents Hoover and Roosevelt chose that massive unfinished project as their front-line defense against the Great Depression. In April 1930, Hoover not only doubled authorizations for the highway program but extended a loan to the states to cover their matching share. Highways were also the only earmark in Roosevelt’s massive National Industrial Recovery Act of June 1933, which launched the New Deal.Footnote ¹³

The central argument of this article is that the agencies that built the nation’s first highway system also created a powerful institution in the American political system able to advance their collective policy aims as both the advice of experts and the will of the states. In contrast to other associations that emerged in response to the advent of a new administrative state, members of the new American Association of State Highway Officials (AASHO) were representatives of co-equal sovereigns in a policy realm historically dominated by the states.Footnote ¹⁴ Delegated authority from two levels of the federal system situated them, in turn, at the center of an expanding constellation of private industries, from building contractors, to equipment suppliers, to firms producing sand, gravel, asphalt, and cement—each with its own national lobby able to bring additional influence to bear on the policy process. In the 1926 reauthorization debate, the motor vehicle industry (by now, the largest in the land) dropped their opposition to the rural-focused highway program and joined the entourage.Footnote ¹⁵

That same extra-constitutional authority, however, was also the source of distinctive excesses. The fact that they were not elected officials or legislators, but bureaucrats meant that their policy recommendations were the product of bureaucrats negotiating with bureaucrats. Highway officials notably defined themselves in opposition to the excesses of politicians in this regard, that is, as engineers committed to applying scientific reasoning to solve policy problems that politicians could not. The cost, however, was a tendency to rationalize their own political compromises in scientific terms.Footnote ¹⁶ The capacity to invoke the will of the states also required a high threshold of consensus for any substantive policy change, ensuring that most of their policy recommendations were rigid one-size-fits-all prescriptions that were unusually hard to change.

The best indicator of these extra-constitutional constraints was the failure to address a major functional problem with their new highway system: rising traffic congestion where the new roads left off. Construction protocols as noted above emphasized geographical reach over capacity; traffic counts emphasized farm goods on the way to market, not people on their way to work.Footnote ¹⁷ When the cities demanded a share of the state gas tax to address the problem, highway departments invoked their federal mandate to complete the national system; when the new urban majority in Congress lifted the urban exclusion in 1933, most state highway departments met that obligation by extending their roads through small towns, still technically defined as “urban” at the time. Their primary achievement during the New Deal, indeed, was a formal “secondary” highway program for rural roads only approved by Congress in 1936.Footnote ¹⁸ The rising traffic congestion in the cities, however, was also the inspiration for a new kind of road.

In February 1938, President Roosevelt proposed a national system of superhighways funded by tolls, drawing on the simple insight that motorists would pay to bypass the traffic jams. That plan, which became the centerpiece of his 1939 bill for a Federal Loan Authority designed to provide low-interest loans for “self-liquidating projects,” was challenged by a report authored by the federal Bureau of Public Roads (BPR), the small agency in the U.S. Department of Agriculture charged with overseeing the federal highway program.Footnote ¹⁹ The primary argument of the BPR report—that tolls would increase traffic congestion by encouraging motorists to divert to adjacent free roads—played a major role in the narrow defeat of Roosevelt’s Loan Authority bill; Southern Democrats, in particular, used it as evidence of the general hazards of debt.Footnote ²⁰ It is best known, however, for proposing a freeway system twice as large, the first blueprint of the Interstate highway system that was later built.

That report, aptly named Toll Roads and Free Roads, is widely attributed to longstanding BPR Chief, Thomas MacDonald, whose achievements spanning a 40-year career fit the description of a classic “bureaucratic entrepreneur,” or an agent endowed with both the technical expertise and political savvy to navigate a fragmented political system. As a state highway official from Iowa, however, MacDonald was also a founding member of AASHO selected by his fellow state highway engineers in 1918 to be their chief advocate in Washington, D.C., a role he self-consciously assumed in all of his public appearances and reports.Footnote ²¹ The freeway plan is a striking example of that situated agency: extending the big roads directly into the cities would not just cure the functional problems created by a generation of overbuilding rural roads but attract new traffic, potentially transforming the entire highway system into a self-funding public utility, with costs defrayed through the existing state excise taxes on gasoline.Footnote ²² The big obstacle, however, was its enormous upfront cost.

Subsequent efforts to get Congress to fund those costs failed. His proposal to attach it to the defense build-up as a new “strategic network” so incensed Roosevelt that he cancelled the entire highway program for the duration of the war. His plan to prioritize it in a new program of public works for after the war collapsed in a fierce new debate among state highway officials, who were unable to agree on any change to the original parameters of 1916.Footnote ²³ That conflict, which played out in the full public glare in a series of hearings during the 1943–44 legislative session, spilled back into Congress, which debated for another eight months before passing its own truncated highway bill.Footnote ²⁴ Though the final bill, signed by Roosevelt in January 1945, approved the freeway plan in principle, it not only failed to fund the system but divided the regular highway program into three separate programs, each with its own conditions and formulas, effectively reclaiming the authority that Congress had delegated to the state highway departments 30 years before.Footnote ²⁵

3. The interstates

It is a great irony that the largest category of public works during the New Deal declined after the war, even as the traffic congestion it helped to produce surged to new heights. Persistent discord among state highway departments persuaded Congress to cancel an entire year of the already truncated highway authorization in 1948. President Truman not only failed to lift the embargo on construction materials for a full year after the end of the war but reinstated it in 1950 as the conflict in Korea took hold—effectively agreeing with his predecessor that highways were not necessary for the national defense. That same post-war traffic surge, however, also inspired a wave of toll road construction, as states beginning in the Northeast and spreading West chose to pick up where Roosevelt left off. Bond issues for toll roads exceeded federal highway aid in 1953. More importantly, the “toll road epidemic” persuaded President Eisenhower that he could build the entire Interstate system by pledging the federal gas tax to the job.Footnote ²⁶ That plan, developed by a special advisory committee headed by Lucius Clay, Eisenhower's supply general during the war, also invoked a new national threat to overcome opposition to the costly urban portions at the heart of the dispute among the states: the big roads could double as evacuation routes in the event of a nuclear war. That purpose also justified a federal share of ninety percent, sparing the states from the need to increase their own matching funds.Footnote ²⁷

The final bill, signed by Eisenhower in June 1956, is rightly celebrated as a great national achievement: it committed the federal government to the expedited construction of 41,000 miles of high speed, limited access superhighways connecting all the major cities and stretching across all forty-eight states. It also resurrected the powerful confederation of state highway departments that built the first highway system noted above. Though Congress would pay most of the cost, there was no question that the states would build and own the roads. It also shifted all of the existing highway programs to the federal gas tax as well.Footnote ²⁸ The prospect of a huge increase in their authority and resources persuaded these agencies, in turn, not just to set aside their differences but map out the final 2000 miles in urban areas, an initiative that also significantly increased the cost. New estimates submitted to Congress in January 1958 were forty percent greater than the original cost estimates of 1955, precipitating the system’s first fiscal crisis.Footnote ²⁹ It also set them on a collision course with the cities.

Even before the 1956 Act was signed, city planners called for a moratorium on the urban portions of the Interstate system until more coordinated procedures could be worked out, noting that some seventy percent required new rights-of-way. Emphasizing the accelerated construction schedule, however, highway official managed to persuade Congress not just to exclude city planners from a formal role in the location and design of the big roads but include recourse to federal eminent domain in case they got in the way.Footnote ³⁰ In the run up to the 1960 election, big city mayors reassembled their own powerful national lobby to demand relief for people and businesses in the way, securing the first federal aid for transit and relocation assistance in 1961. That same legislation, however, also made a temporary surcharge on the gas tax permanent, enabling highway authorizations to surpass $2 billion that year ($23 billion in today’s dollars).Footnote ³¹ The most poignant indicator of the resurrected authority of state highway departments, however, was the new planning requirement approved by Congress in 1962. This, notably, was not a formal plan but a continuous planning process involving all local governments in a metropolitan area, effectively giving equal voice to areas outside the cities where the impact of Interstate construction was much less acute. Administered by a new inter-governmental entity, the Metropolitan Planning Organizations (MPOs), it also gave the state highway departments control of the funds, a large share of which were allocated to the calibration and feeding of traffic flow models running on large new mainframe computers, effectively reducing their conflict with city planners to a technical dispute.Footnote ³²

Lack of formal recourse, of course, did not prevent opponents from pouring into the streets. Interstate construction was especially egregious in the South where the new corridors deliberately cut through African American neighborhoods; the rising monoliths were also a visible symbol of an unaccountable government prosecuting an undeclared war in Vietnam.Footnote ³³ It was the decision by one of those big cities to heed the protesters rather than the highway engineers, however, that finally pulled Congress back in. In a cliffhanger vote on March 21, 1966, the San Francisco Board of Supervisors rejected both of the city’s Interstate routes, along with $200 million in federal aid, the equivalent of over $1 billion in today’s dollars.Footnote ³⁴ That event persuaded congressmen from around the country, fearing that their districts could be next, to back significant revisions to federal highway policy that year. The reauthorization of September 1966 gave federal agencies a veto over any plan that did not consider “all feasible and prudent alternatives” to the disruption of parkland and historic sites;” the bill creating a new consolidated Department of Transportation the following month required an environmental review for all highway projects funded by federal aid. It also put a new layer of federal administrators over their heads, who began to hold up approvals for Interstate routes already approved by the states.Footnote ³⁵ The highway departments, however, also regrouped.

At a special hearing called by the House Public Works Committee in June 1967, state highway departments used the rising delays in urban areas to call for a 15-year extension of the Highway Trust Fund (HTF), the mechanism created by the 1956 Act to secure the federal gas tax for the highway program. Though initially off to a shaky start, by the late 1960s dedicated revenues in the HTF were over twice the original projections of 1955. Revenues were so great, indeed, that the Johnson Administration impounded several billion dollars as an anti-inflation measure in 1968, setting off a multi-year legal fight by the state highway departments to defend their claim.Footnote ³⁶ The bigger concern, however, was the impending sunset of the HTF scheduled for 1972, the original date for completion of the Interstates. Though giving the rising delays it was reasonable to assume that the fund would be extended, the prospect also raised fears of renewed political disputes over formulas and matching shares as Interstate construction wound down. The rising cost and delays in urban areas provided a perfect excuse in both respects not just to extend the Highway Trust Fund, invoking Congress’ commitment to complete the system, but to advance a new post-Interstate plan designed to address the problems that had emerged.Footnote ³⁷

In another indicator of their resurrected clout, Congress not only gave the highway departments an enthusiastic go-ahead to develop the new post-Interstate plan but extended the time to complete it as new threats emerged.Footnote ³⁸ Those threats included not just a further escalation of the freeway revolts but the prospect of extensive environmental reviews under the new National Environmental Policy Act (NEPA), passed by Congress in December 1969. The March 1970 petition by the bankrupt Penn Central Corporation to abandon all of its passenger rail lines was widely blamed on the huge federal investment in roads; the Clean Air Act, approved on December 31, 1970 authorized the new Environmental Protection Agency (EPA) to regulate emissions from motor vehicles, potentially undercutting that revenue source.Footnote ³⁹ The biggest threat, however, was a plan announced by President Nixon in his State of the Union Address of January 1971 to consolidate all federal transportation aid in urban areas—highways included—into a single block grant, directly administered by local governments, not the states. That proposal set off a fierce debate in Congress that lasted the better part of the next two years, distilled in the popular press as a contest between a powerful “road gang” of motor vehicle manufacturers, truckers, and road contractors against a growing array of freeway opponents, civil rights activists, and environmentalists.Footnote ⁴⁰

Prospects initially favored the Nixon plan. Although Congress delayed its own debate until the highway departments had completed their post Interstate plan, administration officials did not hesitate to conform the data pouring in from the states to the Nixon bill, introduced as the “Federal Highways and Mass Transportation Act” in May 1972. That data, however, was also a formidable display of the technical capacity of the state highway departments, honed over 50 years: it not only re-classified all 3.5 million-plus miles of the nation’s roads into new functional categories but included a broad array of measures designed to promote highway solutions to the problems that had emerged, including enhanced traffic signaling, high occupancy vehicle lanes, expanded access roads, and the designation of “economic growth center highways” for areas outside the cities where the primary solution to traffic congestion was de-concentration. Equally impressive, it projected 20-year funding needs of almost $600 billion ($4.4 trillion in 2023 dollars)—over twice the original estimate of 1955 in real terms—sending a strong message to Congress that there was no room in the Highway Trust Fund for anything but highways.Footnote ⁴¹

Though final debates were also fierce, the final highway bill passed by Congress in August 1973 not only dropped the Nixon plan entirely but incorporated all of the aims that the state highway departments had set out to achieve five years before, all of which would be funded by a sharp reduction in authorizations for the Interstates, which the legislation confirmed were in the “final stage of completion.”Footnote ⁴² The one exception—a provision allowing cities to substitute their Interstate routes for an equal amount of funds for other transportation projects—also proved the rule: all of the new “trade ins” would be funded by general revenues, not the Highway Trust Fund.Footnote ⁴³ Most remarkable, however, was the timing Two months after Nixon signed the Federal Highway Act of 1973 the Organization of Arab Petroleum Exporting Countries quadrupled the price of crude oil.

4. The energy crisis

As the Oil Embargo of October 1973 forcefully revealed, 60 years of retrofitting the nation’s public roads for motor vehicles had exposed the entire economy to the political volatility of the Middle East, home of the largest share of the world’s crude oil reserves. The new grip of the highway departments on the gas tax ratified by Congress two months before, however, effectively eliminated a powerful tool for addressing the crisis. Nixon quickly backed off the hefty surcharge on the gas tax he proposed in November 1973 to conserve use, famously opting for onerous regulations instead, including a 55 mile-per-hour speed limit on roads designed for 70 miles-per-hour. President Ford also opted for regulations, imposing the first fuel efficiency standards for new motor vehicles in 1975.Footnote ⁴⁴ In the reauthorization debates of 1976, state highway departments persuaded Congress to extend the deadline for completion of the Interstates by another 15 years by emphasizing the additional costs and delays imposed by the new environmental reviews.Footnote ⁴⁵ It was another response to the Energy Crisis, however, that finally began to challenge their grip: the rise of a powerful transit lobby.

The first major casualty of the 1956 Act were the commuter rail lines operated by the nation’s freight railroads. Anticipating a major drop-off in passengers from the huge new corridors being cleared for cars, they petitioned the Interstate Commerce Commission (ICC) for permission to abandon these lines, which was granted by Congress as part of a general relief package for the railroads in 1958. This, not surprisingly, galvanized the nation’s big city mayors, who reassembled their own formidable lobby in the general election of 1960 to demand relief, emphasizing the threat to their downtown business districts. President Kennedy, who owed his own narrow victory to the urban vote, responded with the first federal transit aid in 1961, which was expanded into a formal program by the Johnson Administration in 1964.Footnote ⁴⁶ These initiatives, combined with the popular reaction to the Interstates noted above—freeway revolts, civil rights protests, environmental activism—produced not just a major increase in federal aid in 1970, from $125 million to over $800 million per year, but the consolidation of large public transit authorities with resources approaching the state highway departments in metropolitan areas. The other result, not surprisingly, was the rise of a formidable lobby in Washington, D.C. bent on securing those funds.Footnote ⁴⁷

As noted above, the new national transit lobby had a major influence on President Nixon, whose central proposal in the 1971–73 debates was to transform the gas tax into a general transportation tax in urban areas, cross-subsidizing other modes.Footnote ⁴⁸ The energy crisis also significantly expanded the purpose of federal aid from the rehabilitation of transit to energy conservation. The reauthorization of 1974 not only doubled the already sizeable increase in capital grants for transit approved in 1970 but provided the first operating assistance expressly designed to make transit more competitive with the automobile.Footnote ⁴⁹ That same legislation, however, also enabled the state highway departments to advance their own solution to the urban problem ratified by Congress the year before: “highway-oriented mass transportation.” The new operating assistance, in particular, enabled scores of smaller cities to establish new bus systems, all of which would be operated on the new urban highway systems authorized by the 1973 Act. (Highway officials celebrated that achievement by rechristening their national association, the American Association of State Highway and Transportation Officials (AASHTO) the same year). The following year, they extended their claim to the new transit aid by calling for a formal merger between the federal highway and transit programs, a proposal widely viewed by the transit lobby not as a merger but a reverse raid.Footnote ⁵⁰

The rivalry between highways and transit emerged full blown in the debate over President Carter’s proposal for a modest 5-cent increase in the gas tax. That proposal, introduced in April 1977 as part of his comprehensive energy plan, was quickly challenged by state highway officials, who descended on Capitol Hill the following month to assert their prior claim. This prompted transit supporters to negotiate a separate deal with the Carter Administration for a 50–50 split of the increase, arguing that transit unlike highways would advance the President’s conservation goals.Footnote ⁵¹ Though highway officials managed to hold the line again—the gas tax increase was defeated by large majorities in early August—the cost was a significant erosion of political support for the highway program. Congress not only rejected a second merger plan but ignored their calls for fiscal relief over the next four years, even as inflation cut the purchasing power of the Highway Trust Fund in half.Footnote ⁵²

The larger context of the sharp new rivalry between transit and highways was a debate over federal controls on the price of domestic oil. First imposed by President Nixon in 1971 as an anti-inflation measure, controls kept the price of domestically produced oil some forty percent below the international price as the energy crisis ensued. Though a significant cushion for consumers, it also precipitated a fierce reaction from domestic oil producers, who argued that controls prevented them from developing new domestic sources. This, according to historian Meg Jacobs, was the source of an anti-tax, anti-regulation, libertarian critique of government in general that culminated with the election of Ronald Reagan in 1980.Footnote ⁵³ The more immediate problem for Carter, however, was that it split the Democrats. Demands for deregulation by congressmen from the South and West were met by equally fierce charges of price gouging by congressmen from the urbanized Northeast. Failure to agree on even a small increase in the gas tax for conservation in this context set the tone for the rest of Carter’s ambitious energy agenda. Debates persisted well into the following year with only meager results—leaving the country almost as unprepared for the next oil crisis as it was for the first.Footnote ⁵⁴

That second oil crisis, which began with a strike by Iranian oil workers in November 1978, ushered in a calamitous year not just for Carter’s presidency but the country as a whole. The new surge in oil prices precipitated an even greater surge of inflation, which was followed by declining economic growth, the Iranian Hostage Crisis, and a Soviet invasion of Afghanistan. These calamities notwithstanding, Carter did manage to resolve the price control debate. He approved a phased deregulation of domestic oil prices in April 1979 and a “windfall” tax on the resulting increase in oil industry profits the following year, which was followed by a major supplemental for transit funded by that windfall tax approved by large majorities in both houses of Congress.Footnote ⁵⁵ These achievements, however, were not sufficient to save his reelection bid. The transit supplemental succumbed to a filibuster during the lame duck session of December 1980 orchestrated by supporters of the President elect.

5. Truce

In sharp contrast with his predecessors, Ronald Reagan was motivated by the simple conviction that “government is the problem.”Footnote ⁵⁶ He managed extraordinary legislative gains during his first year in office under that banner, including a huge tax cut, across-the-board budget cuts, and the consolidation of scores of federal programs into new block grants. In his State of the Union Address of January 1982, he went after the rest of the federal budget, proposing to devolve all grant-in-aid programs—highways included—back to the states.Footnote ⁵⁷ What saved the highway program from that fate was a big log roll orchestrated by Democratic leaders in the House, recovering their voice after a bruising year. Two things, more specifically, combined to set that compromise in motion. The first was the exception Reagan had made for the Interstates. Like Ford’s similar proposal of seven years before, this was a non-starter for the simple reason that it would send the lion’s share of the remaining highway funds to the Northeast, home of the longest Interstate delays. When Senate Republicans tried to advance a regular highway bill instead, however, they were blocked by House Democrats who insisted on another joint reauthorization bill, effectively conditioning any rescue of highways on a rescue of transit.Footnote ⁵⁸ The second condition was the resurrection of Carter’s plan for a five-cent increase in the gas tax. Initially advanced by Reagan officials as a means of honoring his pledge to complete the Interstates, it emerged from negotiations with Congress as an increase for the highway program as a whole with a penny for transit, a proposal that galvanized stakeholders on both sides of the aisle. The result was an all-out campaign to highlight the nation’s crumbling infrastructure, road and rail alike.Footnote ⁵⁹ Two other conditions, however, combined to push the bill over the top: a sharp recession, which began in the second quarter of 1981; and big gains for the Democrats in the midterm elections of 1982 (though Republicans held onto the Senate, they lost twenty-seven seats in the House, increasing the Democratic majority to sixty-two percent). In a rare display of ideological backsliding, Reagan personally faced down a new filibuster in the final debates. In his signing statement of January 6, 1983, he assumed the mantle of his historical rival, Franklin Roosevelt, boasting that the large new investment in public works would get the economy moving again.Footnote ⁶⁰

The timing this time was almost as remarkable as the 1973 reauthorization above. The Surface Transportation Assistance Act of 1982 not only rescued highways and transit from the fate of other federal programs during the Reagan years but positioned them for a new economic boom, which took off just after the bill was signed.Footnote ⁶¹ The return of oil prices to their pre-crisis lows in real terms produced not just a strong increase in motor vehicle traffic but a surge of pork barrel politics, as members of Congress realized that the new revenues pouring into the Highway Trust Fund were exempt from the new budget procedures inaugurated by Reagan’s other signature achievement: the Gramm Rudman Hollings Balanced Budget Act of 1985. In the 1986–87 reauthorization debate Congress inserted scores of demonstration projects (also known as “earmarks”) into the bill and then overrode a presidential veto to secure them. In 1990 Congress voted to increase the federal gas tax again rather than subject the rest of the federal budget to new sequestration cuts.Footnote ⁶² Not surprisingly, that new revenue surge also inspired state highway departments to launch a second post-Interstate plan.

Formally introduced in October 1989, the new AASHTO plan called for a new collaborative mapping exercise designed to identify which of the original pre-Interstate highways should be upgraded to Interstate status. When complete, the new “national highway system” (NHS) would add another 120,000 miles of high speed, limited access highways to the 42,500-mile Interstate system already in place. Incorporated into the Bush Administration’s bill of February 1991 the AASHTO plan also called for consolidating urban and rural programs into block grants with a lower federal matching share.Footnote ⁶³ Before the debate could begin, however, transit advocates also regrouped. Their plan, outlined in a May 1991 report, “Acting in the National Interest,” effectively resurrected Nixon’s block grant proposal of 20 years before: it called for delegating all authority to program federal aid in urban areas to the Metropolitan Planning Organizations (MPOs), the agencies created in 1962 to implement the first federal planning mandate noted above.Footnote ⁶⁴ Though initially little more than a rubber stamp for the highway departments, the MPOs’ authority expanded through the 1970s, bolstered by new federal mandates to improve inter-governmental coordination.Footnote ⁶⁵ Most importantly, they were grandfathered in the 1982 logroll, thus escaping the fate of other urban programs during the Reagan years, making them a good vehicle for urban activists seeking to recover lost ground. Their cause was taken up, finally, by Senator Daniel P. Moynihan, a veteran of the Nixon Administration and longtime critic of the highway program, who incorporated it into the Senate’s reauthorization bill of 1991.Footnote ⁶⁶ Though the two bills were initially far apart, negotiators managed to find common ground in a new national purpose of connecting the nation’s massive highway systems to other transportation modes. The ISTEA was signed by President Bush on December 18, 1991.Footnote ⁶⁷

6. Reform

To briefly recap, this article has revisited the history of American highway policy from the perspective of the powerful institution at its core: a confederation of state highway departments whose capacity to resolve their own often significant differences was the primary condition behind both the remarkable achievements of American highway policy -- two continent spanning highway systems -- and their equally remarkable social and economic costs. It provides an especially good example in this regard of an institutional layer of social process and form in the American political system. As argued above, the rules and resources collectively secured by state highway departments in the early twentieth century were the primary source of self-reinforcing policy feedback and crisis tendencies that produced two distinctive cycles of institutional expansion and decline. As also explained, the second cycle, set off by Congress’ approval of a plan in 1956 designed to cure the problems created by the first highway system, precipitated the rise of a powerful opposition. Though lacking similar institutional capacity and reach, transit advocates successfully challenged the extra-constitutional authority of state highway departments in the 1970s, creating the conditions for both the logroll of 1982 and the institutionalization of that truce in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA).

The basic provisions of that landmark law have been reauthorized five times over the past 30 years, a record approaching the landmark Federal Highway Acts of 1921 and 1956.Footnote ⁶⁸ The primary explanation for that achievement is simply that new national purpose. In contrast with all federal transportation legislation back to the nineteenth century, the central purpose of ISTEA was to integrate separate transportation modes.Footnote ⁶⁹ The effect was not just the absence of the type of systemic excesses that plagued the highway systems of 1921 and 1956 but a greatly expanded stakeholder base. Reauthorization debates now draw not just the traditional “road gang” or transit lobby but city planners, bikers, pedestrian, and environmental activists whose funding is also at stake. In the first reauthorization of ISTEA in 1997, that expanded stakeholder base persuaded Congress to reassign all increases in the federal gas tax initially designated for deficit relief to the Highway Trust Fund, the equivalent of a sixty percent increase in federal aid.Footnote ⁷⁰ Equally important, the agencies emphasized in this account were also reformed in 1991. Though problems of representation and accountability persist, the simple fact that the old state highway departments were compelled to negotiate with local governments on basic funding and programming effectively transformed them into multi-modal departments of transportation for the first time, with a vested professional, political, and financial interest in all transportation modes within their states. This transformation has been especially important as I discuss below given the faltering of their century-old fiscal base in the excise tax on fossil fuels.Footnote ⁷¹

The Highway Trust Fund (HTF) registered its first shortfall in 2004 in the wake of a new surge in oil prices. Though quick action managed to defang provisions designed to insulate the General Fund from such shortfalls, it was clear by that time that the problem was deeper than renewed volatility in the oil markets. Two trends in particular had emerged by the early 2000s. The first was the rising efficiency of motorized vehicles. By the early 2000s average fuel economy had finally overcome the exception to the fuel economy standards secured by Reagan for “light trucks,” a category that encompassed the fast-rising market for sport utility vehicles and passenger vans.Footnote ⁷² The second was a slowdown in traffic growth. By the early 2000s, the most closely watched indicator, vehicle-miles-traveled (VMT), was growing at half the rate of the volatile 1970s, indicating a slowdown in the larger economic forces associated with highway development in the past.Footnote ⁷³ Shortfalls resumed, not surprisingly, during the Financial Crisis of 2008–09 and have continued ever since.

A large share of the blame for the current fiscal crisis has been the failure of Congress to increase the federal gas tax rate. Though faltering, revenues are still a formidable $40 billion per year, suggesting that even a modest increase could have filled the gap as shortfalls emerged.Footnote ⁷⁴ The most common explanation—fear of motorists’ wrath—misses not just the relative invisibility of the gas tax (currently about five percent of the retail price paid directly at the pump) but the sharp conflicts over allocation of that revenue source emphasized above.Footnote ⁷⁵ Two residual claims to the gas tax, more specifically, still have the capacity to roil the political debates. The first is the claim that it is a “user fee” whose proceeds are only properly dedicated to roads. That claim, which dates to the advent of state gas taxes in the 1920s and is still professed by many conservatives, is not just technically incorrect—the gas tax is an excise tax requiring additional statutory mechanisms to secure it for a specific use—but a flawed application of public finance theory: though the “user pays principle” still applies, the corresponding conception of “user benefit” has shifted sharply through the years in response to the widespread externalities associated with an exclusive focus on roads.Footnote ⁷⁶ The second residual is the claim by the more automobile-dependent states for a one-to-one return of all federal gas tax revenues collected in their states. That claim, which can be traced to the rising costs and delays on the urban interstates in the 1970s, is essentially no different from the claim by Northeast states in the 1910s for a one-to-one return of the new federal income tax collected in their states. Though the latter lost their case in 1926 when it was overturned by the Supreme Court, highway advocates managed to institutionalize their claim to the federal gas tax in the form of a minimum return in the 1982 Act along with formal “equity adjustments” if actual programming amounts fell short.Footnote ⁷⁷

It is a testament to the steady stream of expert testimony from state transportation officials, urging lawmakers to keep all of the post-Interstate programs intact and detailing the dire consequences if they do not, that Congress has consistently filled the rising gap in the Highway Trust Fund with General Funds. The two reauthorizations during the Obama years are especially notable in this regard given the sharp rightward turn of Congress after the midterm elections of 2010. Republican majorities in the House made an exception in both cases to their crusade against the federal deficit and agreed to large infusions from the General Fund. (Both parties had already agreed before then to a moratorium on earmarks, long regarded as the political glue holding the program together).Footnote ⁷⁸ As noted above, President Biden drew on that longstanding bi-partisan accord for his signature legislative achievement: the Bipartisan Infrastructure Act of 2021.

It is also clear, however, that the next reauthorization will be a much heavier lift. According to the Congressional Budget Office, the combination of pandemic lockdowns, rising inflation, and an accelerated shift to remote work has increased the projected deficit in the Highway Trust Fund to fifty percent of outlays when current authorizations run out in 2026, up from twenty percent in 2021. This would require an additional $40 billion per year just to keep the program whole.Footnote ⁷⁹ Equally significant, the federal deficit also took a pandemic leap, pushing the federal debt above Gross Domestic Product (GDP) for the first time since World War II. Given the fact that Republicans managed to retake the Senate and hold onto their narrow majority in the House in the general elections of November 2024, the opening salvo in the reauthorization debate in the 119th Congress will most likely be a push to off-load transit, still widely perceived by conservatives as an illegitimate use of the gas tax.Footnote ⁸⁰ That, however, would still leave a sizeable deficit in the trust fund, leaving the even less palatable options of increasing the gas tax rate or devolving highway programs back to the states. Given the fact that Republican-controlled states are significantly more dependent on federal highway aid than their Democratic counterparts, the latter could threaten a revolt by Republican governors.Footnote ⁸¹ Without a broader remedy for the fiscal crisis, in short, the most likely scenario for the new Congress is a new round of hairsplitting debates over a declining revenue source.

In the final two sections, I return to the insight that launched this investigation of a potent intersection between the fiscal crisis and the climate crisis. I make the case, more specifically, that the transportation departments of the fifty states have both the incentive and the capacity to advance two proposals in the upcoming reauthorization debates: (1) to replace the excise tax on fossil fuels with a new system of mileage based fees using the same technology that has already revolutionized telecommunications; and (2) to develop a new capital plan designed to shore up all of the nation’s aging transportation infrastructure against the coming storms, road and rail alike.