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CEI “Through the Looking Glass” Dinner

Remarks Prepared for Delivery by
U.S. Secretary of Transportation Elaine L. Chao
CEI “Through the Looking Glass” Dinner
Washington, D.C.
Wednesday, June 7, 2017

Thank you, Kim [Strassel, WSJ], for that introduction.  We are great fans of yours.  Thanks for championing conservative ideals and informing and inspiring us. Let me also recognize CEI President Kent Lassman, and Pierre Descrochers, the Julian Simon Memorial Award winner.

You couldn’t have chosen a better metaphor for this year’s event than “Alice through the Looking Glass.”  In Lewis Carroll’s immortal tale, Alice wonders what life is like on the other side of the mirror above the fireplace. She steps through to find everything familiar-- but also strange, new and illogical.   

Most of us came to Washington by road, train or airplane, not through a mirror or a rabbit hole.  But for so many, Washington is a kind of wonderland that is different from the real world outside the beltway. 

Just like Alice, a recurring problem in Washington is right sizing.  Alice tried shrinking herself; then she tried getting bigger. Both times, she ran into problems.  In Washington, all too often the default solution to every challenge has been to get bigger—to grow government.     

This Administration is taking a fresh approach.  It is looking for opportunities to right size the delivery of services in order to produce better results for you, the taxpayers.  Let me share three examples of how right sizing can yield major benefits.

This past Monday, the President announced a transformational initiative to reform our country’s air traffic control system.  The case for change is clear. Who among us has not been delayed?  By 2020, over one billion passengers will be flying every year.  Air freight is expected to more than double over the next three decades.

Without change, our current air traffic control system will be unable to keep up.  Today, many domestic flights actually take longer than they did decades ago because of congestion and indirect routing.  The cities haven’t moved.  The problem is the congestion and delays caused by an antiquated air traffic control system.   Air traffic controllers still use paper strips to keep track of incoming and outgoing flights and pilots rely upon a system based on 1960s technology.  And the delays are costing users more than $25 billion annually in operating costs and wasted time.

This Administration proposes to separate the operation of our country’s air traffic control system from the FAA.  Air Traffic control operations would be moved to a non-governmental, independent, non-profit cooperative. 

The FAA would retain its safety oversight functions and would remain at the U.S. Department of Transportation.  This would solve a long standing conflict of interest issue of an operating entity regulating itself.

The new air traffic control structure proposed by the President will:

  • Enhance safety  
  • Protect our national security
  • Ensure state-of-the-art air traffic control technology that is secure, robust and resilient;
  • Maintain access for all users of the airspace, especially those in rural communities, general aviation and the military;
  • Ensure financial self-sufficiency through user fees and independent access to the public capital markets.  Rights now, there’s over $5 billion in the Aviation Trust Fund that’s not being spent.
  • Be governed by a professional board of directors that includes all stakeholders, such as general aviation, airports, airlines, the public etc. and gives no one group a majority.  Their fiduciary responsibility will be to ensure the health, safety and efficiency of the air traffic control system.

But just because the cooperative is a non-profit, it doesn’t mean it won’t have surpluses. The good news is that 100 percent of the surplus would be reinvested back into the cooperative.

Despite the fact that in 2001 the Congress allowed the FAA to adopt its own procurement rules, the system has been unable to deliver new air traffic control technology in a timely and cost effective manner.  The new organization will be better able to plan, innovate and modernize its technology once it is freed from budget politics.   The flying public, as well as the air traffic controllers who run the system, will benefit from the enhanced safety and efficiency. It would mean fewer delays and more direct routes, using less fuel and producing fewer emissions.

There will be no disruption in the transition, and no physical movement of assets.

This is a proposal that restructures the governance and financial structures of the air traffic control system.  If enacted, this will be one of the largest transformations of government assets and services into a non-governmental independent entity in our country’s history. It is noteworthy that this is not a new concept.  Discussion and proposed bills to separate air traffic control from the FAA have been talked about for over 30 years—this was a major effort in the Clinton Administration.

But today, the need for change is more of an imperative than ever before as the rate of technological change accelerates and we need to equip air traffic controllers with the best modern equipment they deserve.  This is the first time a President has offered leadership on this issue.

With government services in general, the public has gotten used to prices going up, while services go down.  It doesn’t have to be that way. More than 50 countries have independent air traffic control organizations. In Canada, the air traffic control system that was spun off from the Canadian government over 20 years ago. 

Recently, it just proposed another 3.9 percent rate decrease, while improving safety and efficiency.  Adjusted for inflation, Nav Canada user fees are 45% percent lower than the taxes they replaced in 1996.  So this concept does work!

The Competitive Enterprise Institute should be lauded as an early and strong supporter of ATC reform. 

Another issue ready for right sizing is government regulation.  This week, the Administration is convening a series of events to highlight the need to reform the permitting process for building public infrastructure.  In the 1930’s, it took five years to build the Hoover Dam—one of the most spectacular infrastructure projects of the 20th century.  Today, it takes longer—sometimes decades—to get a highway, a bridge or a few miles of metro rail built because of the delays caused by government permitting and regulatory processes.  These delays also add billions in extra costs to building infrastructure.  So a major part of the President's infrastructure initiative will be common sense regulatory, permitting and process reform. 

Streamlining the regulatory process not only cuts costs. It can improve environmental outcomes by delivering infrastructure improvements more quickly. Resources will be spent on actual environmental mitigation, rather than stacks of paperwork.

At the Transportation Department, there is a Task Force that has already identified dozens of proposals to cut red tape and reduce time delays and cost burdens for road and rail projects. For example, the task force is considering allowing the steps in the permitting process to occur simultaneously rather than sequentially, which would save a lot of time.  Another move being considered is to enforce the page limit restrictions on environmental reports, which now can number in the tens of thousands of pages.

Lastly, let me also say additional words about the infrastructure proposal that the Administration is working on.  In the past, poorly designed programs have wasted a lot of money.  This Administration believes infrastructure can be improved without asking the taxpayers to shoulder the entire burden.  A key component of this Administration’s plan will be incentivizing public-private partnerships, in order to unleash the billions in private capital available to invest in infrastructure. 

Public-private partnerships are widely used throughout the world to finance new infrastructure.  They are not the answer to every infrastructure financing challenge.  But they work well in many situations.  Yet today, a significant number of states in this country do not even allow them. Private entities are discriminated against when it comes to investing in public infrastructure. That doesn’t make sense.

This Administration does not intend to repeat the mistakes of the past.  Federal money will be used as an incentive to get projects underway quickly, not to overwhelm or replace state, local or private funding sources. That is important because historically, only 16% of infrastructure spending is federal. The other 84% is state, local and private investment.

So whether it’s fixing the air traffic control system or regulatory reform, we can take a page from Alice and find the right size to get the job done better.  By introducing common sense, market-based reforms we can enhance safety, fix our crumbling infrastructure and create a better quality of life for the hard working American people.  It’s an important lesson, and one that Washington should be able to learn without falling down a rabbit hole.

So thank you for inviting me to speak tonight.  And thank you for everything you are doing to advance liberty and principled change.

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Updated: Tuesday, June 27, 2017
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