Smart Deficit Reduction: Congestion Pricing  

A blog about business and economics.
Feb. 28 2013 10:10 AM

Congestion Pricing Could Reduce the Deficit and Boost the Economy

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A nationwide road congestion pricing plan could raise up to $55 billion annually in revenue when fully implemented, according to the Hamilton Project.

Photo by Jean-Pierre Clatot/AFP/Getty Images

Tyler Duvall and Jack Basso have my favorite contribution to the Hamilton Project's 15-point deficit reduction plan, a proposal to implement a nationwide road congestion pricing plan that "could generate between $38 billion and $55 billion annually in revenue" when fully implemented and that they modestly score as generating $312 billion in deficit reduction over a 10-year window due to implementation lag.

What makes this a great idea is that it's not deficit reduction for the sake of deficit reduction, it's an actual policy improvement that will greatly improve the functioning of our transportation infrastructure. Even if you just piled up the resulting cash and lit it on fire, you'd be making better public policy. Dedicating the funds to deficit reduction (which in practice in this context means reducing the need to cut Social Security and Medicare benefits) is even better.

There are a bunch of other good ideas on the list, my favorites being a carbon tax and an improved work visa system, but the general spirit of all of these is to start looking for ideas that make sense on the merits rather than starting with an arbitrary deficit reduction target and then reasoning backward.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.