THE TRANSPORTATION JALOPY.(U.S. Department of Transportation)(Brief Article)

From its creation, the U.S. Department of Transportation has been an intellectual desert and a spending spigot. Few Americans realize that the federal highway program over which it presides is our largest aid program, dwarfing expenditures for things like education, housing, and medical research. And the department has many dark corners.

* Cost-raising regulations. The federal highway act is now an alluvial deposit of regulatory requirements which increase construction costs: Federal prevailing-wage laws, competitive bidding and bid-protest regulations, planning bureaucracies, and Buy American requirements prevent all but the largest, most bureaucratized contractors from competing. Efforts to compensate for these regulations' effects by having minority and small business set-asides just erect more barriers.

* Mass transit boondoggles. The department's mass transit subsidies favor inflexible rail systems, partly because contractors love their huge construction costs. Meanwhile, privatization of bus systems is made virtually impossible. Mandates require many city vehicles to be able to handle disabled riders, instead of allowing less costly, more demand-responsive van systems. No effort is made to persuade states and localities to abandon taxicab licensing systems that discourage cab competition and service in low-income neighborhoods.

* Perverse incentives. Since the department requires only a 20 percent matching contribution for most transportation projects, any federally aided highway project is a windfall for the state sponsoring it, and expensive local projects of marginal value are encouraged.

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