400 Transportation:Close Down the Maritime Administration and Repeal the Jones Act
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2016150
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2017151
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2018151
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2019153
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2020156
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2021160
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2022163
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2023168
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2024171
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2025174
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2016-2020761
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2016-20251597
Sources
Only the savings from closing down the MARAD are included. These savings are expressed as budget authority and were calculated by using the FY 2015 estimated spending levels as found on page 1,027 of “Appendix, Budget of the United States Government, Fiscal Year 2015,” March 2014. The FY 2015 estimated spending level was used instead of the FY 2014 enacted level because the FY 2014 enacted level was markedly higher than the FY 2013 or FY 2015 levels. The FY 2015 estimated level was increased at the same rate as discretionary spending for 2016–2025, according to the CBO’s most recent August 2014 baseline spending projections.
×Technical Notes on Scoring
CBO Baseline
Unless otherwise noted, calculations for savings for each recommendation relies on the most recent Congressional Budget Office baseline, as found in “An Update to the Budget and Economic Outlook: 2014 to 2024,” published August 27, 2014, has been used.
Savings “Totals”
While totals for the five and 10 year savings are provided by section and for the complete set of recommendations, there are two reasons they should not be viewed as representing total savings for The Budget Book.
First, as noted in the introduction, The Heritage Foundation would recommend that the savings realized in the Function 050 Defense section would stay within the Department of Defense to strengthen the nation’s defense capabilities.
Second, the numbers cannot be deemed to represent the realized savings if every single recommendation were adopted because policy changes made in one program can impact spending levels in other programs. Thus, the numbers in the table do not reflect any potential interactions between the various policy changes affecting spending or savings.
×Heritage Recommendation:
Eliminate the Maritime Administration (MARAD) and repeal the Jones Act. Eliminating MARAD saves $150 million in 2016, and $1.6 billion over 10 years. No savings are included for repeal of the Jones Act.
Rationale:
Created in 1950, MARAD’s purpose is to maintain a maritime fleet to be used during a national emergency. Decades later, it continues to oversee and implement outdated, Depression-era laws, which prevent foreign maritime industry companies from competing with those in the United States.
MARAD and the laws it implements are steeped in protectionism and subsidies. For example, taxpayers continue to pay for an Operating Differential Subsidy program that guarantees U.S.-flag vessel operators a payment to make up for the difference between shipping cargo on a U.S. vessel compared to a foreign vessel (the former being more expensive). Another program, the Ocean Freight Differential program, subsidizes part of the costs associated with having to transport food aid cargo on more expensive U.S.-flagged vessels, again as opposed to shipping them on foreign vessels. Finally, the Jones Act—established nearly a century ago in 1920—requires incredible standards: any cargo (or people) shipped between two U.S. cities must be on a U.S.-built and U.S.-flagged vessel with at least 75 percent of its crew from the U.S.
Congress should close down the Maritime Administration, transferring its international regulatory roles to another agency, such as the Department of State. The federal government should sell the government-owned ships in the Defense Ready Reserve Fleet and transfer funding for this program to the Department of Defense. Simultaneously, Congress should repeal the Jones Act, the Operating Differential Subsidy program, and Ocean Freight Differential program, which have spent billions of taxpayer dollars and stifled innovation of the U.S. domestic maritime industry.
Contributing Expert
Emily Goff advances conservative solutions to transportation and infrastructure challenges as policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Emily GoffPolicy Analyst, Transportation and Infrastructure
Heritage Expert
Diane Katz, who has analyzed and written on public policy issues for more than two decades, is a research fellow in regulatory policy at The Heritage Foundation.
Diane KatzResearch Fellow in Regulatory Policy
Additional Reading
- Wendell Cox and Ronald D. Utt, “How to Close Down the Department of Transportation,” Heritage Foundation Backgrounder No. 1048, August 17, 1995.
- Brian Slattery, Bryan Riley, and Nicolas Loris, “Sink the Jones Act: Restoring America’s Competitive Advantage in Maritime-Related Industries,” Heritage Foundation Backgrounder No. 2886, May 22, 2014.