We analyze the role of the US Department of Transportation (DOT) in regulating transportation safety and funding surface transportation infrastructure. These two aspects of DOT policy are important in light of recent trends and problems with our transportation system. Government officials and transportation experts have expressed growing concern about deteriorating surface transportation infrastructure. Transportation safety regulation, which continues to increase, disproportionately burdens low-income Americans and small businesses. This paper synthesizes and updates the literature from past debates about the costs and incentive effects of safety regulation. A counterfactual analysis using historical evidence and economic research on safety regulation indicates that without regulation, the private sector would provide many safety features in response to market incentives. Economic research also shows that when the DOT mandates safety features, people must then spend less on other things they value more. Similarly, we demonstrate, based on economic theory and evidence, that existing policies for funding transportation infrastructure contribute to investment decisions that do not accurately reflect the traveling public's preferences. Evidence from other studies suggests that these policies also create excess demand for highway space in many cities and excess supply of mass transit service. To promote a more efficient and equitable transportation system, the role of the DOT in funding surface transportation should be reduced and the role of state and local governments and private firms should be increased. The DOT should also reduce its role in regulating transportation safety so that travelers and shippers have more freedom to choose the level of safety they desire.