I see all sorts of policies proposed for alleviating traffic: congestion surcharges, street cars, dynamically-priced parking meters, "smart growth" zoning plans, privatized toll roads, etc.
I don't remember ever seeing anyone make a simpler proposal: make the driving exam harder. Much, much harder. Turn it from a test of basic competance to one of skill. Don't just ask people to demonstrate that they can drive, ask them to demonstrate how good they are at driving.
Perhaps you set a monthly quota for new licenses given out, and only the top k scorers on the exam get new licenses.
For people who are concerned about teenage drivers, this would also be a good alternative to simply raising the driving age to 18.
This whole plan might not help me as much in DC since it has such a high proportion of out-of-state drivers, but I think it could help in LA or London.
PS If I was the Most Righteous Padishah God-King of 'Meriker my first big infrastructure investment would not be infrastructure at all. It would be a series of virtual reality centers for continuing drivers ed. Everyone would have to log x violation-and-accident-free hours every y years in order to renew their license.
This would be one of the few ways my Sublime and Benevolent Regime would intrude in people's lives more than the current one. Yes, this law will cost you some hours, but when you drive poorly you're costing your fellows time, money and potential life and limb. If that's not a libertarian enough reason for state intervention I'm not sure what is.
(Of course this would be better yet if someone with the proper incentive, say, insurance companies, could do this without state intervention, and maybe in my fantasy of living in the Free Distributed Republic I'll add this wrinkle in.)