Fifty-three years ago, the transit industry was mostly private and earned a net profit. Today, it’s almost entirely publicly owned, and subsidies have grown out of control. It’s time to take a stand and say all transportation subsidies are bad, but transit subsidies are the worst.
The National Transit Database says agencies spent more than $64 billion in 2015 yet collected less than $16 billion in fares. They carried about 55 billion passenger miles, for an average cost of $1.15 per passenger mile, of which 87 cents was subsidized. No other major mode of passenger transportation is anywhere near this expensive.
Americans spent about $1.1 trillion buying, operating, repairing, and insuring cars and light trucks in 2015, but they also drove their autos nearly 2.8 trillion miles. At average auto occupancies of 1.67 people (see table 16), that’s 4.6 trillion passenger miles by auto, for an average cost of about 24 cents per passenger mile. We don’t have 2015 data yet, but in 2014, government agencies spent about $72 billion subsidizing roads (add the $98 billion in “other taxes and fees” to the minus $10 billion in “less amount for nonhighway purposes” and the minus $16 billion for “less amount for mass transportation”).
This is more than was spent subsidizing transit, but those roads not only produced 70 times as much passenger travel, they were used to ship more than a quarter of the freight moved in this country. Ignoring the freight, the subsidy was about 1.6 cents per passenger mile, meaning the total cost of transit was more than four times the cost of driving.
Airfares are about 14 cents a passenger mile, making air travel a bargain. Airline subsidies are only a couple of cents a passenger mile (subtract government expenditures from government revenues and divide by passenger miles). Amtrak subsidies are comparatively horrendous at 22 cents a passenger mile but are still only a quarter of transit subsidies.
Transit is expensive because it is subsidized. Lacking any need to keep costs within revenues, transit agencies spend way too much money accomplishing far too little. It is time to stop all transportation subsidies, but as the most-heavily subsidized form of transportation, transit should be the priority.
This piece first appeared on The Antiplanner.
Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.
Photo: Robert Dyess, CC License
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