American Dream

A new study from the US DOT Bureau of Transportation Statistics compares federal subsidies to air, rail, highway, and transit passengers from 1990 to 2002. Transit subsidies have been the largest in most years, averaging about $5 billion a year. Air subsidies have fluctuated -- and were even negative in 1999 and 2000 -- but in other years averaged about $2.5 billion. Rail subsidies (meaning Amtrak) averaged about a billion dollars a year. Highway subsidies averaged negative $7 billion a year, meaning highway users were subsidizing transit riders and other things.

On a per-passenger-mile basis, Amtrak subsidies were the greatest, averaging 20 cents a mile. Transit subsidies averaged more than 10 cents a mile. Air and highway subsidies (or negative subsidies) are close to zero mainly because there is so much more airline and highway travel than Amtrak or transit travel.

These are federal subsidies only. State subsidies to highways also tend to be negative as they divert gas taxes to transit and other uses, but local subsidies to highways out of property and other taxes tend to offset the federal and state diversions. Overall, my calculations indicate that about 10 percent of the cost of highways, roads, and streets are subsidized. This averages about 0.3 cents per passenger mile.

Of course, state and local subsidies to transit make total transit subsidies much larger than indicated in this report. According to the data from the American Public Transit Association, total federal, state, and local subsidies to transit in 2002 were more than 60 cents per passenger mile.