Governments have often used subsidies to drive change and innovation. The West has lingering checkerboard land patterns along the transcontinental rail lines that reflect federal carrots offered railroads in the 19th century. Amtrak, of course, still gets a subsidy.
Air travel, reserved for the economic elite and cultural innovators when I was growing up, is also subsidized. The Federal Aviation Administration budget for 2013 is $15.2 billion, which includes $2.4 billion for “safety” improvements at local airports. Almost all airport runways are built on the back of these 90 percent grants from the FAA.
Where does the money come from? User fees, is the common answer, but that’s only partly true, according to Harvard economist Edward L. Glaeser. , he said user fees cover just 70 percent of the FAA’s budget. That doesn’t include the cost of security. For that, $5.1 billion comes from the U.S. Treasury. In other words, a subsidy.
As for cars, that’s trickier to pin down. Federal and state gas and diesel taxes provide the bulk of funds collected for highway infrastructure, but several times in recent years that has been supplemented by the U.S. Treasury. Towns and cities more directly subsidize the outlay of streets through sales and property taxes.
No matter what the transportation type, subsidies seem to be the rule.
