The Public Money Behind Road, Rail and Air Travel

A common theme of U.S. political dialogue is that while highways are sustained by tolls and gas taxes, trains and other mass-transit systems are heavily subsidized by the government through tax revenue.

Nothing could be further from the truth. Federal, state and local governments have subsidized all modes of transportation since the birth of the nation. Tolls and dedicated taxes such as the gas tax have paid for only a small portion of our nation's road system. In the past century, road and air transportation have received more government money than rail. Here is a very brief accounting:

On a federal level, support for highways in the modern era begins with the Federal Aid Road Act of 1916. The act approved $75 million for highways, to be administered by the Office of Public Roads, the small agency still under the Department of Agriculture that would eventually grow into today's federal Department of Transportation, dominated by the Federal Highway Administration. The 1916 measure launched the tradition of a big highway bill, passed by Congress every few years. With state and local dollars, the pool of government money would develop the roughly 2.75 million miles of paved roads in this country, paid for by a variety of sources, of which gas taxes and user fees were only a small part. Even today, revenue from user-related taxes and fees account for only a small share of the cost of the nation's road system. According to the Federal Highway Administration, of the $202 billion spent on roads in 2010, only $84 billion came from fuel or vehicle taxes.

These figures underline an obvious point: Roads don't pay for themselves. In fact, a 2009 study by the Texas Department of Transportation that examined grade-separated highways in the state concluded "there is not one road in Texas that pays for itself based on the tax system of today." A typical example was a highway outside Houston that was projected to cost $1 billion over its 40-year life span and generate only $162 million in gas taxes."

Air travel has a similar record of government largess. The federal government used public money to resolve a patent dispute in the 1920s between the Wright Brothers and Glenn Curtiss of Curtiss Aeroplane. In the 1930s, the Civil Aeronautics Board funded the development of passenger air travel in a variety of ways. After World War II, state and local governments, sometime with federal help, built hundreds of airports around the country. After the attacks of 9/11, Congress voted the private airlines grants and loans of $15 billion. Congress is currently developing the next generation air traffic control system, estimated to cost $40 billion.

By comparison, the amount spent on train travel pales in comparison, unless you go back to the 19th century. There you find that government assisted private railroads mightily through land grants and direct payments and loans. Historian Paul Johnson called railroads "the Eldest Sons," so heaping were the rights and revenues given to them. But the record is very different in the 20th century, and in the last 100 years the amount of government money spent on railroads have been paltry compared with what is spent on roads and air travel. As government money has poured into air and roads, the once robust network of intercity passenger rail has shriveled to a skeletal framework.

All this is not to criticize government spending. It's simply to make clear that government supports all types of transportation, and none of them pay for themselves directly. Private companies often are involved, whether it's a car company or a private train operator. If done right it can be to everyone's benefit. But this almost never changes the need for some sort of ongoing government funding, or subsidy.

If well designed, a transportation system does pay for itself through larger benefits to the economy and society. International experience and historic example in the U.S. has demonstrated that a multi-modal transportation system with many choices is far more flexible than putting all our eggs in one basket.

Consider, for instance, how different the subsidy and transportation choice debate is in Europe and Asia. There, conservative parties often argue simultaneously for investment in multiple modes of transportation infrastructure. Richer countries such as Germany and France have high-speed rail networks, local transit networks, extensive intercity highway networks such as the Autobahn, and state-of-the-art airports.

We could decide transportation issues more by looking at the many modes available, and what their best purpose is. Most of the time, having a balanced transportation network, with a variety of competitive transportation options, is wise. Automobiles, airplanes, trains, buses, bicycles and walking all have a role to play in modern city and national transportation toolbox.