Policy Analysis No. 162

False Dreams and Broken Promises: The Wasteful Federal Investment in Urban Mass Transit

By Jean Love and Wendell Cox
October 17, 1991

Executive Summary

Over the past quarter century, U.S. taxpayers have pumped more than $100 billion in subsidies into the nation’s urban mass transit systems. That massive taxpayer investment has paid for urban public transportation systems that fewer and fewer Americans are using. Incredibly, mass transit ridership is lower today—not only as a percentage of commuter trips taken but also in absolute numbers of riders—than it was in the early 1960s. Despite the low and declining use of bus and rail systems, federal grants for urban transit now appear to be as popular as ever: bills before both houses of Congress would provide increases of up to 20 percent in public aid for municipal bus and rail systems.

The considerable support within Congress for expanded transit aid is not surprising. Since the federal government created the Urban Mass Transportation Administration during Lyndon Johnson’s administration, public transit has been a fertile field of dreams and promises. Tax-supported transit lobbyists[1] supply Congress and state houses with visions of magic carpets that whisk commuters around gleaming cities.

The alleged virtues of public transit are by now familiar. For weary motorists, public transit systems promise less automobile-generated traffic congestion; for environmentalists, less air pollution; for city planners, a first step toward urban revitalization; for the poor, inexpensive access to efficient transportation; for conservationists, less wasteful use of energy; and for the business community, a way to lure suburbanites back to central business districts.

Regrettably, more than two decades of experience with publicly supported bus and rail systems have exposed each of those dreams as a costly illusion. Public transit systems have failed to deliver any of the promised benefits.

  • Transit subsidies are not increasing ridership. Transit ridership is lower today than it was 30 years ago—before the billion-dollar subsidies began. People, including transit executives[2] and elected officials, tend to ride public transit only when they have no other reasonable choice.
  • Transit subsidies have not reduced road congestion. The shiny new multi-billion-dollar rail systems have not diverted meaningful numbers of drivers from their cars; most new patronage has been of less expensive, more flexible bus lines and energy-efficient car and van pools.[3]
  • Transit subsidies do not reduce air pollution. Because public transit has not increased ridership, transit has had no discernible impact on air quality in cities. Mass transit patronage is so low that even doubling it would have a negligible effect on air quality.
  • Public transit is not energy efficient. The average public transit vehicle in the United States operates with more than 80 percent of its seats empty.[4] Because of the low average number of passengers per bus, energy consumption per passenger mile for public transit buses now is greater than that for private automobiles and far exceeds that for car and van pools.[5]
  • Transit subsidies have not helped revitalize cities. Cities, such as Buffalo, with new multi-billion-dollar rail systems have not reduced flight from their central business districts. Even with ever-greater subsidies for public transit, the exodus of businesses and residents from downtown areas is accelerating.[6]
  • Urban transit does not benefit the poor. Ridership studies show that the poor are not heavy users of federally subsidized transit systems. Transit provided only 7 percent of trips made by low-income people.[7]

The cold, hard lesson of the last 25 years is that instead of promoting increased efficiency in bus and rail service, higher taxpayer subsidies have paid higher-than-inflationary transit costs. Subsidies have financed exces-sive compensation for transit employees, declines in transit productivity, and swollen bureaucracies—not increased sevices. If public transit costs had risen only at the same rate as private bus industry costs, service levels now could be more than double the 1989 level.[8]

Worst of all, taxpayer subsidies, particularly federal grants, have actually impeded the development of efficient and cost-effective urban transit programs in U.S. cities. The experience of other industrialized nations and some selected systems in the United States demonstrates that by tearing down the significant regulatory barriers, which prevent private, unsubsidized transit systems from developing, and by encouraging competitive contracting by private providers for subsidized systems, the mobility needs of urban residents can be met at lower cost and greater convenience to customers. Conversely, if Congress approves further large increases in transit subsidies, they will fuel further increases in transit costs. Those funding increases will ill-serve the interests of urban commuters, and they will certainly ill-serve the interests of American taxpayers.

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Jean Love and Wendell Cox are Illinois-based consultants who specialize in transportation, privatization, and the economics of the public sector.