The recent declines in transit ridership are a continuation of trends that began before 1920: the most important of these are the increasing levels of auto ownership and the migration of jobs and people to the suburbs. Even ride hailing is just a 21st‐century version of the jitneys that threatened streetcar companies in the mid‐1910s.72 Seattle’s experience notwithstanding, all of these trends appear to be irreversible in the long run.
The main reasons that have been given for subsidizing transit—providing transit to lower‐income people, reducing environmental costs, and relieving congestion—are obsolete:
- Large numbers of low‐income people no longer rely on transit, and, in fact, increasing auto ownership has helped lift many people out of poverty because automobiles provide them with access to far more jobs and other economic opportunities than transit does.
- In all but a handful of urban areas, transit consumes more resources and does more harm to the environment than driving.
- Outside of New York and perhaps a half‐dozen other urban areas, transit does little to relieve traffic congestion and may even increase it because dedicated transit lanes and railcars that frequently delay vehicles at grade crossings do more to increase congestion than to reduce it.
- Even if transit could achieve any of its high‐minded goals, throwing money at transit has failed to get people out of their cars. The number of transit trips taken by the average urban resident has declined from 62 in 1964, the year Congress started extending federal subsidies to transit, to 36 trips in 2019.73
Federal subsidies to transit are especially questionable because most transit agencies do not engage in interstate commerce. When Congress passed a law in 1958 making it easier for railroads to cancel intercity passenger trains that cross state lines, several railroads proposed to also cancel commuter trains. This led Congress to pass the Urban Mass Transit Act of 1964, which offered federal funds to help states keep such trains operating. At the time, the justification for this was that some of the commuter trains serving Boston, Chicago, New York, and Philadelphia crossed state lines. But Congress extended its funding offer to any state or local government that operated transit services. In 1964, most transit was private and the industry as a whole was profitable, but within a decade it was almost entirely taken over by state or local governments and had become highly unprofitable. Today, the vast majority of federal dollars allocated for transit go to transit agencies that do not cross state lines.
Since 1965, federal, state, and local governments have spent close to $900 billion (in 2018 dollars) subsidizing transit operations, more than $100 billion of which has come from the federal government. Early records of capital spending are incomplete, but since 1988 the federal government has provided more than $350 billion (in 2018 dollars) in capital subsidies to transit, out of $450 billion spent by the transit industry. Total subsidies have therefore been well over $1.4 trillion, of which at least a third has come from the federal government.74
Transit will clearly remain important in the New York metropolitan area. The question is: How will the region pay for it? The Metropolitan Transportation Authority’s (MTA) long‐term debt is more than $43 billion.75 Its maintenance backlog is $60 billion.76 Its unfunded health care liability is more than $20 billion.77 Despite not having funds to close these gaps, the agency is planning to spend $13 billion extending the Second Avenue Subway another six miles at a cost of $2.2 billion per mile. As then MTA vice president Dave Henley admitted in 2009, “There will never be ‘enough money’” to put the system in a state of good repair.78
Beyond New York City, New Jersey Transit needs $29 billion for the Gateway project that would rebuild century‐old tunnels under the Hudson River and bridges near those tunnels. New Jersey’s congressional delegation would like the federal government to pay half of this cost and to loan the states the other half, with no revenue source in sight to repay the loan—a plan that is opposed by the Trump administration.79 Even if the federal government ultimately provides some funding, it doesn’t seem likely that enough money will be ever found to completely restore the region’s transit systems.
New York City’s densities cannot be supported without transit, particularly the subway system. Buses running on the city’s surface streets simply cannot move as many people as 10‐car subway trains that run up to 30 times per hour. Unless New York finds a way to fund its transit, it may have to accept lower population and job densities and a wholesale movement of residences and offices to the suburbs.
Outside of New York, buses can replace most rail lines in the country and actually move more people per hour in the same amount of real estate. This is because, for safety reasons, rail lines can typically move no more than 20 railcars or trains per hour in mixed traffic (such as streetcars or light rail) and no more than 30 per hour in dedicated rights of way (such as subways), while a single bus lane can easily move hundreds of buses per hour. For example, Istanbul has an exclusive busway that moves more than 250 buses per hour, despite each bus stopping at 33 stations en route. While each bus has a lower capacity than a train, the increased number of vehicles per hour means the Istanbul Metrobus has an estimated capacity of 30,000 people an hour—more than almost any rail line in the United States outside of New York City.80
Transit agencies should do several things in response to ridership declines. First, they should stop planning and building new rail transit lines. Buses can move more people per hour than most trains, at a far lower cost, and no city outside of New York has the job concentrations that would require a subway system.81
Second, as existing rail lines wear out, transit agencies should replace them with buses. This would save billions of dollars in capital replacement costs.
To save money operating those buses, transit agencies could contract out all bus operations to private companies. Several companies, including First Transit and Veolia, compete for such business, giving them incentives to keep their costs low. By Colorado state law, Denver’s Regional Transit District (RTD) must contract out half of all of its bus services. The contractors are unionized and pay taxes that RTD is exempted from. The contracted half of the service costs taxpayers just 52 percent as much, per vehicle revenue mile, as the half that is operated by RTD.82 Contracting out transit services in the seven urban areas where transit carries more than 10 percent of commuters could save taxpayers close to $4 billion a year.
An even better solution would be to privatize transit. This would result in the concentration of transit services in dense cities and near job centers, where people use it the most, but the reduction or elimination of services in low‐density suburbs, where relatively few people rely on transit.
A number of private companies, including Bridj and Chariot, have attempted to enter U.S. transit markets but were unable to compete against heavily subsidized public transit systems.83 In San Francisco, San Jose, and Seattle, major employers such as Apple, Google, and Microsoft provide private transit for their employees, which indicates that public transit systems in those regions aren’t working very well.84 Privatization would lead to transit going where people need it, not where politicians want it.
Congress should start by abolishing the transit capital improvement grant (New Starts) program, which encourages transit agencies to waste money building expensive, and generally obsolete, infrastructure that they won’t be able to afford to maintain. The one strategy that transit agencies have successfully used to increase ridership is to redesign their bus systems, something that can’t be easily done with fixed‐rail systems. This limitation alone is a strong argument against new rail construction.
Next, Congress should phase out other federal subsidies to transit and end federal subsidies to highways. The Highway Trust Fund was originally created to collect funds from highway users and spend those funds on highways. As such, it was at least a weakly effective mimic of markets. Since 1982, however, Congress has increasingly diverted a share of the funds to transit and supplemented both highway and transit funds with general funds. In the long run, there is probably no need for the federal government to be involved with highways or transit. In the short run, Congress can at least ensure that funds collected by the federal government from highway users—and no other funds—go to highways.
A century ago, transit was a vital part of American urban economies. At least outside of New York City, that is no longer true. It’s time to stop wasting $54 billion a year pretending that it is.