WHAT PRIZES WHEN ONE SUBSIDIZES? SOME LESSONS FROM THE PAST

This paper reviews past U.S. subsidy programs in both agriculture and transportation to establish facts about federal subsidies and apply these facts to current federal transportation subsidy programs. Two points are made. First, traditional transportation subsidies paid by the federal government have been justified in terms of national advantage. Based on this assumption, the case for federal subsidization of urban public transportation would be in extreme difficulty. This point primarily estabilishes reasons why urban transportation subsidies should not exist. There is, however, another approach, which leads to the second point that a new case for federal subsidization can be made strictly in terms of local advantage. An argument is presented for this new case.