We've made a thorough mess of transportation. Just about every form of it gets subsidies of one form or another. There are major problems caused both by the form and amount of subsidies we use, and in the fact of subsidizing it at all. I will look at both.
Subsidizing anything always has consequences. One of the lessons of social policy is that unintended consequences are just about impossible to avoid. And, of course, some of the consequences are intended - though I will make the case that even those may be misguided.
Making transportation cheap, of course, has some good outcomes. Exotic foods and other goods from other parts of the world are readily available. It's easy to go and visit your grandmother. Employers can choose from a large supply of potential employees. Mostly, people are familiar with those, so I'm not going to spend any time on them; instead, let's look at the negative aspects.
One of the major things to happen in the 20th century is the suburbanization of America (and other industrialized countries, though less than here). To some extent, this is a natural phenomenon, and a response to the crowding of cities. But social policies have made moving to the suburbs less costly (and thus more appealing) than it otherwise would be.
First, there is the building of all those roads. Building of major highways is mostly paid for by the gasoline tax, so drivers everywhere are helping to pay for the new roads. Building of lesser roads and routine maintenance is paid out of other taxes, so everybody is paying those costs. Suburban residents use many more miles of road per capita than city dwellers do, so they get more benefit from this. (To be fair, the higher cost of maintaining roads in densely populated areas partly offsets this.)
We also have a number of other policies and social programs that lower the cost of dispersing. For example, public utilities are required to serve urban, suburban, and rural customers at the same rates, even though city dwellers are less costly to serve. (On the other hand, city dwellers pay more for auto insurance, because of the higher risk of accidents and theft there. Suppose we were to propose charging the same rate everywhere, to make it easier for the urban poor to afford cars? Sounds like a joke - but the opposite, subsidizing electricity and telephones to make it easier for the rural poor to afford those things, is accepted social policy.)
Many billions of dollars were pumped into the Rural Electrification Administration, which was intended to bring lower-cost power to farmers, but now mostly benefits surbanites and agribusinesses. On unintended consequences - the funding of the REA also destroyed a thriving small-windmill industry; it took over 40 years for makers of windmills to get back to the point they had reached in the 1930s.
Making transportation cheap changes the cost balance between growing food locally and bringing it in from distant farms. (Below-cost government-sponsored irrigation programs for those distant growing areas further shifts the balance.) Cheap transportation also speeds the spread from the cities, adding a further threat to farmland.
But although it looks cheaper in current dollars, the environmental cost of trucking in food from distant farms is high. Valuable nearly open land is lost, while land in the midwest and southwest US is overburdened and destroyed. People eat food that is less fresh, less tasty, and perhaps less nutritious. And the society becomes more dependent on technological infrastructure, and more fragile.
When transportation is cheap, it's easy to bring in goods from afar. People build big plants to build everything in one place, rather than manufacturing things nearer to their point of use. Again, more energy (and irreplaceable fossil fuel) is used, and our society loses regional diversity as everybody eats and wears and uses the same things.
Road travel is the most heavily subsidized. Although we do charge special taxes to motor vehicle users, they do not come close to paying all the costs caused by vehicle use. Furthermore, even the taxes we do charge do not reflect the contribution to road wear caused by various types of vehicles.
A big challenge is figuring out how to apportion the costs of road use. The problem is that heavy vehicles (trucks and buses) cause much more wear than lighter vehicles (cars, motorcycles, bicycles). I have seen an estimate that claims that a fully loaded truck (40 tons) causes 1000 times as much road wear as a typical car (2 tons) - suggesting that wear is some sort of exponential function of weight, not linear. But not all road wear is caused by vehicle travel; some is caused by weather.
One approach that has been taken is a fixed tax on each gallon of gasoline (or diesel fuel). This does charge the heavy vehicles somewhat more; a large truck pays 5-10 times as much per mile as a car. This doesn't fully compensate for the vastly higher wear, though.
Toll roads often charge a fixed fee per axle of the vehicle. This means that trucks pay 2.5 times as much as cars, even farther away from charging by road wear.
We could simply let the cars travel for free and charge all the road maintenance costs to trucks and buses. Curiously, this would actually be a much closer approximation to charging each for its contribution to wear than the current system is!
Toll roads are, in many ways, an appealing solution to the problem of charging for road use. Users pay right at the time of use, making the connection between travel and cost very clear. It's easy to charge different rates for different kinds of vehicles. Time-of-day rates can be adopted to discourage peak-hour traffic.
The basic flaw of toll roads is the high cost of collection. Existing turnpikes, even with their very limited number of entrances and exits, spend 10% or more of the money they collect just operating the toll booths. Collecting tolls in more open situations such as city streets would be even more difficult and expensive.
Some of you will argue that a universal electronic collection system would solve these problems. True, it could be done now, though it would be expensive, and there are privacy concerns. But how would we have gotten here? Sure, you could do it with microcomputers now - but how would you have make it work in 1950?
Airlines benefit considerably from the fact that they do not pay the full costs of airport construction or air traffic control. (Airports are typically built by state or local governments; air traffic control is funded by the federal government.) At least it's a bit more obvious that the subsidies that trucks get.
Although railroads have been hurt badly by their subsidized competition, they also belly up to the government trough. Passenger railroads (subway systems, commuter rail, and intercity lines) get government subsidies. And, of course, there is the historical subsidy of land grants, and continuing below-value taxation of railroad land.
Even these people-powered forms of transportation benefit from tax money to build roads and sidewalks. They cause little wear, however.