From Alyssa Katz’s excellent profile of the people in the Obama administration working to shift policy away from its anti-urban bias:
New measures to reverse the march of spraw may be too little, too late. It took seven decades and trillions in federal investment to create the sprawl that the Obama administration is now moving to brake. The first interstate highways rolled out in the 1950s with the present-day equivalent of $300 billion in federal funds. The suburban home industry was fueled by subsidies that today amount each year to almost twice HUD’s entire budget.
By way of contrast, the budget of the Federal Transit Administration is about $2.4 billion. If you put $300 billion in 30-year treasuries, you’d generate enough income to quintuple that. Which isn’t to say that’s something we can or should do, but merely to observe that suburban sprawl is not a market outcome. In part it’s a question of unintended consequences, but largely it’s a result of “industrial policy” designed to boost firms that make automobiles, drill oil, and build suburban homes. Much of that is legacy at this point but to this day Fannie Mae and Freddie Mack serve to create bias against financing mixed-use projects which is why it can be more economical to build large, empty lobbies rather than fill them with stores.