I frequently complain about subsidies around here and I thought I’d provide a few examples of it. The FAA and federal air traffic controllers are, effectively, subsidies to air travel and cities. They aren’t entirely funded by excise taxes and fees. About 15% of FAA expenses which funds both air traffic controllers and other FAA personnel are funded from general revenues. Part of TSA funding is paid by a $2.50 per passenger tax; the rest comes from general revenues.
The effect of this subsidization is to encourage air travel. If you want to discourage air travel, a good place to start would be by leveling the playing field and increasing fees and excise taxes to fund the FAA and TSA fully.
There have recently been proposals to subsidize renters, generally people who pay 30% or more of their incomes in rent, some of the proposals calling for the subsidies to include people who earn $100,000 per year. Such proposals would in general subsidize people who choose to live in high-rent areas, mostly in large cities. It would also take the pressure off cities to increase their population density. Note that the policies that lead to high rents are primarily under the control of state and local governments.
My views are more nuanced about rent subsidies.
It is entirely appropriate for communities like Palo Alto to choose how they want to have necessary workers like teachers / police officers / grocery clerks who otherwise cannot afford to live in these communities due to high cost of living. A choice between 100000 and a 12000 subsidy vs wants 112000 and no rent subsidy is a matter for them . The key is the subsidy must come from within the community.
It is inappropriate to do this at a national level because as you pointed out, the likely result is other communities subsidizing communities like Palo Alto.
In the absence of moves to increase the supply of available housing in cities like New York and San Francisco, the effect of federal housing subsidies will be to increase the prices of housing in those cities. The cities and states may do as they wish but I don’t think I should be dragooned into increasing housing prices in New York and San Francisco.