"And the two issues aren’t disconnected. When commuting is difficult, people push to live closer, driving up land prices and housing costs. A good transportation network would allow development of areas further out, where land is cheaper."

What you're saying here is that we should spend billions of tax dollars to make the cost of living cheaper for those that live at the edge of town. 

We could instead encourage infill development so that housing can keep up with demand in the closer neighborhoods, so housing prices don't have to keep going up.  We can then build a transportation system for a lot less money based on a fully connected efficient street grid, where travel distances are much shorter. Where walking, biking, and transit are realistic options.