"The rail doesn't go where you want it to go" comment is directed at Muni, not Chicago's or New York's system. Chicago's and New York's largely goes where people want it to go because development springs up around the transit.
The problem with buses is capacity. If you city is relatively sensibly laid out and commuters tend to follow certain predictable routes, you can get far more capacity on a rail line than on roads. Not only does a bus carry a lot fewer people (an NYC reticulated bus can carry about 120, a full NYC subway train about 2,000), but as a practical matter you can't run the buses as fast or as frequently as you can run trains.
Predictability is also a problem. Buses are at the mercy of street traffic. Trains run on a schedule. My commute from northern Virginia to d.c. by highway used to take anywhere from 40 minutes to 80 minutes depending on traffic. My commute from westchester to new york city by train (which is actually 2 miles longer) takes exactly 34 minutes almost every day. About once a month a train will be 5-7 minutes late (which is consistent with the ~95% on-time performance of Metro North). I can leave my house 5 minutes before the expected departure time (with a 3-4 minute walk to the station) because I can count that the train will arrive within a minute of its scheduled time. You can't replicate this by car or bus in a dense metro area.
Pollution is another problem. Air pollution has huge externalize costs in a city because of the density. With electric rail, you can build the power plants out in the country where the pollution affects fewer people. With buses, you're clogging up the air breathed in by several million people in close proximity. Buses are prime contributors to sulfurous and particulate pollution in cities.
Moreover, it's not like bus infrastructure is free. You have to build and maintain the roads, and if you want to replicate the capacity of trains you need to build isolated bus highways through the city. These are not cheap, and have a very damaging effect on the communities they run through by cutting them in half. Highway construction inside a city is an absolute terrible idea from an economic point of view.
It's wholly inappropriate to compare the operating costs of transit to revenues. First, the shortfall in the MTA isn't because it can't charge high enough fares, but because the ticket prices are kept artificially low ($100 for unlimited rides per month!) as a subsidy to low-income people. Second, transit infrastructure generates high positive externalities. You have to look at the net impact on the whole economy instead of looking at just a piece of it. E.g. consider the highway system. It brings in a few tens of billions in revenue each year via gas taxes. Is that the whole of the economic benefit of the system? Are people like me, who don't drive, subsidizing people who do? Imagine if we got rid of the highway system. What would be the impact on GDP? A hell of a lot more than a few tens of billions, I can tell you.