Thursday, August 4, 2011

The United States Congress at Work: FAA Shutdown

Congress Departs on August Recess as the Federal Aviation Administration is Shutdown

The latest victim to be caught in the partisan cross-hairs of the United States Congress is the Federal Aviation Administration. The Federal Aviation Administration, commonly known to most of us as the FAA, is responsible for regulating U.S. commercial transportation space, regulating civil aviation, issuing, suspending, or revoking pilot certificates and a plethora of other responsibilities unbeknownst to us. The FAA is most commonly associated with the Air Traffic Controllers, who sit in the FAA Control Towers and literally hold our lives in their hands when we travel by air. After a string of bad publicity and public squabbles regarding a long disputed staffing practice of FAA Control Towers, the FAA has found itself as the center of attention once again. Only this time, The United States Congress holds their lives, in the palm of its partisan hands. To many there seems to be no reasonable end in sight.

Since July 23rd, the FAA has been forced to furlough approximately 4,000 employees and halted more than 200 construction projects. Since then, the treasury has lost more than $200M due to the expiration of the FAA's operating authority. Airlines are unable to collect taxes on ticket sales. According to estimates, the US Treasury is likely to lose more than $1 billion in federal taxes from airline ticket sales because the US Congress has left Washington for their annual August recess without resolving this issue. So basically, Congress took off for vacation and didn't finish their job before doing so.

The issue at hand is centered around ideology and political talking points. Congress failed to pass a clean Federal Aviation Authority Funding Bill
. There appears to be a dispute over funding and subsidies for smaller/regional airports and an attack on labor and unions via "anti-worker"provisions slipped into the bill by Republican house members. Sounds like another fake crisis created by our very own Congress. Per Associated Press:

Sen. Jay Rockefeller, D-W.Va., chairman of the Senate committee that oversees the FAA, held out the possibility that if the Senate were able to pass a bill acceptable to Democrats, it could still be approved by the House using obscure parliamentary procedures, and sent to the White House.
But his House counterpart, Rep. John Mica, R-Fla., ruled out that possibility. The only way left to end the shutdown is for the Senate to agree to a previously passed House bill containing $16.5 million cuts in air service subsidies to 13 rural communities that some Democrats — particularly Rockefeller — find objectionable.
"The only one holding this up now is Mr. Rockefeller," Mica said. One of the 13 communities that would lose subsidies is Morgantown, W.Va.
The entire air service subsidy program costs about $200 million a year, roughly the amount the government lost in uncollected ticket taxes in the first week of the shutdown. The program was created after airlines were deregulated in 1978 to ensure continued service on less profitable routes to remote communities. But critics say some communities receiving subsidies are within a reasonable driving distance of a hub airport.
Subsidies per airline passenger range as high as $3,720 in Ely, Nev., to as low as $9.21 in Thief River Falls, Minn., according to the House Transportation and Infrastructure Committee.
Senate Majority Leader Harry Reid, D-Nev., said Republicans were trying to force Democrats to accept policy concessions they would be unable to enact through normal legislative procedures. Democrats tried repeatedly over the past two weeks to pass a bill extending the FAA's operating authority without the subsidy cuts, but were blocked by Republican senators each time.

Capitalism at Work
Airlines collect an average of 10% per round-trip ticket for federal taxes. With the shutdown the government has no authority to collect the tax revenue from the airline carriers, therefore the carriers should pass the tax holiday onto consumers. Think again! Several US airline carriers, were not only collecting the taxes, but they were raising the fares as well, looking to cash in on the political stalemate. Transportation Secretary Ray LaHood called on airline CEO's to act in good faith by passing the tax relief on to customers and also asked that the airlines refund customers who paid the tax with their ticket purchase. Both US Airways and Delta Airlines have agreed to refund customers the federal taxes that were wrongfully collected. We are still waiting to hear other airlines come forward and do the right thing. My guess is we will wait until the cows come home. According to the Air Transport Authority, in the first six months of 2011, airlines collectively lost approximately $400M. Ladies and Gentleman - once again, the corporations took the opportunity to screw the American people. They sought to recoup their losses on the backs of their customers. As if they weren't going to already write them off on their taxes and probably receive a refund check from the treasury - also known as, The US Taxpayer.

Is this partisan politics or a simple disagreement of legislation?
Should Congress be allowed to go on recess when there is pending or unresolved legislation?
Should airline carriers be allowed to recoup earlier loss' from the uncollected federal tax?
blog comments powered by Disqus