US Government Has Been Losing $30 Million A Day Since FAA Shutdown

More to FAA shutdown than air service subsidies (AP, Aug 5, 2011):

WASHINGTON (AP) — On the surface, the partial shutdown of the Federal Aviation Administration is about whether to cut $16 million in air service subsidies, a pretty small amount in this town. Underneath are layers upon layers of political gamesmanship that, at its heart, is about whether Democrats or Republicans get to call the shots in Congress.

The immediate price is high. Already, 4,000 FAA employees have been furloughed, more than 200 construction projects have been halted and an estimated 70,000 other private-sector workers affected. Air traffic controllers and safety inspectors remain on the job because the agency still has money from another pool of funds to pay them.

The government has been losing about $30 million a day in uncollected airline ticket taxes since the shutdown began on July 23, when FAA’s operating authority expired. If it’s not resolved until after Congress returns from its August recess in early September, lost revenue will tally about $1.2 billion.

The political stakes are even higher.

Democrats complain that Republicans, by manufacturing crisis after crisis, are trying to force them to accept painful policies that haven’t been negotiated through normal legislative processes.

Earlier this year, it was the prospect of a government shutdown over tax breaks for higher-income Americans. More recently it was a potential default on the government’s financial obligations. Now it’s a continued shutdown of the FAA unless Democrats accept the air service subsidy cuts.

“This is becoming a very disturbing pattern: A small, uncompromising group, feeling the righteousness of their cause, hurt tens of thousands of innocent people and takes them hostage until they get their complete way,” Sen. Chuck Schumer, D-N.Y., said. “These debates should not be determined by which side is willing to take the most casualties.

In this case, what Republicans are really demanding isn’t token cuts in air service subsidies but reversal of a federal labor rule in order to make it more difficult for airline workers to unionize, Democrats said.

Republicans deny that, saying the labor issue is a separate matter. Rather, they said they simply have to use the tools available to them because Democrats are unreasonable about cutting spending.

“If we’re having this fight over $16 million in subsidies, how are they going to get trillions (of dollars in cuts) from government? It’s not a good start,” Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee, said in an interview with The Associated Press. “This may be emblematic of what we face getting any cuts.”

But Democrats said if they accept the air service cuts now, Republicans will demand a higher price — possibly including labor concessions — when the next short-term FAA extension bill must be passed, which is expected to be in mid-September.

Mica made the first move leading up to the shutdown in July when he attached a provision eliminating subsidies for air service to 13 rural communities to a bill to extend FAA’s operating authority. The FAA has been operating under a series of 20 short-term extension bills since 2007, when the agency’s last long-term funding bill expired.

The Senate approved a long-term bill in February and the House its own bill in April. More than 200 differences between the two bills have been worked out, but a dozen thorny issues remain.

One of those issues is the air service program, which was created after airlines were deregulated in 1978. It pays airlines to fly less profitable routes to remote communities. The entire program costs about $200 million a year, about the same as what the government is losing each week the FAA shutdown continues. Critics say some of the communities don’t deserve aid because they are within a reasonable drive of a hub airport or because their subsidies are exorbitantly high — more than $1,000 per passenger.

Since both long-term bills would reduce funding for the program, although in very different ways, it has been clear for months that some cuts will be made, lawmakers said.

The more politically difficult issue is a GOP proposal to overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting. Under the old rule, workers who didn’t vote were treated as “no” votes.

Democrats and union officials say the change puts airline and railroad elections under the same democratic rules required for unionizing all other companies. But Republicans say the new rule reverses 75 years of precedent to favor labor unions.

The GOP labor provision has the backing of the airline industry. The biggest beneficiary would be Delta Air Lines, the largest carrier whose workers aren’t primarily union members.

Last month, in comments to the House Rules Committee and separately to reporters, Mica said the labor provision was the only issue standing in the way of the House and Senate reaching an agreement on a long-term FAA bill. He said Senate Majority Leader Harry Reid, D-Nev., has refused to negotiate with Republicans on the issue.

“There is only one issue — have I not been clear? It’s up to Mr. Reid,” Mica told the committee. He added that including the subsidy cuts to the extension bill “forces the Senate’s hand to act.”

One of the communities that would lose subsidized service is Morgantown, W.Va., in the home state of Democratic Sen. Jay Rockefeller, who, as transportation committee chairman, is Mica’s Senate counterpart. Reid and Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, which handles the tax aspects of the bills, also have communities on the list.

Besides Morgantown, the cities on the list are Athens, Ga.; Glendive, Mont.; Alamogordo, N.M.; Ely, Nev.; Jamestown, N.Y.; Bradford, Pa.; Hagerstown, Md.; Jonesboro, Ark.; Johnstown, Pa.; Franklin/Oil City, Pa.; Lancaster, Pa.; and Jackson, Tenn.

“Yes, I did work with our leadership to find some pressure points to get leverage on the (long-term) bill,” Mica told the AP. “I didn’t ask for a lot.”

Sen. Kay Bailey Hutchison of Texas, the senior Senate GOP negotiator on the FAA bill, called Mica’s inclusion of the subsidy cuts in the extension bill a “procedural hand grenade.”

It has been House Republicans who have refused to negotiate with the Senate unless Democrats agreed to concessions on the labor issue, Hutchison said.

The House bill was approved on July 20 by a mostly party-line vote. Senate Democrats have introduced their own FAA extension bill with no strings attached, but Republicans have repeatedly blocked votes on the measure. Democrats have responded in kind, blocking votes on the House-passed bill containing the subsidy cuts.

A few days ago, House Speaker John Boehner, R-Ohio, indicated to Democrats that he’d be willing to accept their extension bill without the subsidy cuts in exchange for concessions on the labor issue, but Democrats refused the offer, Rockefeller said.

Boehner didn’t respond to a request for comment.

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