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  • Airline Taxes, Job Cuts Tied To Fights Over Subsidies & Unions

Airline Taxes, Job Cuts Tied To Fights Over Subsidies & Unions

Kelly Phillips ErbAugust 5, 2011

Congress learned a lesson this week: it’s hard to talk job creation when you’re directly responsible for thousands of employees being out of work.

In July, Congress failed to reach a compromise on the budget for the Federal Aviation Administration (FAA). The immediate result was that airlines were not authorized to collect federal ticket taxes, a move thought to mean the loss of $1.2 billion in revenue. It also meant that, without funding, thousands of federal employees were out of work.

And with that, your Senators went on vacation.

Or maybe not.

Late yesterday, Senators Ben Cardin (D-MD), Barbara A. Mikulski (D-MD), Frank Lautenberg (D-NJ), Robert Menendez (D-NJ), Mark Warner (D-VA) and Jim Webb (D-VA) wrote a letter to House Speaker John Boehner (R-OH), Senate Majority Leader Harry Reid (D-NV), House Democratic Leader Nancy Pelosi (D-CA) and Senate Minority Leader Mitch McConnell (R-KY), urging the use a pro forma session of Congress in order to offer a solution.

A pro forma session is a brief meeting of the Senate. It is held usually to satisfy a constitutional obligation. The Constitutions says, at Article 1, Section 5:

Neither House, during the Session of Congress, shall, without the Consent of the other, adjourn for more than three days, nor to any other Place than that in which the two Houses shall be sitting.

It’s all procedural. The Senators want to use the move to keep the FAA measure alive even as members of Congress are packing up their bags to leave town. At the pro forma session, Majority Leader Harry Reid (D-NV), presumably standing alone, will call for unanimous consent to pass the bill.

As an alternative, Senators Cardin, Mikulski, Lautenberg, Menendez, Warner and Webb have asked that Congress be called back into session to vote on FAA funding. I think we all know that the chances of that happening are about as good as the Philadelphia Eagles calling McNabb back this season.

So what’s holding up the vote in the first place? Politics. And more politics.

Specifically, the fight over the funding focuses on two important issues: subsidies to rural airports and the ability for airline employees to unionize.

The airport issue is clearly a power struggle. Republicans in the House voted to extend FAA funding but to slash subsidies to rural airports. Why is that a big deal in D.C.? Singled out for massive cuts were airports in Nevada, Montana and New Mexico. Those states have powerful Democratic Senators at the helm, including Senate Majority Leader Harry Reid (D-NV). Those Senators are, as you can imagine, not happy about the cuts.

The organized labor issue is a bit more complicated. The Democrats back a ruling by the National Mediation Board from last year which re-characterized the way that airline and train employee votes were counted in elections to organize a union. For nearly a century, those airline and train employees that did not vote in an election to organize a union were considered to have voted no on the matter. Under the National Mediation Board ruling, that’s no longer the case, making it easier to unionize. However, a number of Republican Senators oppose the ruling with Sen. Orrin Hatch (R-UT) referring to it as “absolutely wrong.” Extending the funding for the FAA has been tied to a compromise plan to undo or limit the ruling, making the whole situation sticky.

Chances are, the airport issue will be resolved in some fashion as part of any immediate funding extension. But don’t expect the organized labor issue to be part of any short term deal; that matter is likely to be part of a bigger fight when Congress regroups in the fall.

In the meantime, about 4,000 federal aviation workers aren’t getting paid. In addition, tens of thousands of construction and other workers are sitting idle while approved airport projects go unfunded. The result is more unemployed workers in an economy where the job news is already grim. Underlying bickering aside, Congress has to fix it. And they will. The question is merely how long they’ll take to do it… and whether the collective patience of taxpayers will run out first.

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Kelly Phillips Erb
Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.
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airline taxes, airline tickets, Barbara Mikulski, Federal Aviation Administration, Harry Reid, job creation, job losses, John Boehner, Mitch McConnell, National Mediation Board, organized labor, Orrin Hatch, rural airports, unions

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