Friday, August 5, 2011


Over 4,000 Federal Aviation Administration (FAA )workers have been furloughed and another 70,000 airport construction workers are sidelined because of a legislative impasse in Washington. FAA DebacleThe FAA bill was passed over two weeks ago by the House and has been sitting in the Senate. The Senate’s objection to the bill is over two provisions. Rather than vote it up or down, the Senate is crying for the House to come back and rewrite the bill in a “clean” way that the Senate leadership would like.

The first objectionable provision in the bill is that it cuts 16 million dollars in subsidies for small airports. For example, the airport in Ely, Nevada receives $3,720 per ticket in subsidies. Further, each airport that would receive this subsidy cut has a larger airport within 90 miles. As one representative said, “"If we're having this fight over $16 million in subsidies, how are they going to get trillions (of dollars in cuts) from government?” That’s a good question. After the debt ceiling was raised, the government quickly borrowed more money taking our borrowing up to 100% of GDP. We can’t keep going like this. It’s not a matter of what makes good sense any longer; it’s a matter of solvency.

The other objectionable provision is one that overturns a National Mediation Board rule approved last year that allows airline employees to form a union by a simple majority of those voting. Under the old rule, the union had to get a majority of the workers, not just those voting. In other words, workers who didn't vote were counted as "no" votes. The democrats continue to push for increased union power. Meanwhile, not only are corporate taxes driving businesses overseas, but so are unions. Besides the good that unions once served and possibly may serve today, one thing is for sure: They drive up labor costs. When labor costs get so high that a company can’t compete on a global market, it finds cheaper labor overseas or in Mexico. Labor costs are the greatest cost to most businesses. To maintain their profit margin, companies increase the cost of their goods in compensation to higher wages. Thus higher wages are inflationary. It becomes a vicious cycle. Wages go up; soon the cost of products follows; thus the cost of living is higher, and now workers want higher wages because of the higher cost of living. It’s craziness. Anyway, why are the airlines against unions? Simply, they can’t afford them. Can America afford them these days?

So, Congress is on recess for the rest of the month while the FAA bill languishes in the Senate. Meanwhile, the government has been losing about 30 million dollars a day in uncollected airline ticket taxes since the shutdown began on July 23rd. That’s when the FAA’s operating authority ended. So, while the shutdown is costing 74,000 jobs and 30 million dollars a day, Congress is on recess. That is just one sign that things need fundamental change in Washington.

I have one other comment. It takes 4,000 people to run the FAA? We’re not talking about the airlines here. We’re talking just to run the FAA. I suppose it reflects the ugly fact that 608 new government (not just FAA) regulations were put into place in July alone. No wonder the government is so big. In addition, it takes 70,000 construction people to work 200 airline construction jobs? No wonder we see so many union construction guys standing around.

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