Airheads: An FAA Agreement, Sort Of

U.S. President Obama signed on Friday a deal to end a two-week partial shutdown of the Federal Aviation Administration caused by lack of funding. Some 4,000 furloughed FAA workers can begin returning to work Monday. Another 70,000 laid off construction workers, who were working on airport expansions and upgrades before the money ran out, can filter back to their jobs.

So, all is well, right?

Well, no. This latest temporary extension of funding for the crucial agency - the 21st of its kind - lasts only till mid-September, after Congress returns to Washington, D.C. Then the whole comic opera can begin again.

There is still no resolution of the labor dispute over airline union-certification elections - one cause of the partial shutdown. There is no long-term settlement of the subsidies given to small-market communities, which media reports say run $163 million USD a year. Uncle Sam has lost two and a half times that amount - about $400
million - in lost air fare tax revenue when the taxes could not be collected during the partial shutdown. Some savings.

Now, the Internal Revenue Service says there will be no IRS refunds to consumers who paid higher fares when airlines decided to raise fares during the tax holiday. To be fair, loss-making airlines need to make money. Still, once again, the long-suffering little guy has been left at the gate.

When this dysfunctional Congress, rent by partisan divides - some calculated and carried out with extreme recklessness by Republican freshmen in the House of Representatives - gets back to work in September, the political gridlock will leave the FAA scuffle looking like a day at the beach. It would be nice to think it gets better, but it's hard to see how.

Airheads and the FAA: 70,000 More Worries

As noted here in earlier posts, the U.S. Congress - the House of Representatives and the Senate - have each passed legislation to fund the Federal Aviation Administration, but can't blend - 'reconcile' in Washingtonese - differences in the bills. Moreover, an attempt to pass a 21st temporary funding measure for the FAA failed.

This latest example of governmental dysfunctionality caused 4,000 FAA workers to be furloughed on Saturday, Day 1 of the crisis. Today, Thursday, Day 6, they have been joined by 70,000 more workers who were laboring on badly needed airport expansions and other infrastructure upgrades; these have been halted for lack of money. This means no paychecks and no spending money for these people and their families. All this at near-record highs in nationwide unemployment, when throwing 70,000 more onto the unemployment rolls means U.S. retail outlets, automobile dealerships, construction companies and other busiensses will lose revenue.

Does Congress not understand that putting 70,000 out of work - not to mention the legions of federal workers targeted by presumptive future cuts in the federal budget - means adding significantly to short- and perhaps long-term unemployment?

As slowing growth in international air-travel shows, pace the International Air Transport Association's statistics (www.iata.org)- a big influx of newly unemployed means the already-staggering business community won't see enough demand to hire these people and switch their employment to the private sector from the public sector. Result: Deep structural unemployment.

What a mess. Well, at least the air traffic controllers are still on the job and the planes are still flying. But without federal funding, without the revenue from suspended federal taxes on air fares and without continuing research on long-delayed next generation air traffic control systems, the crucially important U.S. aviation market is flying into turbulence and no one knows when it's going to fly back out.