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Marketplace Morning Report

Everybody loses as the FAA remains unfunded

David Gura Aug 3, 2011
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Kai Ryssdal: I’m going to have to do a little math to set up this next story. Hard as this may be to believe, after the debt crisis Sturm und Drang we’ve just been through, but since July 23rd, the Congress of the United States has voluntarily passed up the chance to collect almost $30 million a day in tax revenue.

Do the calculations — that’s $350 million give or take to date — all because Congress can’t agree on aviation policy. The Federal Aviation Administration’s been partially shut down for two weeks now, and as a result, can’t collect taxes on airline tickets.

Marketplace’s David Gura has the latest.


David Gura: All sorts of taxes get factored into an airplane ticket. One of them goes into a fund that pays for maintenance and operating costs at airports.

Joe Del Balzo used to run the Federal Aviation Administration; he’s now a consultant. And he says the FAA can’t collect that tax because Congress can’t agree on a bill to fund the agency.

Joe Del Balzo: So you’re letting politics and philosophical differences tie up clean re-authorization bills, clean funding bills.

Congress argued over union rules and subsidies for rural airports. Now it’s on recess. Four thousand FAA workers have been furloughed; more than 200 construction projects are on hold.

There should’ve been at least one winner here, without this tax. Jamie Baker is an airline analyst with J.P. Morgan.

Jamie Baker: Consumers probably would’ve witnessed about a 10 percent decline in total ticket cost.

That makes sense. The government’s not collecting the tax, so airlines could trim the cost of their tickets. But Joe Del Balzo says that never happened.

Del Balzo: They’re not passing the tax savings along to the customers — it’s going into their own pockets.

President Obama has called the impasse an unnecessary “self-inflected wound.”

Barack Obama: This is a lose-lose-lose situation that can be easily solved if Congress gets back into town and does its job.

He says he wants a deal by the end of the week. But with most members of Congress already on vacation, that doesn’t seem likely.

In Washington, I’m David Gura for Marketplace.

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