Add another $1.2 billion in lost revenue to the contracting fiscal policy we’re embarking on in the midst of a low-growth jobs crisis. After passing the debt limit deal today in the Senate, Congress plans to take a vacation for a month. That’s despite some unfinished business. The FAA is still without authorization, and 4,000 workers have been furloughed, with another 70,000 working on construction projects sidelined. And Congress is just going to leave town without dealing with this. An effort in the Senate to get the authorization done brokedown.

A bipartisan Senate plan to end the partial shutdown of the Federal Aviation Administration has fallen apart as the cost to the government and to workers mounts [][…] Senators said the government will lose about $1.2 billion in uncollected airline ticket taxes.

The Democratic-controlled Senate and the Republican-controlled House are at odds of over proposals to cut rural air service subsidies and change federal labor law to make it more difficult for airline workers to unionize.

The rural air service subsidies are just the spiteful riders thrown into the routine extension, which has happened 20 times since 2007. They particularly attack Harry Reid’s Nevada, Max Baucus’ Montana and Jay Rockefeller’s West Virginia, i.e. the main Democrats in the Senate dealing with the FAA authorization bill. This is really about labor law, and because Republicans want to bust unions, thousands of workers are on furlough and billions of tax dollars are going uncollected. That’s not to mention the $2.5 billion in airport construction projects being halted, and all the economic activity stopped as a result.

FAA airport inspectors are working without pay and funding their own travel costs during the shutdown. Meanwhile, in a fun twist, the airline industry has pocketed the taxes that the government no longer has the authority to collect, about $200 million a week, by just raising ticket prices to the level of what they would be with the taxes included.

The irresponsibility of this all is astounding and shameful, causing needless pain to thousands of families caught up in a Washington power play.

As for the economic impact, it’s not nothing. Keep in mind that CBO projections were based on a growth rate of 3%. We’re getting nowhere near that in the first half of the year, and it’s hard to see how the second half will improve – where will the growth come from exactly? Shutting down part of the FAA certainly doesn’t contribute to growth. So by the end of the year, a HIGHER deficit out of austerity is likely.

David Dayen

David Dayen

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