Sssshhhh! Should the Airline Passenger Foot This Bill?

The airlines are swooping down on Congress to grab four billion more dollars from airline passengers. Behind this latest chapter of corporate pressure politics is a tale of corporate socialism so bold as to set, if successful, the stage for many similar inflationary congressional raids on consumers. It is a simple story of business greed. Back in 1976 the Federal Aviation Administration ordered the airlines to comply with new noise reduction standards in gradual stages by 1985. To retrofit the noisier jets in the airlines’ fleet would require, after taking generous tax credits and depreciation allowances, less than a fourth of what the airlines are demanding from Congress.

The airlines saw an opportunity. Why not claim that to really reduce noise of airplanes around airports it would be best to replace the entire airplane fleet that needs to have its engines treated for noise levels? This approach would cost a mere $7 billion, the airlines estimated.

To fund this enterprise, airline lobbyists went to their friends in Congress and got them to introduce Title Three of H.R. 8729. The bill would impose a tax on airline passengers to produce a slush fund of $4 billion for the industry.

At first, this slush fund was to be tax-exempt to the airline so But this was too much to absorb for some of the members of the House Ways and Means Committee. Instead, the fund was made taxable and then the Committee passed the measure by a two-to-one majority. It now goes to the House floor.

So the unequal battle begins between the organized interests composed of airline, aircraft manufacturing and associated companies and the interests of millions of unorganized taxpaying consumers. The industry is making its move for this bill at the same time as the House is taking up President Carter’s airline deregulation legislation.

On Capitol Hill such timing is not entirely coincidental. The White House has been informed by key legislators that letting the passenger tax bill pass might hasten the advance of the deregulation bill in the House of Representative so Carter’s people are not yet opposing this $4-billion surge in predatory inflation. On the contrary, Transportation Secretary Brock Adams had some kind words for a passenger surcharge in recent congressional testimony.

Another expedient alliance has formed behind the bill. Otherwise progressive legislators, such as Rep. Abner Mikva, and Rep. Joseph Fisher, D.-Va., are being pressed by constituents living near busy airports to do something about aircraft noise.

Orders for new airplanes increase economic activity in other states, such as California, so erstwhile tax reformers in the House of Representatives suddenly become special pleaders like those they have spent much of their careers opposing.

Noise reduction, they should be reminded, can come about without a $4-billion consumer tax.

Should H.R. 8729 pass the Congress and be signed by President Carter, it would make a mockery of the President’s anti-inflation program and start a chain reaction to other industries lining up to feed from the taxpayers’ trough. Any time health and safety laws are enforced, Industry X or Corporation Y could go to the Congress, vastly inflate their compliance costs, and cry “gimme,” citing the airline’s success at getting on the welfare roles.

If airlines want to replace their aircraft, they should do it on their own and not ask the federal government to tax consumers in the guise of a noise abatement program. Rather than demanding an additional tax bonanza, the carriers should be trying to meet the cost of compliance out of profits or capital financing and pass on any necessary added expenses to consumers through the marketplace.

This is not only a fairer approach but it also enhances the competitive foresight of competing carriers and keeps the passed-on cost to an efficient minimum.

But it is remarkable how rarely conservatives in Congress or conservative economists speak out against this kind of big government “Sugar Daddy” behavior. This bailout-subsidy philosophy would be anathema to market-oriented economic doctrine. Yet too many conservative politicians and economists choose the corporatist route rather than the marketplace whenthe chips are down.

Two conservative economists–Milton Friedman and Murray Weidenbaum–have been warning their big-business colleagues that the more demands they make for government subsidies the less will be their credibility when they oppose other government policies. What these two men are saying is that business can’t have it both ways.

Let’s hope that the Congress and the White House begin to inventory the vast array of government subsidies to business and apply some zero-based thinking to this burgeoning corporate welfare state. A good place to start the awakening process is with the airline’s latest raid on the taxpayers’ Ho R. 8729.

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