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September 22nd, 2017 1:55 pm
Air Traffic Control Proposal: Making Airlines Tax Collectors?
Posted by Timothy Lee Print

Beware policy proposals waving the “privatization” banner that don’t constitute true privatization at all, and threaten to actually worsen the situation.

The latest example:  Efforts to restructure the U.S. air traffic control system, which would likely repeat the mistakes of such federal boondoggles as Amtrak and the U.S. Post Office.

Alongside numerous other conservative and libertarian organizations, CFIF has maintained serious concerns over H.R. 2997, the “21st Century AIRR Act.”  Those concerns include, among other flaws:

  • Greater empowerment of air traffic controller unions, by maintaining centralized monopoly power over air traffic control while expanding their authority over such matters as personnel changes, salary caps and mandatory retirement age (currently at age 56, compared to 65 for pilots), which explains why the unions favor the proposal;
  • It would increase the U.S. budget deficit by $20 billion between 2017 and 2026, according to the Congressional Budget Office (CBO) itself;
  • The U.S. Department of Defense recently weighed in to say, “The establishment of a new entity separate from the FAA raises serious concerns regarding the disposition of certain unique National Defense procedures, programs and policy,” adding that, “it is significant to note that the DoD relies on FAA ‘command and control’ capabilities in the execution of the national defense mission”;
  • The proposed replacement air traffic control entity would possess authority to impose new taxes and user fees without Congressional oversight, meaning higher costs for American consumers, which is far from the sort of market competition that true “privatization” would offer.

On that latter point, Andrew Langer of the Institute for Liberty raises an ominous concern in his recent commentary in The Washington Times:

[W]e’ve been told that the new entity will be self-funded, in this case by a user fee.  As always, I’m skeptical taxpayers won’t ultimately have to bail out a GSE, but with the ATC proposal, it’s really about control.  Proponents have made clear that their real motivation is to shift the tax burden to other segments of the industry.  Ian Adams, a proponent of separating ATC, recently argued that it would reallocate the tax burden among the ‘fees its users pay,’ including general aviation.

The only privatization will be that the authorization and taxing authority of Congress will be supplanted by authority of one segment of an industry to tax another with no oversight.  If the airlines were granted more monopoly power and gained taxing authority from Congress, they have shown time and again that they would abuse that power.  They have increased their fees on passengers by over $7 billion.  Now they want to phase out their fuel and excise tax for a flat user-fee tax that would get levied disproportionately at economy class passengers.  I’m always in favor of getting rid of taxes, but this is a tax by another name, without the political accountability to keep it from rising in perpetuity.

And, since there would be no accountability from anyone to stop it or make sure this entity is being managed properly, it’s a safe bet that ultimately all taxpayers will pay more in the form of a bailout.”

That is among the reasons the American Conservative Union Foundation (ACUF) last week announced its opposition to the proposed restructuring, saying that it, “would gladly stand in support of true policy efforts to privatize our air traffic control system that better reflect the ideals of privatization – those that align with a more robust free market and exhibit a true transfer of power from public to private hands.”

Well said.  At this point, the proposal simply doesn’t amount to the type of true privatization that merits support from conservatives and libertarians across America.

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