Freedom Line Blog

Alongside numerous other conservative and libertarian organizations, CFIF has repeatedly voiced concerns regarding an effort underway in Congress to “privatize” our nation’s air traffic control system (H.R. 2997, the “21st Century AIRR Act”), which doesn’t appear to constitute true privatization at all.  In fact, it may actually make the situation worse.

Among other concerns, the proposed legislation would:

–  Increase the power air traffic controllers’ unions by not only maintaining current centralized monopoly power over air traffic control, but actually expanding their authority over such matters as personnel changes, salary caps and mandatory retirement age (currently 56, compared to 65 for pilots), thus explaining unions’ support for the bill;

–  Increase the federal budget deficit by $20 billion between now and 2026, according to the Congressional Budget Office (CBO);

–  Upend U.S. Department of Defense practices.  According to the Defense Department, “The establishment of a new entity separate from the FA 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”;

–  Create an air traffic control entity that 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.

And now, the concerns have grown.  As noted by The Hill, according to the Congressional Research Service, the proposal would trigger automatic cuts from other programs due to its impact in raising the deficit, including Medicare, the Federal Emergency Management Agency (FEMA) National Flood Insurance Fund and the Military Retirement Fund, among others:

A memo from the nonpartisan Congressional Research Service (CRS), released Monday by Democratic Reps. Peter DeFazio (Ore.) and Rick Larsen (Wash.), found that legislation to hand over the country’s air navigation system to a private entity would trigger budget sequestration, which automatically cuts some mandatory spending programs if a piece of legislation exceeds certain budget caps.

In the case of the air traffic control (ATC) spinoff plan, it would result in across-the-board spending cuts of $49 billion over the next 10 years.  That would include cuts to Medicare, the Military Retirement Fund, the Federal Emergency Management Agency National Flood Insurance Fund and other critical programs, DeFazio and Larsen warned.”

As stated by our friends at the American Conservative Union Foundation, we “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.”

Until all of these defects are resolved, however, Congress mustn’t act in a way that would make matters worse.

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.

CFIF has for months highlighted serious concerns regarding proposals to remodel the nation’s air traffic control system.

More specifically, alongside other conservative groups, we’ve noted how proposals claiming to “privatize” the system don’t fairly constitute true privatization at all.  The federally-chartered nonprofit corporation earlier proposals contemplate repeats the same errors of previous public/private creations like Amtrak and the U.S. Post Office.  It would maintain monopoly power over air traffic control while perpetuating and expanding benefits for the current air traffic controllers union, which standing alone undercuts the primary goal of true privatization:  eliminating inefficiencies of government bureaucracies in favor of competition and market choice.  In fact, the proposal could weaken existing constraints on unionized air traffic controllers regarding such crucial functions as personnel changes, salary limits and the current mandatory retirement age of 56 (whereas pilots themselves can continue to age 65).  It’s therefore no mystery why the National Air Traffic Controllers Union advocates the proposal.  The new entity would also possess authority to levy new taxes and user fees without oversight of Congress, let alone the sort of competition that true privatization would provide.  That could mean much higher costs for the traveling American public.

Additionally, the Congressional Budget Office (CBO) determined that it would widen the federal deficit by $20 billion between 2017 and 2026, and increase net direct spending by $90 during that span.  The Government Accountability Office (GAO) has also found that the proposal could delay NextGen air system implementation, and the Defense Department recently determined that, “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.”  It added that, “it is significant to note that the DoD relies on FAA ‘command and control’ capabilities in the execution of the national defense mission.'”

This week, the Trump Administration issued a broad set of principles regarding air traffic control system reform, but it left those myriad serious concerns unresolved.  Apart from a generalized comment advocating a no-strike clause in any future agreement, it simply accommodated the flaws of previous proposals or left them unaddressed.

The nation’s air traffic control system is too critical an issue to leave vulnerable to the concerns that we and other conservative organizations have itemized throughout this process, and Congress should not authorize any plan that fails to resolve them.

This afternoon, proponents of a proposal claiming to privatize air traffic control (ATC) are joining with labor activists to continue pushing what amounts to a labor union giveaway.  Alongside a number of conservative groups, CFIF remains concerned about the proposal, which upon closer scrutiny doesn’t constitute true privatization at all, because it would maintain monopoly power over ATC without sufficient accountability to taxpayers, as well as expanded gold-plated compensation and benefit guarantees to the National Air Traffic Controller’s union.

Instead of real privatization through open competition, pricing transparency and increased efficiency, the union-supported proposal would create a federally-chartered nonprofit corporation similar to current inefficient and bloated public/private entities like Amtrak and the U.S. Postal Service, which have long required massive subsidies and bailouts from taxpayers while struggling to manage legacy union contracts.  Under the proposal, air traffic controllers would receive additional taxpayer- and passenger-funded guarantees with diminished legal consequences for labor pressure tactics.  It’s therefore little wonder that the union’s bosses push the proposal so aggressively.

If that wasn’t bad enough, the Congressional Budget Office (CBO) determined last year that creation of a nonprofit ATC corporation would widen the federal budget deficit by $20 billion between 2017 and 2026.

This type of proposal could lead to a vicious cycle of increased user fees, more aggressive union contract demands and potential taxpayer bailouts.

In a letter sent to House Transportation and Infrastructure Committee  members today, the Center for Individual Freedom reiterated its deep concerns regarding  proposals to restructure the nation’s air traffic control (ATC) system.

In addition to pointing out ongoing concerns outlined in a coalition letter that was sent back in August, CFIF highlighted new concerns:

Since that letter, the Defense Department stated just last week that creating a separate new ATC organization “raises serious concerns.”  In its analysis, the Pentagon said, “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.”  It noted, “It is significant to note that the DOD relies on FAA ‘command and control’ capabilities in the execution of the national defense mission.”

Additionally, the Congressional Budget Office (CBO) determined last year that creation of a nonprofit ATC corporation would widen the federal budget deficit by $20 billion between 2017 and 2026, and increase net direct spending by an alarming $90 billion over that same period.  Separately, the Government Accountability Office (GAO) also determined that the proposed ATC restructuring may delay implementation of the NextGen air transportation system while necessary new safety oversight procedures were developed.

Read CFIF’s full letter here.