Senate FAA Bill Betrays Free Market and Fiscally Conservative Principles

Last month, I wrote about why everyone should be disappointed by the Senate’s FAA reauthorization bill: it fails to include key air traffic control reforms contained in the House’s AIRR Act and threatens the nascent small unmanned aircraft research and entrepreneur communities with onerous manufacturing regulations (Section 2124).

Apparently undeterred by the bill’s fundamental weaknesses, Senate leadership is poised to move forward with a floor debate. Things are likely to get worse, as the Senate has once again indicated it has little interest in passing needed aviation reforms. Instead, most of their energy appears to be focused on protecting crony capitalist tax breaks, some of which are due to expire at the end of the year. Free market and fiscal conservative organizations have already blasted a plan from Minority Leader Harry Reid (D-Nev.) and Finance Committee Ranking Member Ron Wyden (D-Ore.) to use the FAA bill as the vehicle to renew $1.4 billion in tax subsidies to “green” energy corporations.

Making matters worse, a few conservative groups are supporting the big government status quo, as the Reason Foundation’s Bob Poole, the free market movement’s leading transportation scholar and a key architect of air traffic control reform, highlights in his air traffic control reform newsletter. One such group is the Capital Research Center. Last week, I debunked their false claim that the House’s AIRR Act grants air traffic controllers a right to strike. Unfortunately, such groups seem to rely on bogus arguments made by House Transportation and Infrastructure Committee Ranking Member Peter DeFazio (D-Ore.), who in turn relies on falsehoods peddled by lobbyists for the corporate jet trade association (the National Business Aviation Association) and Delta Air Lines—the two entities funding the opposition to air traffic control reform. Poole adds more in his latest newsletter:

In the small fraction of the piece that attempts to deal with the substance of the issue, it repeats almost word-for-word the DeFazio line of argument that the bill would "create an unaccountable special-interest-controlled monopoly 'corporation,'" and also that it "would give the controllers union the deal of a lifetime." Its only citation for the union give-away allegation is the previously noted NRO blog posts, which have been shown to be erroneous. As drafted, the legislation bans the right to strike and does not give NATCA or other ATC unions any kind of veto power over policy or operational decisions—only the same degree of inclusion in discussions that they have in the Air Traffic Organization today.

What I find especially disturbing is the piece's misunderstanding (or misrepresentation) of what the proposed corporation actually is. It is not a government-sponsored enterprise (GSE) like Fannie Mae, as the piece claims. It would be a federally chartered private nonprofit corporation, analogous to the American Red Cross or federal credit unions. It would receive zero government funding, and its bonds would not be backed by taxpayers, only by the revenues that it generates from providing ATC services (just like private or public toll roads—or like utility companies).

Surprisingly for a conservative organization, CRC seems enamored of congressional micromanagement of what is basically a high-tech business. It repeats the NBAA line about the stakeholder board being "special interests" and opposes shifting governance from a gaggle of politicians to a board of directors reflecting the varied interests of all key aviation stakeholders. Congressional micromanagement doomed National and Dulles Airports to mediocrity when they were part of FAA and their budgets were specified in detail by congressional committees. Only when they were divested to a newly created nonprofit entity were those airports freed from micromanagement and enabled to self-finance major improvements by issuing revenue bonds. This was done, incidentally, by the Reagan Administration. CRC's article also misunderstands that the stakeholders would be nominated by groups like AOPA and A4A, but would not directly represent them. No board member could hold a position in or receive compensation from any aviation company or organization, and each would have a legally enforceable fiduciary duty to serve the best interests of the ATC corporation, not the entity that nominated them. This is a model that has performed superbly over the past 20 years for the corporatized nonprofit Nav Canada, which has won global awards as the world's best air navigation service provider (ANSP).

As I documented in my FAQ on air traffic control reform, corporate jet lobbyists and Delta are opposed to reforms for completely self-serving reasons. Delta has stated that it believes its lobbyists can more effectively manipulate air traffic control in their favor if it remains under the FAA’s and Congress’s control. The National Business Aviation Association is worried that it will lose its subsidies. Under the status quo, corporate jets account for 9-11 percent of air traffic control system use, but pay just 0.6 percent of the taxes that support the system. Paying $1 to receive $20 in services is a great deal for the wealthy, but the rest of us poor slobs who fly commercial are the ones paying for these corporate jet subsidies.

Finally, free market supporters should be disgusted by the regulatory micromanaging contained in the Senate’s FAA bill. These provisions are too numerous to list here, but range from a mandate for slightly improved flight data recorders that will do nothing to improve safety under Section 2303 (likely cost ≈$700 million) to changing airline first-aid kit requirements to include EpiPen epinephrine auto-injectors that are already carried by those who deal with serious allergies under Section 3105 (likely cost is several million dollars).

Conservatives supposedly grasp the death-by-10,000-cuts burden of the regulatory state, which my CEI colleague Wayne Crews has catalogued for two decades, but the Senate’s bill fully embraces Progressive technocratic central planning. And we can only expect for the FAA bill to be larded up with even more giveaways to special interests once the bill hits the floor.

Senate leadership should recognize that the Commerce Committee failed to adhere to free market, fiscally conservative principles, and allow the House to take the lead on FAA reauthorization. Moving forward with the deeply flawed Senate bill would represent a betrayal of these core principles.