Congress Cuts Fliers a Break by Ending FAA Furloughs

The sequester caused flight delays, so Congress got right on it.

By SHARE
FE_PR_130412_meanestairlines.jpg

If you've been inconvenienced, Congress is eager to help. If you're out of a job, tough luck.

The first modification of the sequester – $85 billion in federal spending cuts that went into effect March 1 – appears likely to be targeted at the nation's backed-up air-traffic control system. Just days after the Federal Aviation Administration furloughed air-traffic controllers, in order to comply with the spending cuts, the usually plodding Senate has speedily passed a bill intended to keep controllers on the job and relieve a surge in flight delays. The House followed, with a reluctant signature from President Barack Obama likely, making the bill law.

[READ: Norquist: Obama, Congress Locked in Stalemate]

Don't think, however, that Congress is backing away from the sequester, which has been roundly criticized as a clumsy and cowardly way to cut federal spending. The new bill doesn't direct more money to the FAA. It simply gives the agency more flexibility to shift money around in order to keep controllers on the job while making deeper cuts elsewhere. Many budget experts say that, at a minimum, such rules should apply to every federal agency, rather than the blunt, across-the-board cuts that make it impossible to prioritize what's most important. Yet Congress hasn't considered that.

Meanwhile, we now have the first tangible evidence the sequester is hitting the real economy fairly hard. First-quarter GDP growth came in half-a-percentage-point lower than economists had expected, mainly because of a 4.1 percent decline in government spending. The economy still grew 2.5 percent in the first quarter, mainly because consumer spending held up. But that may not last either, as tax hikes that kicked in at the start of the year reduce take-home pay and drive down confidence. And the sequester is likely to push second-quarter growth much lower.

[OPINION: Spending and the Budget Are Under Control]

Here's the difference between the effects of the FAA slowdowns and of the sequester as a whole: Economists at Bank of America Merrill Lynch estimate that furloughed flight controllers would cost the economy $195 million in lost income, plus another $400 million in lost output on account of airline flight delays. That adds up to about $600 million.

If the broader sequester takes $85 billion out of the economy, that's 142 times the impact of the sequester on airline traffic. The Obama administration estimates the sequester will cost 750,000 jobs if it stays in effect all year. That may be an exaggeration, yet simple math dictates that if you take $85 billion out of the economy, it will reduce incomes and cause higher unemployment.

[READ: How Airline Mergers Saved an Industry]

The difference, of course, is that flight delays represent a discrete, tangible way [in]action in Washington harms ordinary people. It's harder to pinpoint people hurt by money that doesn't get spent or jobs that don't get created. There's also an important sympathy factor. People who fly are "just like us" – typically middle- or upper-class Americans who tend to be economically productive. Their pain is our pain. The underprivileged who tend to benefit from publicly funded programs, not so much. And of course bureaucrats who might lose their jobs or have their pay cut are nothing more than a public nuisance (until tax refunds run late or the phones go dead at the Social Security administration).

The sequester exists because Washington spent recklessly for a decade, and needs to somehow cut back. Most Americans have benefitted from excessive federal spending, and most Americans should bear the cost of reining it in. But there's nothing special about airline passengers that should make them exempt from Washington's clumsy cutbacks. If Congress can give air travelers a break, it can do the same for everybody else.

Rick Newman's latest book is Rebounders: How Winners Pivot From Setback to Success. Follow him on Twitter: @rickjnewman.