12-04-1999

CONGRESS: Why the FAA Bill Didn't Fly

During the first day of the House-Senate conference showdown over aviation
spending, Rep. Bud Shuster, R-Pa., the chairman of the House
Transportation and Infrastructure Committee, displayed the confidence of a
champion prizefighter. After all, Shuster had won last year's whopping
spending increase for highways and other surface transportation projects.
On the afternoon of Oct. 18, he acted as if victory would again be his;
before the conference meeting, he chatted gregariously with reporters,
reminding them that more spending would alleviate gridlock in the
skies.


During the conferees' opening remarks, no one uttered an unkind word about
his controversial bill. But by the time the monthlong fight was over, the
champ would have a legislative black eye.


In his bill to reauthorize the Federal Aviation Administration, Shuster
proposed spending $57 billion on aviation from 2001-2004; he planned to
pay for this increase by taking the Airport and Airway Trust Fund
off-budget, freeing billions for aviation improvements.


Shuster has always maintained that this fund, which consists of revenues
from airline taxes and aviation fuel, has accumulated large cash reserves
that have been used to offset other federal spending rather than pay for
aviation projects. Taking the aviation trust fund off-budget would reserve
this money for aviation spending, and remove it from the overall budget.
Shuster also proposed tapping into the general fund to help pay for the
FAA's operations. His bill passed the House in June, 316-110.


Appropriators and budgeteers have always resisted these off-budget
crusades, in part because such maneuvers reduce the amount of spending
that they control. This year, these off-budget critics--led by Senate
Budget Committee Chairman Pete V. Domenici, R-N.M.--made sure that
Shuster's bill didn't make it out of the conference committee. Domenici
successfully blocked the bill by securing seats on the committee for his
allies and by submitting a shrewd compromise proposal that Shuster could
never accept. "I think Pete Domenici looks like a titan," said
one Senate aide. "The lesson here is, the Senate didn't get
bullied."


Domenici's defiant stand against Shuster can be traced to last year's
fight over highways. During that debate, Shuster proposed taking the
highway trust off-budget, but he eventually settled for a compromise:
Although the fund would remain on-budget, a fire wall was placed around
it, guaranteeing that a minimum amount of the fund would finance increased
highway spending. This fire wall angered Domenici and the other off-budget
detractors.


Determined not to hand Shuster another trust-fund victory, Domenici met
this summer with Senate Majority Leader Trent Lott, R-Miss., Senate
Appropriations Committee Chairman Ted Stevens, R-Alaska, and Senate
Commerce Committee Chairman John McCain, R-Ariz., to ensure an
appropriator-budgeteer presence on the conference committee with Shuster.
In the end, Domenici was able to get five Budget Committee members
(including himself) on the conference committee--enough, with a few other
Commerce Committee allies, to block Shuster's bill. "He got rolled
last year," an airline lobbyist said of Domenici. "I think that
stiffens your backbone."


This move surprised many observers who were expecting the conference
committee to be a showdown between Shuster and McCain, who had passed a
competing FAA reauthorization bill in October. Rep. James L. Oberstar,
D-Minn., a Shuster ally and the ranking member on Shuster's committee,
told National Journal that the Budget Committee presence on the conference
committee was a first. "I've never seen that happen before on a
transportation bill," he said.


Domenici also was able to block Shuster's trust-fund move by floating a
compromise proposal--one that would never meet Shuster's demands. Domenici
offered to spend all the receipts in the aviation trust fund (plus the
interest), and he also proposed to tap into the general fund only when the
money in the aviation trust fund had been exhausted. "It allowed
[Domenici] to say publicly that he was unlocking the trust fund,"
said another Senate staffer. "I thought it was very clever." In
all, Domenici's staff said his plan would spend $43 billion between 2001
and 2004--$14 billion less than Shuster's bill.


But Shuster rejected the offer. He argued that it didn't guarantee that
the aviation trust fund would be unlocked, as an off-budget or fire-wall
provision would do. He was also disappointed that there was not a
guaranteed general-fund contribution; without the general fund, Shuster
couldn't get the large spending increase he desired.


As he did last year, Shuster submitted a counterproposal to
"fire-wall" the aviation trust fund and still get a general-fund
contribution. He based this counterproposal on a transit-funding provision
in the highway bill that had been devised in part by--guess who?--Pete
Domenici. Shuster also proposed to whittle down the general-fund
contribution to as little as $1.4 billion a year. But, in the end, Shuster
and Domenici weren't able to cut a deal. Oberstar said, "We were not
going to capitulate to the Senate. If we could not get a guarantee of
general-fund funding...then it [was] not worth doing."


The failure to get an FAA bill passed this year means more than just a
chink in Shuster's armor. It jeopardizes about $2.4 billion in fiscal 2000
for the Airport Improvement Program, which helps fund the nation's airport
construction projects. The program had been funded by a series of
extensions since the last reauthorization in 1996, but in a strategic move
to give him more bargaining leverage next year, Shuster prevented its
extension before Congress adjourned. "It definitely puts some urgency
in getting the bill passed," said Shuster's spokesman, Scott
Brenner.


The odds were always against Shuster's repeating last year's success with
highways. For starters, aviation spending is less attractive than highway
spending; not every member has an airport in his or her district.
Furthermore, many members are wary of dumping large amounts of money on
the FAA, which critics say has previously mismanaged its funds.


But, observers explain, the biggest obstacle may have been an aviation
industry that--unlike the highway groups last year--was not strongly
united behind Shuster's effort. In particular, the major airlines were
divided over an airline-passenger tax in the bill, and over a few measures
that would promote more airline competition.


Shuster did have a couple of advantages. His bill directly addressed two
of the most important issues facing aviation: congestion and competition.
Shuster constantly stressed that his large spending package was intended
to meet the aviation system's upcoming demands. For instance, in the next
decade, the air-travel population is expected to approach 1 billion, up
from about 600 million today. In addition, the Air Transport Association,
the major airlines' trade group, estimates that such traffic in the next
decade would create a 250 percent increase in flight delays, given the
current air traffic control system. "We are hurtling toward gridlock
and potential tragedy in the skies," Shuster said throughout the
debate.


Moreover, Shuster linked his bill to the public's demand for more airline
competition. For the last couple of years, some Americans--particularly
those living in small and mid-sized cities--have been furious about rising
airfares. And the number of consumer complaints against the airlines has
been skyrocketing. "I think the flying public is about as disgusted
as it can get," said Rep. Louise M. Slaughter, D-N.Y. Slaughter is
pushing for more competition in an effort to drive down fares for her
constituents in Rochester.


The Wall Street Journal profiled this dissatisfaction in an hour-by-hour
account of one Northwest Airlines jet stuck on a runway in snowbound
Detroit for nearly seven hours. "The 757's toilets overflowed. A
hysterical passenger vowed to blow an emergency door and jump into the
freezing darkness. A grown man wept and begged to be freed. The air stank.
Babies screamed. Adults screamed, too," the Journal reported.


Shuster addressed the competition issue by proposing to phase out the slot
restraints on airline entry at Chicago's O'Hare and New York's La Guardia
and John F. Kennedy airports, while adding more slots at Washington's
National. These measures would give the smaller, low-fare airlines access
to these important airports. In fact, these competition provisions were
the centerpiece of McCain's FAA bill, and several observers had speculated
that the slot issue would compel McCain to compromise with Shuster on his
off-budget move.


But McCain's influence on the conference committee was overshadowed by
Domenici's, and many of Shuster's supporters were disappointed that
McCain--who's running for President--did not take a more active role in
the debate. Hardly critical of McCain's absence, Oberstar said McCain was
engaged on the issue while on the campaign trail, but that he might have
been able to put more pressure on Domenici if he had been in town more
often. Mark Buse, the staff director on McCain's Commerce Committee, says
that McCain was displeased that the "parochial" budget
disagreement sank the more important competition provisions. The budget
debate, Buse said, "is nothing the public understands, nor should
they."


The conferees will resume their debate next year, and what happens is
anyone's guess. Many observers believe that Domenici still holds all the
cards, but they say it would be a mistake to underestimate Shuster and his
allies. Indeed, Oberstar promises that the House and the aviation industry
will launch a more coordinated campaign to unlock the aviation trust fund.
And the unfunded Airport Improvement Program gives Shuster additional
leverage.


Some aren't too sad to see the Shuster-Domenici battle continue into next
year; it's been one of the most entertaining contests in town. "We're
putting the game into extra innings," one Senate observer said.
"This is so much fun."


Mark Murray

National Journal