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Friday
Aug052011

Congress brokers FAA deal, ending shutdown - 555

On Thursday, Aug. 4, Congress came to a bipartisan agreement ending the partial Federal Aviation Administration shutdown threatening jobs and halting airport projects.

The shutdown was a result of disputes over funding the FAA and has continued since July 22. During the shutdown, taxes collected on fares lapsed; 4000 jobs were furloughed; and 70,000 airport contruction jobs were affected. The uncollected taxes added up to $30 million a day that would have contributed to government revunue available for halted projects.

The compromise reached by Congress is only a temporary extension until it returns from recess in September. According to Reuters,

The FAA impasse hinged on cutting more than $16 million in subsidies for rural air service — a demand by the Republican-led House that rankled key Senate Democrats like Reid, Finance Chairman Max Baucus and John Rockefeller, chairman of the Commerce Committee.

Congressional and transportation officials said the linchpin of the compromise gives LaHood authority to waive cuts in service to rural airports targeted in the bill, raising the prospect that some or all of the cuts will not be made.

There are undertones of another partisan showdown, though. Congressional Republicans want to rework the FAA funding such that unions are not easily created at airlines. As Reuters also point out, the extension of FAA funding ends the revenue stream created by the uncollected taxes, which some airlines capitalized on by raising fares equal to the hole left.

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