Chris Prandoni

Three Myths About the NAT GAS Act


Posted by Chris Prandoni on Thursday, September 22nd, 2011, 2:47 PM PERMALINK


Today, the Ways and Means Committee held a hearing on energy tax policy and prospective tax reform. During the hearing—which lasted nearly 4.5 hours—the most interesting debate surrounded the NAT GAS Act, legislation that would provide tax credits to consumers who purchase natural gas cars and construct natural gas infrastructure.

Proponents of HR 1380, the NAT GAS Act, constructed and leaned on three straw men. The bolded sentence represents the NAT GAS Act advocates’ arguments—my rebuttal follows.  

  1. Increasing demand for natural gas via the NAT GAS Act will increase American natural gas production. Unfortunately, this theory only works in a vacuum. A vacuum that is absent government’s prohibitive exploration policies and uncertain regulatory environment. The hostile-to-hydraulic fracturing Environmental Protection Agency is looking to impose regulations which will surely hamstring the burgeoning industry. States like New York have banned hydraulic fracturing completely. In reality, the NAT GAS Act would likely induce demand that outpaces supply. This would raise prices for other, less politically connected, consumers of natural gas—like American manufacturers.
  2. The NAT GAS Act will make America more secure. America imports a majority of its oil from our North American neighbors, Canada and Mexico. The amount of oil we import from unfriendly governments, that perhaps may be sponsoring terrorist activity, is not insignificant but minimal. The NAT GAS is estimated to displace 100,000 oil-based cars over the next five years. This will reduce the amount of foreign oil we important but is not substantial enough to starve OPEC or Venezuela of revenue. After all, Venezuela and the countries that constitute OPEC export arguably the most valuable resources in the world—they don’t have trouble finding buyers.
  3. Without the NAT GAS Act, consumers won’t buy natural gas cars. While a tax credit would certainly increase purchases of natural gas cars, it is important to ask what the impetus is behind such a policy, and is it fair. Americans for Tax Reform operates under the assumption that the government should abstain from meddling in the market unless there is an obvious market failure. With their vast natural gas vehicle fleets, UPS and Fed Ex disprove the supposition that natural gas cars are simply too expensive. Further, why should natural gas consumers who drive cars receive preferential treatment over a family that uses the fuel to heat their home?
     

Don’t like the NAT GAS Act? Tell your Representative or Senator.

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ATR Urges Passing Of TRAIN Act


Posted by Chris Prandoni on Tuesday, September 20th, 2011, 2:41 PM PERMALINK


The TRAIN Act will establish an interagency committee to assess the combined impacts of recent environmental regulations. Although the EPA employs its own economists to access the fiscal impact of its rules, internal employees underestimate regulatory costs.

Immediatley, the TRAIN Act would delay the onerous Utility MACT rule and new transport rule until the economic impacts of these two rules are fully understood. When combined, the Utility MACT and the new transport rule until could cost approximatley $17.8 billion annually, totaling $184 billion by 2030. Additionally, these rules could result in 1.44 million jobs lost.

With an economy on the edge of another resseccion, it's vital that TRAIN be passed in order to jump start the long-delayed phase of real job creation.  Click here to read the full letter.

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Obama Proposes $100 Billion in Tax Hikes on Energy Producers and Families


Posted by Chris Prandoni on Monday, September 19th, 2011, 4:38 PM PERMALINK


Click here for a PDF file of this document

More taxes, less jobs
Oil and natural gas companies are responsible for about 9.2 million jobs in this country and about 7.5 percent of its GDP. Raising taxes on this industry would force companies to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs. Repealing the below deductions and credits could kill 170,000 jobs and ultimately reduce government revenue, according to a Wood-Mackenzie study.

Encumbered by taxes
Already paying a little over $85 million a day, the oil and natural gas industry’s earnings are taxed at an effective rate of 41 percent. Compare this to the average income tax rate of 26 percent for non-oil and natural gas companies in the S&P 500 and it is clear that oil companies are paying their “fair share.”

Repealing the following twelve tax policies employed by energy producer would raise these businesses taxes by $95 billion. Eliminating the first eight tax policies increases oil and natural gas companies’ taxes by $41 billion. 

1. Intangible Drilling Costs.  Current law allows energy companies to deduct most (only 70% of these costs for the larger companies) of the costs associated with drilling.  All expenses should be deductible in the year they are incurred.  Stimulus 2.0 would repeal this and make companies deduct the costs very slowly over fifteen years.

2. Tertiary Injectants.  Current law allows energy companies to deduct the cost of injecting materials into older energy reservoirs in order to keep them productive.  This is the proper tax treatment of this cost.  Stimulus 2.0 would replace this very ordinary deduction with precisely nothing.  Energy companies would simply have to eat the cost with after-tax dollars.

3. Percentage Depletion.  This refers to a provision of law that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well.  Stimulus 2.0 would repeal this provision ONLY for investments in oil and gas wells.  Interestingly, the largest oil companies don’t benefit from this today, so this tax increase is targeted only at smaller energy companies and their investors.

4. Manufacturer Tax Deduction (aka “Section 199”). All employers are today allowed to deduct up to 9% of the cost of domestic manufacturing—all employers, that is, except energy companies, who can only deduct 6% of such costs.  Stimulus 2.0 would deny this deduction entirely to energy companies, singling them out by picking winners and losers in the tax code.

5. Oil and Gas Passive Losses.  In general, “passive” (trade or business activities without active participation) losses are not allowed to be claimed by taxpayers.  There is an exception for investment in oil and gas extraction.  Stimulus 2.0 repeals this exception, which will tend to hit small energy companies and their investors the hardest.

6. Geological and Geophysical Costs.  Currently, small energy companies can deduct the costs of exploring for new sources of energy over two years (again, the proper treatment should be to expense in the first year).  Stimulus 2.0 would stretch this period to seven years.  This only affects small, independent energy employers as larger companies are ineligible for the two-year treatment under current law.

7. Enhanced Oil Recovery Credit.  This credit, intended to spur oil production even when prices are low, can only be claimed when oil is less than $42 per barrel.  Oil is currently about $87 per barrel, so this credit is nowhere near claim-able.  Nonetheless, Stimulus 2.0 repeals the credit just to raise taxes while scoring cheap points against energy employers.

8. Marginal Well Production Credit.  This credit is the same as the Enhanced Oil Recovery Credit in Sec. 437, but it is only use-able when oil prices drop to $27 per barrel.  Stimulus 2.0 repeals this credit for similar reasons.

9. Dual Capacity Rules (tax increase of $10 billion).  The U.S. is one of the only nations which attempts to tax on a “worldwide” basis—even on income which has already faced income taxation in other countries.  When combined with the highest corporate tax rate in the developed world, “worldwide” taxation is an uncompetitive jobs killer.  In order to avoid international double taxation, employers can claim a tax credit for income taxes paid overseas.  Stimulus 2.0 makes it more difficult for energy companies to claim this tax credit, exposing their worldwide income to international double taxation—potentially shipping jobs overseas to avoid paying taxes twice.

10. Repeal last-in, first-out (LIFO) method of accounting for inventories (tax increase of $52 billion, $22.5 billion on oil and natural gas industry). A long-accepted accounting method, LIFO is employed both by small businesses and energy producers. Retroactively taxing businesses accrued LIFO reserves would drain these entities of capital.

11. Reinstate Superfund taxes (tax increase of $19 billion). Reintroducing a $.10 excise tax on barrels of oil, the superfund tax would generate revenue for the Superfund Trust Fund (STF). The STF would initially be used to clean up hazardous substances released into the environment but likely be raided for other uses—just like Highway Trust Fund is used to pay for bike paths, subsidize subways, and finance other non-highway projects. Proving the STF unnecessary, energy producers have responsibly removed waste since the elimination of the Superfund in 1996.  

12. Repeal the coal industry’s tax policies (tax increase of $2 billion). Just as Obama proposed to raise the oil and natural gas industry’s taxes, the president has also looked to repeal similar tax policies employed by the coal industry. Specifically, Obama has proposed to eliminate the expensing of exploration and development costs (described as number one of ATR’s analysis), percent depletion (number three), capital gains treatment for royalties, and Section 199 (number 4).

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How Not To Create Jobs: Further Tax An Industry That Employs Nine Million Americans


Posted by Chris Prandoni on Thursday, September 15th, 2011, 11:25 AM PERMALINK


Stimulus 2.0= Lost oil and natural gas jobs
Oil and natural gas companies are responsible for about 9.2 million jobs in this country and about 7.5 percent of its GDP. Raising taxes on this industry would force companies to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs. Repealing the below deductions and credits could kill 170,000 jobs and ultimately reduce government revenue, according to a Wood-Mackenzie study.

Encumbered by taxes
Already paying a little over $85 million a day, the oil and natural gas industry’s earnings are taxed at an effective rate of 41 percent. Compare this to the average income tax rate of 26 percent for non-oil and natural gas companies in the S&P 500 and it is clear that oil companies are paying their "fair share."

How to create jobs
House Republicans have passed eight bills that would create jobs and induce domestic growth by increasing onshore and offshore energy production, and preventing the EPA from implementing onerous regulations. Allowing oil and natural gas companies to develop America’s vast resources would create around 530,000 jobs, bringing the treasury increased revenue and reducing our dependence on foreign oil. Eliminating imminent EPA rules would provide utility, manufacturing, and coal companies/refiners the certainty they need to invest and grow.

Unfortunately, the Democrat-controlled Senate rejected every single House GOP proposal to jumpstart our fledging economy. Disappointingly, President Obama seems to be doubling-down on his Party’s tax and regulate approach. Click here to view to full PDF.

List of 9 proposed tax hikes on oil and natural gas producers in Stimulus 2.0:

1. Intangible Drilling Costs (Sec. 431). Current law allows energy companies to deduct most (only 70% of these costs for the larger companies) of the costs associated with drilling. All expenses should be deductible in the year they are incurred. Stimulus 2.0 would repeal this and make companies deduct the costs very slowly over fifteen years.

2. Tertiary Injectants (Sec. 432). Current law allows energy companies to deduct the cost of injecting materials into older energy reservoirs in order to keep them productive. This is the proper tax treatment of this cost. Stimulus 2.0 would replace this very ordinary deduction with precisely nothing. Energy companies would simply have to eat the cost with after-tax dollars.

3. Percentage Depletion (Sec. 433). This refers to a provision of law that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well. Stimulus 2.0 would repeal this provision ONLY for investments in oil and gas wells. Interestingly, the largest oil companies don’t benefit from this today, so this tax increase is targeted only at smaller energy companies and their investors.

4. Manufacturer Tax Deduction (aka "Section 199") (Sec. 434). All employers are today allowed to deduct up to 9% of the cost of domestic manufacturing—all employers, that is, except energy companies, who can only deduct 6% of such costs. Stimulus 2.0 would deny this deduction entirely to energy companies, singling them out by picking winners and losers in the tax code.

5. Oil and Gas Passive Losses (Sec. 435). In general, "passive" (trade or business activities without active participation) losses are not allowed to be claimed by taxpayers. There is an exception for investment in oil and gas extraction. Stimulus 2.0 repeals this exception, which will tend to hit small energy companies and their investors the hardest.

5. Geological and Geophysical Costs (Sec. 436). Currently, small energy companies can deduct the costs of exploring for new sources of energy over two years (again, the proper treatment should be to expense in the first year). Stimulus 2.0 would stretch this period to seven years. This only affects small, independent energy employers as larger companies are ineligible for the two-year treatment under current law.

6. Enhanced Oil Recovery Credit (Sec. 437). This credit, intended to spur oil production even when prices are low, can only be claimed when oil is less than $42 per barrel. Oil is currently about $87 per barrel, so this credit is nowhere near claim-able. Nonetheless, Stimulus 2.0 repeals the credit just to raise taxes while scoring cheap points against energy employers.

7. Marginal Well Production Credit (Sec. 438). This credit is the same as the Enhanced Oil Recovery Credit in Sec. 437, but it is only use-able when oil prices drop to $27 per barrel. Stimulus 2.0 repeals this credit for similar reasons.

8. Dual Capacity Rules (Sec. 441). The U.S. is one of the only nations which attempts to tax on a "worldwide" basis—even on income which has already faced income taxation in other countries. When combined with the highest corporate tax rate in the developed world, "worldwide" taxation is an uncompetitive jobs killer. In order to avoid international double taxation, employers can claim a tax credit for income taxes paid overseas. Stimulus 2.0 makes it more difficult for energy companies to claim this tax credit, exposing their worldwide income to international double taxation—potentially shipping jobs overseas to avoid paying taxes twice.

9. Dual Capacity Discrimination Against Oil and Gas Employers (Sec. 442). In addition to the dual capacity rule repeal of Sec. 441, this provision of Stimulus 2.0 makes it even more difficult for oil and gas employers to avoid double taxation than it does for all other taxpayers to avoid double taxation. It adds insult to the injury of dual capacity rule repeal. 

 

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Unions Butter Bread With Obama Tools


Posted by Chris Prandoni on Wednesday, September 14th, 2011, 2:38 PM PERMALINK


This article was originally published by the Washington Times.

Unions have good reason to thank President Obama, who has gone to unprecedented lengths to reverse demographic trends and public sentiment to help unions cling to power. In the past 100 years, Americans have never thought less of organized labor. This disenchantment didn’t happen overnight - Gallup polls show that Americans increasingly disapprove of labor unions and think they should have less power.

Given this negative perception of unions, it is not surprising that union membership has dropped dramatically: Twenty-four percent of America’s workforce was unionized in 1979 while only 12 percent are unionized today. Trying their best to buck this 30-year trend, unions began lobbying for the Employee Free Choice Act (EFCA) - more commonly known as "card check" - during the tail end of the Bush administration. Card check would have stopped unions’ membership from deteriorating further. It would have allowed unions to bully workers into unionization by eliminating the private ballot during union elections.

After spending hundreds of millions of dollars during the 2008 election cycle to help Democrats secure both chambers of Congress, unions had their best chance to have card check signed into law. However, the 111th Congress came and went without even a vote on EFCA. Constituents barred their representatives from even considering this legislation. It turns out the same Americans who don’t want to join a union in the first place don’t want to be forced into a union.

With Congress no longer a viable vehicle to implement pro-union policy, the Obama administration began using federal agencies such as the National Labor Relations Board (NLRB) and the National Mediation Board (NMB) to achieve similar ends. Appointing former union officials to both federal agencies, Mr. Obama’s unabashedly pro-union appointees went to work writing rules to facilitate unionization.

The National Mediation Board - the federal agency that oversees union-employer relations in the transportation sector - overturned 75 years of accepted law to tilt the scales in unions’ favor come election time. Traditionally, for a union to win representation, a majority of workers had to vote yes for the union. Under the new NMB rule, only a majority of voting workers have to agree to unionize. This is especially problematic as it is practically impossible to decertify a union in the transportation industry - no body of workers with more than 400 members has ever decertified a union.

 

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ATR will Keyvote H.R. 2587, the Protecting Jobs from Government Interference Act


Posted by Chris Prandoni on Tuesday, September 13th, 2011, 12:03 PM PERMALINK


The NLRB’s decision to issue a legal complaint that will potentially force the Boeing Company to relocate production of 787 Dreamliner is indicative of the job-killing regulations proposed by this Board. The National Labor Relations Act was never meant to allow the NLRB to dictate where a business can setup shop.

South Carolina, a right-to-work state, created an environment for Boeing to develop and grow uninhibited by Big Labor. South Carolina should not be punished for its ability to attract investment. Boeing and every other company should unquestionably have the right to open offices or plants in the state that offers the best opportunities for growth and job creation.

The federal government should not stand in the way of our job creators when families from South Carolina to Alaska are suffering and the unemployment rate is once again nearing ten percent.

We encourage you to use every tool available to stop the NLRB from implementing policies to appease Big Labor at the expense of workers, businesses, and our economy. The Protecting Jobs from Government Interference Act will rein in the NLRB and allow business to decide how and where they operate and create jobs.

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Obama Demonizes Job Creators During "Jobs Speech"


Posted by Chris Prandoni on Friday, September 9th, 2011, 1:23 PM PERMALINK


The White House spent the better part of August marketing last night’s speech as THE “Jobs Speech.” Given the amount of hype leading up to last night and partisan nature of this Administration, it is not surprising that the Obama’s speech fell flat. Instead of proposing novel, meaningful ideas that cleavages of both parties support, like repatriation of foreign earnings, the President advocated for many of the failed policies of the past.

Similarly puzzling is Obama his Party’s fixation with raising taxes on oil and natural gas producers—some of America’s most adept job creators. Instead of acknowledging these companies as some of the largest employers and creators of wealth in the country, Democrats propagate the notion that oil and natural gas companies are greedy and exploitative, and must be taxed even more. While this sentiment is widely held by those on the Left, it is telling that Obama couldn’t help but demonize an industry employing 9.2 million Americans.

And you wonder why unemployment is still above 9 percent?

Let’s look at some of the investments oil and natural gas companies have made transforming sleepy North Dakota and Pennsylvania communities into bustling commercial regions. Almost entirely due to oil and natural gas companies’ investment in the state, North Dakota has the lowest employment rate in the country at 3.8 percent.

In western North Dakota, there are currently 19,000 workers directly employed by oil producers. This number is expected to rise 8 percent in 2011 as companies look to extract the 3.0-4.3 billion barrels of oil in the Bakken Formation.

Similarly, the discovery of the Marcellus Shale natural gas reserve has proved to be a boon for Pennsylvania and parts of West Virginia. Natural Gas producers have already invested $4 billion in Pennsylvania creating 44,000 thousand jobs in 2009 and an estimated 89,000 jobs in 2010.

Extrapolating the North Dakota and Pennsylvania case studies, a Wood Mackenzie study found that full development of America’s oil and natural gas reserves would likely create 460,000 jobs by 2020 and 530,000 jobs by 2025.

Instead of encouraging oil and natural gas companies to continue investing, producing, and creating wealth Democrats have consistently advocated for job killing tax increases. If Democrats successfully eliminated standard, longstanding tax deductions employed by the oil and natural gas industry, these job creators would be unable to recover many of their costly investments resulting in 170,000 job losses.

Explicitly encouraging these understood job losses, Obama has left struggling Americans in limbo waiting for green shoots.

 

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ATR Urges Congress To Let The Ethanol Tax Credit Expire


Posted by Chris Prandoni on Wednesday, September 7th, 2011, 2:28 PM PERMALINK


Today Americans for Tax Reform reiterated its opposition to the Volumetric Ethanol Excise Tax Credit (VEETC) in a letter sent to Chairman Camp and Ranking Member Levin. ATR President Grover Norquist explained why VEETC is bad tax policy and ever worse energy policy, writing:

The ethanol regime, the Renewable Fuel Standard (ethanol mandate), ethanol tariff, and VEETC, are indicative of government overreach. Unnecessarily attempting to wean Americans off of petroleum products, Washington propped up an industry at the expense of the American consumer.

As often happens when politicians inject themselves into the marketplace, every justification ethanol proponents have espoused over the last thirty years has been proven false—the fuel does not meaningfully reduce emissions and is an inefficient substitute for traditional gasoline. 

Allowing the VEETC to expire is a necessary first step towards dismantling government-induced ethanol consumption. Alternative fuels may very well prove to be a viable substitute for gasoline someday but forcing Americans to carry this politically connected industry’s weight is both unfair and unsustainable.  

Click here to view ATR’s complete letter.

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EPA will delay one of many regulations


Posted by Chris Prandoni on Friday, September 2nd, 2011, 4:08 PM PERMALINK


Today the White House announced it will delay their premature tightening of America’s ozone standards. Every five years, the Environmental Protection Agency is required to reassess the amount of emissions present in the ozone. Given the predisposition of the agency’s regulators, the EPA regularly places stricter, unnecessary limits on the amount of emissions legally permissible.

In an attempt to appease discontented environmentalists, the EPA was considering implementing drastically tighter ozone standards two years before they are required to do so. Acknowledged by the EPA as the most economically burdensome regulations the agency is considering, the proposed ozone standard would have exacerbated America’s economic woes and induced job losses in the millions.

Americans for Tax Reform Foundation’s Cost of Government Day Report highlights a NAM study which quantifies just how disastrous the EPA’s proposed ozone standard would be:

In a report on ozone reduction, the Manufacturers Alliance found that the EPA’s proposed allowable ozone emission standard of 60 parts per billion (ppb) would cost $1.01 trillion in 2020 and in subsequent years through 2030.  These attainment costs are particularly high because the marginal cost of ozone reduction rises quickly as more expensive technologies are required to meet more stringent standards. Using CBO federal spending baseline estimates for the next ten years, the Obama ozone regulations will increase the cost of government by 18 days.

If growth is premised upon historical averages rather than CBO estimates, the ozone regulation will increase the cost of government by 21 days in 2020. The Manufacturers Alliance report estimates job  losses of 7.28 million in 2020.

While the Obama Administration’s announcement to delay a new ozone rule for two years comes as good news, the EPA is still busy implementing a handful of other regulations which could prove to be just as burdensome: The Coal MACT, The Clean Air Transport Rule (CATR) and Utility Maximum Available Control Technology (MACT)—just to name a few.

Click here to learn more about the rules the EPA is still pushing and their effect on our struggling economy.

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Senator Rockefeller Kills Bipartisan Agreement for FAA Extension


Posted by Chris Prandoni on Wednesday, August 3rd, 2011, 4:20 PM PERMALINK


Senator Rockefeller and Senate Democrats said NO to the White House, said NO to the Transportation Secretary, FAA and Jobs. And insist on continued subsidies and favors for Union allies and a partial shut down of the FAA

Majority Leader Harry Reid On August 2, 2011: 

QUESTION:  Senator, if [Senate] Republicans don't accept a clean extension, temporary extension to the FAA act here on the floor by the end of the day, will you guys accept the House version and reopen the FAA?

REID  :  Yes.  I have said that we have 80,000 jobs at least on the line…The Essential Air Service is a program that I believe in, but I also believe that $3,500 per passenger is a little extreme.  That's what Ely, Nevada is.  and I think as we -- we learned with this big deal we've just done, sometimes you have to step back and find out what's best for the country and not be bound by some of your own personal issues.  And I'm willing to give that up.  I hope the other senators would do the same. 

Speaker Boehner Statement on August 3, 2011:

“All it will take to end this crisis is for the Senate to pass the House-approved FAA extension.  The only reason so many jobs are at stake is Senate Democratic Leaders chose to play politics rather than pass the House bill.  I respect the fact that Senators have certain objections, but they have had two weeks to respond to the House bill and done nothing, leaving tens of thousands of workers in limbo.  The House has done its job, and now it’s time for Senators to do theirs.”

Senator Rockefeller at Press Conference on August 3, 2011:

“I don’t know why we didn’t pass the bill…[responding to why Democrats didn’t pass FAA Reauthorization when they had the majority over the past 4 years]

“Of course I care about Morgantown” [which receives large subsidies in West Virginia]

The White House Pushed To Get the Senate To Accept The House Extension To Put 4,000 FAA Employees Back To Work.  “A last-minute Obama administration effort to get the Senate to accept a funding extension that would have returned 4,000 Federal Aviation Administration employees and about 70,000 others to work failed Tuesday as Congress headed home until September.”  (“Congress Heads Home Without Extending FAA Funding,” Ashley Halsey III, The Washington Post, August 2, 2011).

President Obama Demanded That Congress Break “That Impasse Now.”  “President Obama weighed in Tuesday morning, calling the impasse ‘another Washington-inflicted wound on America’ and demanding that Congress break ‘that impasse now’.” (“Congress Heads Home Without Extending FAA Funding,” Ashley Halsey III, The Washington Post, August 2, 2011).

Transportation Secretary Lahood Implored Senators To Accept The House Extension In Order To Avoid Losing $1.2 Billion In Ticket Tax Revenue.  “With House members already departed and senators packing their bags for the summer recess, Transportation Secretary Ray LaHood pressed hard in a final round of meetings and calls with Majority Leader Harry M. Reid (D-Nev.) and other key senators. LaHood implored them to accept a funding extension sent over by the House that contained provisions some senators found unpalatable, but he told them it was the only avenue left that would return people to work and avert the lost of $1.2 billion in ticket tax revenue.” (“Congress Heads Home Without Extending FAA Funding,” Ashley Halsey III, The Washington Post, August 2, 2011).

Secretary LaHood Told The Senate That Their Inaction Would Result in 70,000 Construction Workers Out Of Work But The Senate Ignored Him.  “We have heard many, many grandiose speeches by members of Congress about creating jobs and putting people to work,” LaHood said. “Well, this is not the way to put people to work, to lay off 70,000 construction workers in the middle of the construction season.”  (“Congress Heads Home Without Extending FAA Funding,” Ashley Halsey III, The Washington Post, August 2, 2011).

Senate Majority Leader Harry Reid Initially Agreed That The Senate Should Accept The House Extension Before Going Out Of Session.  In a press conference on Tuesday afternoon, August 2, Senator Reid said that “80,000 jobs at least” were “one the line” and people were laid off in Nevada and even though he wanted to “protect” his state on the EAS subsidies, “you have to be reasonable” and “sometimes you have to step back and find out what’s best for the country…”  (Harry Reid Press Statement on August 2, 2011).

Senator Reid Said He Hoped The Other Senators Would Agree With Him On The Extension.   “Sometimes you have to step back and find out what’s best for the country and not be bound by some of your own personal issues.  And I’m willing to give that up [Nevada’s EAS subsidy] I hope the other senators would do the same.” 

QUESTION:  Senator, if [Senate] Republicans don't accept a clean extension, temporary extension to the FAA act here on the floor by the end of the day, will you guys accept the House version and reopen the FAA?

REID  :  Yes.  I have said that we have 80,000 jobs at least on the line.  In Nevada, as an example, we have a new airport tower there where they started the construction about two weeks ago.  All those people have been laid off.  That's a huge project.  I don't know, but it's nearly a $100 million project. …

The Essential Air Service is a program that I believe in, but I also believe that $3,500 per passenger is a little extreme.  That's what Ely, Nevada is.  And I do my best to protect the state, but sometimes you have to be reasonable.

And I think as we -- we learned with this big deal we've just done, sometimes you have to step back and find out what's best for the country and not be bound by some of your own personal issues.  And I'm willing to give that up.  I hope the other senators would do the same.  (Harry Reid Press Statement on August 2, 2011)

But Senator Rockefeller, The Chairman Of The Committee That Oversees The FAA, Refused To Move The Extension Before The Senate Went Out Of Session.   Despite Secretary LaHood’s appeals, Senator Rockefeller refused to agree to the extension:  “Sen. Jay Rockefeller, D-W.Va., chairman of the Senate committee that oversees the FAA, held out the possibility that if the Senate were able to pass a bill acceptable to Democrats, it could still be approved by the House using obscure parliamentary procedures, and sent to the White House.” (“FAA Shutdown To Continue As Congress Leaves,” Associated Press, August 2, 2011.

House Chairman Mica – Agreeing With The White House, Secretary LaHood And Harry Reid, Said The Only Way To End The Shutdown Was To Pass The House Extension And Senator Rockefeller Was Blocking It"The only one holding this up now is Mr. Rockefeller," Mica said. One of the 13 communities that would lose subsidies is Morgantown, W.Va.”  (“FAA Shutdown To Continue As Congress Leaves,” Associated Press, August 2, 2011.

Morgantown, West Virginia – In Rockefeller’s Home State – Is One of the 13 Communities That Would Lose Subsidies. "The only one holding this up now is Mr. Rockefeller," Mica said. One of the 13 communities that would lose subsidies is Morgantown, W.Va.”  (“FAA Shutdown To Continue As Congress Leaves,” Associated Press, August 2, 2011.

Just This Week, While Thousands Of Jobs Were On The Line, Senator Rockefeller Wrote An Op-Ed In USA Today Defending The Large Essential Air Service Subsidies.  “The EAS program has long been a lifeblood of economic development in rural America….at its core, EAS is a smart use of limited resources to support rural economies.  In my state of West Virginia, and many others, hub airports are hours away for most communities, and many businesses won't consider locating in places that lack air service. EAS, which is less than 2% of our aviation budget, makes a difference.” (Sen. Rockefeller: Rural America Needs Essential Air Service,” Senator Jay Rockefeller, USA Today, August 1, 2011)

Senator Reid Has Now Changed His Tune And Is Back To Blaming Republicans Despite His Agreement With The White House And Secretary LaHood On Tuesday, August 2.  “The Federal Aviation Administration has been in a partial shutdown mode since July 22. And Senate Majority Leader Harry Reid says the shutdown will continue, with some 4,000 federal workers remaining on furlough.   ‘It'll be closed until... maybe not September, maybe more than that,’  he tells All Things Considered co-host Michele Norris….’The House has tried to make this a battle over essential air service,’  he says. ‘It's not a battle over essential air service. It's a battle over Delta Airlines, who refuses to allow votes under the new rules that have been passed by the NLRB [National Labor Relations Board].’  The issue, Reid says, is Delta's ‘non-union’ stance. The bill to fund the FAA, as crafted by House Republicans, includes language that sets new rules for aviation workers' votes on labor representation.”  (“Reid Says FAA Shutdown Will Continue; Blames House, Delta Airlines,” Bill Chappell, NPR, August 2, 2011).

But Majority Leader Reid Now Ignores That The Labor Provision Isn’t Even In The FAA Extension As Chairman Mica Explains:  "To be clear, the House extension does not include any National Mediation Board labor provisions, which is another contentious issue between the House and Senate," he said. “Hardworking Americans are suffering because some powerful leaders in the Senate want to protect their own pork programs," Mica continued. "We are all fed up with the sham that is going on in the Senate. The Senate made a clear choice — political pork over American workers.” (“Mica:  Senate chose ‘pork’ over ending FAA partial shutdown,” Keith Lang, The Hill, August 2, 2011).

The FAA Has Already Had 20 Extensions Before But This Time Senate Democrats Said No.  Since the last FAA long-term funding bill expired in 2007, the agency has limped through 20 extensions of its funding while Congress bickered over how to craft a new long-term package. (“Congress Heads Home Without Extending FAA Funding,” Ashley Halsey III, The Washington Post, August 2, 2011).

Already The Government Has Lost More Than 12 Times What The Subsidies Cost.  “The government already has lost more than $200 million since airlines are unable to collect taxes on ticket sales because the FAA's operating authority has expired.  The Senate recessed on Tuesday until September, erasing any possibility for quickly resolving the issue. The House left Monday night.  (“FAA Shutdown To Continue As Congress Leaves,” Associated Press, August 2, 2011).

The Senate Leadership Is Willing To Cost The Government Over $1 Billion In Tax Revenue To Protect Their Subsidies. “As Eyder reported earlier today, The FAA shutdown has already cost the government more money than the disputed $16.5 million in cuts approved by the House. In fact, he wrote, the federal government stands to miss out on "more than $1 billion in revenue from uncollected airfare taxes."  (“Reid Says FAA Shutdown Will Continue; Blames House, Delta Airlines,” Bill Chappell, NPR, August 2, 2011).

Democrat Senator Mark Warner Says The Math On Not Passing The Extension Doesn’t Make Sense:  “Here’s a thing that has really got to make you scratch your head:  during this furlough, and with the FAA shutdown, the airlines who traditionally charge passengers a small tax to help fund the FAA so you can build the airports, maintain the airports, keep them safe, while the FAA is shut down, the airlines aren’t required to collect the tax.  So during this period, particularly if we go through this whole month and leave the FAA furloughed, the United States government….because of this political back and forth , would lose $1.2 billion in ticket taxes…$1.2 billion because of a dispute about a program to support rural airports that in total is $14 million.  Now, if people scratch their head on that kind of math, they’ve got a right to scratch their head.”  (Senator Mark Warner, Floor Statement on FAA Reauthorization on August 2, 2011)

Republican Senator Jon Kyl Calls On Senate Leadership To Put The American People First Instead Of Their Union Allies And Pass The Extension.  "Democrats have to decide if they are going to be the handmaidens of the labor unions in every policy," Sen. Jon Kyl of Arizona, the No. 2 Senate GOP leader, told reporters. "Every now and then they should put the American people first instead of their constituency." (“FAA Shutdown To Continue As Congress Leaves,” Associated Press, August 2, 2011).

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