We’re really through the looking glass now that another airline bailout isn’t just something being snuck into a $2.2 trillion piece of legislation, but is the only standalone action Congress might take, leaving aside more pandemic unemployment, bailouts for state and local governments, or further investment in public health during the Covid-19 crisis.
The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!
— Donald J. Trump (@realDonaldTrump) October 7, 2020
How on earth did we get to a place where President Trump is calling on Congress to send him a bill to hand $25 billion more to U.S. airlines (after the CARES Act appropriated $50 billion)?
- It’s couched as needed to prevent furloughs, that have already happened, afffecting around 35,000 workers – or $714,000 per job actually saved and just for six months
- That would hand billions to airlines that aren’t even furloughing anyone
- It’s clearly an airline bailout, not a ‘passthrough to workers’, at a time when airlines have shown no difficulty accessing private capital markets
- And there’s no systemic risk to the economy at this point, airlines all report they’re well-capitalized. Yet taxpayers are being asked to take a haircut before shareholders or creditors.
How Do Airlines And Their Unions Trump The Interests Of The American People?
For the purpose of this post I’m interested more in “what planet are we on?” that spending on airlines, supported by both Republicans and Democrats, is what’s under consideration and nothing else. How did we get here?
And I’m reminded of Guy Vander Jagt, who was a Michigan Republican Congressman from 1966 to 1992 when he was primaried by Pete Hoekstra. Something he said so struck me that I remember it 30 years later. He said that people were so inconsistent. All he’d hear about in Washington was how much the government needed to do and how much spending was necessary, then he’d go home to Michigan, talk to people there, and he’d hear about overspending and too much government. And he didn’t seem to understand that he was hearing from different people.
Members of Congress hear from the airlines – American’s CEO Doug Parker has practically been living in D.C., commuting back and forth throughout the week. Airline unions have been vocal, turning out their membership to rallies both in the District and in the home districts of Senators and House members. And they’ve bombarded representatives with emails and phone calls, often the same employees sending messages over and over (American Airlines President Robert Isom explicitly encouraged doing this in an employee forum last month.)
And Members of Congress don’t hear from the people whose money is being taken and given to the airlines. And that’s because of concentrated benefits and dispersed costs, an idea that comes to us from Mancur Olson in The Logic of Collective Action. People who benefit from a policy have an incentive to learn about it, focus their time and energy on it, and spend money to influence it and pass it. When benefits are focused on a small group, that group will act. And when costs are dispersed across hundreds of millions of people, there’s little cost to each individual, and there’s little incentive for that person to spend time and resources opposing a policy (or even paying attention to it enough to understand what’s happening).
Why Are Airlines Succeeding In Washington Now?
Airlines are always lobbying for their own interest, and they’re certainly more heard whenever there’s discussion of new legislation or regulation affecting the industry. That’s why it’s always surprising when people believe that new legislation or regulation will >Benefit consumers against the airlines.
But since they’re always lobbying, why is it only now that they’re on the precipice of being handed (another) $25 billion in taxpayer money? And for that we need to understand the Overton Window. (I knew Joe Overton, he was a friend of mine, and saw him weeks before he died piloting a small aircraft 17 yaars ago.)
In order to accomplish a policy you don’t just need to advocate policy through lobbyists. The policy has to be ‘on the table’ and it needs to be focal. It became part of acceptable discourse as we’re spending trillions of dollars at a time (so $25 billion doesn’t seem that much) to address a crisis, and with ‘tens of thousands’ (exaggerated by the airlines as hundreds of thousands) of job losses at U.S. carriers coming right before a Presidential election.
This Isn’t A Corruption Story
Notice that this isn’t a story of corrupt politicians. It isn’t a claim that ‘airlines and unions donate to candidates, who then do their bidding.’ While political contributions help give interest groups a voice, gaining access to Members of Congress also means getting to know them, gaining their personal sympathy by building friendships.
But this story allows for politicians to even think they’re doing the right thing, representing their constituents well (giving them what they hear people saying they want), as well of course as acting in their own self-interest because it’s right before an election and giving constituents what they want is how they expect to be re-elected.
There’s nothing unique about airlines in this regard. It’s just that airlines happen to be what’s on the agenda at this moment. But ‘concentrated benefits and dispersed costs’ frequently explains how one side’s voice is dominant in a debate over an issue that comes into an ‘Overton Window’ of focus.