At last, the national elections are over. But did the election outcome matter to aviation?
The election changed the lineup in Washington very little. President Obama is in the White House for four more years. The Democrats gained two seats in the Senate, but their majority is still too small to overcome the 60-vote filibuster rules. And Republicans continue to control the House of Representatives despite losing a couple of seats.
During the interminable campaign President Obama made several remarks unfriendly to business jet owners and operators. High income Americans of all stripes were campaign targets so it’s hard to say airplanes were singled out. And not even a year before the election President Obama signed a tax bill that granted accelerated depreciation to airplane purchasers effectively reducing the taxes they pay if they bought an airplane and used it a majority of the time for business.
So who is the real Obama? The one who signed a tax bill favorable to aviation, or the one who campaigned to raise taxes on business jet owners because they can afford it? It seems to me the answer is that it depends.
As any sixth grade student should know tax policy originates in the House of Representatives, not the White House or Senate. The good news is that all aspects of aviation have strong bipartisan support in the House. The Obama administration can propose all sorts of taxes or fees on aviation and those ideas will have to get passed in the House to have a chance of becoming law.
The $100 per flight user fee for turbine airplanes remains in the Obama administration budget proposal and is an issue we all need to pay attention to. Even though the proposal limits the fee to turbine airplanes flying in the IFR system it’s not much of a stretch to believe that if such a proposal became law, and the system to collect the fees was created, that fees would soon be a reality for all of personal aviation.
The user fee idea has been proposed several times and Congress—both houses—have firmly rejected the fees. We in aviation have successfully argued that the fuel tax on private aviation effectively pays our fair share and costs the federal government almost nothing to collect. And the fuel tax is proportional by nature so that if you fly a larger, faster airplane you pay more than the small light aircraft owner.
But, the pressure on everyone in government to raise revenue to close the deficit gap is intense so all sources of new taxes and fees will be considered at least a little. There is an old saying that applies to even the most ardent tax opposed member of Congress that “we never raise taxes, but fees are not a tax.” Everyone in private aviation needs to pay attention and be ready to respond in case user fees actually receive serious consideration in the coming year.
The really big government threat looming over all in aviation is sequestration—the so-called fiscal cliff–and that issue was not resolved by the election outcome. Sequestration is the automatic tax increase and spending cut changes that Congress created to try to force a bipartisan agreement. If there is no agreement on tax and spending changes by the end of this year enormous spending cuts and tax increases will automatically go into effect.
We can all debate how big of an impact a tax increase will have on aviation but there is no doubt that big federal government spending cuts will hit aviation hard. Many of the spending cuts would be on military spending which means aerospace and defense companies will shrink. When spending on any aspect of aviation is reduced it ripples through all of aviation.
The most immediate impact on general aviation if the sequestration cuts become real would come from big reductions in the FAA budget. You may think we want and need a smaller FAA, but you are wrong. If the FAA budget is cut most of the reduction will come on the inspector side, not air traffic control. When there are fewer inspectors everything grinds to a halt. It doesn’t matter if you’re trying to certify a big jet or a homebuilt aircraft fewer inspectors means you will have to wait longer—a lot longer—for certification.
Cuts to the FAA budget wouldn’t remove the rules, only the people who certify that we meet the rules. Every segment of aviation will suffer, and it’s my bet that general aviation would suffer most because we don’t have the public support the airlines do to provide service. Private aviation would slide back to the end of a very long line of people and companies waiting for an answer from the FAA.
Did the election outcome convince those in all three branches of government that we want cooperation and action, not continued deadlock? If it did, aviation and the rest of the U.S. is a winner. But if nothing changed and those in Washington can’t get anything done, we all lose.