Sunday, February 21, 2016

WRONG ON THIS ONE

                                                        WRONG ON THIS ONE

On  February 15, the New York Times editorialized against a proposal to remove management of America's air traffic control system from the FAA, and hand responsibility to a non-profit corporation governed by the system's customers and participants. More than 50 countries around the world have already taken equivalent steps, with outstanding results. The US has fallen behind in aviation, and without this change, is unlikely to catch up.

Although I am a great fan of  the Times -- and a Democrat -- I think both the paper and my party are wrong on this issue.   On February 16, I sent the Times the following response,  which it has declined to publish. 





As a long time student of the airline industry and fan of the New York Times, I am deeply disappointed by the Paper’s opposition to the proposal that the FAA’s Air Traffic Control function be moved into a non-profit corporatized ANSP (Air Navigation Service Provider).  The present system is clearly broken and I believe that the Paper is wrong on the facts.

  •    First and foremost, corporatizing is not privatizing. The proposed non-profit organization will be governed by a Board which includes representatives of the airlines, general aviation, consumers, unions and the federal government.  The organization will set and collect service fees sufficient to cover its costs and will be able to sell bonds against those fees, thus providing reliable capital funding.  It will be free to manage its business as it sees fit so long as it conforms to safety requirements established by the FAA.
  • The purpose of the proposal is to separate the  safety oversight and navigation service provider functions, as more than 50 countries have already done. Safety oversight should and will remain the responsibility of government; navigation services should and will be provided by an organization able to provide for its long term financing needs by bonding its flow of user fees, free to compete with private enterprise for the skilled personnel needed to manage the world’s largest and most complex air space, financed and governed by its customers, and free of political interference.
  • The claim that Canadian air traffic control costs have increased more rapidly than costs in the United States is incorrect. Nav Canada's charging rates are now only 5% higher than when user fees were fully implemented in 1999, but are one third lower after correcting for inflation since then. By way of contrast, FAA's  cost per unit of workload has increased sharply since 1999.  Moreover, Nav Canada’s cost per IFR flight hour is more than 30% lower than the same cost in the U. S. 
  • The notion that safety will somehow be compromised is bogus.  While the FAA has done an excellent job of operating a complex system safely, in every country in which safety and  aviation navigation service functions have been separated,  the safety record  has been equal to or better than the record prior to separation of the two. That’s only logical, since splitting the functions removes the burden of self- regulation, in which some level of conflict of interest is inherent and inevitable. 
  • The idea that creating an ANSP would disrupt the FAA's effort to implement Next Gen - a broad upgrade of the nation's airspace management system -- is a refutation of reality.  The FAA has struggled for years with  Next Gen, routinely running far behind schedule and far over budget on each of its many components.  The financial uncertainty and political meddling inherent in Congressional supervision are incompatible with optimizing technical progress. 
  • It is disingenuous to claim that the proposed bill gives short shrift to passenger interests. The public interest is never well served by inefficiency, and in the status quo too many flights are delayed and cancelled and too many passengers are left unserved.   We need a more efficient air space management system, and to get it, we need to create an organization that will be funded and governed by its customers.  Those customers will naturally demand a system optimized for both efficiency and economy. The improved system will allow airlines and others to schedule more flights, burn less fuel and make travel both less expensive and more enjoyable.

This is a change that many in the aviation community have been pursuing for decades.  I hope the New York Times Editorial Board will re-think its position and that Democratic politicians will recognize the error of their opposition and work with the bill’s sponsors to produce a change that will benefit both travelers and the nation’s economy.  
  

Wednesday, April 1, 2015

Tired of it yet?



I often wonder when we are going to decide that an individuals’ right to privacy ends when that person acts or aspires to act in a way that impacts the life and welfare of others.
In Chicago, the mayoral candidates are scrambling to outdo one another’s pledges to remove cameras at intersections, apparently because most Chicago motorists believe their  privacy rights extend to being allowed to run red lights, even if doing so is against the law and may kill other people.     
We are learning that strict German privacy regulations probably prevented Lufthansa and its subsidiary German Wings from acting as aggressively as they should have to prevent a suicidal co-pilot from slaughtering a plane full of passengers.
Similarly, we can’t know the names of the Secret Service agents involved in any of that agency’s recent failures, whether any of the agents involved in those failures have been or will be dismissed and details of the selection and training processes that made it possible for deficient personalities  to play important roles.
The privacy fixation also impacts our lives in day- to- day ways that challenge common sense and shape the social contract. Universities are not allowed to give me the grades of those for whom I pay tuition, doctors won’t talk to me about my wife’s health,  banks won’t give me credit card balances on cards issued to others on which I am joint guarantor. While these irritants do not threaten the public welfare, the imposition of legislated standards which supersede pre-existing presumptions of normality erodes the  social contract by implying that privacy has a uniquely important value.
We will never be able to identify those most likely to commit horrific acts until we are prepared to acknowledge that an application to undertake public life requires giving up personal privacy.  A person who wants to fly or drive a public conveyance, a person who wants a license to practice medicine or dentistry, a person who wants to teach or care for our children, a person who seeks the right to provide legal, brokerage or accounting services, a person who seeks the right to carry a weapon in public places – all these and others who influence the lives of others -- should be prepared for complete disclosure.  How else can we judge the character and qualifications of those to whom we trust our lives, our money and our reputations?
I’m tired of it.  Are you?

Monday, August 4, 2014

DOING EVERYTHING WRONG



It isn’t very often than any individual, company or government gets everything wrong simultaneously.  But the members of Congress, clinging fiercely to ideology, expediency and cynicism, are doing so regularly.  There can be no better illustration than the pathetically ignorant and immoral “solution” fashioned this week to forestall the pending insolvency of the Highway Trust Fund.
No thinking person – Democrat, Republican or Unicorn – can possibly believe that encouraging companies to further shortchange already inadequately financed pension plans is a sensible approach to funding highway construction. Nevertheless, that’s what Congress just did, before rushing off to an ill deserved “vacation”.   
Anyone who pays attention to public affairs knows that the US has been seriously underfunding maintenance of the country’s physical infrastructure for many years.  We spend roughly half as much, as a percentage of GDP, on infrastructure maintenance as most developed countries.  The Highway Trust Fund, which provides a large percentage of the money needed to sustain and expand our roads, is supported by a federal gasoline tax of 18.4 cents per gallon, which has not been increased since 1993.  Since building and maintaining our roads is more expensive now than when the tax was last increased, the Trust Fund is expected to run out of money at the end of August. Should that happen, about 600,000 jobs will be lost as highway construction and maintenance projects across the country shut down.

Shutting down projects that are providing good  jobs is bad for the re-election prospects of incumbents,  so Congress went looking for a way to keep those projects going – without raising taxes (perceived as bad by politicians) or increasing the deficit (also perceived as  bad by politicians) .  To accomplish its goal, Congress  decided to make another problem even worse than it already is—counting on the fact that most of us won’t notice and even if we do, won’t do anything about our outrage. 
To prevent the Trust Fund from running dry, Congress authorized the transfer of $10 Billion from the General Fund to the Highway Trust Fund.  Normally, increasing the government’s expenses by paying for road building would count as an increase in the deficit. However, since most members lack the courage to acknowledge that truth, Congress decided to “finance” the fund transfer by allowing corporations to make smaller pension contributions under certain circumstances.  Doing so allows Congress to forecast larger corporate profits and increased tax receipts, thus – theoretically – covering the cost of the payment to the Highway Trust fund.   
Since smaller pension contributions now will mean higher contributions later, arguing that such an arrangement generates additional revenue for the government is nonsensical.  Moreover, since many pension plans are already underfunded, and since the government agency responsible for replacing benefits owed by failed pension plans -- the Pension Benefit Guaranty Corporation ( PBGC)—is itself in financial difficulty, allowing more plans to be more underfunded is clearly contrary to common sense.   Nonetheless, because underfunded pension plans make news only when they actually go broke, Congress feels confident that its chicanery will go unnoticed and has proceeded to “solve” the problem of a depleted Highway Trust Fund by making the pension funding problem worse.
This nonsensical legerdemain is extraordinarily troubling and goes on only because most citizens pay little attention to what Congress does.  Even fewer write, call, or otherwise complain about irresponsible behavior. 
Every member of Congress knows that this “solution” to the Highway Trust Fund’s illiquidity is both illusory and fraudulent.   Each member, whatever their ideology, knows that without world class infrastructure, our country cannot create or sustain the constantly growing economy needed to sustain the US way of life. Each member, by participating in such charades, makes a mockery of the leadership he or she pledged to provide when seeking office. 
Until a larger percentage of our citizens realize that our government isn’t working well, the US is not going to find solutions to the many great issues that challenge us  --infrastructure, education, energy, research and development, immigration, inequality, taxation, debt, you name it.  While these are all hard problems – requiring careful thought and serious deliberation – they are no more difficult than other problems we have faced and overcome in times past.  Solutions are not beyond us, but will surely continue to elude us until we choose our leaders more wisely and pay more careful attention to what those leaders are doing.  Those who choose to lead must be held accountable for getting things right, but so far, seem to be doing just the opposite.

Sunday, January 6, 2013

TIME FOR A REAL DISCUSSION



               

In our ever more dysfunctional political system, discussions about real problems never seem to happen. As a result, neither our problems nor potential solutions are well understood. 

For whatever reason – probably because facts are boring and conflict sells newspapers and draws viewership – the media seems intent on casting last weekend’s Congressional action as a plus or a minus for one or another of the political parties and individual political figures.  The facts are that while the legislation raised taxes on some affluent Americans by a bit, it also made the ill-advised tax cuts of 2001 and 2003 permanent for most Americans and did nothing to reduce US government spending.  As a result, the deficit will increase by about $4 trillion dollars more during the next 10 years than would have been the case had the Congress done nothing.  The entire charade was political theatre, pure and simple.

The primary problem, for the benefit on anyone who has been living on another planet for the last several years, is that our tax system is not generating enough money to pay for the many programs and services Congress has voted to adopt. We have more government than we are paying for – and we can’t continue living on our credit card forever.  

Federal spending is running at about 23% of our gross domestic product (GDP) while our tax system is generating federal revenues of only about 16% of GDP. The federal government’s share of Gross Domestic Product – federal revenue as a percentage of Gross Domestic Product – is far below the 21% collected by the federal government in 2001 and well below the average collected for the last 60 years. 

The notion that we can bring the deficit under control simply by cutting spending is pure fantasy. The big entitlement programs – Social Security and Medicare – can certainly be modestly adjusted, but cannot be substantially changed without repudiating promises on which millions of Americans depend. Moreover, our aging population will be pushing entitlement spending up, thus offsetting our efforts to reduce costs. 

We can and should stop acting as the world’s policeman, and having done so, should be able to reduce defense spending substantially.  We can and should eliminate or substantially reduce outdated and unneeded major programs like agricultural subsidies, but we cannot and should not eviscerate the hundreds of essential programs and agencies supported by the domestic non-defense budget which politicians love to rant about reducing.  We should demand that the government’s agencies and programs be run more efficiently, but whatever we save will likely be more than offset as interest rates rise and the interest we must pay on our massive government debt increases.
  
To have a real conversation, we need to know what share of our national income the government needs to provide the services we all want and expect. The President-- who is supposed to lead – needs to put together a list of what he thinks we need, and what he thinks we can get rid of. Others will disagree, but instead of denouncing the President should be required to propose alternative lists of things to be kept and things to eliminate. Debating the merits and desirability of alternative governmental functions would constitute a real discussion about what we are prepared to pay for and what we are willing to eliminate. Unhappily, no one in political life has yet been willing to put together a list, since eliminating anything will offend someone. 
  
Once we reach a consensus on what’s needed, we’ll need to have another discussion about how to raise the needed money. It can’t all come from those characterized as rich, although we should – in my judgment – expect affluent Americans to pay the same percentage of their incomes as they did in 1990, before the two rounds of ill- advised tax cuts in 2001 and 2003. Doing so will increase their tax burden by a lot more than what’s required by the recent fiscal cliff compromise, and would be a step towards a solution. 

 But no amount of taxes on the rich will even scratch the surface of the deficit problem.  To pay for the government we all seem to want, every American is going to have to pay more than we pay today. Like it or not, the “hard working middle class” that our politicians love to pander to cannot be spared their share of the burden. 

Getting the necessary money will require major changes in our tax system.  Taking all the money we need as taxes on income will have substantial negative impacts on incentives and capital accumulation, and will slow the pace of an economy that is already growing too slowly. In my view, we need to design and implement a far simpler income tax code, with fewer deductions, loopholes and exceptions, impose higher Social Security and Medicare taxes,  levy a gasoline or usage tax to pay for our highway system and add a value added tax.  Most other developed countries employ a similar variety of taxes to meet their revenue needs, and we ought to follow their lead. 

Whatever the answer, we aren’t going to get there until all of us tell those who represent us to get serious. Any member of Congress who thinks that refusing to raise the debt limit – which amounts to refusing to pay for programs Congress itself  has  voted to implement  – makes any sense should be defeated when he or she next runs for office and should be told so by every constituent, whether liberal or conservative. 

Instead of threatening to destroy the full faith and credit of the United States, every member of Congress should stand up and tell us – in detail – exactly which government programs he or she wants to eliminate, what modifications to present rules and regulations they propose and how much the government they propose to preserve will cost.  Having done so, they should also tell us how they propose to raise the money needed for the things they think we should continue doing.

Unhappily, the message hasn’t gotten through.  I am writing this on Sunday, January 6th, after having watched both Mitch McConnell and Nancy Pelosi avoid any hint of specificity when responding to questions on Face the Nation.  Neither of these people is stupid.  Mr. McConnell knows that the government needs  more revenue, and that to provide it everyone is going to be required to pay more taxes.  Ms. Pelosi knows that we cannot sustain current levels of spending on Social Security, Medicare, and every other program she favors,  however desirable they may be in the abstract.   Yet neither is prepared to speak the truth, for fear of offending the ideologically driven “party base” to which each seeks to appeal. 

It’s time – and long past time – for a real conversation.  Each of us needs to do what we can to be sure that whoever represents us understands that we will no longer tolerate generalities, ideologically driven rhetoric and dishonest numbers. 

Unless we act, we will leave our children and grandchildren an America that is a pale shadow of the great country we have been privileged to enjoy.