Times Examiner Facebook Logo

Sunday, April 14, 2024 - 06:23 PM

INDEPENDENT CONSERVATIVE VOICE OF UPSTATE SOUTH CAROLINA

First Published in 1994

INDEPENDENT CONSERVATIVE VOICE OF
UPSTATE SOUTH CAROLINA

Attention readers: Neil Patel is off this week. Please enjoy the following column by Veronique de Rugy.

As the saying goes, "When you find yourself in a hole, stop digging." This advice applies to the hole Congress leapt into by bailing out the airline industry back in March through the Coronavirus Aid, Relief and Economic Security Act. Now these companies want even more taxpayer money. The federal government should refuse another bailout.

Like many industries affected by the COVID-19 pandemic, airlines have lost a lot of revenue. But unlike other industries, the coronavirus relief bill authorized up to $32 billion for payroll support through Sept. 30, for roughly six months. Basically, the way it worked is that every airline that got a loan could furlough its employees, but those that took both a grant and a loan couldn't. Of course, it's difficult to tell if the Treasury Department was ever serious about enforcing these requirements.

Traditional objections to the first bailout were ignored in the name of saving airline workers' jobs. Unfortunately, that reasoning was mistaken. Many airline employees still lost their jobs, while others suffered severe reductions in employment. For instance, part-time workers only had to be paid for minimum hours. As a result, many airline employees still had to apply for unemployment insurance to cover their lost hours.

Unless the worries around the COVID-19 virus quickly disappear and consumers are willing to soar in droves through the friendly skies once again, that bailout would have merely postponed layoffs through September. Sure enough, here comes the airline industry again, with its captain's hat in hand, asking for another $25 billion bailout.

Several members of Congress have already signed a letter urging their colleagues to extend the bailout, and President Donald Trump is even considering an executive order to accomplish that goal, echoing the airline unions' claim that 75,000 employees would be furloughed without it. If you do the math, that's $333,333 per job "saved" until the money runs out.

Let's remind everyone why we shouldn't bail out airlines. Yes, the coronavirus crisis is both a public-health and an economic tragedy. But this doesn't justify the government granting special privileges to private firms, at least not without those firms first taking other available steps to potentially avoid the need for a bailout.

Here are a few steps they could pursue:

First, the airlines still have plenty of access to private capital markets. They own significant amounts of durable assets that they can sell or use as collateral to get additional financing. Indeed, they've been able to secure substantial private capital since the beginning of the pandemic.

Second, if private financing fails, some airlines can and should do what they've done in the past when in such a predicament: declare bankruptcy. Past bankruptcies tell us that airlines can continue flying safely even during a bankruptcy, so there's no systemic risk posed to the economy at large.

To be sure, bankruptcy would mean that, for the time being, airlines may fly on more limited routes. But that shouldn't be a problem in light of a collapse in demand, which won't be resolved as long as Americans remain wary of flying.

There's no easy solution during this pandemic. Many people and businesses have no options at all. But an airline bailout would bring about more negative consequences. The first is that it's a huge expense for taxpayers to shoulder with no promise for a solid return. We've already bailed out the airlines, and all this past coddling has done is to postpone the inevitable layoffs of its excess employees.

Analysts don't think air travel will return to prepandemic levels for several years -- some say up to seven. Let's assume that it takes five years for air travel to return to its previous level. That would require taxpayers to extend up to $320 billion in bailout funds to the airlines.

Not surprisingly, bailouts beget more bailouts. My colleagues at the Mercatus Center, Matthew Mitchell and Tad DeHaven, write, "We know from the history of bailouts that the true cost of a bailout is not the taxpayer expense (which is often recouped) but the expectation it sets for future bailouts, an expectation that invites future disaster."

Bailing out airlines the first time around was a bad idea; doing it again would be even more counterproductive. It only delays the inevitable.

----------------------

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. To find out more about Veronique de Rugy and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

COPYRIGHT 2020 CREATORS.COM

No comments

Leave your comment

In reply to Some User

 

Tucker Carlson and Neil Patel

Tucker Carlson currently hosts Fox News’ “Tucker Carlson Tonight” (weekdays 8 p.m. ET). He joined the network in 2009 as a contributor.

“Tucker Carlson Tonight” features powerful analysis and spirited debates, with guests from across the political and cultural spectrum. Carlson brings his signature style to tackle issues largely uncovered by the media in every corner of the United States, challenging political correctness with a "Campus Craziness" segment and tackling media bias and outrage during "Twitter Storm."

Carlson co-hosted “Fox & Friends Weekend” starting in 2012, until taking on his current role at “Tucker Carlson Tonight.”

While at Fox News, Carlson has provided analysis for “America's Election Headquarters” on primary and caucus nights, including in the 2016 and 2012 presidential elections, as well as the 2014 midterm election. He also produced a Fox News special, "Fighting for Our Children's Minds," in 2010.

Prior to working at Fox News, Carlson hosted “Tucker Carlson: Unfiltered” on PBS from 2004 to 2005 and “Tucker” on MSNBC from 2005 to 2008. He joined CNN in 2000 as its youngest anchor ever, co-hosting “The Spin Room” and later CNN's “Crossfire,” until its 2005 cancellation. In 2003, he wrote an autobiography about his cable news experience titled "Politicians, Partisans and Parasites: My Adventures in Cable News."

Carlson graduated with a B.A. in history from Trinity College in Connecticut.

Neil Patel

In addition to his role as publisher of The Daily Caller, Neil Patel is co-founder and managing director of Bluebird Asset Management, a hedge fund investing in mortgage-backed securities.

Before starting his two companies, Neil served in the White House from 2005 to 2009 as the chief policy adviser to Vice President Dick Cheney. From 2001 to 2004, Neil was staff secretary to Vice President Cheney. Prior to joining the Bush administration, Neil was assistant general counsel at UUNET Technologies. Earlier in his career, Neil practiced law with Dechert Price & Rhoads. He also served as Counsel to the U.S. House of Representatives Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China. 

Neil received his B.A. from Trinity College in Connecticut and his J.D. from the Georgetown University Law Center, where he served as associate editor of the Journal of Law and Policy in International Business.

Neil lives in Washington, D.C., and Jackson Hole, Wyoming, with his wife, Amy, their two daughters, Caroline and Bela, and their son, Charlie.

COPYRIGHT 2019 CREATORS.COM