The dust is beginning to settle after the grueling 2012 election campaign, but members of Congress barely have time to take a breath as they must deal with a number of pressing public policy issues before year's end. As Congress convenes for a post-election "lame duck" session, now is a good time to review what impact the year-end scrum might have on the travel industry, your bottom line and how you run your business.
Remember last summer when the U.S. government nearly defaulted on its debts? Well, the law that averted that catastrophe calls for across-the-board cuts to nearly every government program starting on Jan. 2. The cuts, averaging about 8% per program and known as "sequestration" in Beltway-speak, would impact a broad range of federal activities that the travel industry and consumers rely on every day. This includes a $515 million cut to the airport infrastructure fund; a $429 million cut to airport security screening (which will mean a 10% reduction in screener workforce); and a $955 million cut to Customs and Border Protection, which processes international visitors and returning U.S. nationals. The list goes on and on.
At virtually the same time, a number of tax cuts enacted over the past decade -- individual rates, capital gains, payroll taxes and others -- are due to expire. These tax hikes would impact everyone working in the travel industry and any other industry, especially those small businesses who file individual tax returns. Combined with sequestration, this represents the so-called "fiscal cliff" facing the economy in January, which according to the Congressional Budget Office would cut gross domestic product by 4 percentage points and lead to the loss of 2 million jobs. The good news is that nobody wants these cuts to happen. The bad news is that nobody seems willing make the compromises necessary to stop them. Legislators are likely to do something -- anything -- even if it's simply kicking the can down the road again, but brace yourself for a lot of Christmas-time drama, because this is going down to the wire.
Visa Waiver Program
An issue related to the travel industry that could move before the end of the year is an expansion of the Visa Waiver Program. This is a critical tool for promoting travel to America and enhancing its public diplomacy efforts by permitting business and leisure travelers from 35 countries to visit the U.S. for up to 90 days without obtaining a nonimmigrant visitor visa. Language expanding the program, a top priority of the travel industry, is contained in the Senate version of the 2013 Homeland Security Appropriations bill. An "omnibus" appropriations bill encompassing the entirety of the federal discretionary budget could move by year's end, and inclusion of the Visa Waiver Program expansion in it would be a big win for the industry.
No-Hassle Flying Act
Another travel-related bill that might see action during the lame duck is the "No-Hassle Flying Act." This bill would grant the Transportation Security Administration authority to decide whether baggage on flights from so-called "preclearance airports" in Canada, the Caribbean and Ireland needs to be rescreened in the U.S. before continuing onto another flight. Today, passengers flying from a preclearance airport can connect to a domestic flight without passing through security, but their bags must be rescreened. That means that these passengers must exit security, claim their bags, recheck them and go through security again. This common-sense bill passed unanimously through the House in September, and the Senate looks likely to follow suit during the post-election session.
Government travel and meetings
The controversy over a 2010 government conference in Las Vegas has led to attempts to deeply cut federal travel and meetings. In September the House unanimously passed legislation to this effect. Federal travel and meetings matter to the travel industry and the U.S. economy. In 2011, meetings generated $99 billion in direct travel expenditures, which supports 859,000 U.S. jobs and contributes $15 billion in tax revenue for local, state and federal governments. Agents frequently arrange travel for these meetings, and this part of our business could be severely impaired if unreasonable restrictions are imposed. It is unlikely that the Senate, led by Majority Leader Harry Reid of travel-dependent Nevada, will follow the House's lead on the issue, but it remains one of concern.
EU tax on airlines
Earlier this year, the European Union (EU) announced that its "cap and trade" pollution control system will cover the aviation industry, meaning it would apply to all flights arriving at or departing from EU airports, including U.S. airliners. According to Airlines for America, the estimated cost of the EU program to U.S.-based carriers is more than $3.1 billion from now until 2020, enough to support more than 39,200 airline jobs. On its first day back after the election, the House quickly passed a Senate-approved bill that would prohibit U.S. airlines from participating in the EU's system if the secretary of transportation decides it is in the public interest. While full implementation of the EU's plan is being delayed until October at the earliest, getting the president's signature on this legislation will be one of the top priorities for aviation stakeholders during the lame-duck session.
This is a snapshot of what the outgoing Congress could take up between now and the end of the year. It may take some time for the results of the election -- President Obama re-elected and a new Congress (still split between Democrats and Republicans) -- to be felt on ASTA's longer-term priorities like airline ancillary fees, independent contractors and aviation security. Through it all, rest assured that ASTA will spare no effort in ensuring that the interests of our members and agents everywhere are fully protected in the debates that affect us most.
Eben Peck is ASTA's vice president for government affairs. Contact him at [email protected].