The government is likely to lose more than $1 billion in airline ticket taxes because lawmakers have left town for a month without resolving a partisan standoff over a bill to end the partial shutdown of the Federal Aviation Administration.
The government already has lost more than $200 million since airlines are unable to collect taxes on ticket sales because the FAA's operating authority has expired.
The Senate recessed Tuesday until September, erasing any possibility for quickly resolving the issue. The House left Monday night.
Caught up in the partisan acrimony are nearly 4,000 FAA employees who have been furloughed. The FAA also has issued stop-work orders on more than 200 construction projects, threatening the jobs of thousands of other workers. Air traffic controllers, however, remain on the job.
The debacle could have had an upside for airline passengers because ticket taxes, which typically average about $30 on a $300 round-trip fare, are suspended during the shutdown. But airlines decided to pocket the windfall. Within hours of the shutdown July 23, most airlines raised their fares by amounts equivalent to the taxes that disappeared.
Transportation Secretary Ray LaHood called airline CEOs to complain, and lawmakers have sent letters demanding that the fare hikes be reversed and the profits be placed in escrow. But their howls have largely been ignored. Airlines collectively lost about $440 million in the first six months of this year, according to the Air Transport Association.
Some passengers will be due tax refunds if they bought their tickets and paid taxes before the shutdown, but their travel took place during the time airlines no longer had authority to collect the money. Airlines and the Internal Revenue Service are quarreling over who will handle the complicated and expensive process of getting those refunds to passengers.
President Obama implored Congress on Tuesday to settle the dispute before leaving town, calling the stalemate "another Washington-inflicted wound on America."
LaHood, a former GOP congressman from Illinois, conveyed the same message in a series of private meetings on Capitol Hill and in phone calls to lawmakers but was unable to clinch a deal.
Sen. Jay Rockefeller, D-W.Va., chairman of the Senate committee that oversees the FAA, held out the possibility that if the Senate were able to pass a bill acceptable to Democrats, it could still be approved by the House using obscure parliamentary procedures and sent to the White House.
But his House counterpart, Rep. John L. Mica, R-Fla., ruled out that possibility. The only way left to end the shutdown is for the Senate to agree to a previously passed House bill containing $16.5 million cuts in air service subsidies to 13 rural communities that some Democrats -- particularly Rockefeller -- find objectionable.
"The only one holding this up now is Mr. Rockefeller," Mica said. One of the 13 communities that would lose subsidies is Morgantown, W.Va.
Underlying the subsidy dispute was an argument over a labor provision, deemed anti-union by Democrats, that was inserted by House Republicans into a long-term FAA funding bill. The provision would overturn a National Mediation Board rule that allows airline and railroad employees to form a union by a simple majority of those voting.