Barrett: Having torpedoed the housing market, D.C. eyes airlines

Barrett: Having torpedoed the housing market, D.C. eyes airlines

February 5th, 2012 by Steve Barrett in Opinion Columns

Gotta love it when the federal government blames everybody but itself for the misery casseroles it deposits on the nation's doorstep.

First we had the housing collapse, courtesy in large part of government-run mortgage behemoths Fannie Mae and Freddie Mac. Fannie's and Freddie's post-collapse bailouts may cost taxpayers close to $200 billion -- far more than any private company got.

Yet what was Rep. Barney Frank, D-Mass., saying about Fannie and Freddie in 2003? "The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. ..."

Do tell.

Sen. Charles Schumer, D-N.Y., said two years later: "I think Fannie and Freddie need some changes, but I don't think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don't undo Fannie and Freddie."

Oh we didn't, Senator. Instead, we let them shepherd the economy into an industrial shredder bought on credit from China. The American people hemorrhaged $7 trillion in household wealth, and now Washington types are placing responsibility for that not on Fan-Fred but almost solely on the lenders that were encouraged or pressured by government to dish out home loans that would make a payday lender blush.

More fun still, the federal government -- having deflected culpability for the suffering it created in the housing market -- has now set up stone-throwing operations in another glass house. New regulations are forcing airlines to make taxes part of their advertised ticket prices. The result? There is suddenly less transparency about how much a flight actually costs versus how much it costs once government piles on. (In 2011, federal taxes amounted to 20 percent of the average ticket price.)

In a word game fit for "1984," the government claims it is just making airlines disclose fully the price of a ticket. But customers were already able to see the total cost -- including taxes -- long before they completed the purchase of a ticket, so the disclosure excuse is bogus. Washington's end game is to be able to veil tax increases in higher advertised ticket prices that can then be attributed to gouging by carriers.

Spirit Airlines, which along with Southwest and Allegiant has sued to stop the new rules on making taxes part of advertised fares, had some choice words for this con game:

"Thanks to the U.S. Department of Transportation's latest fare rules, Spirit must now HIDE the government's taxes and fees in your fares," the company wrote on its website. "If the government can hide taxes in your airfares, then they can carry out their hidden agenda and quietly increase their taxes. (Yes, such talks are already underway.) And if they can do it to the airline industry, what's next?"

Writing in The Houston Chronicle on proposed higher ticket and other taxes on airlines -- $36 billion worth over 10 years -- the CEOs of American, Southwest and United pointed out that "Washington has come to use the industry as an efficient tax collection agency that shields those imposing the tax increases from responsibility."

Chattanoogan Wayne Evans, interviewed by the Times Free Press at Chattanooga Metropolitan Airport, saw through the tax-cloaking scheme.

"It's a manipulation to fool the consumer," he said.

That it is. It does violence to the principle that keeping taxes separate from the price of actually producing a good or service holds government accountable by making consumers aware of how much they're paying specifically in taxes.

If Washington can raise taxes on airline tickets while making the price increase look like private-sector gouging -- you know, by airlines such as American, which is doing so great that it had to file for bankruptcy protection last year -- then rest assured you'll soon pay higher prices for flights. You just may not realize tax increases are a big part of the reason why.

Reach Steve Barrett at 423-757-6329 or