Category: reason

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10/8/1888: Chief Justice Melville Fuller takes the judicial oath.

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Belarus President Alexander Lukashenko has run the formerly Soviet country since 1994, but his latest victory, following a Potemkin election on August 9, may be the beginning of the end for the man European media often call “Europe’s last dictator.” Within days of the vote, formerly loyal factory workers refused to allow him to speak, employees of state-run media walked off the job, and citizens packed the streets to demand Lukashenko step down.

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Three more officers of the Los Angeles Police Department have been charged with falsifying information they placed into a state gang database. “In all three cases, the defendants are accused of writing on the (interview) card that a person admitted to being a gang member even though body-worn camera video showed the defendants either never asked the individuals about their gang membership or the individuals denied gang membership if they were asked,” according to prosecutors. A total of six officers so far have been charged with entering false information into that database.

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Regal Cinemas announced recently that it will temporarily close all 536 of its U.S. locations as the COVID-19 pandemic rages on and continues to keep customers away. This move will affect approximately 40,000 employees across the country. And yet, nobody in Congress is talking about a bailout for Regal.

Now compare that with the airline industry.

Congress passed a $50 billion bailout for the airlines in April of this year, with $25 billion in subsidized loans and $25 billion meant to keep most airline workers employed until the end of September. As predicted, since consumers weren’t ready to fly yet, this taxpayer-funded Band-Aid only postponed the inevitable. American Airlines and United Airlines just furloughed 32,000 employees. Yet, in this case, most legislators—from House Speaker Nancy Pelosi (D–Calif.) to a large number of Senate Republicans to President Donald Trump—want to bail out the industry.

We’re told that a new injection of taxpayers’ money is about saving airline jobs. But it’s hard to believe that this is really what it’s all about. As mentioned above, nobody is talking about bailing out Regal to save its workers. Moreover, as my colleague Gary Leff and I show in new research published by the Mercatus Center at George Mason University, the math doesn’t add up to support the arguments that a second airline bailout is about the workers. If the bailout were truly to support upwards of 35,000 airline employees for six months, assuming roughly $50,000 per worker paid out over that period (i.e., $100,000 annually), the bailout would only be around $1.7 billion, not the $25 billion package that Congress is talking about. What’s more, if the bailout is indeed another $25 billion for 35,000 jobs, that would cost taxpayers $715,000 per job saved—for only six months.

Bolstering the claim that this isn’t about protecting jobs, much of the payroll support would give money to airlines that aren’t furloughing workers to begin with. These points should put an end to the argument that the bailout is to prevent furloughs. But it doesn’t. Airline representatives have argued that the bailout would not only be beneficial to freshly furloughed workers but also protect against the termination of workers currently on leave. Don’t buy it.

First, there’s no indication that airlines plan to furlough those workers. If they did, they would have had to notify them 60 days in advance of the furloughs, which they have not. Second, if the concern is that airlines might make additional, yet-to-be-announced furloughs, then that’s an even bigger argument against payroll support. It suggests that the industry isn’t expecting to do better anytime soon if they feel the need to furlough the on-leave workers who aren’t costing them a dime.

As I said, saving jobs isn’t the primary reason for this bailout. It never is.

It’s also worth noting that some companies are taking a different approach to retaining their employees. For instance, Southwest is asking its labor unions to accept pay cuts to prevent furloughs and layoffs through the end of next year. Others, such as Singapore Airlines, have done the same. Airlines also have access to capital markets and have many durable assets that they can sell or use as collateral to secure additional financing, even during a crisis. And even without selling these lucrative assets, airlines can also turn to their co-brand credit-card-issuing partners for liquidity like they have during past financial challenges.

Sadly, as long as demand for air travel remains so deflated, there’s no way to avoid airlines restructuring and slimming down their payroll. Subsidies provided through the cover of payroll programs aren’t necessary to protect an industry that could restructure through bankruptcy. Airline bankruptcies aren’t the equivalent of an airline collapse. They can continue to fly safely during the process where a judge imposes a stay on creditors’ claims and gives the airlines breathing room until consumers are ready to come back.
Importantly, the bankruptcy process is fair. It shifts the cost of this crisis onto those airline investors who make good returns during good times and should shoulder the decreased value of their investments, instead of taxpayers. Without a bailout, airlines won’t just be flying the friendly sky, but the fairer sky—for all taxpayers, including Regal employees.

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During Wednesday night’s debate, Vice President Mike Pence kept saying that a Biden-Harris administration would “ban fracking.” Democratic vice presidential candidate Sen. Kamala Harris (D–Calif.) insisted that claim was not correct. In fact, Democratic presidential candidate Biden has consistently said that he would not ban fracking and other fossil fuel exploration and exploitation on private lands. His administration, however, would ban fracking on federally owned lands. Natural gas production from onshore federal lands currently constitutes less than 10 percent of production in the United States.

Pence also noted that U.S. carbon dioxide emissions are down. That is true, but the chief reason that U.S. carbon dioxide emissions are down is because cheap natural gas (produced from largely from fracking) has outcompeted coal. If President Donald Trump had kept his promise to revive “beautiful clean coal,” then U.S. carbon dioxide emissions would not be falling.

Debate moderator Susan Page asked Vice President Pence, “Do you believe, as the scientific community has concluded, that man-made climate change has made wildfires bigger, hotter, and more deadly and has made hurricanes wetter, slower and more damaging?” He responded, “With regard to climate change, the climate is changing. The issue is what is the cause and what do we do about it? President Trump has made it clear that we will continue to listen to the science.”

The science suggests that man-made climate change is indeed making wildfires in the western U.S. worse. As I recently reported, researchers find that climate change is contributing to the rising temperatures and lengthier droughts that are fueling the increasing extent of wildfires in California. In addition, evidence is accumulating that as a result of rising greenhouse gases hurricanes are slowing down and getting wetter as well.

Pence is right that the issue is what do we do about climate change, but he offered no answer to that question other than a vague reference to “innovation” and to a shift in power generation from coal to natural gas for which the Trump administration can claim little credit. Biden’s proposal to ban fracking on federal lands would, in fact, slow that shift. But it’s false to say he would ban fracking altogether.

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