Mike Leven is President and Chief Operating Officer of the Las Vegas Sands Corporation and a Job Creators Alliance member.
After months of warning, the dreaded federal budget sequester started biting last month. The traveling public felt the forced cuts first as more than 13,000 air traffic controllers were furloughed from their jobs for the rest of the summer.
The effect of the furloughs was obvious and immediate to those of us in the tourism industry. Flights out of major airports were running hours late. Vacations were cancelled. Companies began rethinking corporate retreats; organizations questioned their summer conventions.
The flying public was quickly up in arms — especially when they found out that the airport delays were both intentional and unnecessary. Congress rapidly approved a bill, and the Federal Aviation Administration (FAA) said that air traffic controllers had returned to a regular schedule by the following Sunday night.
The FAA is just one of hundreds of government agencies anticipating the sequester’s across-the-board cuts. The control tower staff cuts allegedly would have saved $200 million from the department’s annual $16-billion budget. The savings could have been found elsewhere in the FAA, but there was a twisted logic to the Obama administration’s monkey wrenching. These moves were precisely targeted to get the attention of the American people.
In fact, they got more than they bargained for, and the travel industry screamed in protest. The jammed airports appeared on track to kill tourism jobs for the sake of brinksmanship.
The total FAA budget this year is actually higher than last year and more than the president even requested. The sequester only means that the amount budgeted for the FAA is less than originally projected, even though it is — I can’t stress this enough — still more than was budgeted last year.
By front-loading these spending cuts, the first effects of the sequester would hit the average American right in the airports, at the beginning of the summer travel season. The administration’s goal was clear: to force a slowdown in service to increase frustration, then leverage that frustration against political opponents in the next round of fiscal bargaining.
With 1.7 million people flying daily, spending money on hotels and car rentals and restaurants and taxi drivers, the number of those affected grew so rapidly that the politicians who engineered this fake frugality backpedalled in record time.
Tens of thousands of jobs in the travel and hospitality industry were at risk. Business conventions generate hundreds of millions in revenue every year. Summertime recreational travel generates and sustains millions of jobs. In fact, according to the U.S. Department of Commerce, every year travel and tourism generate about $1.4 trillion in economic activity and support 7.5 million jobs in America — almost 5 percent of the workforce, directly or indirectly. That’s 2.6 percent of the nation’s gross domestic product.
Last year, nonpartisan studies were predicting the economic cost of budgetary failure for the nation in billions of dollars and hundreds of thousands of jobs. A July 2012 study by George Mason University showed that in Nevada alone, the full effect of the sequester could cost the state 10,400 jobs and more than $550 million in income for the state. Imagine the disproportionate cost to the economy here if the FAA cuts had a lasting impact on tourism.
That is what Washington is using as a playing chip: people’s lives and their jobs, the very economic security of the United States. Even Nicolo Machiavelli would recoil, aghast.
The sequester was a deal proposed by the president and agreed to by both Democrats and Republicans in Congress as the fallback plan should the two sides fail to reach a responsible budget agreement. But while some of the sequester’s provisions kick in automatically, policymakers have far more control than they admit when the cameras are rolling.
It’s hard to believe that the savings achieved by laying off 13,000 air traffic controllers are vital, given the wasteful spending in Washington. The small amount saved by these high-profile cuts does not offset the resulting economic stagnation and job losses. Meanwhile, useless programs are left untouched in this charade.
Pulling back the curtain even more, we now know that the D.C.-area airports serving policymakers in Washington were exempted from these “mandatory measures.” At a recent New York media event, U.S. Sen. Rand Paul (R-Ky.) noted the irony in these selective cuts when he said, “The same day [the president] announces that we have no self-guided tours in the White House, he sends $250 million to Egypt. It’s a matter of priorities.”
The priorities are clear enough to those paying attention. In cynical Washington, partisan games are more important than American jobs and economic growth.