Function 400 - Transportation
Increase the Passenger Fee for Aviation Security
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
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The Aviation and Transportation Security Act, enacted in response to the terrorist attacks of September 11, 2001, made the federal government, rather than airlines and airports, responsible for screening passengers, carry-on baggage, and checked baggage. Implementing new standards under the 2001 law required the hiring of screeners who were more highly qualified and trained, necessitating increased compensation and raising overall security costs. To help pay for those costs, the law directed airlines to charge passengers a fee, remitted to the government, on trips beginning from an airport in the United States. Initially set at $2.50 for a one-way trip with no stops and $5 for a trip with one or more stops, the fee was raised and restructured by the Congress in 2013 and 2014. It is now set at $5.60 per one-way trip, with a maximum charge of $11.20 per round trip, regardless of the number of stops. In 2017, the Transportation Security Administration (TSA) collected about $3.9 billion from the fee, of which $2.4 billion helped to offset its appropriation of $7.3 billion for operations and support, most of which relates to civil aviation security. Of the remaining fees collected, $1.3 billion was deposited in the Treasury's general fund and $250 million was allocated to TSA's Aviation Security Capital Fund.
This option, which is similar to a proposal in the President's 2019 budget, would increase the passenger fee to $8.25 per one-way trip by 2020, with a maximum charge of $16.50 per round trip. Projected budget authority for TSA would not change.
Effects on the Budget
Implementing this option would boost collections (and thus reduce net budget authority and outlays) by $20 billion over 10 years, the Congressional Budget Office estimates. That increase in collections is based on CBO's projections of future air travel, which in turn are largely based on the agency's projections of gross domestic product (GDP), adjusted to account for a slight reduction in the amount of travel as a result of the higher fees. Once the option went into effect, the total amount of fees collected would be equivalent to 80 percent or more of the amount of projected total funding for TSA's operations and support and for the allocation to its capital fund. A higher percentage of TSA's costs could be recouped if the fee was set to some amount above $8.25 or vice versa; a given percentage increase or decrease in the fee relative to $8.25 would roughly change the effect on outlays by the same percentage.
Uncertainty surrounding CBO's projections of future air travel is the primary source of uncertainty in the estimates of the option's budgetary effects. The actual number of trips could be larger or smaller than CBO projects, either because actual GDP is higher or lower than anticipated in CBO's current baseline or because travel can be affected by factors other than changes in GDP—for instance, by changes in airfares resulting from changes in the cost of jet fuel.
The main arguments for and against this option rest on the principle that the beneficiaries of a service should pay for it; the differences lie in who is seen as benefiting from TSA's aviation security efforts. An argument for the option is that the primary beneficiaries are passengers and that security is a basic cost of airline transportation, just as fuel and labor are. The current situation, in which roughly 40 percent of those costs are covered partly by taxpayers in general, provides a subsidy to airlines and their passengers.
Conversely, an argument against the option is that the economy as a whole and the public in general benefit from the availability and security of air transportation. To the extent that greater security reduces the risk of terrorist attacks, the entire population is better off. By that reasoning, using less funding provided by taxpayers in general to pay for the costs of transportation security measures is a disadvantage of the option.