To win Republican support, Senate negotiators promised that a bipartisan COVID-19 aid package would be fully paid for with cuts to previous pandemic relief programs that had money left over.
But the single biggest offset in the compromise legislation — $2.3 billion in savings from the vastly undersubscribed “aviation manufacturing jobs protection program” in last year’s pandemic aid package — is money that was never going to be spent anyway. So, in reality, it’s just a phantom offset that leaves the bill partially unpaid for, budget experts say.
The crux of the issue is that the Congressional Budget Office is still working off last summer’s “baseline” for measuring the cost of legislative changes, with its updated forecast on hold until May.
But the Biden administration’s fiscal 2023 budget request, released last week, shows the program would retain an unobligated balance of nearly $2.3 billion out of a total $3 billion appropriation that’s available through Sept. 30, 2023. That’s because the program’s application process ended last December with demand for aid only a fraction of what was originally anticipated.
However, Congress operates under CBO scorekeeping rules. And the CBO’s summer baseline assumed demand for aviation program funds would be more robust. Therefore, as part of the bipartisan agreement senators reached this week, the CBO score for the new $10 billion coronavirus aid package showed $2.3 billion in “outlay” savings from rescinding those unspent aviation dollars — meaning an actual reduction in spending that would help pay for the bill.
“Importantly, this bill is comprised of dollar-for-dollar offsets and will not cost the American people a single additional dollar,” Utah Sen. Mitt Romney, a key Republican negotiator, said in announcing the compromise in a statement this week.
But instead of clawing back money that was going to be spent for other pandemic-related uses — in this case, manufacturing jobs — lawmakers effectively decided to spend money that was otherwise going to be saved.
“It’s hypocritical to crow about savings from a bucket of funds that was never going to be spent anyway,” Victoria Gorman, policy director of the Concord Coalition, a nonpartisan group that advocates for greater fiscal accountability, said in an email. “But unfortunately, there is no point of order against hypocrisy in Congress.”
During the negotiations, Romney said he was insisting on securing reductions to actual spending, or outlays, as opposed to just cutting the size of allocations, known as budget authority.
“We all agreed it’s from the outlay side,” Romney told reporters on March 31.
Romney aides didn't have an immediate comment. But the senator had some reason to believe the proposed offset was real, given what the CBO said this week.
However, even that paper savings may evaporate in a matter of weeks. The new CBO baseline will align with the Biden administration’s projection for the aviation program, said Jeff Davis, a senior fellow at the Eno Center for Transportation, a nonprofit research group.
Designed to keep manufacturers employed during the pandemic, the aviation manufacturing jobs program offered to pay up to half of the compensation for certain workers for up to six months. The companies, in turn, had to agree not to conduct any involuntary layoffs, furloughs or reductions in pay and benefits for those workers.
White House budget documents released last week estimate the program will ultimately pay out about $717 million in benefits and administrative costs of its total $3 billion appropriation. After the application period ended in mid-December, the Transportation Department reported that through Feb. 11, a total of nearly $674 million had been made available in direct grants to eligible companies.
Department data shows that beneficiaries expected to preserve nearly 31,000 aviation industry jobs. The single biggest award, $75.5 million, went to Wichita, Kan.-based Spirit AeroSystems, which claimed to save 3,214 jobs as a result.
“After we witnessed a 96 [percent] drop in global air travel, this critical bipartisan, bicameral program helped bridge the gap for hundreds of aviation manufacturers and their employees,” Spirit CEO Tom Gentile said in a statement after the program closed.
In his statement, Gentile thanked Sen. Jerry Moran, R-Kan., and Rep. Ron Estes, R-Kan., for supporting the program. However, Moran and Estes voted “no” on the underlying $1.9 trillion aid package in which it was included, along with every other Republican.
Spirit is a major supplier for aircraft manufacturer Boeing Co., the largest employer in Washington state. Gentile also praised Sen. Maria Cantwell, D-Wash., and Rep. Rick Larsen, D-Wash., who voted for the 2021 relief package.
Other big beneficiaries of the aviation jobs program were 10 U.S. facilities owned by French manufacturer Safran SA, which in total received $41.1 million and reported saving 1,850 U.S. jobs.
None of those previously awarded funds would be clawed back under the Senate’s new offset. The only issue is what becomes of the $2.3 billion remaining that no other companies have come forward to claim.
While the merits of the aid program were not in doubt, analysts such as Gorman said the budget sleight of hand used to produce a spending offset raises broader questions about fiscal accountability on Capitol Hill.
“The most chilling aspect of the Aviation-Offset-That-Isn’t is the signal it sends about hard choices,” Gorman said. “If lawmakers can’t find legitimate offsets for a mere $10 billion, how will they address the bigger issues that are driving our deficits and debt to uncharted, unsustainable levels?”
Jessica Wehrman, Lindsey McPherson, Ryan Kelly and Peter Cohn contributed to this report.