Evening star., 1952-06-15
Subsidies
House Is Nearing Vote
On AirnoiI Payments
By 6. H. Irvino

Public opinion samplers probably
would find that only handful of
Americans are aware that $50 mil
lion of their last years tax money
went to subsidize the Nations air
lines.
This is the kind of bonanza that
doesn't loom very large when stacked
up against budget of $50 billions,
, but it gets bigger when only four
to be getting the lions share of the
total.
Under present rules, the Civil
Aeronautics Board votes itself COM
bination mail and subsidies payment
each year, then turns it over to the
Post Office Department to include
in it's budget. The sum covers mail
pay" and includes. besides the sub
sidy, the actual cost of moving the
mail by air. Last year the total
check came to Silt million, about
35 per cent of which would have
covered the actual cost of conveying
the mail.
Sensitive to Deficits
For some years now, the Post Of
flee Department has been a noto-
rious money loser. A subsidy for the
airlines merely adds to the amount
the Post Office goes into the red.
1t has been proposed that the sub
Sidy be labeled for what 1t is and
taken out of the Post Office Depart
ment budget.
A bill to do just that passed the
House unanimously in 1850, but
begged down in the Senate. Last Sep
tember, however, the Senate passed a
heavily revised version of this original
House bill and sent it back to the
House. Authors of the original bill.
Representatives Kennedy and Hesel-
ton of Massachusetts,, found the Sem
ate revision entirely unsatisfactory,
however. They now have re-intro-
duced their old bill. Several other
variations on airmail subsidy revision
also are being considered now in the
House Interstate and Foreign Com
merce Committee. A vote is due this
week.
Senote Bill foVored
Indications are now, however, that
the House committee will approve
the watered-down Senate bill.
Every one. including the proponents
of calling the subsidy spade spade,
admits that the airlines must con-
tinue to have subsidies. but bringing
the subsidy out in the open proba-
bly, will make it vulnerable to
congressional snipers. Proponents
of the Kennedy -Heselton meas
ure think this is all to the good.
Others hint darkly, however, that the
national defense may be jeopardized
by overzealous knifewielders in Con-
gress. Senator Brewster worries
about giving away secrets to the
Communists.
The Differences
Opposing views on how to settle the
subsidy issue are roughly reflected in
. the House and Senate bills now before
the Senate. Here are the principal
controversial issues:
l. Foreign mail rates. The House
bill advocates paying the airlines a
fair margin of profit on carrying the
international mail. The Senate bill
wants to pay the same fee that all
countries have agreed to pay when
they hire foreign airlineS to handle
their mail. This would be $2.86
per ton mile without subsidy.
Right now the CAB authorizes
payment of $3.50 per ton mile,
but this includes the hidden
subsidy. Proponents of the Senate bill
shy away from paying foreign carriers
more than we pay our own. However,
Senator Lehman of New York has
pointed out that this foreign-carried
mail amounts to only per cent of
the total load. and would be ire
mendous penalty to pay for retaining
the option to use foreign lines. Other
countries subsidize their airlines, but
out in the open. They also pay their
own lines well below the $2.86 figure.
they must pay United States or other
foreign lines.
2. Cost ALLEGATION. Airlines conduct
four principal kinds of business:
Passenger service. express, freight
and mail. To arrive at a fair pro-
portion of the overhead to be
added to mail service costs, the House
bill would require a breakdown of
cost allocations" The Senate bill
does not.
3. Yearly accounting Senator Pat
McCarran of Nevada is the author
of one feature of the Senate bill that
is under attack. His amendment
would give CAB the power to
give certain airlines subsidy contracts
for several years at time. The
House bill would let Congress decide
each year how much of the airlines'
costs should be covered.
4. Post Office discretionary powers.
The Senate bill would prevent the
Postmaster General from hiring
the cheaper lines where no change in
mail service would be involved. The
House bill does not.
The Postmaster General, under
congressional pressure to cut his
deficit, is providing Kennedy -Hesel-
ton supporters with some Of their
most important ammunition. Also
on their side are such organizations
as the American Federation of Labor,
the CIO. the Budget Bureau, tax
payer and veteran groups, and, of
course, the railroads.
Ranged against these forces are
the airlines themselves. although they
keep pretty much in the background.
There have been charges that strong
lobbies are at work for the airlines.
CAB in Between