April 28,2008

Baucus Floor Statement Regarding FAA Reauthorization

Mr. President, at 5:30 this afternoon, the Senate will vote on the motion to invoke cloture
on the motion to proceed to the reauthorization of the Airport and Airway Trust Fund,
also known as the Aviation Trust Fund. I urge my Colleagues to support getting to this
important bill.

Before getting to the specifics of the bill, I’d like to give some perspective on our current
aviation system. And I’ll start with the story of Sir Robert Watson-Watt.

Robert Watson-Watt was born in Scotland in 1892. He was a descendant of the steam engine pioneer James Watt. Robert was a student of science, with a fascination for radio waves and how they might be used to transmit information. After finishing school, he
got a job as a meteorologist at the Royal Aircraft Factory, not far from London. He
worked on developing methods of using radio waves to help British airmen locate and
avoid thunderstorms.

After years of work, in 1935, Watson-Watt produced a report called “The Detection of
Aircraft by Radio Methods.” The report suggested a new idea. The idea was that people
could use short-wave radio to detect not only bad weather, but also aircraft, including
bombers.

Watson-Watt’s superiors tested his theory. And it worked. They called his new gizmo
RADAR, an acronym for Radio Detection and Ranging. By the time that World War II broke out in September 1939, the British government had installed radar all along the English Channel and the North Sea coasts. That gave the British advance warning of Hitler’s bombers. Acclaimed historian A.J.P. Taylor said that he doubted that Britain could have survived the Second World War without Watson- Watt’s invention.

Next, radar was ready for commercial application. All civil aviation needed for dramatic
growth was a faster set of planes. That happened with advent of the jet engine in the
1950s and 1960s.

In 1952, what is now British Airways introduced the de Havilland Comets. Those were
36-seat British-made jets that could fly as fast as 500 miles an hour. Six years later, the
Boeing 707 entered commercial service. Pan Am flew it from New York to Paris in just
under nine hours — twice as fast as a propeller plane.

Seven years after that, in February 1969, the world’s first wide-body jet — the Boeing
747 — made its inaugural flight. With seating for up to 450 passengers, the 747 was 80
percent bigger than the largest jet of that time. The era of mass aviation was in full
swing.

But as air travel flourished, growing pains ensued. And by the late 1960s, public concern
over air-traffic had spilled into the headlines: Here’s a news story from 1967.

“Thicket in the Skies . . . . When a passenger hops a commercial plane to get from here
to there quickly, he soon discovers that man does not live by one means of transportation
alone. The Labor Day weekend congestion and peril underscores the point . . . .”
And here’s another story, from May 1969:

“FAA Predicts Summer Air Jam . . . . [The FAA] forecast yesterday that, despite Federal
restrictions that would limit flights at five major airports beginning June 1, air travelers
might have another summer of frustrating delays.”

In short, the air transport system had grown beyond anyone’s expectations. Change was
needed. Congress responded by passing groundbreaking legislation.

In May 1970, Congress passed the Aviation Trust Fund. Congress built on a Nixon
Administration proposal to adopt a law in which users of the aviation system paid for its
upkeep. The new law imposed taxes on tickets, fuel, cargo, and the like. And the law
established the Aviation Trust Fund to provide a stable source of funding for our Nation’s
aviation needs.

Despite some ups and downs over the last 38 years — including a lapse of the Trust Fund
in the early 1980s — this system of funding air traffic has by and large succeeded. The
rates of the taxes have changed. And some — like those on aircraft tires — have been
phased out. But generally, this Trust Fund has managed to finance the needs of the airtraveling
public.

Not anymore. Our system needs modernization, to improve efficiency and safety. Our
2008 Trust Fund, born in the 1970s, is paying for 1930s technology. That will change
with passage of this bill. That will change with the adoption of NextGen.

And that brings us to the bill in connection with which we will vote this afternoon — the
reauthorization of the Airport and Airway Trust Fund, also known as the Aviation Trust
Fund. The Trust Fund finances the U.S. aviation system, with about $12 billion per year
in user-based taxes. The Senate substitute amendment would provide an additional $750
million to the Trust Fund over the next three years. The bill would provide needed funds
to modernize our aviation system.

The Senate substitute amendment is a compromise product. It represents months of work
on the part of the Finance and Commerce Committees. Its passage promises
improvements in safety and efficiency for air travelers.

Key to that improvement is NextGen. NextGen is the Federal Aviation Administration’s
plan to modernize the Nation’s air-traffic system. NextGen would address the effect of
air traffic growth. It would increase air-traffic capacity and efficiency. And it would
improve safety and reduce the effect of air travel on the environment.

Generally speaking, NextGen involves the use of satellite-based technology. This
includes items like Automatic Dependent Surveillance Broadcast. ADS-B would allow
aircraft to continuously transmit location, speed, and altitude to other planes, pilots, and
controllers. And that would improve the efficiency and safety of air traffic.

Instead of using Watson-Watt’s radar to tell where they are, planes equipped with ADS-B
get their exact location from Global Positioning System satellites. They then broadcast
their flight number, speed, and heading — automatically and continuously — to ground
control and other planes within 150 miles. This is a sea change in air-traffic technology.
And we need to invest in it now.

So how do we pay for NextGen? The Finance Committee passed a bill to pay for
NextGen this way: First, we set the tax for General Aviation jet fuel at 36 cents a gallon.

That’s up from the current 21.9 cents a gallon. This proposal was agreed to by the
General Aviation community. And it will raise about $240 million a year in additional
funds for NextGen. Note that this proposal does not affect those who fly planes using
“avgas,” such as a propeller-powered Cessna.

Second, we moved partially-owned planes — known as “fractional” aircraft — from the
commercial taxation regime to that of General Aviation. Fractional owners expressed
concern that without this change, their ability to fly and land in Europe would be
hampered. The European Union has strict rules governing which airports commercial
flights can use. And this change should allow fractional aircraft to be considered as
General Aviation, not commercial aviation. This change comes with a cost to the
fractional users.

The Senate substitute amendment drops a proposed increased on the tax on international
departures and arrivals. The Finance Committee bill proposed raising that rate —
currently at $15.40 — by $1.55 each way. That’s just over $3 roundtrip. We argued that
if someone had the wherewithal to travel overseas, then the cost of a Starbucks at the
airport was a reasonable price to pay for contributing to a modernized air traffic system.

But given the state of the commercial airline industry, Senator Rockefeller and I agreed
to drop this provision. In the face of dramatically higher fuel prices and mounting
financial losses, we agreed that this was not the time to raise extra funds from the
commercial industry.

All told, the package in the Senate substitute amendment raises an additional $800
million over the next three years. More may be needed, especially given the rapid state
of technological change. I know that both the Finance Committee and Commerce
Committee plan to monitor NextGen’s implementation. And since this is just a three year
reauthorization, we’ll be back at this again before long.

Finally, I’ll note that this bill is not just about aviation. The Finance Committee package
also contains other critical infrastructure items, including a direly-needed fix to the
Highway Trust Fund. The Highway Trust Fund will run a deficit in 2009, unless
Congress acts to repair that deficit.

In a time when our surface transportation suffers as much as — if not more so — than our
air transport system, it is imperative that Congress act to restore needed monies to the
Highway Trust Fund. We need to finance construction and repair of our Nation’s roads
and bridges.

Taxes on gasoline, diesel, and heavy trucks finance the Highway Trust Fund. The
Highway Trust Fund is thus sensitive to changes in the use of these items. As Americans
drive less, and as vehicle fuel-efficiency increases, the Highway Trust Fund’s balance has
taken a significant hit.

A Highway Trust Fund deficit is projected for 2009. And even worse projections are
expected for 2010 and beyond. As we get nearer to the next Highway Bill, it’s important
that we at least make the Highway Trust Fund whole going into 2009. The Senate
substitute amendment would do that. And I urge my colleagues to support it.

Mr. President, we’ll have a vigorous debate this week. And I look forward to it.

But before that debate begins in earnest, I want to thank my colleagues — particularly
Senators Rockefeller and Inouye — for their willingness to seek common ground. I think
that the Senate substitute amendment is a good package.

So let us help to bring air travel from Robert Watson-Watt’s 1935 idea into the 21st
Century. Let us adopt NextGen to improve safety and efficiency in the skies. And let us
vote to move to this bill this afternoon.

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