KWCH - Kansas News and Weather - Aviation Divestiture Removed from House TARP Bill

Aviation Divestiture Removed from House TARP Bill

By John Boyd (WICHITA, Kan.)

A provision in the House Troubled Assets Relief Program (TARP) that would have required businesses that receive federal bailout money to divest private aircraft has been removed.

Senator Sam Brownback's office made the announcement Tuesday afternoon, saying he applauds the move.  Brownback and other Kansas representatives said the provision would have caused a negative impact on the general aviation industry.

Congressman Todd Tiahrt told Eyewitness News in an interview Monday that the provision targets a single industry and could have had devastating impacts on thousands of Kansas families.

BROWNBACK APPLAUDS REMOVAL OF AVIATION DIVESTITURE PROVISION IN HOUSE TARP BILL

Sent letter to Senate Committee warning of negative effects of provision

WASHINGTON - U.S. Senator Sam Brownback applauded the removal of a divestiture provision in the House Troubled Assets Relief Program legislation which would have negatively affected the general aviation industry.  

"I am thankful that my colleagues carefully considered the very real consequences of the House divesture provision," said Brownback.  "My home state of Kansas is just one of many states across the nation which would have suffered economically if the divesture provision had been included in the TARP legislation.  Congress should do everything it can to help the general aviation industry during the difficult economic situation we now face." 

Brownback yesterday sent a letter to Senators Chris Dodd (D-CT) and Richard Shelby (R-AL), Chairman and Ranking Member respectively of the Committee on Banking, Housing and Urban Affairs, urging the Committee to oppose House efforts to adopt the divestiture provision in the TARP legislation.  Brownback was joined by Senator Pat Roberts (R-KS) in sending the letter.    

Full text of the letter follows:

We are writing to strongly encourage you oppose efforts underway in the House of Representatives to punish corporations that own or lease business aircraft.   

As you recall, the Auto Loan Financing bill that passed the House in December required corporations receiving government assistance to divest any business aircraft they owned or leased.  The Bush Administration later incorporated the same measure in its loan package after the bill died in the Senate. While we understand that Congress and the Administration were reacting to the criticism the CEO's of GM, Ford, and Chrysler encountered when they flew business aircraft to Washington, the fact is that this provision, if replicated, will lead to fewer aircraft orders, cost jobs, and tarnish the image of the general aviation industry.

Chairman Frank of the House Financial Services Committee has included the same business aircraft divestiture provision in his draft proposal for the reauthorization of the Troubled Assets Relief Program (TARP).  In our view, it is imperative that the Banking Committee reject this proposal as it will greatly damage an important manufacturing industry. Furthermore, business aircraft often provide businesses of all sizes a cost effective means of transportation. Requiring such a divestiture may increase the cost of doing business for many of the companies that this program intends to help.

General Aviation is absolutely vital to the economic stability of Kansas and our nation, as a whole.  Specifically, general aviation contributes more than $150 billion to the U.S. economy annually and employs more than 1,265,000 people.  In 2007, U.S. general aviation airplane manufacturers delivered over 3,279 airplanes to customers in the United States and abroad.  The total value of these aircraft was close to $11.9B of which 38.4 percent were exported.  The general aviation industry is one of the few remaining domestic manufacturing industries that maintains a positive trade balance for the United States.

At the same time, general aviation is beginning to suffer the effects of the economic downturn.  Major manufacturers such as Cessna and Hawker Beechcraft have had to cut jobs recently because of a decline in new orders.  In light of this, targeting general aviation - which itself is unfair and completely inappropriate - would have the perverse effect of hurting general aviation manufacturers further and weakening the economy, even though the intent of the legislation is to help it recover.  It will depress the general aviation market and result in the loss of good, high-paying jobs throughout the United States.

In conclusion, we urge you to reject any effort to include business aircraft divesture language in the TARP bill.  We thank you for your leadership and for considering this urgent request.