Hoping to quickly stabilize the airline industry and prevent further deterioration in the economy, the House and Senate have passed a controversial $15 billion aid package to keep the struggling airlines in business.
Following the terrorist hijackings of four commercial jetliners on Sept. 11, consumers have been afraid to fly, insurers have been reluctant to continue to insure the airlines and financial losses have mounted.
Those losses explained why executives from American Airlines and United Airlines, the two carriers whose planes were hijacked, roamed Capitol Hill over the past week asking for a $24 billion bailout to keep them from going into bankruptcy.
Lawmakers rejected that proposal, but House and Senate leaders hammered out an agreement that would give the airlines $5 billion in direct aid, the amount the airlines said they would lose by the end of the month as a result of the government-ordered grounding of flights.
Any airline that wishes to receive direct aid must agree to freeze executive salaries that exceed $300,000 for the next two years.
The plan also would provide the airlines with $10 billion in loan guarantees, and it would require carriers to maintain air service to the small and rural communities they were serving before the hijackings.
For the victims of the terrorist attacks, the bill would create a compensation fund administered by a "special master" at the Justice Department. That fund would provide compensation on an expedited basis, but not for punitive damages, which are meant to punish a defendant. Instead, victims and their families may choose to take their case to court, where they could seek compensatory damages and damages for pain and suffering, but not punitive damages. Their lawsuits would be restricted to a federal court in New York.
Finally, airlines unable to obtain commercial insurance because of the terrorist threat would be covered by the federal government under the War Risk Insurance plan for the next six months. The plan traditionally has provided money to companies doing business overseas in time of war.
On Friday, the Senate passed the bill 96-1 and the House followed suit, voting 356-54.
Numerous lawmakers complained Friday that the measure did not include assistance for the thousands of workers laid off by the airlines in recent days. They also complained that the bill did nothing to upgrade safety at airports or to protect airlines against terrorist attacks.
Senate Majority Leader Tom Daschle (D-S.D.) assured senators that both matters would be addressed in future legislation. And House Speaker Dennis Hastert (R-Ill.) separately promised House Minority Leader Richard Gephardt (D-Mo.) that lawmakers would help workers in other bills to be brought up shortly.
"We have to address the impact that all of this has had on employees," Daschle told the Senate. "Over 100,000 employees are now out of work from this extraordinary economic problem we are facing."
Speedy passage of the airline bailout plan reflected the new cooperative approach in the House and the Senate among Democrats and Republicans.
Instead of moving legislation through committees, congressional leaders have taken matters into their own hands, negotiating among themselves and with administration officials and then selling the plan to the rank-and-file members.
That has not always proven to be a smooth road. During the airline negotiations, House Majority Whip Tom DeLay (R-Texas) and Assistant Senate Republican Leader Don Nickles of Oklahoma complained that Congress was creating an unlimited entitlement for the people injured or killed at the World Trade Center, the Pentagon and in the four airplanes that crashed.
DeLay's and Nickles' effort to cap the amount of money available for the victims, however, was rejected during the negotiations.
Sens. Peter Fitzgerald (R-Ill.) and Jon Corzine (D-N.J.) strenuously objected to propping up the airline industry without getting something in return. The two senators argued that, if the government were to bail out the airlines, it should do so in a manner similar to the way it rescued the Chrysler Corp. in 1979.
Back then, the government guaranteed Chrysler a $1.5 billion loan. As a fee, the Treasury received 14 million "warrants," or options to buy stock. Four years later, it sold those warrants at a $300 million profit for the federal government.
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