Yes, the Federal Government does provide essential services, but they are so far beyond "essential" as to be ridiculous. Is sponsoring Cowboy Poets Recitals essential service?
If revenue and spending are disconnected, as you say, why is there any argument about--just let the Feds spend $10, 20, or 30 trillion each year. We cannot spend what we do not produce--Say's Law.
The EAS program is a prime example of wasteful spending, fares subsidized in multiples of the face value of the fare. There isn't any "normal" service at, say Ely, NV because there isn't a demand for it, taking it away from Harry "Pomegranate" Reid is just icing on the cake.
In fact, your comment on Silly Putty fare structure is an example of the price elasticity of tickets. For those who really need to be there, put a much higher value on the trip or the time spent traveling, pay more. For those for whom the travel is optional are charged just enough to induce them to part with the money. The factor that drove the airlines to price the way they did is that the supply of airline seats is inelastic over the time frame in this situation. The airlines couldn't add seats, thus letting the 7.5% go to the passengers due to the airlines competing for them with additional supply. So, they could raise fares, by 7.5%, and reap a revenue windfall, due to Congress. ECON 101
Regarding the "transfer" of $30 million/day, it isn't a transfer in any meaningful sense of the word. Congress didn't renew the law, giving up the revenue. The market between airlines and passengers decided who got it. Congress did not transfer the money to anybody. Had an airline priced their tickets ex-taxes and buyers flocked to that airline (read: SWA, perhaps), the industry would NOT have raised their fares and passengers would have benefited.
GF
Last edited by galaxy flyer; 6th Aug 2011 at 04:12.