CNN.com - Congress approves $15 billion airline bailout
Jessica Wood By Kate Snow, Dana bash and Ted Barrett
CNN Washington Bureau
WASHINGTON (CNN) -- In the wake of last week's terrorist attacks involving hijacked airplanes, Congress Friday passed a measure for a $15 billion financial aid package to help the crippled airline industry and set up a government compensation fund for victims to help deter lawsuits.
The House approved the measure late Friday night, 356-54. The Senate passed the package earlier in the day, 96-1.
The White House response was quick with press secretary Ari Fleischer saying in a statement: "A safe, viable and effective commercial air travel system is important to America's economy and to our way of life."
"The president commends the Congress for its quick bipartisan passage of the Air Transportation Safety and System Stabilization Act.
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"This legislation will help ensure the safety and stability of the nation's vital commercial airline system."
The measure gives the nation's airlines $5 billion in immediate cash assistance and $10 billion in loan guarantees in an effort to keep several major carriers from collapsing. Sen. Peter Fitzgerald, R-Ill., was the only senator to vote against the bill.
Senate and House leaders on both sides of the aisle feverishly worked with the White House Thursday night and all day Friday to bring the bill before Congress with almost unprecedented speed -- despite concerns on all sides about on a variety of issues.
Some senators who questioned parts of the bill -- like the absence of assistance for the unemployed or uninsured or aid to other industries -- decided to support it anyway because of the extraordinary circumstances and as a continued show of bipartisan cooperation.
Concerns raised
"Why am I up here supporting this bill? Because I think we are in a new era . . . where every one of us has to give a little bit. We heard the president speak, we were unified yesterday, we must keep that unity," said Sen. Charles Schumer, D-N.Y.
Many senators raised concerns about bailing out an industry that already had financial problems before the terrorist attacks, and questioned why the airlines, not other industries, were receiving taxpayer dollars.
Two hijacked airliners destroyed the twin towers of the World Trade Center on September 11, while another slammed into the Pentagon.
A fourth hijacked jet, believed headed for another Washington target, crashed in Pennsylvania. Planes were grounded for three days due to security concerns.
'Too generous'
"I think this assistance is too generous, it gives too much money, it goes far beyond compensating the airlines for those three days that government edict was in effect and the question I have is clearly we are compensating them for far more," said Fitzgerald, who like some other Republicans, openly worried that the bill was being passed too fast.
But other senators argued saving the airline industry has a ripple effect that helps the whole economy.
"If planes don't fly, the whole economy shuts down," said Sen. Jay Rockefeller, D-W.V.
Many senators voted for the bill because of last-minute additions forcing airlines not to shut down business in small communities and a provision to allow the government to receive airline stock options as collateral for the loan guarantees.
As well as the money for airlines, the package includes an ambitious plan for compensating families of victims in the attacks. Rep. Roy Blunt, R-Mo., said it was like nothing ever tried before.
Under the legislation, the families of those killed at the World Trade Center, Pentagon and Pennsylvania sites, with those who were injured in the crashes, would have two options: they could decide to forgo the right to sue the airlines and instead go to a government fund for compensation; or they could sue.
'Special master'
If they opt into the government fund, the amount of money they eventually receive would be determined by a "special master" appointed by Attorney General John Ashcroft.
That determination must be made within 120 days of filing the claim. A payment would be made within 20 days after that.
The special master would decide what would be fair compensation and move quickly to pay it. Congress would not limit how much the special master could pay out.
If victims sue in court, there would be pre-determined limits on how much money they could receive.
"They can choose one way or another," said House Speaker Dennis Hastert, "but there is a limited amount of money, a pot of money, to sue to get any relief."
The "pot of money" available to those who file lawsuits in court would probably equal the amount of insurance coverage carried by airlines involved when the attacks occurred.
Victims fund
That would include American Airlines and United Airlines but could also include insurance carried by airlines, which ran connecting flights to those that crashed.
There are advantages and disadvantages to choosing either the victims fund or going to court, congressional aides explained.
Opting for the victims fund might prove easier. Families could avoid a potentially long trial and an uncertain outcome. But there would be a formula used to determine how much a victim would receive, based on that person's income and possibly on the amount of insurance the victim carried.
Going to court would be risky, but victims could end up receiving more money if a jury is sympathetic. On the other hand, a jury trial could take a long time and the airlines could be bankrupt -- or at least out of insurance money-- by the time a trial ended, according to congressional aides.
House Speaker Dennis Hastert explained the approach being taken by Congress as a tradeoff.
Salaries limited
"What we're trying to do is lift the airlines out of that liability issue so they can get insurance, they can go fly, they can do their work. And we're afraid they couldn't get insurance unless we intervened."
The bill also contains a measure limiting salaries for airline executives. In exchange for accepting the government's money, airlines would not be allowed to give a raise for the next two years to any executive who made more than $300,000 in the year 2000.
It also limits the "golden parachutes" available to retiring executives to twice their salary in the year 2000.
Most lawmakers conceded the bill is not perfect and promised to re-examine and revisit the issues.
"I would call upon my colleagues at the proper time to support this aviation legislation, not to say that it is perfect, not to say that some of this legislation that has risen out of this crisis is perfect, and we will have a chance to revisit and this is only the first of a wave of accountability," said Rockefeller.
