Tracing the tax that's supposed to fund TSA

0:01NPR.

0:11This is The Indicator from Planet Money. I'm Ricky Mulvey. And I'm Waylon Wong. Chaos continues at the airports as a significant number of TSA workers aren't showing up for work. As we know, they've not been paid for more than a month now. Congress is still at an impasse on funding the Department of Homeland Security, and that's left these federal workers in the lurch. We've all heard this before. Late last year, TSA workers also went without pay because of a government shutdown. Here's what you may not know. Every time you buy a ticket for a flight that leaves a U.S. airport, you pay something called a U.S.

0:43passenger security fee, a little over$11 for round-trip tickets. It's a tax that was supposed to help fund TSA salaries. Travelers are still buying tickets and paying this fee. The money is coming in. But TSA workers aren't getting paid for now. So what gives? Exactly. Answer that question, politicians. Answer that question. That's Angela Grana, a TSA worker in Colorado. You are the only ones that can answer that question. I'm just a simple servant wanting to do my job. We deserve to have a paycheck. This is Taxi Remarking Gone Awry. We'll talk about what happened, the economic consequences, and the very personal financial effects after the break.

1:26Where we are today goes back more than...

1:55dot com. Investing in securities involves the risk of loss. This message comes from Serval AI. With Serval, you can cut 80 % of your help desk tickets. Serval AI writes automation in seconds. Your IT team describes what they need in plain English and Serval generates production-ready automations instantly. Serval powers some of the fastest growing companies in the world. Get your team out of the help desk and back to the work they enjoy. Book your free pilot at serval.com slash indicator. This message comes from Apple Card. You could be earning 2 % daily cash back on that purchase. That's because Apple Card users earn 2 % daily cash back on every purchase, including everyday items you buy online or in store when using their Apple Card with Apple Pay.

2:43Not an Apple Card customer? You can apply in the Wallet app on iPhone. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. More than 20 years. Right after 9-11, Congress created the Transportation Security Administration, the TSA. But a new federal agency with thousands of employees costs money. The law that created the TSA built in a method to help fund the agency. One part was a fee on the airline ticket. The second was a monthly fee the airlines would pay. So both sides, the consumers and the airlines, had a stake in paying for this program. and the salaries of people charged with keeping explosives off airplanes and larger-sized liquids out of your carry-on luggage.

3:29The security fee was tax money used to pay a specific cost, something called a hypothecated tax. So the idea is rather simple. That's Adam Hoffer with the Tax Foundation, a nonpartisan tax policy think tank. And it can be quite useful in the public finance sphere of taking a revenue source and allocating it directly to what that revenue is going to be spent on. Economists can be supportive of hypothecated taxes, but it all depends on how they're applied. If the fees are unrelated to the program, most economists are not fans, like grade schools getting money from a cigarette tax. That can cause unintended problems.

4:09problems. Waylon, I put down my smokes and now the kindergarten can't hire more teachers. Oh, no. Well, light them up, Ricky. Think of the children. My God. It's why I quit in the first place. But Adam says that a hypothecated tax can work when the funding and spending programs are directly connected, like a gas tax that pays for roads or let's just say a security fee on airline tickets that pays for TSA agents. The idea here was that, again, we're going to try to get the people who travel who are using these services to pay for it. And in that vein, it's a great idea from a public spending perspective to connect that revenue source and the eventual expenditure item.

4:54And those passenger security fees went directly to airport security for a while. That all changed in 2013. You know, politicians love to find pots of money and use them for other things. Yep, they saw this fee and realized it could be used to reduce the federal deficit. Grab some money from the TSA pot versus cutting programs or directly raising taxes. Bipartisan legislation passed Congress and was signed into law by President Obama. The new law changed passenger security fees in a few important ways. First, the airline industry got something they had long been lobbying for, removing the monthly fees those companies paid for security.

5:32Conversely, the passenger tax more than doubled. And if you think this even things out for TSA funding, you would be wrong. A big chunk of those fees would now go toward paying down the government's debt instead of going to the TSA. Adam says this is relatively common for hypothecated taxes. So often we do see this erode over time, the connection between funding source and expenditure program. But with the passenger fee in particular, there's another problem. Those fees go into the general fund. And during this partial shutdown, airport security is not getting any of that money. So once again, this leaves TSA workers without paychecks, as Democrats and Republicans argue about how the Department of Homeland Security is funded.

6:18Democrats want to change how ICE and Customs and Border Protection operate. Republicans want a clean funding bill without policy writers, and the TSA is in the middle of it. TSA officer Angela Grana is also with the union that represents airport security employees. She says that TSA workers want to show up to work, but they can't make ends meet. We're sworn officers. We swear that we will take care of our jobs and we will show up. When we're not showing up, it's because we can't show up. We don't have gas money. TSA workers will receive back pay after the shutdown, but Angela says that many TSA employees need a consistent income.

6:55They live paycheck to paycheck. A first-year TSA agent living in Washington, D.C. will make a base yearly salary under$50 ,000. Even if they came to an agreement today, it still takes a while to pay us. So, you know, that's not going to repair our credit reports. That's not going to pay our late dealings. That's not going to find me new child care. It's not going to ever put me whole again. This financial stress is why many TSA workers are rethinking their careers. Thousands of employees have called off work and hundreds have left the agency since the beginning of the shutdown. A lot of them have made the choice, and these are seasoned employees that have a lot of skills, to leave the agency altogether.

7:34That's leaving a career. The decision for a TSA worker to leave could mean higher pay. But leaving years of service means losing out on retirement income, and defined benefit pension plans are rarely found outside of public service. Angela says President Trump's solution of putting ICE agents into airports to help with security will not help lines move faster. Furthermore, she says their presence is a distraction and could even create resentment. They're also getting paid. So there's going to be an animosity right there. Some airports, including Denver and Seattle, have set up collection boxes for grocery and gas gift card donations.

8:11Angela called the move fantastic, humiliating and humbling. We have to swallow our pride to go get a bag of toilet paper and some diapers and the non-perishable items. They're giving out the gas cards for gas, but that's not happening at all the little airports. And while Angela is grateful for these donations, she doesn't believe it's the passenger's job to pay her bills. They're already paying that 9-11 tax when they buy their boarding pass. How can we ask them for more? They're putting up with the lines. Thank you, thank you, thank you. But it's not their responsibility. This is the politician's responsibility to take care of it.

8:49Angela worries that all of this chaos is making air travel more vulnerable. And the bad guys, they just have to get it right once. That's all they take. And they're watching us. They are definitely paying attention to this weakness. So the broad economic lesson is that earmarked taxes need to be closely linked with the programs they fund. Messing with that connection can contribute to the issues we see at airports today. And the financial consequences for TSA workers may continue in the forms of damaged credit reports, late fees, even after paychecks hit their bank accounts again. This episode was produced by Cooper Katz McKim and engineered by Maggie Luthar.

9:29It was fact-checked by Sierra Juarez. Kate Kincannon is our editor. The Indicator is a production of NPR.

9:37This message comes from Capella University. You know that feeling when there's a spark building inside you, that you were meant for more? That's your own drive pushing you towards what's next. Capella University gets that. With their FlexPath learning format, you can set the pace and earn your degree without putting life on pause. You've built experience and know what you're capable of. Now, this is your time to turn that momentum into more. The only real question is, what can't you do? Learn more at capella.edu. This message comes from Mint Mobile. If you're tired of spending hundreds on big wireless bills, bogus fees, and free perks, Mint Mobile is for you.

10:21Shop plans at mintmobile.com slash switch. Taxes and fees extra. See Mint Mobile for details.