Even More Expiring Provisions

Two follow ups on the nice Pew chart of many federal laws that expire at year-end.

First, commenter rjs reminds us that “the whole [darn] [continuing resolution] expires Friday.” In short, almost all discretionary agencies of the federal government run out of money at the end of the week. The one exception? Agriculture, whose 2012 appropriations managed to get enacted as part of the last continuing resolution. (Track the status of appropriations bill here.) Another CR will, I presume, pass later this week.

Second, reader JP points us to a new report by the Committee for a Responsible Federal Budget about the expiring provisions. They found a few more (e.g., some additional Medicare ones) and then toted up the costs for one-year extensions and ten-year extensions (except for the payroll tax cut and extended unemployment benefits):

Time’s Almost Up for $152 Billion in Expiring Provisions

America is increasingly governed by temporary policies. The 2001/2003/2010 tax cuts get most of the attention, but they are hardly the only ones. There are also a host of other semi-permanent provisions like patching the alternative minimum tax (AMT), avoiding big cuts to what Medicare pays doctors (the “doc fix”), and a plethora of miscellaneous tax cuts that get extended every year or two (the “extenders”).

And then there are the policies that really are supposed to be temporary, but likely won’t be retired until the economy strengthens. They include the 2% payroll tax holiday and extended unemployment insurance, both of which Congress is debating this week.

Over at the Pew Fiscal Analysis Initiative, Carla Uriona, Evan Potler, and Ernie Tedeschi have put together a nice infographic of all the provisions scheduled to expire at the end of the month. The 2001/2003/2010 tax cuts aren’t included, since they expire at the end of 2012, but there is still plenty of action:

In the near-term, the big money is in the payroll tax cut and unemployment insurance. Extending those provisions for one year would add about $164 billion to the deficit, not including interest costs. Over the next decade, however, the really big money among these provisions comes from patching the AMT ($690 billion) and the extenders ($356 billion). (Extending the 2001/2003/2010 tax cuts, in comparison, comes in around $4 trillion.)

Cuddle in Coach, But Don’t Get Too Comfortable

Yesterday’s Wall Street Journal had a fun article about Air New Zealand’s latest innovation: Cuddle Class. As “the Middle Seat” columnist Scott McCartney describes it:

Steve Metz of Houston cuddled up with his wife Jackie and slept as they flew to New Zealand on a small futon. This flying couch wasn’t in a private jet or even a high-priced business-class cabin. They snuggled in coach.

“I don’t sleep well on planes, but I actually slept a good five hours,” said Mr. Metz, aboard a 13-hour Air New Zealand flight from Los Angeles to Auckland recently. “It’s no king-sized bed, but we made do.”

“Cuddle class” is an innovative seat design that has given coach passengers the first real opportunity to lie flat for sleep on long flights. To create the extra space, three seats in a row have fold-away armrests and a padded foot-rest panel that flips up and locks into place. Two passengers take up three seats and pay an average of half the cost of the third seat, typically an extra $500 to $800 for an overnight flight.

This sounds a fun innovation, but don’t get too excited:

The sky couch has limitations. To make it fit, Air New Zealand narrowed the aisles in the coach cabin. And since the couch is only about 4½-feet long, most people have to scrunch up to keep their feet from hanging into the aisle. In the middle of the night on a recent flight, it was impossible to walk through the coach cabin without bumping feet and legs hanging out of sky couches. And since it’s still the cheap-ticket cabin, two people have to cuddle closely in only 32 to 33 inches of width for each row, including the seat.

Now what does this have to do with economics, you might ask? Well, Air New Zealand faces a classic problem for any supplier who offers different levels of service. On the one hand, it wants to offer better service to attract more customers. On the other, it wants to make sure that some travelers still opt for higher-priced service. As McCartney puts its:

Air New Zealand doesn’t want to make the couch longer or wider—if it were better, it might start cannibalizing passengers from business-class or premium-economy seats.

So there you have it. Coach air travel isn’t unpleasant just because the airlines want to reduce costs. It’s unpleasant so that some flyers will pony up for better service.

P.S. For more economics of the air, see this post on the Tragedy of the Overhead Bin.