Some airline customers won’t see savings this weekend even though several federal taxes on tickets have expired.
US Airways and American Airlines raised fares to offset the tax savings.
That means instead of passing along the savings from expired taxes, the carriers are pocketing the money while customers pay the same amount as before.
But other airlines left their prices unchanged on Saturday. Consumers could save money by shopping around.
The expired taxes can total $25 or more on a typical $300 round-trip ticket. For a September trip between Dallas and San Francisco, the cheapest American flight on Travelocity.com was $24 higher than offerings from United, Continental, Delta and Virgin America, which did not raise fares.
The taxes expired after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running.
That gave airlines a choice: They could do nothing _ and pass the savings to customers _ or they could grab some of the money themselves.
“We adjusted prices so the bottom-line price of a ticket remains the same as it was before … expiration of federal excise taxes,” said American spokesman Tim Smith. US Airways spokesman John McDonald said much the same thing _ passengers will pay the same amount for a ticket as they did before the taxes expired.
Smith declined to say whether the increase would be rescinded if Congress revives the travel taxes.
Tom Parsons, who runs the Bestfares.com travel website, said consumers should get a break.
“Why would the airlines deserve it?” he said. “They already hit us with enough fees. Now they’re keeping the government fees too.”
The Transportation Department says it will lose $200 million a week. J.P. Morgan analyst Jamie Baker said airlines could take in an extra $25 million a day by raising fares during the tax holiday.
Parsons said competitive pressure eventually will force the airlines to match _ either they’ll all pass the tax savings on to passengers, or they’ll all raise fares and keep the money themselves.
Southwest Airlines and its AirTran subsidiary raised prices by $8 per round trip, said spokeswoman Marilee McInnis.
Southwest’s support could be crucial if the airlines decide to keep the tax money. Southwest carries more U.S. passengers than anyone, and it effectively sets rates on many routes. Southwest torpedoed attempts by other airlines to raise prices in the last two weeks. CEO Gary Kelly has publicly worried that airlines could frighten away passengers by raising prices too high.
That may be less of a fear this time, however, since consumers wouldn’t be shelling out more money for tickets _ they just wouldn’t get an unexpected discount, courtesy of Congress.
Several federal travel taxes expired when Congress adjourned for the weekend without passing FAA legislation. Lawmakers couldn’t break a stalemate over a Republican proposal to make it harder for airline and railroad workers to unionize.
Air traffic controllers stayed on the job, but thousands of other FAA employees were likely to be furloughed.
Airlines stopped collecting a 7.5 percent ticket tax, a separate excise tax of $3.70 per takeoff and landing, and other fees. Those add up to about $32 on a round-trip itinerary with base fare of $240 and one stop in each direction.
Other government fees for security and local airport projects are still being collected. They boost the final cost of that $240 base-fare ticket to $300.
Passengers who bought tickets before this weekend but travel during the FAA shutdown could be entitled to a refund of the taxes that they paid, said Treasury Department spokeswoman Sandra Salstrom. She said it’s unclear whether the government can keep taxes for travel at a time when it doesn’t have authority to collect the money.
London’s departing police chief revealed Tuesday that 10 of the 45 press officers in his department used to work for News International, but he denied there are any improper links between the force and Rupert Murdoch’s media empire.
Paul Stephenson was giving evidence to a committee of lawmakers investigating wrongdoing at the now-shuttered tabloid News of the World, and allegations of bribery and collusion between Murdoch employees and the police.
“I understand that there are 10 members of the (Department of Public Affairs) staff who have worked in News International in the past, in some cases journalists, in some cases undertaking work experience with the organization,” he said.
News International is the British newspaper division of Murdoch’s global News Corp.
Stephenson denied wrongdoing, or knowing the News of the World was engaged in phone hacking _ but acknowledged that in retrospect he was embarrassed the force had hired Neil Wallis, a former executive of the paper, as a PR consultant,
After being asked about his relationship with Wallis, who was arrested last week, Stephenson said he had “no reason to connect Wallis with phone hacking” when he was hired for the part-time job in 2009.
He said now that the scale of phone hacking at the paper has emerged, it’s “embarrassing” that Wallis worked for the police.
Stephenson announced his resignation Sunday, saying allegations about his contacts with Murdoch’s News International were a distraction from his job.
He was followed out the door by assistant commissioner John Yates, who gave evidence before a hotly anticipated appearance by Rupert Murdoch, his son James and the media mogul’s former U.K. newspaper chief, Rebekah Brooks.
Yates said that with the benefit of hindsight he would have re-opened an inquiry into electronic eavesdropping of voicemail messages.
Yates said if he “knew now” how the phone hacking scandal would enfold, he would have done something different.
He has denied wrongdoing in the scandal.
Rupert Murdoch’s car was mobbed by photographers as he arrived for a grilling from U.K. lawmakers about the phone hacking scandal that has swept from his media empire through the London police and even to the prime minister’s office.
The elder Murdoch’s Range Rover was surrounded as he arrived at the Houses of Parliament three hours early, and it quickly drove off. The vehicle returned to Parliament about half an hour before the hearing was due to start.
Politicians will be seeking more details about the scale of criminality at the News of the World, while the Murdochs will try to avoid incriminating themselves or doing more harm to their business without misleading Parliament, which is a crime.
Lawmakers are also holding a separate hearing to question London police about reports that officers took bribes from journalists to provide inside information for tabloid scoops and to ask why the force decided to shut down an earlier phone hacking probe after charging only two people.
Detectives reopened the case earlier this year and are looking at a potential 3,700 victims.
London’s Metropolitan Police force said Tuesday it had asked watchdog to investigate its head of public affairs over the scandal _ the fifth senior police official being investigated. The Independent Police Complaints Commission will look at Dick Fedorcio’s role in hiring a former News of the World executive as an adviser to the police.
Fedorcio also was questioned by lawmakers Tuesday, along with Stephenson and Yates.
It was the appearance by the Murdochs and Brooks that was drawing huge public interest.
Members of the public and journalists lined up hours ahead of time in hope of a spot in the small committee room, which holds about 40 people. More will be able to watch in an overspill room, and Britain’s TV news channels are anticipating high ratings for the appearance.
Prime Minister David Cameron cut short a visit to Africa and is expected to return to Britain for an emergency session Wednesday of Parliament on the scandal.
A former News of the World reporter, Sean Hoare, who helped blow the whistle on the scandal, was found dead Monday in his home quick pay day loan. Police said the death was “unexplained” but is not being treated as suspicious. A post-mortem was being conducted Tuesday. Hoare was in his late forties.
Brooks’ spokesman, David Wilson, said police had been handed a bag containing a laptop and papers that belong to her husband, former racehorse trainer Charlie Brooks. Wilson said the bag did not contain anything related to the phone hacking scandal and he expected police to return it soon.
The bag was found dumped in an underground parking lot near the couple’s home on Monday, but it was unclear how exactly it got there. Wilson said Tuesday that a friend of Charlie Brooks had meant to drop the bag off, but he would say only he left it in the “wrong place.”
Murdoch shut down the News of the World tabloid that Brooks once edited after it was accused of hacking into the voice mail of celebrities, politicians, other journalists and even murder victims. Still, the closure has done little to end a string of revelations about the murky ties between British politics and the country’s tabloid media.
The scandal has prompted the resignation and subsequent arrest of Brooks and the resignation of Wall Street Journal publisher Les Hinton, sunk Murdoch’s dream of taking full control of lucrative satellite broadcaster British Sky Broadcasting and raised questions about his ability to keep control of his global media empire.
Rupert Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets _ including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post _ are based.
In New York, News Corp. appointed commercial lawyer Anthony Grabiner to run its Management and Standards Committee, which will deal with the scandal. But News Corp. board member Thomas Perkins told The Associated Press that the 80-year-old Murdoch has the full support of the company’s board of directors, and it was not considering elevating Chief Operating Officer Chase Carey to replace Murdoch as CEO of News Corp.
News Corp.’s widely traded Class A shares fell 68 cents to $14.97 Monday _ down 17 percent since the scandal reignited on July 4.
Britain’s Independent Police Complaints Commission also is looking into the phone hacking and police bribery claims, including one that Yates inappropriately helped get a job for the daughter of Wallis. Wallis has been arrested on suspicion of conspiring to intercept communications.
London police also confirmed that they once employed a second former News of the World employee besides Wallis. Alex Marunchak had been employed as a Ukrainian language interpreter with access to highly sensitive police information between 1980 and 2000, the Metropolitan Police said.
The police force said it recognized “that this may cause concern and that some professions may be incompatible with the role of an interpreter,” adding that the matter will be looked into.
Meanwhile, Internet hackers took aim at Murdoch late Monday, defacing the sites of his other U.K. tabloid, The Sun, and shutting down website of The Times of London. Visitors to The Sun website were redirected to a page featuring a story saying Murdoch’s dead body had been found in his garden.
Internet hacking collective Lulz Security took responsibility for that hacking attack via Twitter, calling it a successful part of “Murdoch Meltdown Monday.”
Lulz Security, which has previously claimed hacks on major entertainment companies, FBI partner organizations and the CIA, hinted that more was yet to come, saying “This is only the beginning.”
It later took credit for shutting down News International’s corporate website. Another hacking collective known as Anonymous claimed the cyberattack on The Times’ website.
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Danica Kirka and Bob Barr contributed to this report.
Meera Selva can be reached at http://twitter.com/Meera_Selva.
Jill Lawless can be reached at http://twitter.com/JillLawless
Struggling to avert an unprecedented national default, congressional leaders jettisoned negotiations on a sweeping deficit-reduction package Friday despite a plea from President Barack Obama to “do something big” to stabilize America’s finances.
Instead, lawmakers embarked on rival fallback plans as a critical Aug. 2 deadline neared, a House version given little chance of success, even by some supporters, and a bipartisan Senate approach holding out more promise.
At the behest of conservatives, House Republicans announced plans to vote next week on legislation to raise the $14.3 trillion debt limit automatically if Congress approves a balanced-budget constitutional amendment. Senate approval of that amendment seemed extremely unlikely in a vote set for the next few days.
Senate leaders from both parties worked on their own measure that would allow Obama to raise the debt limit without a prior vote by lawmakers. That plan was likely to include limits on spending across thousands of government programs, and possibly a down payment on cuts, as well.
As part of that proposal, a panel of lawmakers would recommend cuts in benefits programs by the end of the year, with the House and Senate required to vote yes-or-no on the package without possibility of changes.
“If they show me a serious plan I’m ready to move,” declared Obama at his second news conference of the week, even though he said he wanted a far more sweeping deal that might even have raised the age of Medicare eligibility from 65 to 67 if Republicans would increase selected taxes.
“We are obviously running out of time,” he said.
Numerous officials have cautioned that a default will occur if the debt limit is not increased by Aug. 2, warning also of a calamitous effect on an economy struggling to recover from the worst recession in decades.
“Now the debate will move from a room in the White House to the House and Senate floors,” said Senate Republican leader Mitch McConnell, indicating that the daily closed-door negotiations at the White House were a thing of the past.
The House Republican rank and file were advised in a GOP meeting that, barring action by Congress, the government would be able to pay only about half its bills after Aug. 2, and separately that a default could cost the government trillions of dollars in the form of higher interest rates on the debt.
“No matter what 50 percent you choose to pay, there are things in that 50 percent you don’t pay that would have really severe consequences,” Rep. John Campbell, R-Calif., said afterward.
“There are people out there who keep saying we don’t need to increase the debt limit at all. I think this was a way of saying, the people who are saying that need to look at the practical consequences of what they are saying.”
Rep. Paul Ryan, of Wisconsin, chairman of the House Budget Committee, told reporters after the meeting he had discussed the additional costs generated by a default _ an event that would be likely to raise interest rates no fax cash advance.
At his news conference, Obama said that would mean “effectively a tax increase on everybody” by affecting car purchasers, students and businesses.
The second White House news conference in a week was a testament to the overriding political and economic significance of the issue that has convulsed Congress as well as the administration.
Urging lawmakers to cut trillions from deficits at the same time they raise the debt limit, the president said he favored a balanced approach that included spending cuts, changes to huge government benefit programs and higher taxes on wealthy individuals and certain industries.
It was an offer Republicans could _ and did _ refuse.
“There are going to be no tax hikes because tax hikes destroy jobs,” said House Speaker John Boehner of Ohio.
While Boehner had earlier shown some flexibility on closing tax loopholes as part of an unprecedented deal with Obama, many Republican lawmakers are adamant that deficit reductions be limited to spending cuts.
To underscore their conservative priorities, GOP leaders scheduled a vote for next week on legislation they said would cut $111 billion in the budget year that begins Oct. 1. It would also require a steady decline in spending as a percentage of the overall economy over the next decade.
Even some supporters conceded it was a symbolic gesture given the realities of divided government.
“I think everybody knows the president won’t sign this,” Campbell said after the closed-door Republican meeting.
“But we’re putting a marker down, and that’s an important step that begins the process of resolving this,” he added.
If so, it was in a style that only congressional insiders might recognize as the beginning of the endgame to an unprecedented problem.
McConnell issued a statement announcing the Senate would vote on both a balanced budget amendment and the House’s “Cut, Cap and Balance Plan.”
His statement didn’t say so, but neither measure has much, if any, chance of passage in the Democratic-controlled Senate.
Still, the votes themselves would clear the way for debate on the fallback plan the two Senate leaders have been working on for the past several days.
Senate aides said the measure was not yet fully drafted, but likely to come up for debate by the end of next week.
A two-thirds vote of each house is required for passage of a constitutional amendment. Approval would send the issue to the states, where ratification by three quarters of the legislatures is needed to make it part of the Constitution.
Presidents play no official role in amending the Constitution, but Obama expressed his opposition to the GOP-backed measure anyway.
“We don’t need a constitutional amendment to do that. What we need to do is do our jobs,” he said.
A nationwide crackdown is coming for people fraudulently drawing unemployment payments _ those who were never eligible and workers who keep getting checks after they return to work _ a $17 billion benefits swindle last year alone, say federal officials.
With the poor economy lingering and the jobless rate remaining high, Rhode Island and other states are stepping up efforts to stop the fraud and improper payments.
As much as 30 percent of the wrong payments in 2010 went to people who had returned to the workforce but continued to claim benefits, according to Dale Ziegler, deputy administrator for the Office of Unemployment Insurance at the U.S. Department of Labor. Those payments came even after a 2009 executive order by President Barack Obama seeking new policies to cut payment errors, waste, fraud and abuse.
Ziegler said states will be required to submit plans by Sept. 30 to the federal government on how they plan to curb such payments, Ziegler said.
“This is a national concern,” said Raymond Filippone, assistant director of income support at the Rhode Island Department of Labor and Training. “States across the country are stepping up and looking at overpayments and detection.”
Since last year, Rhode Island now has four investigators assigned to ferret out double-dippers scamming the system, Filippone said and will add a fifth this year. The state has also for the first time retained a collection agency to recoup incorrectly paid payments.
Filippone said the state has paid out $33 million in overpayments since 2008. The May unemployment rate in Rhode Island is the third highest in the country at 10.9 percent.
Providence resident Jose L. Roque, 43, is among 15 people charged last month with bilking the state’s unemployment benefits system. He faces one count in state court of obtaining money under false pretenses for allegedly accepting more than $20,000 in benefits over nearly four years while working for a Warwick landscaping company, court records show.
He was released pending a pre-arraignment conference next month. Roque has yet to enter a plea. Officials say people convicted of this crime are usually ordered to pay restitution as punishment.
“I kept working and collected at the same time. I know that’s my big mistake,” Roque said in a telephone interview. “I feel real bad. I’m sorry for that. … Before I had problems. You know, now I got more problems.”
Since the economic dive began in 2008, 126 Ocean State residents have been criminally charged with defrauding the unemployment benefits system, said state police Capt. James O. Demers.
Since 2008, $8 million in overpayment shelled out by Rhode Island have been classified as fraud, officials said. Filippone said of the $33 million in overpayments paid out over that period, $16.5 million has been recovered.
Those losses are why the federal government is pressing states to keep a closer watch on the $155 billion in jobless benefits paid annually to the nation’s unemployed workers.
Five states are collaborating to address a problem known as separation errors, including payments to people who file for unemployment benefits after they’ve voluntarily resigned from their jobs. Those individuals are not eligible to collect, but some slip through the cracks because their former employers do not respond to states’ requests to verify the ex-worker’s claim, Ziegler said.
Ohio, Colorado, New Jersey, Utah and Georgia have developed a web-based system to share unemployment insurance information with states, multistate employers and others, Ziegler said.
In New Jersey, officials have also come up with a system to kick the newly employed off the jobless benefits rolls faster, Ziegler said. Whenever people show up in the national directory of new hires, they are assigned a code in the unemployment benefits system that flags them if they file for weekly benefits.
Ziegler said these efforts have reduced the average overpayment from $1,200 to $472. He added the average weekly benefit is $305, indicating most abuses are identified within a week and a half.
Still, Ziegler said officials have been working for years to come up with solutions.
“This is not a simple problem,” he said. “If someone who’s unemployed and not looking for work, how is someone going to find that out? If you’re someone who is claiming benefits and gone back to work, how quickly are they going to find that out? The idea here is prevention.”
Cranston resident Patricia A. Proulx said she’s been wrongfully caught up in the confusion.
Proulx was also charged last month in state court with defrauding the unemployment system of $18,992 from 2007 to 2010, court records show. She said she applied for partial unemployment benefits after her hours at an area hotel were cut back. Proulx has yet to enter a plea.
“If I was doing something wrong, I wasn’t told I was,” said Proulx, adding her superiors told her she was eligible to collect unemployment. “I have no idea what’s going on. When I called unemployment they didn’t want to discuss anything with me. Nobody’s letting me know what’s going on and what I owe.”
Filippone said investigators use multiple methods to identify fraud. They check wage records submitted to the state tax division, the national directory of new hires, and they compare records with state child support enforcement officials. The state also runs an anonymous fraud hotline, subpoenas employer payroll records and sometimes conducts surveillance operations.
Filippone warned scammers are going to get caught and anyone who gets more than what they’re owed must pay up.
“My message is to be honest with us,” he said. “At a later date, it could be years later … when you need the funds again, you’re not going to be able to receive them. … We never take an overpayment off the books.”
Falling gas prices brought truck buyers back to General Motors showrooms last month. Still, pump prices remained high enough that shoppers snapped up smaller cars as well.
GM sales rose 10 percent in June from a year ago. The Detroit car company said it sold 215,000 cars and trucks last month, up from 194,828 a year ago. The result indicates the auto industry’s slow recovery from the recession is back on track after a brief slump in May.
GM said that cheaper gas lured more pickup truck buyers with Chevrolet Silverado sales rising 5 percent and GMC Sierra sales up 8 percent compared with a year earlier. Any jump in pickup sales helps GM and other Detroit automakers, which sell more than five times as many pickups as foreign-based brands.
Still, GM’s sales were led by smaller, more fuel-efficient models like the new Chevrolet Cruze compact. Gas prices averaged $3.68 per gallon in June. That’s cheaper than the average for May, but hardly cheap. Sales of the Cruze more than doubled the sales of the car it replaced, the lackluster Chevrolet Cobalt.
GM’s small-car and crossover sales also got a boost from earthquake-related shortages of Japanese models that persisted through June.
GM is the first major car company to report U.S. sales on Wednesday. Earlier, Volkswagen of America Inc. said its U.S. sales rose 35 percent in June on strong demand for its Jetta midsize sedan and other models. Industry analysts expect overall U.S. sales to rise 13.5 percent from last June.
Even with sales rebounding in June, GM backed off a bit from its sales forecast for the year payday loans online. Don Johnson, vice president of U.S. sales, said he now expects the total sales to be at the low end of the company’s previous prediction of 13 million to 13.5 million vehicles.
Johnson blamed the change on stubbornly high unemployment, which contributed to the decline in May. Total U.S. sales fell 3.7 percent in May after a string of double-digit monthly increases.
Johnson sees the slow recovery continuing through the rest of the year. He said that even with unemployment around 9 percent, 91 percent of the country is still working, and many are driving older cars.
“There are still people out there looking for a vehicle and in many cases need to replace their vehicles,” Johnson said.
The average car on the road now is 10.6 years old, according to the Polk research firm.
Automakers expect to sell around 1.1 million cars and trucks in June. That’s up 5 percent from May, when parts shortages caused by the March earthquake in Japan, $4-per-gallon gas and a lack of deals caused a slump.
But the pace of sales has slowed from the beginning of this year. Like GM, some analysts are starting to question the strength of the recovery. J.D. Power and Associates lowered its full-year sales forecast from 13 million vehicles to 12.9 million, saying the sluggish economy could take a bite out of sales even if car shortages ease by this fall.
TMX Group Inc. says London Stock Exchange Group plc has agreed to pay a special cash dividend of $4 per share, sweetening its bid for the Canadian stock market operator by $660 million.
TMX says its shareholders will get the special payment of $4 a share in cash when the proposed merger closes.
The move sweetens the friendly merger
Kevin Garland still remembers the pessimistic prediction of a well-wisher when she took over as executive director of the National Ballet of Canada a decade ago.
After two years without seeing an increase in their Social Security checks, more than 59 million retirees and other beneficiaries can expect a bump up in benefits next year.
The Social Security trustees’ annual report released last month estimates that the cost-of-living adjustment in next year’s checks will be 0.7 percent. The increase, which will be announced in October, could be higher, depending on where prices head in the coming months.
Still, experts say, retirees could see all or some of that raise eaten up by higher Medicare premiums.
News of the potential rise in benefits didn’t generate much excitement last week among seniors at the Allen Center, a Baltimore senior center, although some retirees say they would be grateful for any boost.
“If it was $5 more, I would be happy,” Frances McCready, 69, a retired cashier, said about her monthly benefit Same day payday loans. “I would dance a jig.”
The past two years have been “very bad,” said McCready, who receives $616 a month from Social Security and about $400 working for the Department of Aging.
She said she lives with her son and his wife, who help her pay her bills.
“If it wasn’t for them, no way in the world could I make it,” she said.
The Social Security trustees projected the cost-of-living adjustment using inflation assumptions from December. Since then, the price of gas has spiked and then pulled back. If fuel prices tick up again, beneficiaries could see as much as a 2 percent increase.
The actual cost-of-living increase will be based on the inflation rate in July, August and September, and how it compares with the rate during the third quarter of 2008
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