Macro economics and U.S. Government Travel

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» Posted by on Aug 17, 2014 in Airlines, Industry Postings, Payment Methods | 0 comments

The material covered in 4a (Payment Methods) has a particular significance in understanding some of the relationships between government and the current economy. In essence, it covers how payment is ensured to the airlines and the issuance of credit by the banks to the government for travel expenses. In essence, the macro relationship is that the banks extend credit (via IBAs or CBAs) to the government, which purchases travel from the airlines. The credit extended by the banks is paid back by the government using funds from various taxes (income, transportation, levies on financial transactions). A short, open source search did not reveal if the airlines pay more or less in taxes than they receive in government travel income. Likewise, it is unknown the ratio between the amount of taxes that the banks, which extend credit to the government pay, versus the income which they receive. In both cases, is it practically a wash, or are there profits or losses by these institutions? There is a case to be made that government dependence on particular companies may create incentives for these companies to become the first recipients in government funds should their businesses start to fail. From this angle, the government as a customer dependent on these services and with the ability to extend funds to the airlines and banks aligns with recent economic events. Insofar as the voter is the entity which ultimately must oversee how his or her tax dollars are spent, he or she must decide if the interdependent relationship between the government and service providers or financial institutions is the optimum choice in the expansion of U.S. influence across the globe.
By Olivia Tautkus

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