Tracing the tax that's supposed to fund TSA

Summary

---

Podcast Summary: The Indicator from Planet Money

Episode: Tracing the Tax That's Supposed to Fund TSA

Date: March 26, 2026

Hosts: Ricky Mulvey & Waylon Wong

---

Overview

This episode investigates the U.S. airline passenger security fee—a tax introduced to fund the Transportation Security Administration (TSA)—and why, despite continuous collection of these fees from travelers, TSA agents have gone unpaid during a government shutdown. The hosts explore how this earmarked tax has been rerouted away from its original purpose, the economic and personal impacts of that shift, and the current standoff over Department of Homeland Security funding.

---

Key Discussion Points and Insights

1. Chaos at Airports Due to Unpaid TSA Workers

• The episode opens with reports of ongoing disruption at airports, as a significant number of TSA workers are not reporting for duty after missing paychecks for over a month due to a political impasse on Department of Homeland Security funding.
  • “TSA workers aren’t getting paid for now. So what gives, exactly?” (Ricky, 00:56)

2. The Security Fee: Its Purpose and Mechanics

• How It Began:
  • The TSA was created after 9/11, funded partly by a security fee added to every U.S. airline ticket and a monthly fee from airlines themselves.
    • “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...” (Ricky, 02:40)
• Hypothecated Tax:
  • The security fee was meant to be a “hypothecated tax”—used to pay a specific cost (TSA salaries and operations).
  • “The idea is rather simple... taking a revenue source and allocating it directly to what that revenue is going to be spent on.” (Adam Hoffer, Tax Foundation, 03:05)

3. When the Intended Link Was Broken

• 2013 Legislative Change:
  • In 2013, Congress overhauled the structure:
    • Airlines successfully lobbied to end their monthly fees.
    • The passenger security fee paid by travelers more than doubled.
    • The link between fee collection and TSA funding was severed when much of the revenue began being diverted to pay down the federal deficit.
      • “A big chunk of those fees would now go toward paying down the government’s debt instead of going to the TSA.” (Waylon, 04:47)
• Erosion of the Hypothecated Model:
  • “So often we do see this erode over time, the connection between funding source and expenditure program.” (Adam Hoffer, 05:12)

4. Personal and Systemic Consequences

• Immediate Impact on Workers:
  • TSA employees like Angela Grana describe how they are unable to meet basic expenses, living paycheck to paycheck.
    • “We’re sworn officers... When we’re not showing up, it’s because we can’t show up. We don’t have gas money.” (Angela Grana, TSA worker, 06:00)
  • Even after eventual back pay, damage is lasting:
    • “...that’s not going to repair our credit reports... pay our late bills... find me new childcare. It’s not going to ever put me whole again.” (Angela, 06:25)
• Worker Exodus:
  • The prolonged shutdown is causing experienced TSA workers to leave for higher-paying jobs, forfeiting retirement benefits unique to federal employment.
    • “A lot of them have made the choice... to leave the agency altogether.” (Angela, 06:48)
• Stopgap Measures and Public Support:
  • Airports such as Denver and Seattle have set up collection boxes to help TSA workers with essentials—an act Angela calls “fantastic, humiliating and humbling.” (Angela, 07:38)
  • She insists, however, “This is the politicians’ responsibility to take care of it.” (Angela, 07:56)

5. The Impact on Air Travel Security

• Angela points out the risks of weakened security during periods of worker shortages:
  • “Bad guys... just have to get it right once, that’s all it takes. And they’re watching us.” (Angela, 08:16)

6. The Broader Economic Lesson

• The hosts and Adam Hoffer drive home the economic principle:
  • When a tax earmarked for a specific service is disconnected from its intended use, it can have serious and sometimes unexpected downstream consequences—such as the ones affecting the TSA and air travelers now.
    • “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.” (Waylon, 08:25)

---

Notable Quotes and Memorable Moments

• On the Disconnect:

  • “They are 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... But it’s not their responsibility. This is the politicians’ responsibility to take care of it.”
    — Angela Grana (07:56)

• On Personal Toll:

  • “Even if they came to an agreement today, it still takes a while to pay us. So...that’s not going to repair our credit reports...pay our late bills... It’s not going to ever put me whole again.”
    — Angela Grana (06:25)

• On Exacerbating Risk:

  • “The bad guys, they just have to get it right once...they’re watching us. They are definitely paying attention to this weakness.”
    — Angela Grana (08:16)

• On the Broader Lesson:

  • “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.”
    — Waylon Wong (08:25)

---

Key Timestamps

• [00:15] Ongoing airport chaos and TSA pay interruption
• [02:15] Origins of TSA and passenger security fee
• [03:05] Adam Hoffer explains “hypothecated tax”
• [04:21] 2013 shift: fee revenue rerouted to general fund/deficit
• [06:00] TSA workers (Angela Grana) on not being able to afford to work
• [06:48] Loss of experienced TSA workers
• [07:26] Community donation efforts and workers' dignity
• [08:16] Security vulnerabilities exposed
• [08:25] Economic takeaway on earmarked taxes

---

Conclusion

This episode reveals the hidden mechanics and real-life impacts of breaking the link between an earmarked tax and its intended use. While travelers dutifully pay security fees, the funds no longer directly support TSA operations, leaving essential workers unpaid and the flying public less secure during political deadlocks. The story serves as a cautionary tale about the importance of accountability in public finance and policy.

---

Transcript

[A]

Npr.

[B]

This is the indicator from Planet Money. I'm Ricky Mulvey.

[C]

And I'm Waylon Wong.

[B]

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 the and that's left these federal workers in the lurch.

[C]

We've all heard this before. Late last year, TSA workers also went without pay because of a government shutdown.

[B]

Here's what you may not know. Every time you buy a ticket for a flight that leaves a US airport, you pay something called a US passenger security fee, a little over $11 for round trip tickets. It's a tax that was supposed to help fund TSA salaries.

[C]

Travelers are still buying tickets and paying this fee. The money is coming in, but TSA

[B]

workers aren't getting paid for now. So what gives Exactly.

[D]

Answer that question. Politicians answer that question.

[C]

That's Angela Grana, a TSA worker in Colorado.

[D]

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.

[B]

This is tax year marking gone awry. We'll talk about what happened, the economic consequences and the very personal financial effects after the break.

[E]

This 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 [e-mail] Support for NPR and the

[F]

following message come from the Kauffman foundation. Providing access to opportunities that help people achieve financial stability, upward mobility and economic prosperity, regardless of race, gender or geography.

[B]

Kauffman.org where we are today goes back more than 20 years. Right after 9 11, Congress created the Transportation Security Administration, the TSA.

[C]

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.

[B]

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.

[C]

The security fee was tax money used to pay a specific cost, something called a hypothecated tax.

[G]

So the. The idea is rather simple.

[B]

That's Adam Hoffer with the Tax Foundation, a nonpartisan tax policy think tank.

[G]

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.

[C]

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.

[B]

Waylon, I put down my smokes and now the kindergarten can't hire more teachers.

[A]

Oh no.

[C]

Well, light em up, Ricky. What? Think of the children. My God.

[B]

That's why I quit in the first place.

[C]

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, or let's just say a security fee on airline tickets that pays for TSA agents.

[G]

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.

[B]

And those passenger security fees went directly to airport security for a while.

[C]

That all changed in 2013. You know, politicians love to find pots of money and use them for other things.

[B]

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.

[C]

First, the airline industry got something they had long been lobbying for. Removing the monthly fees those companies paid for security. Conversely, the passenger tax more than doubled. And if you think this evened 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.

[B]

Adam says this is relatively common for hypothecated taxes.

[G]

So often we do see this erode over time, the connection between funding source and expenditure program.

[C]

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 by.

[B]

Democrats want to change how ICE and Customs and Border Protection operate. Republicans want a clean funding bill without policy riders. And the TSA is in the middle of it.

[C]

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.

[D]

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.

[B]

TSA workers will receive back pay after the shutdown. But Angela says that many TSA employees need a consistent income. They live paycheck to paycheck. A first year TSA agent living in Washington, D.C. will make a base yearly salary under 50 grand.

[D]

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 deals. That's not going to find me new childcare. It's not going to ever put me whole again.

[C]

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.

[D]

A lot of them have made the choice and these are seasoned employees that have a lot of skills to leave the agency altogether. That's leaving a career.

[B]

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.

[C]

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.

[D]

They're also getting paid, so there's going to be an animosity right there.

[C]

Some airports, including Denver and Seattle, have set up collection boxes for grocery and gas gift card donations. Angela called the move fantastic, humiliating and humbling.

[D]

We have to swallow our pride to go get, you know, a bag of toilet paper and some diapers and, you know, the non perishable items. They're giving out the gas cards for gas. But that's not happening at all the little airports.

[B]

And while Angela is grateful for these donations, she doesn't believe it's the passenger's job to pay her bills.

[D]

They are 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 politicians responsibility to take care of it.

[B]

Angela worries that all of this chaos is making air travel more vulnerable.

[D]

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.

[C]

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.

[B]

And the financial consequences for TSA workers may continue in the forms of damaged credit reports, late fees and even after paychecks hit their bank accounts again. This episode was produced by Cooper Katz McKim and engineered by Maggie Luthar. It was fact checked by Cierra Juarez. Kate Concannon is our editor. The indicator is production of npr.

[E]

This 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 [e-mail].

[F]

this message comes from NPR sponsor Charles Schwab with its original podcast on Investing. Each week you'll get thoughtful, in depth analysis of both the stock and the bond markets. Listen today and [e-mail] oninvesting or wherever you get your podcasts. Support for NPR and the following message come from the Kauffman foundation providing access to opportunities that help people achieve financial stability, upward mobility and economic prosperity, regardless of race, gender or geography. Kauffman.org.