Deficit Cutting Fever Threatens Broadband Stimulus Payouts

Politicians, news reporters, and now voters have become obsessed with deficit reduction. Not surprisingly, I find myself in agreement with Paul Krugman and other economists who have argued that we failed to spend enough to restart the financial engines of our economy and now appear ready to compound the error by repeating the error of 1937 when Roosevelt cut back on deficit spending and sent the nation back into the Depression. Unfortunately, this “deficit cutting fever” now threatens the money previously allocated for the broadband stimulus programs.

A proposal by Senator Baucus would cut approx $300 million from BTOP and $300 million from RUS to help fund extensions of unemployment benefits and other more popular stimulus measures such as — surprise! — extensions of various tax credits. (Rep. Obey would cut the same amount, but as part of the and supplemental funding for the Afghanistan and Iraq Wars.) While I certainly don’t begrudge extending unemployment benefits (I do think tax credits are rather worthless for motivating corporate behavior in light of how few corporations end up paying corporate income tax), I absolutely question the wisdom of pulling funding from stimulus programs that are not only creating jobs now, but helping to transform our future.

How far we’ve fallen from a year and a half ago when then-Administration broadband spokescritter Blair Levin promised that the $6 billion for broadband stimulus was only a down payment for the Administration’s investment in broadband infrastructure. Now, with the effort to repurpose the Universal Service Fund for broadband seriously jeopardized by the combination of the Comcast Decision, Congress proposes to trim back available money for broadband even further.

I know that folks have had criticisms about the program as it unfolded. Heck, I had a bunch of concerns myself about whether BTOP could make a real difference or would end up going the way of most subsidy programs. But in the last year, the program has risen to the challenge and proven itself. Starting virtually from scratch, and overcoming a wide array of technical problems, the Department of Commerce has built a program capable of processing thousands of complex applications.  The program has contributed more to fund construction of middle-mile infrastructure, public computing centers, and sustainable broadband adoption than any previous federal program — and with the bulk of money going to public/private partnerships and entities with close ties to state and local government rather than to the traditional large incumbents.

(Don’t mean to slight RUS, but I am just not familiar enough with RUS to be able to talk about how they’ve been doing.)

Sure, a dollar $600 million cut back is less than 10% of the original program funding. But with studies showing that investment in broadband infrastructure contributes to future GDP growth, Congress shouldn’t cut back at all. To the contrary, now that NTIA has invested so much in creating the program, worked out the implementation bugs, and is pumping needed funds into local communities both rural and urban, Congress ought to expand the broadband stimulus program as an ongoing means of creating jobs today and building a more productive economy for tomorrow. At a minimum, Congress should not skim money that goes directly into local communities and creates infrastructure that will serve us all for a generation in order to fund a bunch of corporate tax credits that seem unlikely to create even a one-time increase in jobs.

Granted it’s too much to expect our country to follow the lead of places like Australia, which invested $43 billion to create a national broadband network.  I have sadly come to accept the fact that we are no longer a Great Society that aspires to provide a basic standard of living for all Americans. But do we have to descend to a level of shortsightedness that borders on self-destructive stupidity? If we no longer have the spirit to dare great things, can we at least have the brains not to skim money from programs that directly contribute to our economy and our future to programs that don’t? Fund “incentive tax credits” that don’t work some other way, or don’t fund them at all. But for Heaven’s sake, at least don’t fund them at the cost of programs like BTOP and BIP that actually build something.

Stay tuned . . . .

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3 Comments

  1. JohnMc says:

    So Harold explain to me how this makes sense —

    * How spending $600m thru the Commerce Dept on one hand,
    * While suppressing private investment by a Title II reclass by the FCC by $80b on the other,
    * Or gaining 5k jobs on one temporary effort out weighs long term employment of about 500k people in the private sector.

    ends up a net positive for broadband expansion?

    See here

    Please, go ahead and explain this to all of us? While you are doing that I will put ‘Old Tobacco Road’ on the Victrola.

    Have a Happy Foruth!

  2. Harold says:

    @JohnMc That’s easy, the second statement is simply wrong. Remove it as a false assumption and then you will actually understand how things work.

    Further, even if you were right in assumption two, it is a logical fallacy to assume that they are related or outweigh the other. Because it is entirely possible to do investment through stimulus and not give a rat’s patootie about classification one way or another.

    But of course, we all know this is just a clumsy way of making the following argument, which ought to be pronounced in a high pitched whiny 16 year old voice, with dramatic gestures and stomping:
    “Harold, if _really_ cared about investment you wouldn’t push Title II, so there!” followed by angry head-down stomping out of the room and accompanying door slam.

    Which I gotta say is somewhat beneath you, John.

  3. JohnMc says:

    The classification itself is not the issue other than it is the trigger Harold. Obviously you did not read the article I referenced in the piece. The reclass will trigger a reduction in private investment in broadband. You are making the argument that Its a comparison of apples and oranges when in reality they both come from the same tree. The net result is negative.

    Other than the major Telcos themselves, there are only about a dozen OSPE firms in the US. JCEllis,Intota for example. These same firms, or there competitors would be doing the work associated with the Commerce grants are also the same firms that contract with the Telcos. Redefine it as you wish, but the fact is what is going on is no different than what the government did with the tobacco industry. So OSPE firms will start laying off and the results will dwarf the small pittance that the Commerce dept is throwing around.

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