Pork-barrel spending in proposed FCC spectrum auction bill amounts to $23 billion, bypasses appropriations process.
by Daniel Lyons
Former Obama chief-of-staff Rahm Emanuel once famously said “you never want a serious crisis to go to waste.” Uttered in the aftermath of the 2008 subprime meltdown, Emanuel’s (borrowed) mantra suggests that high-stakes political moments create opportunities for politicians to push less popular ideas and pet projects that may not otherwise pass.
A microcosm of this dynamic is currently playing out in Congress with respect to the Spectrum Auction Reauthorization Act. Renewal of the Federal Communications Commission (FCC)’s spectrum auction authority is must-pass legislation, and the bill accomplishes many worthwhile objectives. But it also earmarks over $23 billion in expected auction proceeds for specific projects, some of which Congress has previously rejected. (Hat-tip to former FCC Commissioner Harold Furchtgott-Roth, who has written at length about this issue.) These earmarks circumvent the traditional appropriations process and distort policy by shielding certain members’ favored projects from more thorough evaluation and debate.
For over a quarter-century, Congress has periodically re-authorized the FCC to auction portions of the electromagnetic spectrum for commercial uses. These reauthorizations are essential to American telecommunications policy. FCC auctions help guide scarce spectrum to its highest and best use, contributing to significant breakthroughs in cellular communication, mobile data, and countless other wireless innovations.
Spectrum auctions not only promote efficiency, but they also raise revenue for the government: over the years, hundreds of billions in auction proceeds have been deposited into the US Treasury to reduce the national debt.
But raising revenue creates the temptation to spend it by diverting some of the proceeds toward favored initiatives. The reauthorization bill currently pending before Congress would steer expected auction revenue toward a variety of telecom-related initiatives:
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- $3 billion to replenish the “rip and replace” fund for small telecommunications carriers to remove Chinese-manufactured equipment from their networks;
- $5 billion to fund a subsidy program to construct so-called “middle mile” broadband networks;
- $15 billion to help state and local officials upgrade 911 networks; and
- $200 million to help “minority-serving institutions” such as Historically Black Colleges and Universities to apply for broadband construction subsidies
The cumulative effect of these earmarks is to skim over $23 billion off the top, with only the leftovers going toward debt reduction or funding Congress’s countless other spending priorities.
The objection is not so much to the provisions, but the process. Legislators can debate the merits of individual initiatives—the rip-and-replace spending seems uncontroversial, others perhaps more so. But they aren’t being debated, and that’s the point. By attaching these spending provisions to a crucial but only tangentially-related bill, proponents are limiting opportunities for debate and challenging members to compromise on principles in ways they wouldn’t if the earmarked programs were presented as clean bills. Moreover, Furchtgott-Roth notes, Congress has previously debated and rejected some of these proposals, such as the 911 initiative.
Hiding spending in must-pass legislation bypasses the appropriations process, which is how Congress typically evaluates spending proposals. Each year, members offer several proposals that compete for limited taxpayer dollars. The appropriations process is the mechanism by which Congress triages among these demands on the public fisc and determines which of these the country can afford. Earmarks such as those above distort policy by artificially prioritizing those initiatives that happen to get attached to important legislation.
In this case, Congress also runs the risk of counting its chickens before they’re hatched. While historically spectrum auctions have raised significant revenue, there’s no guarantee the next auction will earn enough money to pay for these earmarks. This is especially concerning regarding the rip-and-replace and minority-serving institutions provisions, which will be funded before the auction. Unusually, the bill allows agencies to borrow from Treasury to fund these programs upfront and then pay them back from expected auction proceeds. The other provisions are not similarly forward-funded, but by creating the programs, the act lays the groundwork for later demands for funding should auction revenue be insufficient.
It would be remarkable if the government managed to lose money on a spectrum auction.
Washington only recently emerged from a brutal fight over the nation’s debt limit. The showdown highlighted the important issue of structural deficits and the need for Congress to better reconcile the nation’s revenue with its expenditures. Deficit hawks in particular should be wary of indirectly contributing to growing spending by hiding pet projects in critical legislation like the auction reauthorization bill. Perhaps initiatives like middle-mile funding are so critical that members would defeat the bill without them. But if these earmarks have that much support, they should pass through appropriations with ease.
Congress should pass a clean spectrum auction reauthorization bill, and decide how to spend any proceeds later through traditional channels.
Originally published by the American Enterprise Institute. Republished with permission.
