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 . . . .