Clinton's America/ Taxing the Air
York, Byron
W hen President Clinton spoke to the nation August 3 in an attempt to create support for his economic plan, he called it a realistic, honest blueprint to reduce the deficit. "Rather than the games...
...The airwaves would be controlled by private enterprise and not by bureaucrats...
...It never was, even after another call and another promise...
...Clinton plans to reduce spending by $10.2 billion using something called the "spectrum auction...
...The Democrats had gotten over their concern about deep-pocket domination of the airwaves...
...It's no more a spending cut than the increase in Social Security taxes that was also called a cut," he says...
...And it will bring billions into the Treasury...
...Thus $4 billion became $7 billion...
...The administration proposed to cut $102 billion through a discretionary spending freeze, another $56 billion in Medicare, $12 billion in retirement, a few billion in other places...
...The reporter made one more call to the White House, with another protestthat there was still no list of 200 cuts...
...Citing the desire to turn over some of the spectrum to the private sector, both the Reagan and Bush administrations proposed the auction idea in the 1980s...
...on President Clinton's economic growth and deficit reduction": 1. Historic Deficit Reduction 2. The Plan Is Good For The Economy 3. Asking Those Who Have The Most To Pay The Most 4. Fairness For The Middle Class 5. Cutting Spending While Still Rewarding Work And Investing In Our People The list went on for several pages, but there was no mention of the 200 cuts...
...Four years ago, conservative Rep...
...Imagine my surprise," says Mike Oxley, "when I picked up the Washington Post and read that overnight it had become $10 billion...
...obody knows exactly how much N money a spectrum auction will bring the government...
...And, in the final days before the budget vote, as Clinton gave away big-money public works projects to on-the-fence lawmakers, $7 billion became $10 billion...
...And a look at its role in the budget debate might make even the most loyal Clinton supporter wonder whether the administration has really moved beyond the "games and gimmicks" of the past...
...Once a band of the spectrum was sold, their thinking goes, the owner would own it as long as he wanted...
...What arrived was a document outlining the following "key points and facts...
...They believe the government should get out of the business of dividing up the airwaves and leave it instead to workings of the market...
...But according to Democratic experts, there is—in.the logic of Capitol Hill—a rationale for calling the auction a cut...
...Oxley...
...In earlier months he had made widely reported claims of 150 cuts...
...But high-tech businesses are developing a whole new generation of products that will need to use the relatively small portions of the spectrum that remain untouched...
...They'll pay the government for the right to use the airwaves...
...Does that make it a spending cut...
...In recent years, the commission has held a lottery to determine who gets new licenses...
...Some budget watchdogs in both parties see it differently...
...Both sides now agree that competitive bidding will probably be a better way to divvy up the airwaves than the current lottery system...
...When a reporter called the White House press office to ask for a list of the 200 cuts, he was told one would be faxed over right away...
...Of course it won't cut spending, but don't blame Rep...
...I guess the short answer is it's a way to raise revenues, and the administration was looking for a way to raise revenues," says one Democratic staffer on the Senate Subcommittee on Communications...
...The next day, and in the days following the budget debate, the New York Times, the Washington Post, and the network newscasts reported little more than the loosely defined figures provided in the second handout, and similar documents coming out of Capitol Hill...
...Most people don't even know what it is...
...As the argument goes, the spectrum is a scarce natural resource in the public domain, and the government has a right to charge people to use it...
...On February 18, the day after the president unveiled his plan, the Washington Post, citing a White House estimate, reported the auction "could raise as much as $4 billion for the federal government...
...But the package passed, and soon the FCC will begin making plans to hold an auction for the unused portions of the radio spectrum...
...Of course, the value of the spectrum was not actually going up during those months...
...A few minutes later, the same document arrived, but with a sheet attached listing eleven broad areas of spending cuts...
...Mike Oxley (R-Ohio) sponsored a spectrum auction bill that never made it out of committee...
...Then came a twist...
...Rather, the administration was becoming increasingly creative as it tried to meet the goal of matching roughly $250 billion in tax increases with $250 billion in spending cuts...
...The spectrum auction had become a Democratic idea because the Democrats needed cash...
...If he wanted to sell it, or use it for some reason other than originally intended, he could...
...It points out the intellectual dishonesty of the whole package...
...Though the auction had never been a featured part of the Clinton economic proposal, White House planners apparently could not resist the income it would provide...
...They liked the revenue more than the idea...
...The airwaves are a unique commodity that has never been sold before, so estimates go all over the place...
...Then one day early this year, Oxley was astonished to see the spectrum auction show up in the Clinton economic plan...
...blocked it, saying an auction would give only those with the deepest pockets the chance to use the spectrum...
...now there seemed to be 50 more...
...When called again, with a protest that a list had not been included, the press office answered that the wrong thing must have been sent out, and the list of 200 would be faxed right over...
...Most of the spectrum has already been given to established broadcasters, businesses, police departments, and the like...
...But, like several other mislabeled user fees in the Clinton budget, it's not a cut at all...
...Yes...
...And in early August, the Post reported "the idea is to raise an estimated $10.2 billion over the next five years for the strapped Treasury...
...In April, the Post reported government estimates that "auctions could bring in about $7.2 billion...
...According to the list provided by the White House, it is the fourth-largest cut in the President's plan...
...And, as thebudget negotiations dragged on during the summer, the "potential gimmick" turned out to have more money-making potential than first believed...
...Gadgets like Apple's Newton, mobile faxes, and "personal communications systems" that combine the functions of a telephone and a computer will all transmit signals via radio waves...
...This is one of those areas where there's a potential gimmick in the making," says Susan Tanaka of the Committee for a Responsible Federal Budget...
...Some observers noted a change in the president's pitch...
...Specifics were hard to come by, but amid all the generalities, there was one precise cut on the president's list...
...It needed more cuts...
...They could smell the money," says Oxley...
...Like current license holders, new users will be required to renew their license periodically, and will likely have to pay each time they do...
...It's not a tax," says one Senate Budget Committee staffer...
...It got some of them simply by raising the estimated income the auction would generate...
...Does that make it a cut...
...They were scrambling to reach $500 billion, which was bogus to begin with, so they just plucked it out of the air...
...They are licensed by the Federal Communications Commission and are allowed to use the airwaves pretty much for free...
...But users of the new technologies will have to bid for a frequency...
...Critics called the system too arbitrary, and now it will change...
...The Clinton estimate has been going up all year...
...Free-market policy wonks have pushed an extreme version of the idea for years...
...It's an offset to outlays...
...According to Oxley, "Markey had a foxhole conversion...
...Under a measure passed as part of the Clinton economic plan, holders of existing licenses will keep them on the old, free-of-charge basis...
...Rather than the games and gimmicks of the past," he said, "this plan has 200 specific spending cuts, and it reduces government spending by more than $250 billion...
...But the House Subcommittee on Telecommunications and Finance, under chairman Ed Markey (D-Mass...
...But it appears nobody else got it, either...
...T he "spectrum" in "spectrum auction" refers to the frequencies of radio waves on which all radio, television, microwave relay, cell-phone, and other wireless communications flow...
...Under pressure to come up with a budget producing "$500 billion in deficit reduction" with equal parts higher taxes and spending cuts, the administration classified the spectrum auction as a "spending cut...
...Again came the answer that one would be faxed...
...And they'll need FCC approval—and an FCC license—to do it...
...Given all the other baggage that accompanied the spectrum auction in Bill Clinton's economic plan, the long-time auction supporter did the only thing he could last August 5. He voted against it...
...The idea made Oxley laugh...
...T he Congressional Budget Office estimates that selling some of the airwaves would bring the government billions over the next five years...
Vol. 26 • October 1993 • No. 10
