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"Large Pile of Money" Attracts Waste

Posted By Conn Carroll On February 18, 2009 @ 10:23 am In Ongoing Priorities | Comments Disabled

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The more we learn what is buried in the 1400+ pages of the economic stimulus bill, the more we’re sure it will fail. The latest boondoggle: broadband. The Los Angeles Times [1] reports:

[I]nsiders said some of the compromises forged by House and Senate negotiators could lead to problems in how the billions of dollars of new grants for broadband access are distributed.

For instance, the final bill divides the money — and the power to dispense it — between the Commerce Department and an Agriculture Department agency with a history of mismanagement of technology issues.

“The question is, why are we having two grant-making infrastructures developed for broadband grants, one of which is at the Department of Agriculture?” said Ben Scott, policy director for Free Press, a nonpartisan media reform group that focuses on technology issues.

The answer is an old story in Washington: A large pile of government money attracts a lot of attention.

“A lot of the numbers that were used in this debate were exaggerated,” said Robert Crandall, an economist at the Brookings Institution. “The problem with broadband subsidies in the stimulus bill is that they focus so much on rural areas. Those areas already get lots of subsidies for telecommunications, and there is no evidence that those subsidies work.”

Companies with a stake in the Internet, including fiber-optic equipment makers and telephone service firms, urged Washington to encourage the buildout with reduced regulation, tax breaks or subsidies. Or all three.

Now, more than 90% of the country has access to high-speed Internet service, and some economists question how stimulative federal tax breaks and grants will be.


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[1] Los Angeles Times: http://www.latimes.com/news/nationworld/washingtondc/la-fi-broadband17-2009feb17,0,6499633.story?page=2

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