President Clinton's recently released fiscal year
(FY) 2001 budget contains a veritable high-tech pork barrel of new
federal programs and spending initiatives. Among them are plans to
spend roughly $2 billion on a "national crusade" to solve an
alleged "digital divide" separating the Internet haves and
have-nots. Despite the amazing spread of digital technology and
Internet-based services in just a few short years, the
Administration believes federal subsidies are needed to complete a
job the private sector is largely accomplishing on its own quite
effectively. Indeed, if ever an industry did not need federal
assistance, it is this high-technology sector characterized by
remarkably innovative products, ever-increasing demand, intense
competition, rapidly falling prices, high-paying jobs, and overall
entrepreneurial energy.
Essentially, the Administration wants to
jump on a horse that is already in the lead to claim victory as it
crosses the finish line. Its new initiatives are tantamount to
establishing a "Digital New Deal" entitlement. Congress should
reject the Administration's efforts before the old entitlement
mentality infects today's most vibrant and accessible industry.
Slippery Slope.
The FY 2001 budget proposes the most new spending initiatives
within the Department of Commerce, including over $45 million for
the Technology Opportunities Program--an ambiguous, catchall
project to increase "tele-mentoring for at-risk youth, and
electronic networks [for local communities]--" $5 million to make
e-commerce applications "more interoperable," and $19 million in
corporate welfare to assist small manufacturers with
e-commerce.
The Department of Education seeks massive funding
increases for many existing technology-oriented educational
programs, including a 100 percent increase over FY 2000 funding for
the Preparing Tomorrow's Teachers to Use Technology program and an
astounding 208 percent increase over FY 2000 for Community
Technology Centers. Other high-technology and Internet-related
spending initiatives are included in the following table.
Significantly, this new spending would not
include the $2.25 billion per year "E-rate," or Schools and
Libraries program, created by the Federal Communications Commission
(FCC) to help wire schools and libraries for advanced
communications services. The program is not a direct federal
appropriation; rather, it redirects money within the communications
sector through various mandates on network providers.
Finally, the budget contains an 11 percent
increase in the FCC's budget, which would rise to $237.2 million
from $210 million. The FCC regulates the communications industry
and Internet sector. Its policies often inhibit the development and
diffusion of new services and technologies to the public. Another
funding increase would signal regulators that they could continue
those policies.
Trickle Before the Flood.
The Administration is likely to claim that its proposals are
modest compared with other federal spending, but history shows that
what begins as a relatively minor spending initiative can grow all
too quickly to become an interminable and expensive entitlement.
Beyond lacking any constitutional authority for federal activity on
this front, the Administration's programs could invite increased
scrutiny and regulation of the Internet sector, since most
subsidized industries typically face greater federal oversight.
The
Administration's call to create a high-tech pork barrel is wasteful
and wrong. A better way to finish connecting America to the
Internet would be for Congress to remove the burdensome regulations
and taxes that inhibit the private sector, which is in a better
position to do the job in the first place.
Adam D. Thiereris a formerr Alex
C. Walker Fellow in Economic Policy, and Gregg
VanHelmondis a former Research Assistant, in the
Thomas A. Roe Institute for Economic Policy Studies at The Heritage
Foundation.