Birth of the Digital New Deal: An Inventory of High-Tech Pork-Barrel Spending

I’d be impressed if a policy issue in Washington actually ever WENT AWAY. But it seems like we have to dust off the same arguments over and over again, beat back and refute the same tired interventionist ideas endlessly. Two stories in today’s news point at the problem. One, $3 billion in “stimulus” spending is being proposed for the Internet and telecommunciations industry–with regulatory strings attached (take the government money, your network has to be “open access”; so a backdoor–strike that, explicit–imposition of net neutrality on technologies and networks that don’t even exist yet). The second notable story is that–surprise–most of those who’d get broadband subsidies apparently don’t even want broadband.

Several years ago at the Cato Institute, Adam Thierer, Thomas Pearson and I wrote on high-tech pork barrel spending of the very kind being pursued today. These projects aren’t new, they’ve been around for a while, and the economic downturn is a perfect excuse to dust them off. We could and probably will write new papers on why the broadband “stimulus” will harm both industry and consumers; but the reality is we’ve said it all before. Here’s the executive summary from our 2002 report “Birth of the Digital New Deal: An Inventory of High-Tech Pork-Barrel Spending”

Congressional spending sprees are nothing new in Washington. But now, new spending initiatives are cropping up that cover telecommunications services, the Internet, and the high technology sector in general. Although federal legislative activity on this front is not a formally unified effort, the combined effect is tantamount to the creation of what might be called a “Digital New Deal.” Just as policymakers proposed a litany of New Deal programs and spending initiatives during the Great Depression era, lawmakers today are devising many new federal programs aimed at solving the supposed emergencies or disasters that will befall the telecommunications industry without government assistance. The recent troubles of the dot-com and telecommunications sectors have only added fuel to the fire of interventionism.

The new communications, cyberspace, and Internet-related spending initiatives that policy-makers are considering or have already implemented can be grouped into four general categories: (1) broadband deployment; (2) digital education, civic participation, and cultural initiatives; (3) cybersecurity; and (4) research and development. Dozens of new federal programs have been proposed in these areas during the 107th Congress. And dozens of other assistance programs already exist.

The dangers of the cyber-pork barrel should be obvious. Washington subsidy and entitlement programs typically have a never-ending lifespan and often open the door to increased federal regulatory intervention. That kind of political meddling could also displace private-sector investment efforts or result in technological favoritism by promoting one set of technologies or providers over another. Moreover, subsidy programs are unnecessary in an environment of technological competition, characterized by both proliferating consumer choices and uncertain market demand for new services. Finally, perhaps the leading argument against the creation of a Digital New Deal is that by inviting the feds to act as a market facilitator, the industry runs the risk of becoming more politicized over time.

Before high-tech sector leaders become too comfortable in Washington circles, they should ask themselves if they want their future to be so closely tied to the whims of federal legislators and regulators.