Gore's Internet Slush Fund:
Gore's Internet Fiasco
By James K. Glassman
Tuesday, June 2, 1998; Page A13
It looks like Al Gore's pet project -- hooking every classroom and library
up to the Internet and using a hidden tax to pay for it -- is about to explode
in his face. It will be a consequence richly deserved.
The political benefits to Gore of linking schools, high-tech and the
doling-out of billions of dollars in cash seemed obvious. The educational
benefits are more uncertain, and 80 percent of schools are already
connected to the Internet anyway.
But the real outrage is the way Gore and his supporters have gone about
implementing what's called the "e-rate program" -- by trying to hide the
astronomical costs and charges from the public and by running the whole
show through a complicated array of boards in a system recently declared
illegal by the General Accounting Office.
I disclosed this hidden-tax set-up in a column last December, and it has
enraged some powerful politicians, including Rep. Billy Tauzin (R-La.),
who heads the telecommunications subcommittee, and Rep. John Dingell
(D-Mich.), ranking member of the Commerce Committee.
The Internet project was part of the big 1996 telecom act, but Tauzin said
on the PBS program TechnoPolitics that the FCC isn't interpreting the law
as intended. Now, it "smells like an unlimited tax upon an unlimited
entitlement."
Dingell told Time magazine that he thought the "era of kings in this country
ended when we kicked out George III." Apparently not. The open-ended
tax circumvents the legislative system -- a reason that the Supreme Court
may declare it unconstitutional.
Telephone companies, which have to collect what is now being dubbed the
"Gore Tax," have been under intense pressure from the Federal
Communications Commission not to disclose it as a line item on customers'
bills.
But, to its credit, AT&T announced last week that it would include a
statement in customers' bills this month to alert them that, starting in July,
they will be hit with a charge of 5 percent of their interstate long-distance
charges to "give schools and libraries access to advanced services like the
Internet." Other phone companies are already disclosing the charges on
bills, and constituents are complaining to members of Congress.
This is exactly what Gore and his friends at the FCC feared. William
Kennard, the FCC's chairman, last week blasted AT&T. But why? If the
Internet project is so popular, then you'd think Americans would be happy
to pay for it.
But as details of the fiasco become known, that supposed popularity is
coming into question. Hidden taxes are only one reason. Others:
Cost. In just 75 days, schools and libraries have applied for $2 billion in
federal money. It's a "rampant feeding frenzy," says Ron Watkins,
president of Information Systems by Design Inc., in Boston, which
develops technology for schools. "It's like watching pigs in a trough. . . .
Schools are getting deluged with ads and high-pressure sales people telling
them, 'Just sign here and send it back to us. We'll take care of it, and the
feds will pay.' But the schools have no idea what they're buying."
The FCC originally estimated that the e-rate program would cost $9 billion
over four years. After plans were publicized and criticisms were raised, the
FCC scaled back the first round of spending to $625 million, but it is
expected this week to approve about $1.2 billion for the second half of the
year.
Hot Wiring. Internet access is only a tiny portion of e-rate spending -- just
4 percent of the $2 billion that the schools have requested. Meanwhile,
two-thirds of the funds will go for "internal connections," including the costs
of ripping up walls to install wiring, repairing carpets, painting and putting in
brand-new computers. Is that what Congress expected? I doubt it.
Scandals. Shenanigans are inevitable when Washington tries to administer
the allocation of billions to 30,000 separate schools and libraries. For
example, Penny Bender of the Nashville Tennessean newspaper, in Gore's
home state, reported in April that a businessman who is a friend of the
governor's won a contract "to beef up Internet service to Tennessee's
schools, even though his bid was $23 million higher than a competitor."
The state is seeking $49 million from the e-rate fund, but the losing bidder
has filed a complaint with the FCC. You can be sure it's the first of many.
Salaries. Members of Congress are just now learning that Ira Fishman, a
former White House aide who once raised campaign funds for Gore, is
being paid $200,000 a year to head the schools and libraries Internet
program. Dingell, in particular, is outraged. "We did not vote to have the
FCC set up a giant bureaucracy headed by someone paid as much as the
president," he told Time.
What's the federal government doing in this business anyway? Local school
boards know local needs best, and local taxes should meet those needs. A
couple of years ago, Al Gore probably figured such logic wouldn't help him
get elected president. But now, with the e-rate project in deep trouble, he
may be having second thoughts. Heeding the Constitution could be a
decent idea, after all.
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