Broadband Stimulus Not So Stimulating to Jobs
About a year ago, I started looking into the Administration’s broadband stimulus program (passed as part of the American Recovery and Reinvestment Act of 2009) to see what $4.7 billion of broadband outlays through the NTIA got us. In particular, with the AT&T T-Mobile merger in full swing, I wanted to see how some analog “investment” played out as it related to job creation.
You my remember that AT&T claimed its $8 billion net investment in new 4G broadband networks would yield up to 96,000 new jobs.
In comparison to this, the President sold his broadband stimulus plan to the public, noting:
“These critical broadband investments will create tens of thousands of jobs and stimulate the economy in the near term.” (Emphasis added)
We know now what happened to the AT&T T-Mobile merger – it got sunk by the DoJ and FCC. Consequently, what we don’t know is just how well this privately borne “stimulus” program would have done for our economy (though I suspect it would have been pretty good).
As to the NTIA, we’re still waiting on the success stories – near term or any term, for that matter.
Today, almost two years after the last NTIA broadband grants had to be out the door, the most recently reported job creation / retention numbers show that only 4,000 jobs in the second quarter have resulted from the program.
That’s only a quarterly measure. To arrive at a cumulative number – which the NTIA has never publicly tallied – one has to add all the quarters up and then divide accordingly. With many of the projects done or nearing completion, and numerous quarters sporting numbers far less, it’s starting to look like the 4,000 jobs created or retained tally might be about as good as it gets for the NTIA’s broadband stimulus plan.
Putting this number in its most optimistic light, that’s about $1.2 million per job created or saved.
Not so stimulating, huh?
Level 3 Misses the Memo – Stimulus Funds Get Spent but Jobs Go Wanting
As I looked into the NTIA program, a couple of grants stuck out more than the others as they pertained to jobs. Of the group I had initially isolated, one in particular struck me as being especially anemic – that is, Level 3 and its six NTIA broadband grants to create 47 (in total) middle mile broadband access points throughout California, Florida, Georgia, Kansas, Tennessee and Texas.
For the six grants – which the NTIA funded to the tune of $13,757,498 – not a single job has been created or retained by the company. In fact, in the 60 reports they have sent to Uncle Sam detailing the progress of their grants (which are now largely completed), nary a direct job is listed as meeting OMB job creation / retention guidelines.
0 direct jobs for $14 million. How does that help our economy recover?
Now, to be fair, Level 3’s NTIA applications noted that the “procurement, installation and activation of the equipment will account for some new economic activity at Level 3 and its vendors.” It added, however, that the “real value of this project is the number of jobs expected to be created or saved in the communities where last mile service providers bring modern broadband services to their customers.” (Emphasis added)
So, stated another way, Level 3 appeared to downplay the Stimulus’ focus on boosting near-term jobs, and focused on the harder to quantify, far fuzzier mid-to-long-term productivity / job-creating effects of putting new infrastructure into service instead.
But, using this lens, jobs – if they do occur at all – they do not quickly materialize.
This is all well and good, but ostensibly the primary focus of the “targeted, timely and temporary” Stimulus was for quick job creation. Remember, “shovel ready”? America called for Recovery. And jobs now, in the near term – not somewhere in the fuzzy future – was the way America would recover through the Stimulus.
Using this yardstick, Level 3 has utterly failed at meeting the basic goal of the legislation.
The Value of Connections – Level 3’s Grants Helped by Lobbyists, PAC Contributions and Bundlers?
Perhaps more disturbing than Level 3’s job creating (in)abilities under the Stimulus is the appearance that politics played an integral part in the company getting the NTIA grants in the first place.
As this Politico story, “Top Barack Obama donors net government jobs,” last year reported:
Telecom executive Donald H. Gips raised a big bundle of cash to help finance his friend Barack Obama’s run for the presidency.
Gips, a vice president of Colorado-based Level 3 Communications, delivered more than $500,000 in contributions for the Obama war chest, while two other company executives collected at least $150,000 more.
After the election, Gips was put in charge of hiring in the Obama White House, helping to place loyalists and fundraisers in many key positions. Then, in mid-2009, Obama named him ambassador to South Africa. Meanwhile, Level 3 Communications, in which Gips retained stock, received millions of dollars of government stimulus contracts for broadband projects in six states — though Gips said he had been “completely unaware” that the company had received the contracts.
Sure. “Completely unaware.”
That’s pretty rich, especially given that Congressional lobbying disclosure reports (and other reporting services) reveal that Level 3’s lobbying efforts surrounding the Stimulus bill (among other legislation) were substantial. From late 2008 until Level 3’s grants were awarded by the NTIA in the first quarter of 2010, the company spent $769,739 for its own lobbying, with at least an additional $859,666 going to outside lobbyists, on Congressional matters including the Stimulus bill.
But wait, there’s more. James Pribyl, Level 3’s chief lobbyist who directed the company’s Congressional spending, is a heavy supporter of Democrats, with FEC data showing he has given at least $13,650 mainly to Democratic candidates since 2000.
And, not to be outdone by his subordinate, Level 3’s CEO – James Crowe – is an even bigger Democrat booster. In fact, OpenSecrets.org describes Crowe as one of the “elite” 558 Obama bundlers who in 2008 helped that cause with a nice little $206,438 bundle of funds for the campaign. Since 2000, FEC records show that Crowe has given hundreds-of-thousands-of-dollars of his own money almost exclusively to Democratic candidates – including two such contributions last New Year’s Eve of $20,000 to the Obama Victory Fund, and $15,000 to the DNC.
Cutting to the chase, one can hardly be faulted for believing that some sort of “pay-for-play” or crony-ism helped win the NTIA’s broadband stimulus grants for Level 3. Yes, they may have had the qualifications (it is a $5 billion, publicly traded company). But, so did others. Of the over 2,000 applications received by Uncle Sam for broadband stimulus grants, to think Level 3’s level of political activity played no role in their winning six of NTIA’s 230 grants which were ultimately awarded strains credulity.
Far from playing no role, it may have been the exact reason why they were selected.
NTIA Broadband Stimulus + Level 3 = Symbol of Systemic Failure
The free market represents one of the most powerful pro-liberty checks against government power and abuse ever known to man. We should always be wary when government supplants this spontaneous check on its power by directing the economy through its spending.
Today, that spending is about 25% (and growing) of GDP. Roughly, that means one-in-four commercial transactions goes through Uncle Sam’s sticky fingers. The bigger that role is, however, the greater the opportunity exists for rent-seeking and market-distorting corruption by politicians and those they benefit / control.
Yes, we were told that without the Stimulus, America’s economy would end up in the crapper. All would be lost. The Depression would pale in comparison to today’s crisis.
It turns out, however, that after spending approximately $800 billion to goose our economy, it still floats in the toilet. And average Americans are left to clean up the mess.
Like the rest of the Stimulus, the NTIA’s broadband program failed to produce its proclaimed “tens of thousands of near term jobs” because instead of letting the market decide where resources needed to go, politicians did so as its corruptible proxy. In doing so, it placed crony-ism over market wisdom, building on house-of-cards policies designed to sand down some of the marketplace’s rough edges, while also creating social mandates and subsidies to “achieve” ends that could only ever-demand more taxpayer dollars to keep the treadmill of economically unsustainable programs “running.”
The Stimulus was not a blip. Sadly, it’s the way government “works” and grows.
If government continues to expand in this manner – and there’s every indication that it will continue on this path – this begs the question: Who among us has the wherewithal and resources like Gips, Pribyl and Crowe to hire lobbyists and cut thousands-of-dollars in PAC checks to favored – and favoring – politicians just to prosper in America?
The answer is – only the politically connected 1%.
More government, touching virtually every aspect of our lives and freedoms, means each one of us may soon have to become their own “Level 3” to eek out an existence.
More government turns our lives into government-granted monopolies, subject to the whims and capriciousness of imperfect officials, instead of each one of us acting freely in liberty.
More government – far from freeing us – turns us into serfs.
There is a good reason why so many objected to the Stimulus. It is more government from which we may never recover.