The $650 million DTV converter box

We've all heard about how wasteful the government is when it comes to spending our money. Examples include the $100 million wasted to purchase 270,000 purchased — but unused — commercial airline tickets, the $355,000 of taxpayers' money spent on NASCAR drivers, and the $25 billion the government shelled out in 2003 but has no idea on what that money was spent. It's about to get worse.

I just finished reading the 334-page American Recovery and Reinvestment Act of 2009 (ARRA). That is the official name for the biggest pork project in the history of mankind. This colossal, budget busting sea of red ink makes all other government spending look like small rain drops.

After downloading the entire bill, I looked up DTV funding. Here's what ARRA says about DTV:


Notwithstanding any other provision of law, and in addition to amounts otherwise provided in any other Act, for costs associated with the Digital-to-Analog Converter Box Program, $650,000,000, to be available until September 30, 2009: Provided, That these funds shall be available for coupons and related activities, including but not limited to education, consumer support and outreach, as deemed appropriate and necessary to ensure a timely conversion of analog to digital television.

That's it! These 73 words justify the spending of $650 million. That's almost $10 million per word!

The most noticeable part of the bill's specificity is the absolute lack of it. NTIA is given more than (another) $0.5 billion, and the only thing NTIA has to do is educate, support and outreach. I'd hope you could do a whole lot of those three things for that amount of money.

I once worked at a university that knew exactly how to fund itself with Federal grant money. It was the university's policy to keep the first 25 percent of any government grant before it was passed on to the researcher's department. So, for example, if a professor received a grant for $200,000, she would actually only get $150,000. The university kept the other $50,000 as an administrative fee. You get the picture. I think the mafia calls this practice skimming.

The issue now is that much of the additional $650 million will never actually be spent supporting Americans' digital OTA viewing. Millions of people received coupons late last year but never actually used them to buy a DTV box, and the coupons then expired. If the $40 coupon was never exchanged, that NTIA money was never actually used.

While the NTIA claims to be out of money, it's simply an accounting slight-of-hand. All of the original money wasn't actually spent, and the remainder now rests in some government coffer. How much? No one is saying. (Think administrative fee.)

About 8.8 million households have yet to convert to DTV. That means Uncle Sam is budgeted to spend at least $74 per household — just to give them a $40 coupon. And how many of those remaining 8.8 million viewers will actually use a coupon to buy a DTV converter box? Half? Three-quarters? I suggest that the actual price of the NTIA providing DTV coupons that are actually used to buy a DTV converter will turn out to cost the U.S. taxpayer thousands of dollars per coupon.

Broadcasters spent $20 billion building out DTV, and yet our government can't do its part and get a simple $40 coupon into the mailbox of a few million American viewers without spending another $650 billion.

I'll bet almost any business in America could do the same thing for less than $1 per coupon. But, this is all about “change” isn't it?

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