WASHINGTON — The Congressional Budget Office said Monday that the Clinton administration has overestimated the value of broadcast and non-broadcast spectra auctions by $24 billion.
Congressional economists took a close look at the White House proposal for balancing the budget by 2002 and determined that the Clinton administration had overestimated the revenue from the sale of broadcast spectra alone by $9.4 billion.
The White House predicted it could sell channels broadcasters are using in 2002 for $14.8 billion. The CBO said the sale will likely bring in $5 billion.
In addition, the congressional number-crunchers said the White House also overestimated revenue for the sale of channels 60-69 by $1 billion. The Clinton administration said the sale would bring in $3.5 billion, but CBO said actual receipts will be closer $2.5 billion.
In addition, the CBO took a much more conservative approach to non-broadcast spectrum that will be on the auction block. While the White House estimated that the airwaves will increase greatly in value — by as much as 40% — between now and 2002, CBO estimated frequency prices will remain level.
One for broadcasters
The CBO estimate is a victory for broadcasters who have said all along that their spectra is not as valuable as the White House has claimed. In addition, broadcasters hope to use the lower estimates to discourage the Clinton administration from repossessing their current channel assignments in 2006. The White House insists that most homes will have made the switch to digital TV by 2006 and the current broadcast channels will no longer be necessary for TV stations to reach their viewers.
Broadcasters have promised to give the channels back, but do not want to commit to a deadline for returning the spectra. They insist there is no way to predict how quickly the transition to digital TV will occur.
$9 billion tax bill?
Under the administration’s plan, broadcasters will be taxed for the difference if the auctions of TV spectrum fail to raise the expected $14.8 billion. If the CBO valuation is correct, the broadcasting industry would be on the line for $9 billion.
Congress is expecting to propose its own budget, which will not rely on the sale of broadcast spectrum to balance the federal checkbook. Overall, the CBO estimates the White House budget will result in a $69 billion deficit in 2002. The White House says its spending plan will yield a surplus by the same year.